19-07-2025
The cost of disharmony: Why banks must rethink the money lifecycle
Financial systems today are often anything but harmonious. With rising complexity, cyberthreats and regulatory pressures creating costly disruption, it's perhaps no surprise to hear that money is going astray. Conducted in collaboration with Oxford Economics, our latest report, The Harmony Gap, finds that every single hour, the average organisation loses $11,200 to financial disharmony. Annually, this figure reaches $98.5m. Large banks (those with more than $20bn of AUM) report an average of $124m in annual losses because of tensions within their money lifecycle. The question is, why, and how?
The money lifecycle
To answer this, we must first and foremost understand the lifecycle's three key phases. These are: Money at Rest, which covers deposits and treasury accounts; Money in Motion, covering payments and transfers; and Money at Work, which is trading, lending, investing and capital deployment.
While all three phases face challenges, the money in motion stage is where the majority of problems surface. Specifically, our research finds that 51% of financial friction occurs here, due to the complexity of multi-party transactions, cross-border payments, legacy infrastructure and inconsistent data standards.
This friction opens the door to a number of vulnerabilities, with the most significant - and costly - being cybersecurity threats. 35% of executives surveyed ranked this their top concern, with $31.7m in annual losses attributed to cyberattacks alone.
Other major pain points include financial fraud, whereby $21.6m is lost annually, particularly affecting the tech and fintech sectors. A further $17.2m of combined losses were a direct result of operational inefficiencies and human error, posing a concern for internal training and compliance processes.
All this being said, banks have an integral role to play in not just recovering costs but ensuring the safety of money throughout the entire lifecycle, whether that is through infrastructure or fraud protection. Banks owe it to their customers to not only safeguard the money lifecycle but modernise it for the future.
Solving the disharmony dilemma
Banks must take some bold and structural steps to solve the disharmony that exists within modern banking architecture. To create harmony across the money lifecycle - every system, platform and decision needs to be connected, intelligent and secure. This demands strategic investment in four key areas.
First, banks must prioritise cybersecurity defence. Our research shows 37% of companies experience cyberthreats daily, and 74% face critical or high-profile threats on a monthly basis. Unsurprisingly, nearly a quarter (24%) already identify cybersecurity enhancement as their top investment focus. However, while there is concern over this technological hurdle, only 53% of companies offer regular cybersecurity training. If banks want to protect customers from cyberthreats we need to see meaningful cyber resilience built into every layer of the banking architecture.
Secondly, we need to see improved operational efficiency. One in five institutions already list this as a core priority, recognising that streamlined processes can reduce costs, enhance compliance and enable faster responses to customer needs. But we are still waiting to see true action. As we head into the future, the banks that invest in tech for efficiency will build the most effective operations. This is evidenced by respondents from firms with dedicated fintech teams reporting higher sales growth than those without, with 83% of these companies seeing revenue increases after embedding fintech solutions.
The third key ingredient to a harmonious money lifecycle for banks is employee training and upskilling. It is all well and good to be investing in and implementing new technologies, but these will sink if there is no one around to steer the ship. A skilled, resilient workforce is critical for long-term success, ensuring that digital transformation is embedded throughout the organisation, not just in the IT department.
Finally, banks should embrace AI and machine learning - not as a silver bullet, but as powerful tools to enhance decision-making and enable smart automation that complements, rather than replaces, human workers. Despite the hype surrounding AI, 73% of respondents cited high implementation and maintenance costs as major obstacles to adoption. Additionally, 64% pointed to a lack of in-house expertise, while 58% struggled with integrating AI into existing systems. To succeed, banks must invest in the right talent and infrastructure to fully realise AI's potential.
When banks achieve true harmony across these four areas, they reduce risk, improve agility, accelerate innovation and unlock sustainable competitive advantage.
Looking ahead
With $98.5m in annual losses at stake (and more for larger institutions), the price of inaction far outweighs the cost of change. But this isn't just a financial issue. Disharmony drags on innovation, slows down agility, and erodes customer trust.
Banks that move now to close the harmony gap through rethinking how money flows, investing strategically, and focusing on integration and intelligence will be better equipped to lead in a world defined by embedded finance, AI-powered insights, and real-time expectations. The opportunity is clear: Rethink the lifecycle. Invest smartly. Build a more secure, connected, and harmonious financial future.
Kanv Pandit is Head of International Banking and Payments Sales at FIS
"The cost of disharmony: Why banks must rethink the money lifecycle" was originally created and published by Retail Banker International, a GlobalData owned brand.
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