Legacy systems rarely become visible until they begin to slow everything around them. For decades, the banking and payments sectors treated core infrastructure as proof of endurance and discipline. Now the same systems that carried the industry into the digital era are being scrutinized for whether they can support the next phase of payments innovation.
During the most recent installment of the “What’s Next in Payments” series, Leonardo Collado, senior vice president and general manager of Pismo, a Visa solution, discussed how financial institutions are reassessing the technology foundations beneath modern banking and commerce.
Collado did not dismiss the role legacy systems played in building the modern financial ecosystem. In fact, he argued the opposite.
“It’s gotten us this far,” he said of the core technical underpinnings.
The issue is whether they were designed for the environment now emerging around real-time payments, artificial intelligence (AI)-driven decisioning and increasingly individualized customer expectations.
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That distinction matters because the competitive pressures facing incumbents and challengers are beginning to converge. Large banks, regional institutions, FinTechs and digital-first players are all facing rising customer expectations around 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.
AI Raises the Stakes for Modernization
AI is intensifying those pressures because it is reshaping expectations around speed, personalization and responsiveness. Collado argued that AI is not merely another software layer that institutions can place atop aging infrastructure. Instead, it is exposing the structural limits of systems originally designed for batch processing and slower 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 adjust continuously to customer behavior in real time. Those requirements depend on infrastructure capable of supporting adaptive analytics, rapid decision-making and multiple settlement frameworks, including emerging blockchain and stablecoin environments.
“The reality is legacy infrastructure cannot support those AI-driven cases,” Collado said. “You can’t just place new tech on old stack.”
The economics behind the debate are becoming harder to ignore. Collado said roughly 70% of IT budgets are often devoted to maintaining outdated systems, leaving institutions with limited capacity to build new products or customer-facing capabilities.
That burden has turned infrastructure modernization into a strategic issue extending far beyond engineering teams.
“Modernizing infrastructure has gone from a technical discussion that only the technical people had to a C-level discussion,” Collado said. “You’re now talking about how to deliver value, how to deliver unique experiences.”
Why Stability Alone No Longer Wins
Collado repeatedly returned to the idea that stability, while necessary, no longer guarantees customer loyalty.
“What customers value today is speed, simplicity, convenience, intelligence,” he said. “Those are the new trust drivers.”
That shift is forcing incumbents to reconsider how much operational complexity they can continue carrying. Collado framed the problem in stark terms: “Stability is an asset, but complexity is the tax.”
Over time, many established banking systems accumulated layers of integrations, patches and operational workarounds that made modernization increasingly difficult. Those structures still perform reliably in many environments, but they were not engineered for the demands of always-on digital commerce or AI-driven customer engagement.
Visa’s Pismo has positioned itself around helping institutions modernize incrementally rather than through large-scale replacement efforts. Collado emphasized that many organizations cannot afford disruptive “big bang” migrations that introduce operational risk.
Instead, he described a phased approach where institutions modernize service by service while maintaining operational continuity. He pointed to examples including Thailand-based FinTech T2P, which migrated roughly 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 one million users across Nordic markets.
Still, Collado suggested the larger issue is not technology alone.
“I don’t think you start with infrastructure,” he said. “I think you start with your customer, your consumer, what value and the value they’re trying to drive.”
That distinction may ultimately determine which institutions adapt most effectively as payments systems move further into real-time commerce, AI-assisted experiences and increasingly complex digital ecosystems.
“Modernization isn’t necessarily a tech upgrade; it’s a strategic choice,” he told PYMNTS.
