Tieto Banktech

Modern banking transformation: how to reap the benefits of a decade of investment

European banks have spent years updating their systems. Now it’s time to put those upgrades to work for your customers.

Jarkko Turunen31 July 2025

Europe’s banking sector has undergone a significant transformation over the past ten years, spurred by regulatory changes and evolving customer expectations.

Table of contents

According to Tieto's recent whitepaper, banks are now primed to leverage their modernized infrastructure to unlock real business value, create standout customer experiences, and ensure long-term competitiveness.

Key Insights:

Infrastructure Modernization Pays Off

  • Investment in real-time payments (RTP) and the ISO 20022 data standard has given banks the tools to provide innovative, efficient services.
  • With high compliance to regulations like PSD2, banks now manage transactions with richer data and straight-through processing, improving operational efficiency and minimizing manual errors.

Unified Payment Orchestration and Order Management

  • Consolidating payment channels through centralized order management platforms reduces costs, enhances the user experience, and allows seamless bulk and batch file payments.
  • These integrated systems orchestrate and validate payments regardless of the customer’s entry point, helping banks meet fast-changing service expectations.

Next-Generation Service Offerings: Request to Pay (R2P)

  • Request to Pay is emerging as a value-added, digital-first service. It supports e-invoicing, flexible payment schedules, and efficient collection management for non-performing or failed direct debits.
  • R2P streamlines billing and payment flows, reduces manual handling, and improves payment times for all parties. This is especially critical as e-invoicing becomes mandatory across the EU in 2026.

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Verification of Payee (VoP): Heightened Security and Fraud Reduction

  • Verification of Payee, mandated EU-wide by October 2025, validates payee details before transaction execution. This reduces fraud, misdirected payments, and streamlines onboarding for clients and partners.
  • VoP applies to single, bulk, and batch payments, ensuring consistent, automated security across all transactions.

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Actionable Takeaways for Banks

  • Maximize Existing Investments: Banks should shift focus from infrastructure compliance to value creation through new products, automation, and customer-centric services.
  • Adopt Modular, Scalable Approaches: Implement order management, R2P, and VoP as modular solutions that incrementally deliver cost savings, efficiency, and competitive differentiation.
  • Prepare for the Future: Stay ahead of coming regulatory deadlines (e.g., VoP, e-invoicing) while using core modernization as a springboard for new digital offerings.

Banks that act now, leveraging their upgraded platforms for innovation rather than mere compliance, can dramatically reduce costs, improve client service, and capture new revenue opportunities in the era of digital finance.
 

Jarkko Turunen
Head of Product Management & Business Development, , Tieto Banktech