Payment Transformation in the Multi-Rail Era ―An Approach to Orchestrating Multiple Payment Rails and Turning Complexity into Competitive Advantage | Insights

Cross-border payments are transitioning from the stage of “standardizing message formats” to the stage of “enhancing end-to-end operations through the use of structured data” as a result of the migration to ISO 20022, the international standard format for payment messages. Although the migration from MT to MX, the messaging formats used on the international payment network Swift, reached a significant milestone in November 2025, this does not mean that banks’ payment infrastructures will become simpler. Rather, the enhancement of existing payment rails, connectivity with national instant payment networks, API enablement, and the utilization of tokenized deposits are advancing in parallel, increasing the complexity that financial institutions must manage.

Moreover, even if payment instructions are transmitted quickly, recipients may not be able to access funds immediately. This is because operational processes such as regulatory checks, funds posting, reconciliation, and exception handling remain at the receiving bank. Competitiveness after standardization depends not only on how quickly messages can be transmitted, but also on the extent to which the subsequent end-to-end processes can be automated and multiple payment rails can be operated consistently and reliably.

This insight argues that the basis of competition after standardization will shift from the ability to respond to individual schemes and payment rails toward the capability to integrate and manage heterogeneity and complexity. After examining the impact of this structural change on bank management, we discuss transformation approaches for turning complexity into competitive advantage.

About the Author

Ryoya Sato

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1. Challenges Remaining in Cross-Border Payments After Standardization

ISO 20022 Adoption Is the Starting Point for Making Effective Use of Structured Data

The focus of standardization is shifting from aligning message formats to making effective use of structured data.

For example, under SR2026 (Standards Release 2026), fully unstructured addresses in CBPR+ (ISO 20022 usage guidelines for cross-border payments) payment messages will be discontinued, requiring support for either fully structured or hybrid formats. As of April 2026, 61.2% of originator addresses and 62.9% of beneficiary information remain unstructured, and financial institutions are therefore required to continue improving data quality^*1.

Meanwhile, even as migration to MX progresses in the Payments domain, MT messages used in other domains, including Trade Finance and Collections, will not be discontinued simultaneously. For the foreseeable future, banks will continue to bear the burden of supporting MX while maintaining and modernizing the remaining MT assets^*2.

The essential challenge is not simply to modify individual message fields. It is to redesign operations as a whole, including data origination, responsibility for data quality management, handling of non-compliance, and integration with existing systems. Merely accumulating regulatory compliance initiatives as standalone projects will cause operational burdens to keep increasing in proportion to the growth in connections and changes. Banks need an operating structure that enables the harmonization of data and operations while anticipating future changes.

The Last-Mile Axis of Competition Is the Automation of Operational Judgment, Verification, and Reconciliation

The Group of Twenty (G20) and the Financial Stability Board (FSB) have set targets that by the end of 2027, 75% of wholesale payments should be credited within one hour of payment initiation. For 75% of retail payments, recipients should be able to access and use funds within one hour^*3.

Meanwhile, on the Swift network, 75% of cross-border payments reach the receiving bank within 10 minutes. Even so, it may still take time before recipients can access the funds. This gap is caused by regulatory reporting requirements in the receiving country, business hours, foreign exchange controls, deposit processing at the receiving bank, and manual operations^*4.

After standardization, the primary battleground is no longer message conversion but the automation of operations that determine the legality and consistency of remittances and perform verification and reconciliation. In particular, it becomes important to design processes and responsibilities from an end-to-end perspective across functions such as operations, compliance, accounting, and data management. This is precisely the area where artificial intelligence can deliver tangible benefits.

The Committee on Payments and Market Infrastructures (CPMI) points out that in the current correspondent banking chain, where international payments are processed through multiple financial institutions, message corrections and requests for additional information must pass through intermediary banks one by one, resulting in significant time and cost burdens. If common data elements and APIs were used to enable direct and standardized information exchange among participating banks, it would be possible to automate the correction of message deficiencies, compliance investigations, and investigations into delayed or missing payments, while reducing rejects and manual work. Artificial intelligence can play a role in enhancing root-cause analysis and preliminary decision-making on top of this standardized connectivity foundation^*5.

Therefore, rather than pursuing abstract “AI utilization,” it is more practical to begin adoption in areas that are closely aligned with day-to-day business operations.

For example, the following use cases can be considered:

Automatically determine the required supporting documents and verification items based on the payment purpose, destination country, and transaction amount.
Read trade finance documents and invoices and verify consistency with payment instructions.
Narrow down potential hits in sanctions screening and AML/CFT processes, reducing the workload of manual reviews.
Estimate the causes of unreconciled items and shorten investigation time for accounting and operations departments.

However, adopting artificial intelligence does not eliminate the need for controls. Decisions made by artificial intelligence require not only performance but also explainability and transparency in error handling. Artificial intelligence should not be viewed as eliminating decision-making responsibility, but rather as a mechanism for supporting decision-making and reducing complex operational workloads.

New Payment Rails Do Not Replace Existing Rails; They Coexist

The harmonization of information does not imply the consolidation of payment rails into a single rail.

The Bank for International Settlements (BIS) describes the future of cross-border payments as one in which, in addition to the correspondent banking model, interlinked Fast Payment Systems (FPS), hub-and-spoke models, common platforms, and payment arrangements utilizing Distributed Ledger Technology (DLT) develop in parallel. This indicates an evolution based on the coexistence of multiple models rather than convergence toward a single rail^*6.

This coexistence of multiple payment models is also reflected in two of Swift’s own initiatives in 2026.

The first is the enhancement of existing payment arrangements. Through the Swift Payments Scheme, common rules are being established for fees, foreign exchange, delivery timing, transaction tracking, and other areas while leveraging existing networks and national infrastructures.

The second is the addition of new payment arrangements. In parallel with enhancing existing infrastructures, Swift is developing blockchain-based shared ledgers that support digital assets such as tokenized deposits. Tokenized deposits represent bank deposits as digital tokens, enabling more flexible transfer and settlement capabilities. These initiatives indicate that existing payment infrastructures will not transition entirely to new methods, but that enhancement of existing infrastructures and the addition of new infrastructures will proceed simultaneously^*7.

For banks, the reality is a world in which multiple payment arrangements, including correspondent banking chains, instant payment systems, and common platforms, are used selectively according to transaction characteristics.

The future axis of competition is not simply which rail to choose. Rather, the focus is shifting toward how effectively institutions can manage regulatory compliance, data management, liquidity management, exception handling, and customer experience as a unified whole across multiple rails.

In other words, the source of competitiveness is shifting from the number of connections itself to the ability to integrate and manage different payment rails and operational requirements.

*1 Swift (2026). ISO 20022 in bytes for payments: Call-to-action for November 2026 / Unstructured address data.
https://www.swift.com/standards/iso-20022/iso-20022-bytes/call-action-november-2026
*2 Swift (2026). Standards releases (Knowledge Centre).
https://www2.swift.com/knowledgecentre/products/Standards%20MT/publications
*3 Financial Stability Board (2025). G20 targets for enhancing cross-border payments.
https://www.fsb.org/work-of-the-fsb/financial-innovation-and-structural-change/cross-border-payments/g20-targets-for-enhancing-cross-border-payments-2/
*4 Swift. Payment Optimization Playbook / Countdown to 2027 (Ahmed, N., 2026).
Payment Optimisation Playbook | Swift　Countdown to 2027: Contributing to lasting progress against the G20 goals | Swift
*5 CPMI (2022) Interlinking payment systems and the role of application programming interfaces: A framework for cross-border payments
Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments
*6 BIS (2026). Cross-border payment technologies: innovations and challenges.
Cross-border payment technologies: innovations and challenges
*7 Swift (2026). A better cross-border payment experience is here.
A better cross-border payment experience is here | Swift

2. The Impact of the Multi-Rail Environment on Bank Management

Tokenized Deposits Open the Way to 24/7 Instant Use of Funds

This diversification of payment infrastructures requires banks to address two objectives simultaneously. The first is to orchestrate existing and new rails and select the optimal rail according to the characteristics of each transaction. The second is to redesign individual payment processes and the services themselves using new infrastructures.

With regard to the tokenized deposits discussed in the previous section, what matters for banks is not the new payment layer itself, but the potential to enhance payment operations while making use of existing core banking systems.

However, tokenization does not eliminate the need for controls. Because a new infrastructure is being used, it is essential to design not only for immediacy, but also for redeemability, governance, security, and compliance^*8.

Accordingly, the key question for banks is no longer whether to add a new rail, but how to make it coexist with existing core banking systems, AML frameworks, liquidity management, accounting systems, and customer channels, and in which areas to begin a phased transition to 24/7 operations.

Furthermore, as 24/7 payments become more widespread, the value that banks provide will also evolve. That value will expand beyond simply processing payments to keeping corporate funds available whenever needed. As the focus of corporate CFOs shifts from “balance visibility” to “keeping funds available for use at any time,” banks will be expected to provide new value by reducing idle funds and enabling immediate access to funds.

How banks manage this expansion of value and the accompanying increase in complexity will become an important management issue.

Banks’ Burden Is Determined Not by the Number of Connections, but by the Management of Heterogeneity

Supporting a multi-rail environment is not simply a matter of increasing the number of API connections. Each rail has its own operating rules regarding payment finality, liquidity management, business hours, refunds, and compliance requirements. Even if ISO 20022 enables information on “who pays whom and how much” to be expressed in a common format, it does not standardize operational rules such as “when a payment is considered complete,” “who verifies what and to what extent,” or “who is responsible in the event of a disruption or failure.”

The BIS identifies a lack of interoperability as one of the major challenges in cross-border payments^*6. In this context, interoperability means not only that systems can communicate with one another, but also that definitions of data elements and operational rules are aligned.

Therefore, the integration burden on banks cannot be measured solely by the number of rails. The complexity that banks must manage increases substantially as the number of rails is compounded by differences among countries and regions, products, customer segments, regulations, and the frequency of change.

Even among instant payment systems, one country may support immediate finality on a 24-hour basis, while another may have different transaction limits or refund rules. The addition of new technologies such as stablecoins and tokenized deposits also changes which areas can be standardized and which require individual treatment. Banks must continuously manage this heterogeneity.

Multi-Rail Adoption from the Perspective of Corporate Customer Value

The value of multi-rail adoption is not determined solely by banks’ operational efficiency. The purpose of orchestrating multiple payment rails is to provide the value required by corporate treasury and accounting functions without requiring corporate customers to be aware of the differences among those rails.

For corporate treasury departments, what matters is not simply the speed of payments, but whether funds can be used when needed. As 24/7 instant payments become more widespread, the predictability of fund receipt times may improve, creating opportunities to reconsider how working capital is managed and how local accounts are structured. Conversely, if payment finality timing and refund rules differ depending on the rail used, fund management may become even more complex.

For accounting departments, the expected value lies in automating cash application and reconciliation using structured payment and receipt information. However, ISO 20022 adoption alone may not provide all the information that companies require. In some cases, camt messages may not include information that was previously available, creating the challenge of how to combine standardized data with internal data from ERP systems and other sources.

Therefore, for corporate treasury and accounting functions, the key issue is not which payment rail to select, but whether immediate access to funds and operational automation can be achieved across multiple rails. Banks are expected not only to select the appropriate rail for each transaction, but also to absorb the differences among rails and provide consistent data and services to corporate treasury and accounting operations.

Do Not Let Standards-Related Investments Remain Defensive Fixed Costs

The investment required of banks in payment infrastructures is increasing. At the same time, the revenue needed to absorb these costs is not growing at the same pace. Although the global payments industry remains a growth market, the expansion of instant payments and account-to-account transfers is placing downward pressure on revenue growth rates.

Even under these conditions, banks are required to continue investing in ISO 20022 adoption, connectivity to instant payment systems, cybersecurity measures, fraud detection, AML/CFT compliance, and data management. Furthermore, differences in regulatory and supervisory frameworks are increasing the complexity of compliance and contributing to higher costs^*9.

From the customer’s perspective, support for structured data and regulatory compliance are increasingly becoming prerequisites for providing payment services rather than sources of added value. As a result, investments in these areas are increasingly taking on the character of fixed costs required to participate in the market, rather than serving as sources of differentiation.

The more significant management challenge for banks is not simply the risk of failing to respond to a particular standards migration. It is the risk of becoming unable to adequately recover costs while continuing to invest in maintaining and updating an ever-increasing number of system connections and operational controls.

This is why it is important not to allow these investments to remain merely defensive costs. Future competitiveness will depend on whether banks can convert 24/7 use of funds and data utilization into new forms of customer value.

*6 BIS (2026). Cross-border payment technologies: innovations and challenges.
Cross-border payment technologies: innovations and challenges
*8 BIS(2023) Trust bridges and money flows: A digital marketplace to improve cross-border payments
Trust bridges and money flows
*9 Financial Stability Board (2024). Recommendations to promote alignment and interoperability across data frameworks.
Recommendations for Regulating and Supervising Bank and Non-bank Payment Service Providers Offering Cross-border Payment Services: Final report

3. Transformation Approaches for Turning Complexity into Competitive Advantage

ABeam Consulting views multi-rail readiness not as an issue of connectivity between individual systems, but as a transformation that spans business portfolios, operational controls, architecture, and sourcing. Building future competitiveness requires a clear perspective on how increasing complexity can be managed. Rather than maintaining all functions internally, banks need to determine which functions should be retained as sources of competitive advantage and which functions should be standardized or outsourced.

The following four perspectives are important in putting this transformation into practice.

Economic Evaluation of the Rail Portfolio
Analyze cost-to-serve by country, currency, customer segment, and transaction purpose, including transaction volumes, revenues, liquidity burdens, operational disruption risks, compliance costs, and annual change costs. Based on this analysis, distinguish areas that should be directly connected, areas that should be managed through partners, and areas from which the bank may eventually withdraw.
Separation of Common Controls and Rail-Specific Controls
While sanctions screening and fraud detection mechanisms should be consolidated onto a common platform, the objective is to establish a structure in which only rail-specific differences are configured separately, such as “a decision must be made within a specified number of seconds for instant payments” or “additional verification is required for high-value transfers.”
Architecture and Data Design Based on Continuous Change
Given that new rail connections and regulatory changes will continue to occur, the data definitions and the way data is managed across the bank should be standardized as much as possible. Artificial intelligence should be utilized on top of this common foundation as a mechanism for supporting decision-making and reducing operational workloads.
Sourcing and Ecosystem Design
Activities such as standards compliance, connection monitoring, reconciliation, testing, and operations can often be performed more efficiently through external providers. However, in order to avoid vendor lock-in, data ownership, portability upon service termination, and responsibility boundaries in the event of disruptions should be defined in advance, ensuring that future choice and ultimate decision-making responsibility remain with the bank.

However, it is not realistic to achieve all of these objectives at once. Given that multi-rail evolution and regulatory changes will continue, it is more practical to establish priorities and define a phased roadmap.

These four perspectives are not intended to be fully realized in the short term. In the short term, priority should be given to structured data adoption and practical AI applications closely aligned with day-to-day operations. In the medium term, controls and APIs should be standardized. In the long term, 24/7 capabilities, including those enabled by tokenized deposits, should be progressively realized.

4. Conclusion: Competitiveness Required in the Multi-Rail Era

ISO 20022, as a common language, represents a major step forward in aligning the message structures of cross-border payments. However, it does not unify national regulations, payment assets, liquidity, risks, or customer needs.

Going forward, the banks that will remain competitive are not those connected to the greatest number of rails, but those that can distinguish among the complexity they should own, the complexity they should externalize, and the complexity that can be transformed into customer value.

What begins after standardization is not competition among formats. It is competition over how effectively heterogeneous payment rails and operational requirements can be orchestrated and how their complexity can be transformed into customer value.

ABeam Consulting supports financial institutions in their transformation efforts to create new customer value while maintaining control over complexity, by combining expertise in business transformation, system strategy, data utilization, artificial intelligence, and global project execution in the banking and payments domain.

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