Legacy systems rarely become visible until they begin to slow down everything around them. For decades, the banking and payments sectors have treated critical infrastructure as a sign of resilience and discipline. Now the same systems that took the industry into the digital age are being examined to see if they can support the next phase of payments innovation.
During the last episode of “What’s next in payments?” series, Leonardo ColladoSenior Vice President and General Manager of the company letterA Visa Solution Discuss how financial institutions are reevaluating the foundations of technology within modern banking and commerce.
Collado did not ignore the role that ancient systems played in building the modern financial ecosystem. In fact, he said the opposite.
“It’s gotten us this far,” he said of the basic technical foundations.
The issue is whether they are designed for the environment now emerging around real-time payments, artificial intelligence-based decision-making, and increasingly individualized customer expectations.
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This distinction is important because the competitive pressures facing incumbents and competitors are beginning to converge. Major banks, regional institutions, fintechs and digital-first players face increasing customer expectations for immediacy, personalization and flexibility.
“The reality is that both incumbents and challengers are facing the same scenario and pressures coming from every direction,” Collado told PYMNTS.
Artificial intelligence increases the risks of modernization
AI is intensifying these pressures as it reshapes expectations around speed, personalization, and responsiveness. Collado sees AI as not just another software layer that organizations can layer on top of legacy infrastructure. Instead, it exposes the structural limitations of systems originally designed for slower batch processing and settlement environments.
“AI has reset the bar for everyone,” he noted.
He pointed to the growing demand for “contextual personalization,” where payment and banking experiences continuously adapt to customer behavior in real time. These requirements rely on infrastructure capable of supporting adaptive analytics, rapid decision-making, and multiple settlement frameworks, including emerging blockchain and stablecoin environments.
“The reality is that legacy infrastructure cannot support these AI-driven cases,” Collado said. “You can’t just put new technology on top of the old stack.”
It is becoming difficult to ignore the economic factors behind this debate. Nearly 70% of IT budgets are often allocated to maintaining legacy systems, leaving organizations with limited ability to build new product or customer-facing capabilities, Collado said.
This burden has turned infrastructure modernization into a strategic issue that extends beyond engineering teams.
“Infrastructure modernization has gone from a technical discussion in which only technicians participate to an executive-level discussion,” Collado said. “Now you’re talking about how to deliver value, how to deliver unique experiences.”
Why is stability alone no longer victorious?
Collado has repeatedly returned to the idea that stability, while necessary, no longer guarantees customer loyalty.
“What customers value today is speed, simplicity, convenience and intelligence,” he said. “These are the new engines of trust.”
This shift is forcing established companies to reconsider how much operational complexity they can continue to tolerate. Collado put the problem in stark terms: “Stability is an asset, but complexity is a tax.”
Over time, many existing banking systems have accumulated layers of integrations, patches, and operational workarounds that make modernization increasingly difficult. These architectures still work reliably in many environments, but they were not designed to meet the demands of ongoing digital commerce or AI-driven customer engagement.
Visa’s Pismo has positioned itself around helping organizations modernize incrementally rather than through large-scale replacement efforts. Collado stressed that many organizations cannot afford “explosive” migrations that create operational risks.
Instead, he described an incremental approach where organizations modernize service by service while maintaining continuity of operations. He pointed to examples including Thailand-based FinTech T2P, which migrated nearly 320,000 customer accounts to a cloud-native platform in three months, and Denmark’s Lunar Bank, which used Pismo’s infrastructure to support more than a million users across Nordic markets.
However, Collado noted that the bigger issue is not just technology.
“I don’t think you have to start with infrastructure,” he said. “I think you start with your customer, your consumer, and what value and value are they trying to achieve.”
This distinction may ultimately determine which organizations adapt most effectively as payments systems move more toward real-time commerce, AI-powered experiences, and increasingly complex digital ecosystems.
“Modernization is not necessarily a technological upgrade; it is a strategic choice,” he told PYMNTS.
