SEPA Instant Payments Require Real-Time Operations: Are Banks Ready?

Participating in SEPA Instant (SCT Inst) whether through direct integration with a clearing and settlement mechanism (CSM) or via a sponsor bank requires a fundamental transformation of a bank’s technical and operational ecosystem. The European Commission’s regulation does not merely call for participation in a scheme; it requires a comprehensive reengineering of the systems that process, monitor, and support payments. Compliance is no longer just a matter of connectivity; it requires full-stack operational readiness.

At the frontend, banks must offer real-time customer experiences. This starts with user interfaces on mobile apps, web portals, and corporate banking platforms that reflect the speed and transparency of instant payments. Customers now expect their payments to be executed and confirmed within seconds, with real-time visibility into transaction status and resolution of exceptions. As one industry expert put it:

If a customer waits longer than a few seconds, they feel something has gone wrong.

In this context, legacy interfaces that update transaction history only once daily or that provide limited failure feedback are no longer acceptable.

Equally essential is the integration of an IBAN-Name check solution at the point of initiation. As mandated by regulation, by October 2025 banks will have to validate that the recipient’s IBAN and name match before executing the payment. This feature, often referred to as “Confirmation of Payee” (CoP), directly supports PSD3’s strengthened consumer protection agenda, which aims to reduce fraud losses and misdirected payments across the EU. Implementing this functionality requires real-time access to trusted reference databases and seamless incorporation into digital channels and APIs, capabilities that will also help future-proof compliance as PSD3 and the Payment Services Regulation expand fraud prevention and liability rules.

Middleware and orchestration layers must also be significantly upgraded to support the speed and complexity of instant payment flows. Traditional batch-based fraud detection and compliance checks are no longer viable. Banks must instead launch real-time transaction monitoring which include: fraud scoring in under one second, sanctions screening before execution, anomaly detection based on behavioural analytics, and compliance validation across multiple data sources. These systems must operate 24/7, interface with internal and external data, and flag suspicious activity without introducing delays.

While critical compliance checks such as sanctions screening and IBAN-name validation must occur before execution, advanced AML modelling, such as behavioural analysis and network pattern detection, typically runs post-event due to its complexity. Real-time systems focus on obvious mismatches and high-risk indicators, while deeper analysis continues after settlement.

While traditional SCT payments might have allowed end-of-day screening, SCT Inst requires all compliance controls to be executed before a transaction is processed. This requires strong API integration with sanctions databases and the ability to perform checks 24/7, including during weekends and off-peak hours. Intelligent orchestration engines must route each transaction through the appropriate compliance flows and determine eligibility for clearing and settlement, particularly when multiple CSMs are supported.

Operational impact of unhappy flows, such as failed compliance checks, fraud system downtime, or clearing rejections, requires robust fallback processes, escalation protocols, and 24/7 support to prevent SLA breaches and reputational risk.

The backend systems, typically the least agile part of a bank’s architecture, must undergo some of the most radical changes. Core banking systems, general ledgers, and reconciliation engines were historically designed for batch processing, with daily or intraday settlement cycles. SCT Inst operates continuously. Each transaction must be booked instantly, settled in central bank money or via correspondent arrangements, and reflected in real-time reporting. Instant payments impact liquidity management. Banks need intraday liquidity buffers and automated funding mechanisms to avoid gridlock. While beneficiaries see credits instantly, funds cannot be withdrawn until interbank settlement is confirmed.

This shift introduces serious technical challenges. Legacy systems may lack the ability to support 24/7 availability or to ensure data consistency during upgrades or recovery procedures. Reconciliation processes must be redesigned to function in a continuous, low-latency environment, enabling operations staff to detect and resolve mismatches as they occur. Additionally, the transition to ISO 20022 messaging mandatory for SCT Inst requires flexible data processing capabilities to interpret, validate, and enrich structured payment messages.

Across all these layers, a new operational mindset is required. Banks must move beyond weekday-based models and adopt a “never closed” paradigm. Operational teams must be available around the clock to monitor payment flows, detect anomalies, respond to incidents, and ensure compliance with service-level agreements. This includes the ability to troubleshoot failures in fraud systems, sanction screening, or clearing interfaces even on weekends and public holidays.

Moreover, real-time monitoring and alerting frameworks must be in place. These systems should provide continuous visibility into processing times, error rates, system health, and compliance checkpoints. Exceptions must not only be logged but resolved immediately, with automatic escalation and fallback protocols to prevent SLA breaches. In the words of a payment operations manager:

In a world where money moves instantly, delays are simply unacceptable.

In an environment where speed and reliability are non-negotiable, any failure can lead to reputational harm and client dissatisfaction.

Ultimately, achieving SCT Inst readiness requires a holistic approach. Upgrading a single system or function will not be sufficient. The transformation must cover digital interfaces, payment engines, fraud and compliance modules, and infrastructure resilience. Each component must be interoperable, scalable, and capable of operating in a real-time ecosystem. Banks that treat SCT Inst as an optional add-on risk creating inefficiencies and exposing themselves to operational gaps. In contrast, those that embrace real-time architecture and agility will be better equipped to compete and to deliver on the promise of instant payments.

Financial Impact: Beyond Compliance

A robust financial framework is essential. Beyond compliance budgets, financial institutions must evaluate strategic returns using established metrics like NPV, IRR, and ROIC. Capital expenditures (integration, infrastructure, certification) must be assessed alongside recurring operational expenses (maintenance, fraud/sanctions, support). At the same time, real-time services offer monetization opportunities through sponsor banking, value-added features, or premium SLAs that can offset costs over time. Shifting the mindset from “cost centre” to “platform for value creation” reframes SCT Inst as a strategic enabler, not just a regulatory obligation.

While regulatory compliance may be the initial driver for SCT Inst adoption, its financial implications reach far beyond simple adherence. SCT Inst readiness represents a strategic transformation that enables banks to unlock new value, differentiate their services, and reposition themselves in an increasingly real-time financial environment.

For direct participants, the ability to own and control their entire transaction flow opens the door to delivering higher-value services. These include enriched payment data, real-time APIs, and custom confirmation tools for clients. Banks can design experiences tailored to the needs of their retail and corporate customers whether through transparency in transaction status or integration into treasury systems. Direct participation also enables banks to become sponsors for smaller PSPs or Fintechs, offering indirect access and expanding their role in the payment’s ecosystem.

Even indirect participants can benefit financially, provided they structure their offerings strategically. Real-time services can be monetized through features like instant reconciliation, enhanced transaction reporting, or guaranteed processing speed. These offerings are particularly attractive to corporates in industries where liquidity management and operational timing are critical.

SCT Inst also aligns closely with Open Banking use cases, and its API-first architecture positions banks for FIDA’s broader Open Finance vision. Instant, API-driven account-to-account payment flows, from e-commerce checkout to QR-code bill pay, become even more powerful when combined with customer-permissioned financial data sharing under FIDA. This convergence will enable richer embedded finance journeys, advanced cashflow analytics, and tailored payment experiences.

Furthermore, SCT Inst enhances a bank’s brand positioning and customer trust. In a digital environment where delays are perceived as failures, the ability to deliver instant, secure, and confirmed payments strengthens customer relationships. It also prepares banks for the future, where real-time capabilities will be expected across all financial services.

Early adopters of SCT Inst will enjoy strategic advantages as the payments landscape evolves. With future initiatives likely to include cross-border instant payments, digital identity, and programmable money, having real-time infrastructure in place is not just smart it is essential. SCT Inst readiness should be viewed not as a destination, but as a gateway to long-term innovation and leadership in the financial sector.

SEPA Instant Payments Require Strategic Readiness

The move toward SCT Inst is not just about complying with a regulation or modernizing payment rails, it is about preparing for a fundamentally different operational reality. Real-time is not a technical feature; it is a mindset, a commitment to continuous service, and an investment in long-term capability.

As the 2025 compliance deadline approaches, banks must act decisively. Choosing between direct or indirect participation is only the first step. The real question is whether their architecture, teams, and processes are ready for the demand of 24/7 financial services.

Those institutions that approach SCT Inst as a strategic enabler rather than a regulatory burden will emerge as leaders in Europe’s real-time financial future. By investing now in real-time infrastructure, banks are not just meeting today’s standards they are positioning themselves to shape tomorrow’s payment ecosystem.

Looking Beyond 2025

SCT Inst readiness does not exist in isolation; it is part of the EU’s broader payments and data transformation. Upcoming frameworks like PSD3 and the Payment Services Regulation will tighten fraud controls and expand data access rights, while FIDA will extend Open Banking into full Open Finance. Instant payment rails will become the backbone for richer account-to-account use cases, powering embedded finance, e-commerce, and fintech partnerships. By aligning SCT Inst investments with these parallel initiatives, banks can turn regulatory compliance into a launchpad for growth and innovation in Europe’s real-time, API-driven financial ecosystem.’s real-time, API-driven financial ecosystem.

Over Projective Group  

Projective Group is opgericht in 2006 en is een toonaangevende change specialist voor de financiële dienstverlening. 

We worden binnen de sector erkend als leverancier van complete oplossingen en werken samen met klanten in de financiële dienstverlening om oplossingen te bieden die zowel holistisch als pragmatisch zijn.  We hebben ons ontwikkeld tot een betrouwbare partner voor bedrijven die willen gedijen en bloeien in een steeds veranderend landschap van financiële dienstverlening.