Fragmented Data Disrupts Operations at 80% of Payments Firms

WHY THIS MATTERS: The rush to deploy artificial intelligence and instantaneous settlement networks defines the modern fintech landscape, yet this research exposes a foundational vulnerability at the heart of the industry: the overwhelming failure of back-office operations to keep pace. Termed “The Great Payments Paradox,” the core issue is that investments in innovation are being negated by reliance on manual processes and severely fragmented data. With 80% of organizations reporting major disruption from this data disparity, the industry’s push toward real-time payments is currently a high-risk endeavor. For senior leaders, this is the must-read data point of 2026, confirming that spending on resilient, unified data foundations—not just flashy front-end features—is the only sustainable path to growth and scalability.

80% of payments organizations experience moderate to significant operational disruption from fragmented data, according to new research from AutoRek. Despite heavy investment in front-end innovation like AI and instant payments, back-office operations remain stuck in manual processes – creating a critical gap that undermines growth, scalability and innovation.

The 2026 Payments Survey, based on 250 interviews with senior finance sector managers across the UK and U.S, highlights what AutoRek calls “The Great Payments Paradox”: while 96% of firms are adopting AI and 67% say instant payment networks are accelerating the need for real-time controls, 69% cite manual processes and limited automation as their biggest scalability constraint.   

“The findings of The Future of Payments Operations 2026 report highlight both the strength of the UK payments sector and the scale of the opportunity that lies ahead. UK firms continue to demonstrate ambition in adopting real-time payments, AI, and emerging settlement rails, reinforcing the UK’s position as a leading global payments hub.” said Benjamin David, Head of Intelligence at The Payments Association “However, the research also underlines the importance of ensuring that operational capabilities, data infrastructure, and governance frameworks evolve in step with front-end innovation. For payments leaders, this presents a clear strategic priority: sustained competitiveness will depend not just on product and market expansion, but on building resilient, scalable operational foundations that support growth over the long term.” 

Fragmented data and manual processes block AI’s value 

The survey reveals that two-thirds (34%) of firms report significant disruption to reconciliation and monitoring due to fragmented data. Despite industry-wide modernization efforts, over half (54%) of businesses remain only partially implemented on ISO 20022, adding increased complexity when richer data should reduce it. 

These data and back-office issues directly constrain firms’ ability to scale AI investments. While AI adoption has increased, confidence in scaling remains an issue. Top concerns include data security and regulatory compliance (61%), implementation costs (50%) and legacy system integration (46%). Firms will struggle to extract value from broken foundations.

“AI doesn’t fix broken data. It amplifies whatever foundation it’s built on,” said Jim Sadler, Chief Product, Technology and Operations Officer at AutoRek. “Without clean, reconciled data, front-end AI investments cannot deliver reliable outcomes.” 

Operational gaps create regulatory and competitive risk 

This operational unpreparedness also has a direct impact on regulatory readiness. With safeguarding deadlines approaching, only 33% of firms say they are fully prepared for upcoming compliance requirements, while 84% expect their controls to require updates within 12 months. Firms are struggling to build the real-time controls regulators demand on fragmented foundations.

As firms expect 24% of payment volume to flow through blockchain-based rails by 2030, the gap between operationally mature organizations and those struggling to keep pace will likely widen. Without automated back-office operations and unified data foundations, firms will struggle to meet evolving regulatory requirements or compete effectively in an increasingly real-time payments landscape. 

“Forward-thinking firms will treat regulatory readiness as a competitive differentiator, rather than just a compliance exercise,” said Nick Botha, VP of Payments and Retail Banking at AutoRek. “The payments industry is not short on ambition and innovation; it is short on operational alignment. 2026 will determine whether firms can close the gap between real-time strategy and manual reality – separating market leaders from those left behind.

FF NEWS TAKE: This report decisively moves the needle by reframing the industry’s biggest hurdle as an internal, operational crisis. The primary takeaway is that without fixing their data infrastructure, firms face not only competitive disadvantage but escalating regulatory penalties, especially with the imminent May 2026 safeguarding deadlines. We must now watch for a strategic pivot in spending, moving resources from front-end experimentation to mandatory back-office automation.

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