Krishna Subramanyan, CEO of Bruc Bond, a global cross-border payment provider, unpacks the regulatory, operational and compliance shifts reshaping Europe’s financial institutions ahead of the Instant Payments Regulation.
The EU’s push for instant payments represents a seismic shift in financial infrastructure. As the industry races toward a 10-second transaction future, compliance readiness may be lagging behind. The cost of being unprepared could mean regulatory fallout, reputational damage, or loss of market share.
The upcoming EU Instant Payments Regulation (IPR) mandates that euro-denominated payments must be processed within 10 seconds, at any time of day, including weekends and holidays. For businesses, it means faster access to funds, reduced settlement delays, and improved cash flow predictability – all crucial for managing international supplier payments and working capital more efficiently. For financial institutions, particularly Tier 2 banks and fintechs, it presents a demanding operational overhaul. Beyond transaction speed, the shift requires a new level of real-time compliance, liquidity management, and fraud prevention that many may not be currently equipped for.
The compliance gap
I’ve seen firsthand how real-time payments expose the operational blind spots of legacy systems. The most pressing issue is real-time sanctions screening, even when limited to EU lists, it’s a major challenge.
In an environment where every payment must clear within seconds, traditional batch processing and weekend freezes no longer apply. Many compliance infrastructures have not evolved to handle the demands of real-time processing and modern fraud prevention.
Financial institutions are now expected to screen every transaction instantly against a constantly shifting landscape of sanctions and fraud indicators. However, compliance teams often struggle to scale, especially in a market where all providers are competing for the same limited resources. The result can be increased regulatory exposure in an environment with little margin for error.
24/7 liquidity a critical pressure point for banks and fintechs
Real-time payments require continuous liquidity at all hours of the day. That includes nights, weekends, and holidays. This marks a fundamental shift away from traditional liquidity models that rely on predictable cycles, end-of-day sweeps, and central bank settlement windows. However, under the new regulation, these practices are no longer sufficient.
Since April this year, payment firms can no longer rely on central banks to hold their clients’ funds and must instead place those funds with commercial banks. This, combined with the need to implement new liquidity management measures may present a double-headed challenge for payment institutions in particular.
The complexities of IBAN-name matching
IBAN-name verification is another key requirement under the regulation. While it is intended to reduce fraud and prevent misdirected payments, implementation brings operational challenges. These are particularly evident across jurisdictions that use different languages, standards, and data formats. Institutions must be able to verify payee names in real time, resolve mismatches efficiently, and communicate outcomes clearly to customers.
There is also a risk of regulatory inconsistency. If EU member states implement the requirement in different ways, it could undermine the clarity and cohesion that the Single Euro Payments Area (SEPA) and the Instant Payments Regulation are designed to promote. Clear and harmonised guidance will be essential to ensure a consistent and effective rollout.
Cross-border compliance will be the true test
The increasing globalisation of finance is driving demand for real-time transaction capabilities beyond Europe’s borders. However, regulatory frameworks in many jurisdictions have yet to align with these expectations. This discrepancy is particularly evident in cross-border payments.
Effective compliance will require institutions to rapidly and accurately address anti-money laundering and fraud detection obligations across multiple regulatory environments. Those who integrate sophisticated, jurisdiction-aware compliance systems within their core infrastructure will be better equipped to navigate these complexities and maintain a competitive advantage. Conversely, institutions relying on manual processes or fragmented approaches may experience operational inefficiencies and heightened regulatory risk.
Beyond a deadline
The transition to instant payments goes beyond a regulatory requirement and represents a fundamental shift in how financial institutions compete. Compliance, liquidity, and operational agility must be treated as strategic priorities instead of administrative burdens. Financial institutions that adopt this approach are likely to strengthen their market position, while those that do not may face increasing challenges.
This evolution is expected to drive a new form of market consolidation shaped not only by capital and acquisitions but also by institutional readiness and operational resilience. The organisations that view compliance as an enabler of growth, rather than a constraint, will be the ones that shape the future of payments across Europe and globally.
Many institutions are focusing on strengthening their capabilities in compliance automation and scalable infrastructure to support real-time operations. Our investments aim to ensure readiness and resilience as the regulatory landscape changes.
In the era of instant payments, speed alone is not enough. Long-term success will depend on the ability to deliver trust, accuracy and compliance all in real time.
