Only 1 in 3 European Banks ready for Instant Payments Regulation, study finds

By Gloria Methri

Only one-third of European banks are fully prepared for the upcoming Instant Payments Regulation set by the European Union. This critical finding reveals widespread compliance challenges across the banking sector.

With the January 2025 deadline for receiving instant payments fast approaching, many institutions are struggling to meet stringent regulatory requirements, risking operational disruptions and potential penalties.

The research conducted by Intix uncovers a landscape in which 41% of banks acknowledge limitations in their readiness, and a concerning 25% admit they are not prepared at all. This situation underscores the urgent need for enhanced compliance mechanisms as banks grapple with the demands of real-time payments.

Respondents identified major concerns around compliance with sanction screening, anti-money laundering (AML) measures, and fraud detection protocols. Additionally, they expressed difficulties in meeting the mandated 10-second service level agreement (SLA) for transactions amid increasing message volumes.

“The survey results highlight the immense pressure that European financial institutions are under as they race to meet the new regulations,” said Yoann Vandendriessche, Chief Product Officer at Intix. “While a third of respondents are confident in their ability to comply, the majority are facing substantial obstacles.”

In a bid to address these compliance challenges, 42% of banks are prioritising their budgets towards regulatory compliance, making it their top investment area. Adaptations to payment engines are also crucial, with 33% of banks identifying this as a primary focus.

Moreover, nearly 42% of respondents plan to implement a combination of pre-screening, real-time, and post-screening measures to tackle fraud detection.

The survey further revealed that 50% of banks are still working towards adopting the ISO 20022 standard, a critical framework that facilitates efficient real-time payments. Nearly 40% of banks reported ISO 20022 as their primary standard, signalling a gradual shift in the industry, although 8% still have no experience with it.

As deadlines loom, Intix’s findings emphasise the urgent need for banks to invest in advanced data management and compliance technologies to achieve the real-time monitoring and reporting capabilities essential under the new regulations.

Speaking on the findings, Yoann Vandendriessche, Chief Product Officer at Intix, said, “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.”

“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. This will be a demanding period with pressure mounting to meet deadlines and avoid potential fines.”

The research highlights the increasing demand for modern solutions that enable banks to navigate the complexities of instant payments, ensuring they have the visibility and control needed to meet regulatory requirements and customer expectations.