Banks Abandon Lift and Shift for Cloud-Native Payments

The cloud hasn’t just modernized payments. It’s made them programmable.

The institutions embracing that shift are accelerating faster than anyone imagined even five years ago. Against this backdrop, the banking sector’s early experiments with lift-and-shift cloud migrations are giving way to fully re-architected systems built for real-time performance, continuous testing and extensibility.

To learn more about how building a cloud-based payments stack is no longer simply an operational necessity but a strategic engine, PYMNTS sat down with Mark Smith, head of Payments for Financial Services at AWS, and Mark Fieldhouse, chief revenue officer at Form3.

“The conversation has changed … from cost and even resiliency to more about innovation and how do we get time to market faster, time to value, and really just driving innovation,” Smith said.

A decade ago, banks approached the cloud with understandable caution. Most were content to move what they already had, unchanged, into someone else’s data center. That era is now over.

As Form3’s Fieldhouse put it, the shift toward true cloud-native rebuilding marks an inflection point for top-tier financial institutions.

“The opportunity to actually modernize … comes with greater resiliency, better agility to market,” he said.

What’s emerging is a new generation of modular, intelligent and infinitely scalable payment platforms. They don’t just operate in the cloud; they behave like the cloud. They are designed to change quickly, fail safely and replicate reliably across markets.

Innovation Engines

For global banks and regulated FinTechs, payments modernization is less about cost savings and more about competitive differentiation. The faster a bank can deliver new payment features, the more effectively it can capture customers in a fluid marketplace where switching costs are eroding and digital expectations continue to rise.

“We have to be up all the time … people cannot have payments fail,” Fieldhouse said. “They need the confidence to know that the second you click ‘send,’ that payment will reach its destination.”

Traditional payment systems were engineered for predictability, not agility. They ran monolithic codebases that resisted change, and their release cycles often resembled compliance reviews more than product launches.

Against this backdrop, the move from monoliths and patchwork integrations is enabling a wave of new capabilities, from real-time fraud detection to sophisticated payment routing to embedded financial experiences.

These are not theoretical wins. Smith pointed to multiple global systemically important banks (G-SIBs) that have already built modern transaction platforms using event-driven architecture on AWS. Others are deploying microservices for customer verification, open finance or real-time payment orchestration.

Cloud-native design does not just modernize workloads. It unlocks strategic velocity.

Data as a New Frontier

Modern payments development resembles aerospace or automotive engineering, as it’s heavily simulated, modeled and instrumented before anything ever goes live. Banks are assembling cloud-based testing factories that make software safer and faster to build.

Testing was long one of the slowest, most cumbersome stages of launching new payment products. Now, it has been transformed by the cloud, in large part due to the capabilities of synthetic data.

“We created this simulation framework that allows them to send effectively real payments that don’t actually hit the real rail or schemes … as quick as they engineer a product or a new feature, they can test and release,” Fieldhouse said.

For engineering teams under competitive pressure, uncoupling development from external dependencies can be transformative. It means fewer bottlenecks, shorter feedback cycles, and the ability to continuously test everything from formatting to resiliency to edge-case behavior.

“A big part of getting to value fast is speeding up the test environment … teams spin up isolated test environments in minutes instead of days,” Smith said. “Synthetic data mimics real payment patterns without exposing sensitive customer information … eliminating lengthy security reviews.”

If modernization and testing create the foundation, data orchestration is the layer that transforms payments from transactions into intelligence. In practical terms, a payment may enter the system in one format and exit in another, from real-time to cryptocurrency, for example. Optionality, then, becomes a competitive advantage.

Large institutions are converging on similar architectural patterns, like decoupled orchestration layers, event-driven data flows and modular microservices, Smith said.

“Customers use Amazon MSK … as centralized event stores to capture payment events and allow multiple microservices to enrich data in parallel … without blocking the core payment flows,” he said.

Fieldhouse described Form3’s own approach as an enrichment engine that operates “at the ingress and egress” of every payment. It’s a flexible workflow environment capable of inserting sanctions checks, identity logic or external datasets in real time without compromising latency.

“We may want to start to look at sanctions listing, auditability … or add in a layer of identification,” he said. “… It’s about the ingress and egress of additional data to a payment workflow.”

Form3’s single-API platform is designed to give institutions multi-scheme access without the burden of integrating each rail separately, he said.

Composable, Data-Rich, Globally Scalable

Data-rich payments unlock new business models. Cloud-native platforms enrich transactions at the moment of authorization, not after the fact. This means attaching customer insights, risk signals, tokenization metadata or compliance attributes directly to the payment event. It transforms a once-static instruction (“move $100 from A to B”) into an intelligent object that can trigger real-time personalization, dynamic limits, proactive fraud detection or automated reconciliation.

Cloud-native platforms make this possible, but only if they’re architected with discipline.

Smith outlined three pillars: fault isolation across regions; continuous resilience testing (including chaos engineering); and automated security controls embedded in every deployment.

“We advise tier one banks on architecting for fault isolation … proving resilience through continuous chaos engineering … and automating security at scale through infrastructure as code,” he said.

One of the top five banks in the United States reduced recovery times “from hours to just minutes” through automated failover built jointly with AWS. That shift, from disaster recovery as an annual exercise to a continuous discipline, is a structural change in how critical financial infrastructure operates.

Global scalability becomes a native property. Modern payment stacks are built to be fault-tolerant across regions. If a European region becomes overloaded, traffic can shift to another zone with minimal latency impact. Banks can replicate entire payment systems into new markets using templatized infrastructure and configuration-as-code, cutting expansion timelines from years to months.

The U.S. market is undergoing its own modernization push, driven by The Clearing House’s RTP® network, the Federal Reserve’s FedNow® Service, and growing demand for crypto and cross-border capabilities.

Real-time account-to-account payments are poised for global expansion, driven by consumer expectations for immediacy. But faster rails mean compressed fraud windows.

Rather than build its own fraud engine, Form3 chose to become an orchestrator, integrating whichever fraud tools a bank relies on, including multiple engines running in parallel.

“We become the integrator … almost a plug-and-play engine for that data to make those fraud decisions,” Fieldhouse said.

Between AWS’ architectural rigor and Form3’s specialization in cloud-native payment flows, the blueprint for the next decade is coming into focus. It includes modular services, integrated intelligence, continuous resilience and global reach without global overhead.

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