AI, RISK, AND REGULATION: STRATEGIC RESPONSES OF PAYMENT INSTITUTIONS IN THE AGE OF GENAI AND REAL-TIME COMPLIANCE

Abstract

The global payments industry is undergoing a structural transformation characterized by the rapid decline of cash usage and the concurrent rise of digital transaction instruments. This study explores the multifaceted transition from traditional payment methods to digitally enabled infrastructures, emphasizing the evolving role of financial institutions in this process. Drawing on comparative analysis of international cases and recent industry data, the research identifies key drivers of this shift, including government-led digital public infrastructure initiatives, the proliferation of instant payments, and the competitive emergence of fintech intermediaries. Particular attention is given to regional disparities in adoption rates and institutional capacity to adapt to these changes. The findings suggest that while banks retain a central position in the financial ecosystem, their ability to capture future value will increasingly depend on technology modernization, strategic partnerships, and proactive regulatory engagement. This article contributes to the scholarly discourse by offering a comprehensive examination of how banks can navigate the complexities of the decoupled payments era and remain relevant in a rapidly digitizing economy.