Identity Automation Moves Up Payments Modernization Agenda
Identity verification, KYC automation and reconciliation are emerging as major priorities in corporate payments modernization, with 65% of firms planning to adopt or expand identity and KYC capabilities within the next 12 months, according to PYMNTS Intelligence research conducted in collaboration with Plaid.
The findings from the report “Payment Protection: Why Firms Still Aren’t Real-Time Ready” show that reconciliation automation ranks first in near-term investment plans at 70%, followed by identity and KYC automation at 65%. Secure bank connectivity and open banking, along with AI-based fraud detection, are each cited by 59% of firms as areas they plan to adopt or expand over the coming year.
The figures suggest that companies are pursuing payments modernization across multiple operational layers rather than placing their investments behind a single technology.
KYC and Identity Plans Extend Beyond the Next 12 Months
Identity and KYC automation have one of the broadest investment pipelines in the survey.
While 65% of firms expect to adopt or expand the technology within 12 months, another 25% have plans for a later period. That brings the share of companies with a stated timeline for identity and KYC upgrades to 90%.
Another 9% are considering the technology without a specific timetable, while only 1% are not considering it.
The figures place identity and KYC among the most widely planned capabilities in the payments modernization landscape.
Reconciliation Automation Leads Near-Term Investment
Reconciliation automation remains the top near-term priority, with 70% of firms planning to adopt or expand these capabilities within the next year.
The technology helps businesses match and clear payments against invoices, ledgers and bank statements. Another 28% have reconciliation automation planned for a later period, leaving only 2% either considering it without a schedule or not considering it.
That makes reconciliation the only capability in the survey with a higher 12-month investment figure than identity and KYC automation.
AI Fraud Detection and Open Banking Draw Equal Interest
AI-based fraud detection is also prominent on companies’ modernization agendas, although it does not rank first.
Fifty-nine percent of firms plan to adopt or expand AI-based fraud detection within 12 months, matching the share planning investments in secure bank connectivity and open banking.
For AI-based fraud detection, another 23% have longer-term plans, while 15% are considering the technology without a timetable.
Secure bank connectivity and open banking have a similar longer-term pipeline, with 30% of firms planning investments later and 9% considering the technology without a defined schedule.
Legacy Infrastructure Remains Part of the Investment Plan
Payments modernization is not eliminating spending on existing systems.
The research shows that 51% of firms plan to invest in legacy infrastructure maintenance over the next 12 months. Another 41% have such spending planned for later, while only 2% say they are not considering this type of investment.
The figures indicate that companies must continue funding established infrastructure while building new capabilities around identity, automation, connectivity and artificial intelligence.
Overall, the investment plans point to a payments modernization strategy spread across several areas. Reconciliation automation leads near-term priorities at 70%, followed by identity and KYC automation at 65%, while AI-based fraud detection and secure bank connectivity or open banking each stand at 59%.
At the same time, more than half of firms expect to continue spending on legacy systems, underscoring that modernization remains a combination of upgrading existing infrastructure and adding new payments capabilities.