2026 in Banking: Cross-Border Disruption and the Fight Against Fraud: By Cian Fernando

From the rise of neobanks and stablecoin-based payments to the pressure of T+1 settlements and ISO 20022 compliance, 2026 will challenge banks to adapt or risk falling behind. Banks that move early and invest in more agile, interoperable systems will be
far better positioned to meet these challenges while strengthening both customer trust and long-term competitiveness.

Here are my top banking predictions for 2026:

Cross-border competition will reach a breaking point as neobanks and stablecoins challenge banks

In 2026, competition from neobanks, digital wallets, and stablecoin infrastructure will force traditional banks to step up their game in cross-border payments. The performance gap is widening quickly. Emerging blockchain solutions
already offer faster and cheaper transactions than most banks can currently deliver. Even the FSA has admitted that the G20’s ambitious 2027 targets to slash the cost and time of cross-border payments are unlikely to be met.

Next year, it won’t be regulators driving change – it will be competitors. Customers now expect secure, real-time payments anywhere, anytime, with anyone. Cut-off times, hidden fees, and multi-day settlements are no longer acceptable, and many customers
have already moved to providers that do better. Banks that fail to take the necessary steps to modernise their infrastructure, embrace interoperability, and adopt next-generation payment rails risk falling even further behind as agile competitors continue
to redefine what customers expect in 2026.

Real-time data will become banks’ strongest weapon against fraud

In 2026, fraud, not speed, will become the defining challenge in the race to real-time payments.
As banks strive to process transactions in seconds, the same automation designed to improve efficiency will expose them to new risks. Duplicate payments can slip through unnoticed, and fraudulent transactions may be executed before anyone realises
something is wrong. The faster payments move, the smaller the window to verify where funds are going – and to whom.

Even recent safeguards such as Confirmation of Payee (CoP) and Verification of Payee (VoP), once seen as strong lines of defence, are being tested. Fraudsters are adapting quickly – exploiting social engineering at scale through phishing, “smishing,” and
deepfake voice calls to impersonate bank staff and convince customers to authorise payments themselves. In 2026, these tactics will only become more sophisticated and harder to spot.

To defend against this new wave of fraud, banks must evolve from basic automation to intelligent automation. Real-time, accurate data on every transaction will be essential. Institutions will need to gather and analyse as much information as possible about
each payment and payer – and ensure it can be retrieved instantly. Integrating this intelligence into configurable payment orchestration and CoP/VoP systems will enable banks not just to react, but to act automatically – flagging anomalies, blocking duplicates,
and intercepting fraud before payments settle.

Those that master this balance between cost, speed, security, and verification will gain a crucial competitive edge, keeping pace with faster payment rails while protecting their customers and their credibility.

Translation tools won’t be enough to meet ISO 20022 compliance

In 2026, banks that relied on translation tools to meet Swift’s ISO 20022 migration deadline will reach the limits of these stopgap measures. From November 2026, Swift will mandate a minimum amount of structured data in CBPR+ messages. Translation tools,
designed as temporary fixes, cannot deliver the precision or depth of structure required. As a result, institutions that continue to depend on them risk failed validations, rejected payments, and mounting operational friction from increased manual intervention.

To obtain this additional granularity, banks will either look to core system vendors or payment orchestration solutions. Next year will mark a clear divide between those still patching legacy systems and those embracing native ISO 20022 adoption.

Banks that make the shift will unlock the standard’s full potential: richer data, greater automation, and more accurate straight-through processing. Moving beyond translation layers won’t just streamline operations, it will enable smarter compliance, enhance
analytics, and deliver a sustained competitive edge across both cross-border and domestic payments.

T+1 settlements force wealth management and private banks to modernise or lose high value clients

In 2026, wealth management and private banks will face a defining moment: modernise or lose their next generation of investors. For decades, these institutions relied on trusted relationships, fixed investment services, and
manual reconciliation processes. That model no longer works. As younger, more digitally savvy clients take the lead, they expect instant visibility, faster settlement, and seamless portfolio management across every asset and market.

However, current legacy infrastructure can’t keep up. Many firms still depend on systems built decades ago, leaving them unable to provide the real-time insights and flexibility high-value clients now see as standard.

At the same time, regulation is tightening. With T+1 settlement already live in the US and Canada and set to become mandatory across Europe, institutions must reconcile and report trades within a single business day. Relying on manual, fragmented systems
to meet these requirements is both costly and risky – and clients will not tolerate inefficiency where their money is concerned.

Exception handling will move from a back-office burden to a strategic priority

In 2026, banks will have no choice but to treat investigations and exception handling (E&I) as a strategic priority – not a back-office burden. By November 2026, Swift’s Case Management service will require the retirement
of legacy MT messages for E&I processes. While full ISO 20022 compliance for all payment cancellations won’t be mandatory until 2027, delaying action will only create problems, with rushed upgrades, unprocessed backlogs, and compliance risk as deadlines close
in.

Next year, banks must stop treating exception handling as an afterthought. They’ll need to redesign payment workflows so that investigations and resolutions are embedded seamlessly within ISO 20022 processes.

The benefits extend far beyond regulatory compliance. Early movers will see fewer manual touchpoints, faster investigations, and reduced error rates. Teams can shift focus from repetitive manual processing to higher-value analysis, while customers benefit
from quicker resolutions and greater transparency. Organisations that embrace this automation will gain a genuine competitive advantage in an increasingly demanding regulatory landscape.

The key to banking success in 2026

As 2026 unfolds, the banks that thrive will be the ones willing to rethink outdated systems, embrace intelligent automation, and treat data as a strategic asset. Those that continue to rely on short-term fixes will find themselves outpaced by more agile
competitors. The message is clear: modernisation is no longer optional, it’s the price of staying relevant.