From AI-driven compliance to the realities of scaling in the cloud, Temenos shares insights into what’s influencing payments strategy in 2025, and where banks are still hitting resistance.
The Temenos Community Forum (TCF) 2025 brought more than a thousand banking professionals, partners and technology providers to Madrid to explore the latest thinking in core banking, payments and digital transformation.
The Fintech Times was there to hear what really matters to the industry and for a view from the payments frontline, we sat down with Mick Fennell, business line director for payments at Temenos, a banking technology firm used by more than 1,000 banks in 150 countries.
With decades of experience in banking and tech, and the past five years focused on payments at Temenos, Fennell works with banks around the world to help modernise their infrastructure and keep up with changing demands.
Rather than focusing on a single issue, Fennell said Temenos structures its payments strategy around four main drivers: innovation, regulation, optimisation and protection.
“It’s never just one thing driving what we do,” he said. “We talk about those four buckets, although within each one of those, there’s often tens of things going on.”
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Innovation in payments
Innovation, Fennell says, is often about accelerating growth. That could mean embedding payments directly into customer-facing channels or supporting alternative payment networks. “You’re putting your payment functionality out into the customer space and getting closer to the coal face,” he said.
That includes new technologies such as APIs, blockchain and stablecoins.
“How do you embrace the blockchain as part of your payment processing? How do you flip from stablecoins into fiat currencies and back and forth?
“All of that is part of innovating in the payment space. And that’s a big driver for what we develop, what we work on with customers and when we go out with new versions.”
For Temenos, AI is becoming a practical tool across fraud detection, exception handling and operational support.
According to a global study by Hanover Research for Temenos, shared during the forum, 77 per cent of financial institutions are investing in data analytics and AI-driven insights, while 60 per cent see AI as a tool to support – not replace – the workforce. The same study found 46 per cent of banking leaders now prioritise customer experience when it comes to tech investment.
“One of the things we are using AI for is exploring AI agents for payment repair and operational support, so systems can learn and improve over time, but overall, it is about innovating with the banks and making sure that we’re building something that’s relevant properly for them.
“As I’ve been saying at the forum this week, we’re all about putting the AI in b-A-n-k-I-n-g!”
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Regulation in payments
Fennell describes regulation as both a constraint and a catalyst. “Payments is probably more impacted by regulation than most other areas,” he said, pointing to changes around instant payments, timestamping and verification of payee in Europe, as well as the SWIFT MT/MX transition.
“Often, regulation forces banks to modernise,” he said. “And when they do, they take the opportunity to improve other systems too.”
In that way. Temenos sees regulation as a lever for improvement, particularly when legacy systems become a blocker.
“Many times, we win business where the legacy platform the customer is on is just a real, real problem due to the latest regulations,” he said. “So, when they look to change their whole platform, we can take advantage of that.”
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Optimisation in payments
As global payment volumes continue to rise – by around seven per cent annually, according to Fennell – banks are under pressure to improve performance and efficiency. “Certain markets and certain aspects of payments are growing faster,” he said. “ with revenues increasing 17 per cent.”
That kind of growth puts pressure on banks to keep up. “Optimisation is about performance and scalability,” he explained. “We talk a lot about straight-through processing, removing manual intervention, but also about how to scale and keep up with increasing volumes.”
This is where software-as-a-service (SaaS) becomes particularly relevant. “Payments is the high-volume part of banking,” said Fennell. “You’re never going to have as many loans as you have payments going through a bank.”
And that volume isn’t evenly spread. “Most salary runs happen between the 21st and the 31st of the month, and end-of-tax-year payments can double or triple,” he noted. “That’s where SaaS and cloud really help, because you can scale on demand without needing to own the infrastructure yourself.”
Temenos recently ran a performance benchmark with Microsoft Azure, simulating a bank with 25 million customers processing 16,600 transactions per second, including live AI workloads. The test showed a 40 per cent improvement over previous benchmarks.
Fennell added that while not all markets are ready for SaaS, many are making the move. “We’ve gone through that early adopter phase,” he said. “Now it’s the kind of majority.”
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Protection in payments
For Fennell, protection covers everything from fraud and cyber risk to operational resilience. “You’ve got to protect your customers, but you’ve also got to protect your business,” he said.
Temenos launched a new Financial Crime Mitigation (FCM) AI Agent at the forum, developed with a Tier 1 European bank, that uses AI to reduce false positives and screen payments in real time. Live deployments are already showing false positive rates of less than two per cent, compared to the industry average of five to eight per cent.
“Reducing false positives means fewer unnecessary delays and more satisfied customers,” said Fennell. “It also frees up compliance teams to focus on the real risks.”
AI is being applied to exception handling and operational support. “There’s always going to be some exceptions,” Fennell said. “But if the system can learn from how people fix them, you can automate those responses next time.”
Temenos is also developing an AI-powered copilot to assist payments operations teams. “It enables staff to use natural language to query systems and manage tasks more efficiently,” he explained.
What banks look for: proof it works
Fennell outlined some of the ways banks are looking to change.
“Customers are coming to us with multiple legacy systems they want to consolidate into one. Or they’re running on old tech and looking to modernise. But they all have different business goals, infrastructures and starting points.”
Ultimately, when it comes to payments transformation, banks aren’t looking for hype, they want evidence. “They want to know it’s been done before so they can get a sense of ‘OK, we could also do this’,” he said.
Temenos delivers payments as a standalone solution through its payments hub, but many clients opt for broader transformation. “Most of our customers are taking more than that from us,” Fennell said. “They get the power of a bank in a box.”
That includes account servicing, customer management, lending, deposit taking, trade finance, analytics and compliance, all integrated into a single platform.
“One of the hardest things on implementations is the integration between all the different systems,” he added. “And of course, they’re all moving at different rates as well.”
Temenos provides highly configurable software, which brings its own challenges. “We give customers enormous power,” said Fennell. “But as I – and Spider-Man – always say: with great power comes great responsibility. You’ve got to do the up-front work to define what you’re building before jumping in.”
And “fear of change is real,” he acknowledged. “We try and make that journey as frictionless, seamless and efficient as possible. But we’re not sitting here saying it’s not going to be difficult. It just is, because every institution is different. “There is also the worry of ‘how much is it going to cost?’
To help build confidence, Fennell points to Temenos’ Value Benchmark initiative: peer-to-peer performance data gathered from clients across the globe. “Luckily enough, we now have a lot of metrics that show the outcomes our customers get. Accelerated growth of payments is 63 per cent higher in Temenos customers than non-Temenos,” he said. “The previous results were at 31 per cent, so we can see we’re actually improving.”
As banks modernise beyond payments, implementation becomes a group effort. “It’s about having the right structure for their project, the right governance,” Fennell said. “A huge part of this is our partners.”
But at the heart of it all, he added, is the infrastructure that matters most.
“The core of banking is accounts and payments,” he said. “We’ve been number one in core banking globally for 19 years and we’ve been the top-selling payment hub for five years running. You don’t stay number one unless you’re constantly changing and improving and innovating and coming out with new stuff.”
