For much of the past two decades, payments innovation has been measured by one metric above all others – speed.
Faster Payments transformed the UK market, real-time settlement became the benchmark, and instant transactions became an expectation rather than a competitive advantage. But according to Paul Horlock, Chief Payments Officer at Santander UK, the industry’s next phase will be defined by something entirely different.
Speaking on Form3’s Payments Cannot Fail podcast, Horlock argues that payments is entering a period where speed alone is not a differentiator. In fact, now that speed has become a baseline expectation, customers want safety and security to be prioritised. This sits alongside the introduction of tokenised money, which could present new challenges for banks’ payments infrastructure.
Payments must be treated like a business
Having led both Pay.UK and Santander UK’s payments function, Horlock has witnessed the industry from two very different perspectives. Yet despite the organisational differences, he says one principle remains consistent – “It always follows the money.”
Whether operating a national payment scheme or managing payments inside one of the UK’s largest banks, investment ultimately depends on proving commercial value.
Historically, however, Horlock believes payments has rarely been viewed as a business in its own right. Too often, success has been measured by the absence of outages rather than the value that payments create for customers and the wider organisation.
He explains, “Payments is always that area that no one wants to talk to you about when it’s going well. They only want to talk to you when it goes wrong. There is a real need to take that view of building payments as a business, understanding what the income line looks like, what the value looks like.”
The lessons began during his time at Pay.UK, where moving away from periodic industry funding required a fundamental shift in thinking. “We built a commercial conversation with our customers. We created a real commercial view of how we run Pay.UK.”
Customer expectations have surpassed simply speed
One of Horlock’s more surprising observations is around customer expectations.
While many assume consumers continue demanding ever-faster payments, Santander’s own research suggests otherwise.
He stated: “We asked them what they wanted from payments… No one’s really asking for change. The only reason they want change is because they’ve either been defrauded or the payment’s been delayed because we thought they would be defrauded.”
The implication of this is significant not least because for years, payments innovation has focused on reducing transaction times. Horlock believes speed has effectively become the baseline expectation. What increasingly differentiates providers is confidence, security and trust throughout the entire payment journey. Ultimately, customers judge payments by the outcome, not the infrastructure behind them.
“It’s an end-to-end experience. It’s not just what the bank does.”
This chimes with Form3’s belief that no-one wakes up to make a payment. Rather, it’s about the real-world motivation behind that payment whether it’s receiving your salary, ordering something online or sending money to a friend. This is what end-customers care about.
Rebuilding an aircraft whilst in flight
Modernising payments infrastructure has become one of banking’s biggest engineering challenges.
Unlike fintechs starting with clean architecture, incumbent banks must replace decades-old systems, while continuing to process millions of transactions every day.
“It’s legacy,” Horlock said simply. “We’ve got ingrained decades of processes and procedures and technology.”
Using Santander’s transformation programmes as an example, Horlock explains that even seemingly straightforward migrations expose countless hidden complexities.
As teams uncover historical differences in systems, data and processes, institutions must simultaneously clean existing infrastructure while building future capabilities.
“It’s not just refuelling while flying,” Horlock says, using Form3’s analogy for updating banking payment infrastructure. “You’re replacing engines and rewiring the thing at the same time.”
That challenge becomes even greater because payments cannot be subject to downtime, they are too essential. Failures may inevitably occur, Horlock acknowledges, but success depends on organisations understanding their infrastructure deeply enough to recover rapidly.
“We’ve got to be great at recovery and you’re only great at recovery if you understand how the damn thing’s working.”
Modernisation means more than replacing old technology
Horlock also warns against confusing digital transformation with simply layering new technology onto ageing infrastructure.
“I think we’ve been very good at bolting things on to old technology,” Horlock claimed.
For Horlock, technologies such as blockchain only become valuable when they solve genuine customer problems rather than existing as solutions searching for use cases.
“I think at last we’re beginning to find that jump into a way that brings services to customers that really makes a difference,” Horlock stated. “I don’t think we should just chase technology.”
Instead, institutions should begin by understanding the customer problems they are trying to solve, then choose the technology that can deliver.
AI’s opportunity and its biggest unanswered question
Artificial intelligence is already beginning to reshape how financial institutions detect fraud, analyse transaction data and improve operational efficiency. For Horlock, those use cases represent only the beginning.
“I think we’re all seeing definite advantages around fraud and financial crime,” he said. “The work that we’ve been doing on data analysis can be massively accelerated through that process and start to get much smarter.”
However, it is not fraud detection that concerns him most. Horlock believes that the industry’s biggest challenge is agentic commerce, where AI-powered assistants are increasingly being developed to make purchasing decisions on behalf of customers.
Horlock continued: “We’ve got customers who are using agents to make purchases and increasingly putting the power in the hands of an unknown agent. Where’s responsibility sitting? Where’s the moral hazard gone? What happens if it goes wrong?”
For Horlock, AI undoubtedly has a place within payments, but only if innovation is matched by equally robust governance.
The next decade belongs to smarter money
Looking ahead, Horlock believes payments is approaching another inflection point.
The UK’s next-generation payments infrastructure will undoubtedly play an important role, but he argues the industry’s biggest opportunity lies in combining multiple forms of money rather than simply replacing one payment rail with another.
Rather than relying on a single payment rail, future payment ecosystems will combine Faster Payments, tokenised deposits, stablecoins and other forms of digital money, with institutions selecting whichever delivers the best outcome to meet customer needs.
Horlock concluded: “If we’re going to start again, we’ve got to think about what the customer is wanting to achieve. What’s the best way we can do that for them? Not how we apply the product we’ve got today.
“We overestimate the short term and underestimate the long term… The five-to-ten-year route is going to be one of those things that’s going to have a whole new foothold in the market.”
For Horlock, that is becoming the industry’s most important conversation.
“That’s what we’re all trying to talk to our executives and boards about at the moment. To explain the different shape of what payments will look like in five to ten years’ time.”
Watch the full Payments Cannot Fail podcast to hear Paul Horlock’s complete insights on tokenised deposits, AI, resilience and why the next decade will fundamentally reshape the future of payments.
