Mihail Duta is the Global Director of Solution Consulting and Payments at Finastra, a London-based global provider of financial software applications and payment services. Duta is currently based in New York.

The Federal Reserve Board recently announced that its Fedwire Funds Service will extend its operating day to include Sundays and federal holidays. This move marks a key step toward 24/7 service in payment infrastructure.

Now is the time for banks to take important steps toward modernization—embracing 24/7 payments and faster fund availability, which not only enhances customer satisfaction but also improves liquidity management for corporate clients and attracts younger digital-native customers accustomed to services like Venmo and Zelle.

Mihail Duta Finastra director for solution consulting and transaction banking
Mihail Duta
Image courtesy of Finastra

Admittedly, forcing financial institutions to operate around the clock may bring unintended consequences, such as increased operational pressure and widened competitive gaps, but relying on legacy payment systems is not the solution.

In addition to providing services outside bank business hours, the system upgrade will also support instant payments, which require more flexible capabilities than traditional platforms, such as elastic scaling and fast end-to-end processing.

This modernization also enables the adoption of the new ISO 20022 standard, which is more complex and data-rich than the message formats used by most legacy payment systems.

Banks need to support newer instant payment networks while still supporting legacy networks that handle a large volume of transactions. Beyond the challenges posed by instant payments, financial institutions relying on legacy systems may also face difficulties in implementing new service enhancements for other payment types, such as ACH.

Managing a complex system of fragmented payment services can undermine a financial institution's ability to operate efficiently and compete effectively.

Of course, updating legacy payment systems can be complex and costly, especially for financial institutions that maintain their own proprietary payment technology stacks.

Financial institutions may be reluctant to push forward with necessary changes due to concerns about long implementation cycles and delayed return on investment. In an environment where compliance and fraud risks continue to rise, financial institutions need to address various competing priorities.

Despite these challenges, many banks should still invest in modernization. A 2024 report by global research firm Omdia found that more than half of surveyed banks plan to increase investment in new payment hubs. These solutions enable financial institutions to build platforms based on modern architecture and deployed in cloud environments, laying the foundation for modernizing the payment stack across the enterprise.

This is especially important as more systems, including domestic and cross-border options, adopt the ISO 20022 messaging framework. In addition to supporting instant payment services, modern payment platforms bring numerous benefits, including enhanced remittance information, improved fraud detection, faster and more efficient cross-border payment processing, automated reconciliation, operational efficiency gains, and enhanced compliance.

The shift toward a 24/7 payment ecosystem is inevitable and already underway. Organizations prepared to support instant payments will have a clear competitive advantage over those that have not yet modernized their legacy payment systems.