The payments technology arms race is no longer a future risk- it is an active, unforgiving contest that is reshaping the structure of global finance. Writes Nicasio Karani Migwi, Founder, MD and CEO of Afromaximus Consult, an end to end consulting house, and Afromillenium Awards, a global strategic marketing communications company.
Banks around the world are accelerating acquisitions of payment technology firms as competition for control of payments infrastructure intensifies, turning what was once a back-office function into a strategic battlefield. The scramble reflects a broader “payments technology arms race” involving incumbent banks, fintechs, telecom mobile money operators, and global big tech firms, all seeking dominance over transaction flows, customer data, and low-cost liquidity.
At the heart of this race is control of money circulation within the economy. Payments sit at the centre of the financial system, influencing how liquidity moves across households, businesses, and governments. Banks that dominate payments are better positioned to capture transaction float, mobilize deposits at low cost, and intermediate credit more profitably. In practical terms, dominance over deposits- particularly current and savings account balances- creates a sustainable comparative advantage by widening interest margins between funding costs and lending or investment yields.
Acquiring paytechs allows banks to leapfrog technology constraints, gain intellectual property, secure skilled software talent, and rapidly enhance customer-facing capabilities.
Money supply itself spans several layers, from reserve money held at central banks to demand deposits, savings, time deposits, and foreign currency holdings. Institutions that sit closest to high-velocity transaction balances- especially digital payments- gain disproportionate influence over liquidity. This advantage translates into higher profitability through lending to the private sector and investments in government securities, reinforcing why payments have become strategically vital.
Beyond profitability, payments infrastructure increasingly determines systemic importance. Regulators classify certain platforms as Systemically Important Payment Systems (SIPS) when their failure could disrupt financial stability. Central banks and the Bank for International Settlements identify such systems based on factors including transaction value, market share, interconnectedness, and criticality to the financial market infrastructure. In Kenya, Safaricom’s M-Pesa meets many of these criteria, highlighting how non-bank platforms can rival or exceed traditional banks in systemic relevance.
Because of their importance, SIPS are subject to stringent oversight. International standards require strong legal foundations, risk management frameworks, operational resilience, settlement finality, and transparent governance. Similar designations exist globally, including TARGET2 in the Eurozone, SPEI in Mexico, FAST in Singapore, and the UK’s Faster Payments Service, reflecting how payments infrastructure has become a cornerstone of national financial stability.
This push toward systemic relevance overlaps with banks’ pursuit of “too big to fail” status as Systemically Important Banks (SIBs). Large, complex, and interconnected banks face higher regulatory expectations, including additional capital buffers, loss-absorbing capacity, resolution planning, and enhanced supervision. In Kenya, tier-one banks such as KCB, Equity, Co-operative Bank, NCBA, and Absa are considered systemic domestically, while globally the Financial Stability Board currently designates 29 Global Systemically Important Banks, led by institutions in the United States, China, Europe, and Japan.
Control over payments translates into higher transaction volumes, deeper data insights, and stronger ecosystem lock-in.
Yet banks are no longer competing solely with other banks. The rise of Systemically Important Technological Institutions (SITIs), a term coined to describe big tech firms whose failure could destabilize economies, has fundamentally altered the landscape. Technology giants such as Google, Amazon, Apple, Meta, Alibaba, and Tencent operate borderless digital platforms powered by network effects, advanced data analytics, and rapid adoption of fourth industrial revolution technologies. Payments are deeply embedded within these ecosystems through digital wallets, super apps, real-time payments, and embedded finance.
This convergence has intensified pressure on banks whose legacy systems struggle to match the speed, flexibility, and user experience offered by fintechs and big techs. Research commissioned by Marqeta found that most bank CEOs view payments modernization as unavoidable, citing delays caused by outdated infrastructure, integration challenges, limited customization, and rising maintenance costs. Technical debt accumulated over decades has become a structural handicap.
As a result, banks are increasingly buying rather than building. Acquiring paytechs allows banks to leapfrog technology constraints, gain intellectual property, secure skilled software talent, and rapidly enhance customer-facing capabilities. Payments platforms also provide stable transaction float that can be recycled into lending or investment. The experience of Alibaba’s Alipay and its once-dominant Yu’e Bao money market fund demonstrated how payments-led platforms can disrupt traditional deposit pricing- until regulators intervened.
Daily customer relevance is another critical driver. Payments occur more frequently than savings, credit, or insurance transactions, making them the primary touchpoint between financial institutions and customers. Control over payments translates into higher transaction volumes, deeper data insights, and stronger ecosystem lock-in. Digital wallets and super apps thrive because they offer convenience, speed, and control- compressing time and distance in ways traditional banking struggled to match.
This strategic logic explains the growing wave of acquisitions and investments. Deutsche Bank acquired Better Payment to expand its payments capabilities in Germany. Digital-first banks such as the Philippines’ Tonik have bought paytech firms to integrate lending, payroll, and financial management tools. Globally, major banks have launched venture capital arms to invest in fintechs, while telecom operators have followed suit to defend and expand their mobile money ecosystems.
In Kenya, this trend has become particularly visible. KCB Group acquired a majority stake in Riverbank Solutions in early 2025 to deepen its payments, agency banking, SME tools, and government payment platforms. Later in the year, it doubled down by acquiring a minority stake in Pesapal, a regional payments provider enabling mobile money, card, and e-commerce transactions across Eastern and Central Africa. The move strengthens KCB’s SME offering and intensifies competition with mobile money platforms and rival banks’ digital channels.
The stakes are high. Mobile money transactions in Kenya reached KES 5.5 trillion by August 2025, highlighting the scale of opportunity. As banks, fintechs, telecom operators, and big tech firms vie for dominance, the battle to become systemically important- whether as a payment system, a bank, or a technology platform- is growing increasingly aggressive.
What was once a supporting function has become a defining arena for financial power. Control of payments now determines who shapes liquidity, captures data, and remains relevant in an increasingly digital economy.
The payments technology arms race is no longer a future risk- it is an active, unforgiving contest that is reshaping the structure of global finance.
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