Payments growth is being held back by manual processes

The global payments industry has reached a defining inflection point. As transaction volumes surge at an unprecedented velocity, a striking contradiction has emerged at the heart of the sector. While fintech leaders in the US and UK are racing toward a future defined by real-time settlement, intelligent automation, and interoperable digital infrastructure, they are doing so while still tethered to manual processes, legacy systems, and fragmented data.

This tension, identified by AutoRek’s 2026 Payments Survey as “The Great Payments Paradox,” reveals that 96% of firms are adopting AI, yet 69% cite manual processes as their primary barrier to scalability. Based on 250 interviews with senior finance sector managers across the UK and US, the research suggests that the next 12 months will determine which firms close the gap between real-time ambition and manual reality.

The Scalability Wall: Operations as the New Bottleneck

For years, the industry focused on front-end innovation improving user interfaces and expanding digital channels. However, the survey indicates that growth is no longer the primary problem; operations are. As transaction volumes rise, organizations are discovering that scale alone does not guarantee profitability.

According to the report, 69% of respondents rising to 73% among larger organizations identify manual processes and limited automation as the single biggest bottleneck to scalability. While infrastructure costs remain a concern, it is people-dependent processes that are actively constraining growth. “We’re seeing volumes rise faster than operational maturity,” notes Murray Campbell, Principal Product Manager at AutoRek. “Without automation, growth simply compounds inefficiency”.

Firms still relying on spreadsheet-driven reconciliations and manual exception handling risk hitting a “diseconomy of scale” where the cost of labor-intensive operations erodes the profit from increased transaction volumes.

Data Fragmentation: The Silent Operational Risk

Perhaps the most pervasive risk identified is data fragmentation. A staggering 80% of organizations experience moderate to significant operational impact from fragmented payments data, with 34% reporting significant or severe disruption. This fragmentation stems from multiple internal legacy systems and limitations from third-party processors, making end-to-end visibility nearly impossible.

This issue is starkly visible in the transition to ISO 20022. While 83% of firms have begun implementation, only 29% are fully migrated and live. Over half (54%) remain in “coexistence mode,” which often introduces more complexity than the richer data standards were intended to solve.

As data architecture emerges as the true foundation of modern operations, firms are finding that fragmented data slows real-time decision-making and increases exception backlogs. Kieran Millar, Principal Product Manager at AutoRek, emphasizes that “safeguarding is fundamentally a data and controls problem, not just a regulatory one”.

The AI Paradox: Foundation Over Flash

AI adoption has reached near-universality, with 96% of firms using the technology in some capacity, up from 89% the previous year. However, maturity remains uneven, and confidence in scaling AI is wavering due to deeply operational concerns:

• Data Security & Regulatory Compliance: Cited by 61% of firms.

• Implementation & Maintenance Costs: Cited by 50%.

• Legacy Integration: Cited by 46%.

The report warns that AI is not a shortcut around operational maturity. “AI doesn’t fix broken data. It amplifies whatever foundation it’s built on,” says Jim Sadler, Chief Product, Technology, and Operations Officer at AutoRek. Payments organizations that invest in clean, governed, and reconciled data will extract far greater value from AI than those attempting to bolt it onto fragmented foundations.

Regulatory Readiness: The Safeguarding Ticking Clock

Operational unpreparedness is also creating significant regulatory risk. With critical safeguarding and client money deadlines approaching notably May 7, 2026, in the UK only 33% of firms say they are fully prepared.

Regulators like the FCA are moving toward “evidence-driven supervision,” where a simple templated policy is no longer sufficient. Instead, firms must demonstrate effective, real-time controls embedded in their daily processes. Currently, 84% of organizations expect their safeguarding controls to require updates within the next 12 months. Firms that treat safeguarding as a continuous control function rather than a periodic audit will be better positioned to adapt as rules evolve.

The Next Frontier: Blockchain and Digital Assets

Looking toward 2030, the shift in settlement infrastructure is moving from experimental to strategic. Organizations expect 24% of payment volume to flow through blockchain-based rails by the end of the decade. Central Bank Digital Currencies (CBDCs) are viewed as the most impactful development, particularly in the US, followed by stablecoins for payments and settlements.

However, these new rails do not eliminate the need for controls; they intensify it. Reconciliation, safeguarding, and reporting become more complex as payment ecosystems diversify. Steve Carlin, VP of Product Management at AutoRek, notes: “Blockchain isn’t replacing payments, it’s reshaping how value is controlled and reconciled”.

Closing the Gap: From Ambition to Execution

The message for payments leaders in 2026 is clear: sustained competitiveness depends on closing the gap between front-end ambition and back-office execution. This requires a deliberate shift away from operational inertia toward automated, auditable foundations.

To thrive, firms must:

1. Automate reconciliation and controls at scale to remove manual bottlenecks.

2. Unify fragmented data into defensible, centralized hubs.

3. Prioritize data quality as a prerequisite for AI and real-time payments.

4. Embed safeguarding into daily operations to meet evolving regulatory scrutiny.

As Nick Botha, VP of Payments and Retail Banking at AutoRek, concludes: “The payments industry is not short on ambition. It is short on operational alignment”. In a landscape moving in real-time, those who fail to modernize their core will inevitably be left behind.

Download the full AutoRek Future of Payments Operations 2026 report here.