Why European Banks Lag on Instant Payments Compliance
European banks are struggling to prepare for mandatory instant credit transfer regulations due to take effect in 2025, according to research from Intix, a financial transaction data management provider that specialises in tracking and monitoring payment flows across financial institutions.
The findings emerge as the European Union pushes forward with initiatives to modernise payment infrastructure across the bloc, aiming to compete with payment innovations in Asia and North America.
European banks differ on technical readiness
The survey reveals that 33% of banks consider themselves prepared for the European Union's Instant Payments Regulation, which requires banks to process incoming payments from January 2025 and outgoing payments from October 2025. A further 41% report partial readiness with limitations, whilst 25% acknowledge they are not equipped to meet the requirements.
The regulations mandate that banks process payments within 10 seconds at any time of day or night, whilst maintaining compliance with sanctions screening and anti-money laundering (AML) protocols. This requirement presents technical challenges for legacy banking systems designed for batch processing rather than real-time operations.
ISO 20022, the emerging global standard for financial messaging that enables richer payment data and improved interoperability between financial institutions, remains a work in progress for 50% of institutions, with 40% reporting it as their primary standard. The remaining 8% report no experience with the standard.
Investment in risk and compliance
Financial institutions are directing resources towards risk management systems, with 42% of surveyed banks allocating most of their budget to regulatory compliance. Payment engine upgrades represent the second highest investment priority at 33% of institutions.
The focus on compliance reflects the complex regulatory environment surrounding instant payments, which must balance speed with security. Banks must implement robust fraud detection systems capable of making risk decisions within milliseconds.
For sanctions screening and fraud detection, 42% of banks plan to implement a combination of pre-transaction, real-time, and post-transaction monitoring. This three-tier approach contrasts with the 25% opting for pre-transaction and real-time screening only, whilst 17% rely exclusively on real-time monitoring.
Modifications needed to technology infrastructure
The transition to instant payments requires substantial modifications to existing payment infrastructure. Banks must upgrade their core systems to handle increased message volumes and meet the 24/7 operating requirements. This involves implementing new database technologies, upgrading network capacity and developing real-time reporting capabilities.
“The survey results highlight the immense pressure that European financial institutions are under as they race to meet the new regulations. While a third of respondents are confident in their ability to comply, the majority are facing substantial obstacles,” says Yoann Vandendriessche, Chief Product Officer at Intix.
Failing to meet deadlines could prompt regulatory consequences
The implementation of instant payments across Europe represents a shift in the payments landscape, potentially affecting everything from consumer transactions to business operations. Banks that fail to meet the deadlines could face regulatory consequences and risk losing market share to more technologically advanced competitors.
Yoann adds: “Banks that are lagging must move quickly to close these gaps. Investment in advanced data management and compliance technologies is essential to achieve the real-time monitoring and reporting capabilities required under the EU's Instant Payments Regulation. It's clear that this will be a demanding period with pressure mounting to meet deadlines and avoid potential fines.”
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