In March 2023, Silicon Valley Bank collapsed in 44 hours. The trigger was a bank run, but the speed was digital. Depositors did not queue outside branches. They moved $42 billion in a single day through online banking and wire transfers. That event demonstrated something regulators and bank executives already suspected: banking infrastructure built for a world of physical branches and overnight batch processing cannot withstand the speed at which digital finance moves. The global banking-as-a-service market, which supplies the digital infrastructure replacing legacy systems, reached $18.6 billion in 2024, according to Global Market Insights, growing at 15.1% annually toward $73.7 billion by 2034.
What Banking Infrastructure Actually Is
Banking infrastructure is the technology, processes, and regulatory frameworks that move money, store value, and manage risk. It includes core banking systems (the databases that track every account and transaction), payment networks (the rails that move money between institutions), identity systems (the processes that verify who customers are), and regulatory reporting systems (the tools that generate the reports banks must file with supervisors).
For most of the past 50 years, this infrastructure was physical. Core systems ran on mainframes in private data centres. Payment networks operated through dedicated telecommunications lines. Identity verification required in-person document review. Regulatory reports were generated from overnight batch runs and filed on fixed schedules.
The Boston Consulting Group projects fintech revenues will reach $1.5 trillion by 2030, with embedded finance and digital lending accounting for the largest share of projected growth.
According to CB Insights’ 2024 fintech report, global fintech funding declined 40 percent between 2022 and 2024, pushing the sector toward consolidation and a sharper focus on profitability over growth at all costs.
Each of these components is now moving to digital equivalents. Core systems are migrating to cloud platforms. Payment networks are being replaced or supplemented by real-time digital rails. Identity verification runs through API-based services that use biometrics and database checks. Regulatory reporting is shifting toward real-time data feeds rather than periodic batch submissions.
The Forces Driving Digitalisation
Three forces are pushing banking infrastructure toward digital.
The first is customer expectations. Consumers and businesses now expect financial transactions to complete in seconds, not days. Brazil’s Pix system processed 42 billion instant payment transactions in 2024. India’s UPI handled 16.6 billion transactions in December 2024 alone. Once customers experience instant payments, they will not accept three-day settlement for domestic transfers. Banks whose infrastructure cannot support real-time processing lose customers to those that can.
The second force is cost. Legacy infrastructure is expensive to maintain. COBOL programmers who understand mainframe systems are retiring, and replacing them is difficult because few universities teach COBOL. The remaining specialists command premium salaries. Meanwhile, cloud-based infrastructure offers variable cost models where banks pay for the computing capacity they use rather than maintaining excess capacity for peak loads. Cloud deployment accounts for 67% of the BaaS market, per Global Market Insights, reflecting the industry’s migration toward lower-cost digital infrastructure.
The third force is regulation. The EU’s DORA regulation, effective January 2025, requires banks to demonstrate that their technology infrastructure can withstand operational disruptions. This includes cloud providers, API partners, and all third-party technology vendors. Open banking regulations in the EU, UK, Australia, and Brazil require banks to provide API access to customer data, which demands digital infrastructure capable of handling millions of API requests. Banks running on legacy systems must build expensive middleware layers to comply. Banks on modern digital infrastructure comply natively.
Real-Time Payment Networks
The most visible infrastructure shift is in payments. Traditional payment networks (ACH in the US, BACS in the UK) were designed for batch processing. Transactions accumulated during the day and settled in overnight runs. Faster Payments in the UK (launched 2008) and FedNow in the US (launched 2023) introduced real-time settlement.
The economic impact of real-time payments is substantial. The global cross-border payments market reached $371.59 billion in 2025, according to Fortune Business Insights, growing toward $727.74 billion by 2034. Digital infrastructure that connects local real-time payment networks across borders is replacing the correspondent banking model, where international transfers passed through chains of intermediary banks, each adding fees and delays.
Banks globally process over 2 billion API calls daily, handling $676 billion in transaction value, per Coinlaw. Payment APIs account for a large share of that volume, enabling instant fund transfers, payment initiation from third-party apps, and real-time payment status tracking.
Cloud Migration of Core Banking
Core banking, the system of record that tracks every account balance and transaction, is the last and most difficult component to digitalise. A bank cannot stop processing transactions while it migrates its core. Every account, every loan, every standing order, and every regulatory obligation must transfer without interruption.
Three migration approaches have emerged. Full replacement involves moving the entire bank onto a new cloud-native platform. This is the most comprehensive approach but takes three to five years and costs hundreds of millions of dollars. The sidecar approach launches new products on a modern platform while legacy products remain on the old core. Over time, customers are gradually migrated. The API wrapper approach places a modern interface layer on top of the legacy core, allowing the bank to connect to digital services without replacing the underlying system.
Fintech companies like Thought Machine, Mambu, and 10x Banking have built the cloud-native platforms that banks are migrating to. Platform-based models account for 69% of the BaaS market. The neobanking segment, where digital infrastructure is the entire bank from day one, reached $210.16 billion in 2025, per Fortune Business Insights, growing at 49.30% annually. Those growth rates reflect a market that has moved past experimentation into large-scale deployment.
The Risks of Digital Infrastructure
Digital banking infrastructure introduces risks that physical infrastructure did not have. Concentration risk is the most discussed. When multiple banks run on the same cloud provider or the same BaaS platform, a single outage can affect many institutions simultaneously. The Synapse collapse in 2024 demonstrated this when a middleware provider’s failure temporarily prevented customers at multiple banks from accessing their funds.
Cybersecurity risk increases as more banking functions move online. Physical infrastructure had a natural air gap: an attacker could not remotely access a system that was not connected to the internet. Cloud-based systems, by definition, are accessible over the internet, and securing them requires continuous investment in monitoring, access controls, and incident response.
The transition to digital banking infrastructure is not optional. Customer expectations, cost pressures, and regulatory requirements are all pushing in the same direction. The institutions that manage the transition well will operate faster, cheaper, and more flexibly than those that delay. The institutions that manage it poorly will discover that digital infrastructure, like any infrastructure, requires careful engineering and ongoing maintenance to remain reliable.
