Why Fintechs And Banks Should Move From Paper Logic To Code

For a system that processes trillions of dollars in value every day, banking still relies on paper files, manual verifications, and long reconciliation processes. While fintechs have seemingly digitized banking, the reality is that they merely converted paperwork into software without implementing any actual modernization.

Every transaction, however simple, could take hours to complete, amidst the long backend processes that treat transactions as documents demanding signatures. Something should change, not in the user interfaces, but behind the screens; banks and fintechs must move from paper reliance to self-executing instructions.

Banking on Paper Logic: Structural Obsoleteness

The World Bank and the Bank for International Settlements argue that, despite decades of continuous upgrading, the financial system remains slow, expensive, and opaque, with cross-border payments still taking one to five business days to settle due to lengthy reconciliation chains and multiple intermediaries.

Banking's outdated architecture comes with a very high cost for stakeholders, individuals, and institutions alike.

In fact, the World Bank highlights that global cross-border settlement costs average 6.2% of the transaction value, which is way higher than the U.N. SDGs' target of 3%. All this is because, amidst the supposed digitization of the financial space, transactions still must go through a myriad of intermediaries before reaching destinations, which increases costs and delays, ultimately affecting the efficiency of cross-border transactions. 

And a big part of the global banking and fintech space still works with technology developed using legacy languages. According to a 2025 analysis, 70% of banks globally still rely on legacy systems — some written decades ago — and about 43% of banking systems globally still work on COBOL-based infrastructure. 

A good example of this failing legacy technology was a struggle by US states in early 2020 to process unemployment payments due to their reliance on COBOL-based programs. The New Jersey governor even publicly called for assistance from programmers who were familiar with the COBOL programming language. 

Corporations Are Demanding Change, Not Just Asking For It

Among the stakeholders severely suffering the consequences of the architectural and structural banking problems is the corporate world, where liquidity is reduced, global trade lags, and operational risks increase. 

Every year, according to McKinsey’s Global Payment Report, banks spend billions on compliance processes and reconciliations as a result of fragmented data systems and manual checks. This is the financial system spending fortunes trying to compensate for inefficiencies it has itself allowed to exist.

While banks are seemingly still comfortable with the status quo, corporations are taking an entirely different direction. In 2026, companies are already operating 24/7, demanding real-time visibility of liquidity, payments, and risk exposure.

In a global transaction and banking survey by CGI, about 83% of corporate respondents find real-time cash visibility and forecasting critical in day-to-day business. Yet, only 31% of banking networks are actively including this in their business strategy. By 2020, 73% of organizations globally had already explored intelligent automation for finance, insight, and reporting.

It is clear that there is a structural gap between what banking networks currently provide and what CFOs and corporates are looking for; hence, banks must adapt.

Programmable Finance is Replacing Paper Logic

Financial rules should exist with autonomy, not in papers and audit trails, but as logic, in codes that autonomously execute when certain preset conditions are met.

For nearly a decade, blockchain-based contracts have shown that payments and settlement instructions can execute automatically once preset conditions are met. That makes finance faster while also improving auditability and real-time verification.

According to research published by the World Economic Forum, blockchain technology has the potential to cut down operational expenses in banking by over $20 billion. Distributed Ledger Technologies can streamline settlements, reduce reconciliations, and automate general compliance workflows.

Compliance systems built on top of smart contracts can potentially eradicate the need for manual reporting and reconciliations, as they can create verifiable transaction records accessible to all stakeholders, including regulators, institutions, and individuals alike.

Instead of the long pre- and post-transaction activities, smart contracts are coded with all those rules governing settlements, eliminating every layer of middle party existing to monitor and reconcile financial activities.

Automated compliance systems can spot violations before transaction execution, cutting the costs of tracking and dealing with them. Owing to immutable ledger technologies, transaction records remain permanent, reducing inter-institutional disputes.

Banking industry leaders are already showing the possibility of the global financial infrastructure’s programmability. For instance, in 2019, the BOE, in collaboration with PwC Global, tested a proof-of-concept real-time gross settlement application for world transfers. The Bank for International Settlements' innovation hub, together with Project Meridian, made a prototype for synchronized payments using RTGS. Programmable payment systems designed to allow corporate clients to set conditions for payment execution are already a practical subject with JP Morgan's Kinexys division.

Now, financial institutions are no longer seeing payments merely as value transfers but rather as instructions automatically enforcing financial rules. And that may be a good start.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.