FIS’ Jim Johnson: Banks That Don’t Own the Payment Flow Risk Losing the Customer

Watch more: Monday Conversation With FIS’ Jim Johnson

There was a time when issuer processing was defined by what happened after the sale. Approve the transaction. Move the money. Reconcile the ledger. Manage the exception. It was essential plumbing invisible to the consumer, disconnected from the commercial decision, and measured almost entirely by issuers on uptime and cost efficiency.

That era is ending.

In a conversation with PYMNTS CEO Karen Webster, Jim Johnson, co-president of banking solutions at FIS, laid out a case that the issuer processing stack is undergoing a fundamental repositioning, from back office to front of house, from cost center to competitive differentiator.

The forces driving the shift are converging simultaneously, he said. Digital wallets are aggregating credentials at the point of purchase, real-time rails are compressing settlement into seconds, artificial intelligence is reshaping discovery and purchase intent, and new forms of programmable money are introducing logic into the payment itself.

The implication for banks is unquestionable, he said. Institutions that continue to treat issuing as an operational line item, something that happens downstream of the customer relationship, risk being disintermediated not by a single competitor, but by the architecture of modern commerce itself.

“The issuer and issuer processor really [have] to be much more involved on the front end of the transaction,” Johnson said.

The opportunity now sits earlier in the cycle, where offers are presented, funding sources are selected and incentives are matched to consumer behavior, he said.

From Settlement Engine to Strategic Asset

The traditional issuer processing model was built for a linear world. The consumer chose a card, the merchant submitted a request, and the processor authorized, cleared and settled. The bank’s value was embedded in risk management and balance sheet funding. Processing was a throughput game.

What has changed is where the payment decision now forms. Digital wallets present multiple credentials simultaneously. AI-driven shopping agents evaluate funding options on behalf of the consumer. Merchant checkout flows route toward preferred rails. By the time a transaction reaches the traditional authorization layer, the most consequential decisions have already been made. The issuer may not have been part of any of them.

FIS’ response is a deliberate effort to push issuer capabilities upstream, Johnson said. SKU-level data, originally developed for restricted purchasing environments such as EBT, is now being applied to commercial and issuer programs to connect payment activity directly to product-level outcomes. Merchants want tighter accountability for marketing spend. Issuers want proof that incentives drive behavior. Both require intelligence that lives inside the processing layer, not bolted on after the fact.

Webster pointed to Smart Basket capabilities as an example of infrastructure designed to attach intelligence directly to credentials and checkout decisions, creating a layer where consumers, merchants and issuers each derive value at the point of sale.

The message to banks is that the processing stack is no longer downstream of strategy. It is strategy. Institutions that can’t surface relevant offers, optimize funding selection and deliver real-time incentives through their credentials will find themselves invisible at the moment that matters most.

Real-Time Rails Make Latency Fatal

The FedNow® Service and other instant payment rails have done more than accelerate settlement, Johnson said. They have compressed the window in which issuer data has economic value. In a batch-processing world, overnight reconciliation was adequate. In a real-time world, insight that arrives after the money has moved is worthless.

The modernization work inside FIS began with exactly this recognition, he said. The company’s legacy monolithic platforms, built over decades, needed to be re-architected not just for cloud efficiency but for data immediacy.

“We made the decision that to be around another 50 years, we really had to modernize our monolithic platforms, get them into the cloud, but more importantly, get the data into modern storage technology that allows us to unlock that in real time,” Johnson said.

For banks, this is more than a technology migration story. It is a question of whether the institution can act on what it knows before someone else does. Real-time rails reward real-time intelligence. An issuer that can detect a shift in repayment behavior, flag a life event or match a loyalty incentive to an in-session purchase has a fundamentally different competitive position than one still working from yesterday’s batch file.

AI is the accelerator of this shift, not the origin.

“To use and make AI valuable, data is the fuel,” Johnson said.

The takeaway for issuers is that AI investments are only as valuable as the data infrastructure feeding them. Modernized processing is the prerequisite, not the afterthought.

Programmable Money Widens the Gap

The pressure on legacy issuer infrastructure intensifies further as new forms of money emerge. Stablecoins, tokenized deposits and smart credentials introduce capabilities that traditional payment instruments were never designed to carry, including conditional logic, automated execution and cross-system coordination.

Stablecoins have drawn attention for settlement speed and portability. Tokenized deposits offer a different value proposition by keeping funds inside regulated banking frameworks while enabling programmability. Both represent an expansion of what payment infrastructure can do, and both raise the stakes for issuers whose systems cannot support them, Johnson said.

New rails will not uniformly displace existing ones. Different transactions will continue to prioritize different outcomes, such as immediacy in some cases, and economics or exception handling in others. The complexity for issuers is that they must support multiple rails simultaneously while helping their institutions understand where each creates value, he said.

For banks, the strategic question is whether their processing partner can navigate that multiplicity or whether they are locked into a single-rail architecture that leaves them unable to participate in new flows. The issuer processor, in this framing, becomes the bridge between the bank’s balance sheet and the expanding universe of payment endpoints.

The Disintermediation Risk Is Architectural

Consumer behavior is already moving in this direction, Webster said. Consumers are showing up at the doorsteps of AI-driven discovery models, even if they remain hesitant to delegate the full transaction. When they arrive, the credential they present needs to carry memory, rewards and intelligence, not simply serve as a funding instrument.

The observation sharpens the disintermediation risk. Banks aren’t losing transactions to a single FinTech or tech platform. They’re losing relevance because the architecture of payment selection is moving to a layer where their credentials have no voice. If the wallet presents the options, the AI agent evaluates them, and the merchant’s checkout optimizes the outcome. The issuer that hasn’t embedded intelligence into its credential is simply not in the conversation.

Johnson connected this directly to FIS’ broader data strategy and to the expanded visibility created through the TSYS integration. Adding credit activity to the company’s dataset strengthened its ability to understand how consumers manage obligations alongside deposits, lending and payment behavior.

“What you get when you add the credit activity is you get a great insight on how a consumer manages obligations,” Johnson said.

That broader perspective allows issuers to move beyond risk models weighted toward negative outcomes and instead build more complete, forward-looking views of customer financial health, he said.

Processing Is the Strategy

Issuer processing has outgrown its back-office identity. For banks evaluating their payments roadmap, the question is no longer whether processing infrastructure is modern enough to handle volume. It is whether that infrastructure is positioned to influence the decisions that determine where volume goes.

Being part of the flow, not routed around it, requires issuers to treat their processing stack as the connective tissue between data, decisioning, credentials and commerce. Banks that recognize issuing as a front-of-house strategic function will shape the next generation of payment experiences. Those that do not will settle other people’s transactions.

“Our job is to make sure transactions go through our clients, not around them,” Johnson said.

For issuers, that statement is both the opportunity and the warning.