Legacy systems become almost invisible until everything around them starts to slow down. For decades, banking and payments sectors have treated core infrastructure as evidence of durability and discipline. Now, the same systems that brought the industry into the digital age are being scrutinized for their ability to support the next phase of payments innovation.
In the latest installment of our “What’s Next in Payments” series, Leonardo Collado, senior vice president and general manager of Pismo, a Visa solution, discussed how financial institutions are reevaluating the technology foundations underlying modern banking and commerce.
Collard did not deny the role that legacy systems have played in building the modern financial ecosystem. In fact, he claimed the opposite.
“This is what got us to this point,” he said of the core technological foundation.
The question is whether they are designed for the environment currently emerging around real-time payments, artificial intelligence (AI)-driven decision-making, and increasingly individualized customer expectations.
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This distinction is important because the competitive pressures faced by incumbents and challengers are beginning to converge. Large banks, local institutions, fintechs, and digital-first companies are all facing increased customer expectations for immediacy, personalization, and flexibility.
“The reality is that both incumbents and challengers face the same scenario and pressure from all directions,” Collard told PYMNTS.
AI increases the potential for modernization
AI is reinforcing these pressures as it reshapes expectations around speed, personalization, and responsiveness. Collard argued that AI is not just a layer of software that agencies can place on top of aging infrastructure. Rather, it exposes the structural limitations of a system originally designed for batch processing and slower payment environments.
“AI has reset the norm for everyone,” he noted.
He pointed to a growing demand for “contextual personalization,” where payments and banking experiences are continuously adjusted in real time to customer behavior. These requirements rely on an infrastructure that can support adaptive analytics, rapid decision-making, and multiple payment frameworks, including emerging blockchain and stablecoin environments.
“The reality is that traditional infrastructure cannot support these AI-driven cases,” Collado says. “You can’t just put new technology on an old stack.”
It’s becoming difficult to ignore the economics behind the debate. Corrado said about 70% of IT budgets are often devoted to maintaining outdated systems, limiting agencies’ ability to build new products and customer-facing capabilities.
This burden has turned infrastructure modernization into a strategic issue that extends far beyond engineering teams.
“Infrastructure modernization has evolved from a technical discussion for engineers only to a C-level discussion,” Collard said. “You’re now talking about how to provide value, how to provide a unique experience.”
Why stability alone is no longer enough to win
Corrado returned to the idea that while stability is necessary, it no longer guarantees customer loyalty.
“Today’s customers value speed, simplicity, convenience and intelligence,” he said. “These are the drivers of new trust.”
This change is forcing incumbents to rethink how much operational complexity they can sustain. Corrado put the issue in stark terms: “Stability is an asset, but complexity is a tax.”
Over time, many established banking systems have accumulated layers of integrations, patches, and operational workarounds, making them increasingly difficult to modernize. While these structures still work reliably in many environments, they were not designed for the demands of always-on digital commerce and AI-driven customer engagement.
Visa’s Pismo is focused on helping institutions gradually modernize, rather than through large-scale replacement efforts. Collard emphasized that many organizations cannot afford to make disruptive “big bang” migrations with operational risks.
Instead, he described a phased approach in which agencies modernize service by service while maintaining continuity of operations. He cited examples such as Thailand-based FinTech T2P, which migrated around 320,000 customer accounts to a cloud-native platform in three months, and Denmark’s Lunar Bank, which used Pismo infrastructure to support more than 1 million users across the Nordic market.
Still, Collard suggested the bigger issue is not just technology.
“I don’t think you start with infrastructure,” he says. “I think it starts with what kind of values, what kind of values are the customers, the consumers, trying to drive?”
This difference may ultimately determine which institutions can best adapt as payment systems move further toward real-time commerce, AI-assisted experiences, and increasingly complex digital ecosystems.
“Modernization is not necessarily a technology upgrade; it is a strategic choice,” he told PYMNTS.
