Banks Use AI To Meet Instant Payment Challenges Despite Threat to Staff

Key Takeaways

• Instant payment demand is rising in banks across the globe. 
• Banks are increasingly turning to AI to keep up with new demands.
• AI could potentially displace jobs in the industry.

The demand for instant payments in banks is rapidly growing. Asia, Brazil, and India have almost fully transitioned to technology, while the U.K. and the U.S. are against the clock in meeting incoming regulations and rising consumer expectations. 

As pressure increases from corporate and retail clients, banks are turning to AI to help close the gap, but what about the technology’s impact on headcount?

Instant Payments in Banks 

Instant payments refer to electronic payment systems in which funds are transferred between banks or financial institutions in real time and made available to the recipient almost instantly. 

The payments typically clear within seconds or minutes, unlike traditional transfers that may take hours or days.

A recent study by Juniper Research predicted that the instant payments market will almost triple from $22 trillion in 2024 to over $58 trillion by 2028 . 

The Demand for Instant Payments 

Banks in the EU will soon have to meet the SEPA Instant Payments Regulation, which will require every bank in the bloc to send and receive payments in less than 10 seconds. 

By January 2025, the SEPA Instant Payments Regulation  will require all bank payment service providers (PSPs) to be able to receive instant payments from their customers. All bank PSPs must offer their customers instant payment options by October 2025. 

In the U.S., banks are also rapidly moving towards instant payments, mainly due to increased pressure from competition and growing customer demand. Most banks are feeling the pressure of this challenge, as upgrades from legacy systems to support instant payments are often a massive undertaking. 

These rely on older processing systems that are not designed for real-time transactions. Upgrading these systems to handle 24/7 instant payments requires significant infrastructure and technology investment.

Banks Turning to AI?

According to recent research from payments company RedCompass Labs, banks across the EU and the U.S. are turning to AI to meet the high demands of this challenge.

In a survey of 200 senior payments professionals at EU and U.S. banks, the payments company found that over half of respondents planned to leverage AI to help the transition. 

RedCompass Labs said that most banks currently possess an advanced understanding of AI technologies, with a quarter of respondents reporting “very high” AI expertise. 

Tom Hewson, CEO at RedCompass Labs, said, “From a process, skill, and expertise point of view, payments innovation and market share is being seized by a few big banking players who are widening an already significant competitive gap.”

“But AI can help to close it or accelerate it. It just depends on who is first to take the opportunity. With AI, we can more than double output and maintain costs, or we can maintain output and more than half costs,” he added.

However, despite AI’s undeniable efficiency benefits, many in the industry are worried about the technology’s effect on human jobs. 

AI Job Displacement 

In a June 2024 Citigroup  report, the bank found that more than half of banking jobs could be replaced by AI in the future. The bank said that while GPTs have the potential to create new opportunities for growth and innovation, they also destroy existing ways of doing things. 

“And as such they also create losers. Especially in the short term,” the report stated.

Indeed, the world’s leading job-hiring platform, reported that almost a fifth of jobs are at high risk of being impacted by AI. The platform’s research branch reported last year that “all jobs face some potential exposure to GenAI-driven change.”

The company’s AI at Work  report found that almost a fifth (19.8%) of jobs face the highest level of potential exposure, while over a third (34.6%) face the lowest potential exposure.

However, some industry heads are more hopeful for the future of human roles within the sector, as long as we can work alongside the technology. 

Peter Wood, Chief Technical Officer at Spectrum Search, told CCN there was no denying that AI is changing the workforce dynamic, but does not believe it will result in major displacement. 

“Yes, some jobs will change, but this isn’t about mass layoffs,” Wood said. 

“We’re talking more about a reshuffle in roles rather than axing jobs outright. AI is great at tackling routine, by-the-book tasks like data entry, churning out reports, and answering basic customer service questions. This frees up human workers to focus on trickier, strategic tasks,” he added. “Working in banking won’t be so much about being replaced by AI as learning to live alongside it.”

About the Author

Kurt Robson

Kurt Robson is a London-based reporter at CCN with a diverse background across several prominent news outlets. Having transitioned into the world of technology journalism several years ago, Kurt has developed a keen fascination with all things AI. Kurt’s reporting blends a passion for innovation with a commitment to delivering insightful, accurate and engaging stories on the cutting edge of technology.

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