Cloud-Native Payments Let Banks Treat Data Like Rocket Fuel

Watch more: What’s Next In Payments: AWS, Nilesh Dusane

In today’s connected economy, the lines between what’s table stakes and what’s transformative are shifting.

To keep pace, financial institutions are re-architecting systems from the ground up to exploit cloud-native capabilities like microservices, serverless computing and elastic scaling. Payments, once viewed as plumbing for financial institutions, have emerged as a competitive differentiator.

“Our customers are moving from the ‘lift and shift’ model that they used to use for cloud … to truly build cloud-native payment applications on AWS,” Nilesh Dusane, the global head of Institutional Payments at AWS, told PYMNTS during a discussion for the September “What’s Next in Payments” series, “From Trend to Table Stakes: Mapping the Next Payment Priorities.”

This represents a potential inflection point. In the early days, banks and payment companies adopted a “lift and shift” approach to the cloud by moving existing applications off legacy data centers and onto the cloud to gain efficiency and scalability. However, in the last few years, there has been a move to cloud-native design.

The conversation, as a result, is no longer just about time-to-market but about time-to-value.

If speed and scale are today’s imperatives, security is the nonnegotiable. AWS operates under a “shared responsibility” model, where AWS secures the cloud infrastructure and customers manage application-level controls, Dusane said.

“It starts with data,” he said.

Traditionally, payment and banking data have been siloed across transactional systems. AWS’ advantage lies in enabling real-time data processing to make smarter risk and fraud decisions.

The impact is tangible in areas like instant payments.

“If I’m working with a bank as an individual and … have some really, really good transaction history, then when that bank enables instant payments for me, my limits might be higher,” Dusane said.

Conversely, a customer with a riskier history might face lower limits. These kinds of “instant risk decisioning” models depend on the ability to process data at cloud scale, he said.

Concurrently, the payments ecosystem is also being reshaped by regulatory frameworks like open banking in Europe (PSD2 and the forthcoming PSD3) and the global adoption of ISO 20022 standards.

“What cloud, what financial institutions can do … is first go live or upgrade their payment systems to support ISO 20022 standards,” Dusane said.

But the real opportunity comes after compliance.

“Once they start seeing the additional structured data flowing through their pipes, they can use AWS services … to extract value from that data and then offer new value-added services,” he said.

This “data dividend” could be the most underappreciated benefit of cloud adoption, he said. Once standardized data flows freely, artificial intelligence and machine learning can uncover insights that were impossible in fragmented legacy environments.

If cloud-native architecture is the new foundation, then generative AI is the rocket fuel. The financial industry has long used machine learning for fraud detection and risk modeling, but gen AI is opening new frontiers.

Dusane broke down gen AI’s applications into three categories: productivity gains, risk reduction and value creation.

“Financial institutions can take preventative measures … to better do risk management for payment applications,” he said, adding that productivity use cases can include automating workflow checks and streamlining onboarding.

“And what generative AI has also enabled our customers to do is build hyper-personalized, end-use-specific experiences, including targeted messaging at scale,” Dusane said.

That last phrase, at scale, may be the most important. Personalization has always been possible, but scaling it across millions of users in real time was not. The convergence of cloud, gen AI and payments changes that.

When it comes to payments, there’s a growing expectation for them to be instant, global and embedded.

“There are roughly 80 countries all over the world, either live or in the process of going live, with instant payments,” Dusane said.

This creates opportunity and complexity. Multirail strategies, where banks and FinTechs enable payments across cards, ACH, real-time rails and digital assets, are becoming the new competitive edge. Customers are using cloud-native technologies and gen AI for building unified microservices-based solutions across different payment rails.

People are asking how they can “offer as many payment options to their end customers as possible,” Dusane said.

Beyond optionality, if real-time payments are the new norm domestically, the cross-border space is where cloud innovation may prove most disruptive. Dusane cited AWS customers like Wise, Remitly and Convera as examples of FinTechs using cloud infrastructure to deliver instant remittances and cross-border services globally at scale.

So, what comes next? If the cloud was once seen as the destination, Dusane said it is now the enabler. AWS will continue to build capabilities in response to customer needs, particularly around agentic AI, which is emerging as a trend.

“We offer cloud services that can help our customers build different experiences using agentic AI,” Dusane said, adding that the technology has matured rapidly over the past year, and organizations now have access to the tools required to safely launch agentic AI use cases, such as automating back-office workflows or powering entirely new customer experiences.

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