Dear readers, 

The payments revolution is real. AI agents will soon shop on our behalf. Stablecoins are processing trillions each year. Real-time networks are connecting across the Asia Pacific. Yet, none of these matters if banks cannot strengthen their foundations fast enough to support them.

Banking faces a paradox. According to McKinsey’s Global Banking Annual Review 2025, the sector has grown over the past five years, but capital markets remain sceptical, valuing banks far below other industries. Returns barely exceed the cost of capital, and much of the past growth was driven by favourable conditions — rising rates, expanding wealth and low risk costs — that are now fading. 

Noteworthy is that the Singapore banks have outperformed global banks. The price-to-book ratios for DBS, OCBC and UOB are at 2.2 times, 1.27 times and 1.2 times, respectively. The weighted average cost of capital for DBS, OCBC and UOB are 7.1%, 7.5% and 6.4% respectively, compared to their respective ROEs of 17%, 12.8% and 11.7%. Despite their outperformance, they are not immune to disruption. 

The question for banking leaders at this week’s Singapore FinTech Festival (SFF) is not whether AI agents, stablecoins or instant payments will transform finance. They already are. The real question is whether traditional banks can refine their operations fast enough to stay relevant when money moves at machine speed.

When speed becomes strategy

See also: What happened to blockchain?

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Banking has always positioned itself where capital needs to flow. Now, those flows are changing. When AI agents execute thousands of transactions daily (such as negotiating prices, optimising spending and managing investments), they need infrastructure that runs at computational velocity.

Traditional systems were designed for deliberate, human actions such as checking balances, confirming amounts and tolerating days of settlement. By contrast, AI agents have no patience for friction. They demand millisecond response times, near-perfect accuracy and programmable interfaces capable of handling complex logic across currencies and jurisdictions.

This is not about adding new services. It is about refining every existing process to support machine clients. Settlement cycles must shrink from days to seconds. Authentication must adapt to delegated AI credentials. Fraud detection must separate legitimate automation from threats. Application programming interfaces (APIs) or software bridges that connect systems must handle thousands of calls per second without failure.

Across the Asia Pacific, that evolution is already underway. From Singapore’s XSGD powering GrabPay settlements to Japan’s recent JPYC enabling digital yen transactions, stablecoins are proving that digital and traditional finance can coexist and reinforce each other. They are not threats to legacy systems but catalysts for transformation. Banks must modernise treasury functions, liquidity management and compliance frameworks to enable seamless operation across both regulated and decentralised environments.

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Most banks were not built for this. Their general ledgers are updated in overnight batch processes. Their treasury desks optimise for next-day settlement. Their compliance teams flag blockchain activity as anomalies requiring manual review.

The good news is that forward-looking banks are already treating this as an opportunity. They are redesigning systems for modularity, real-time processing and interoperability. Rather than treating digital transformation as a finite project, they have embraced it as a continuous evolution. This puts them in a better position to lead in a market where AI agents, stablecoins and instant payment networks will define growth.

The catalyst for excellence

Experts warn that within a decade or perhaps sooner, quantum computers will break current encryption standards. Every bank must migrate to quantum-safe systems, which calls for a multi-year journey requiring identification of vulnerable systems, testing of quantum-resistant algorithms, data migration, protocol updates and ecosystem coordination. Unlike past compliance-driven changes, this cannot be solved with patches. It demands systematic refinement of every authentication system, encrypted database, secure communication channel and partner integration built over decades.

Yet, this complexity creates an opportunity for banks willing to invest properly. Banks that execute quantum-safe migration thoroughly will emerge with cleaner architectures, eliminated technical debt and more modular infrastructure that adapts more easily to future requirements. In a world where AI agents will manage decades of financial data from transaction histories to behavioural patterns, quantum-safe systems are essential to preserving trust, the currency on which banking has always depended.

The same logic applies to stablecoin adoption. Banks that see digital currencies as opportunities to refine rather than replace existing systems are building capabilities that improve efficiency across all forms of value exchange.

Capital markets increasingly reward this kind of operational precision. A bank that can settle in seconds will outcompete one that settles in days. A bank whose APIs scale effortlessly can serve millions of automated clients simultaneously. In today’s digital economy, operational excellence drives valuation and long-term competitiveness.

Small operational improvements may seem trivial, but compounded over time, they transform profitability. Lower error rates reduce losses. Faster settlements create new business models. Lower costs per transaction expand addressable markets. The new measures of success, such as latency, throughput and integration time, are not just technical benchmarks. They reflect efficiency, reliability and growth. 

These metrics matter even more for the generation entering prime earning years. Digital natives expect financial services to blend seamlessly into daily life, from commerce platforms to social and gaming ecosystems. They will be the first to delegate financial decisions to AI agents as naturally as they now rely on navigation apps. 

Banks will be expected to be AI agent-friendly, offering programmable interfaces, real-time settlement and transparent pricing that agents can optimise algorithmically. Those with outdated systems, opaque fees or limited automation capabilities will quickly be bypassed by intelligent systems seeking better performance and infrastructure.

The path forward

Although SFF will spotlight emerging technologies, banks that chase spectacle while neglecting fundamentals risk being overtaken by those that operate better and faster. As AI agents begin to evaluate banking infrastructure with the same rigour they apply to merchant prices, operational mediocrity can no longer hide behind brand recognition or regulatory protection.

The real revolution will not be televised. It is unfolding in milliseconds, in basis points, and in the countless micro-improvements that customers never see but always feel. Banking’s future will take shape through the steady, behind-the-scenes work of refining systems to perform faster, smarter and more efficiently.

As McKinsey notes, precision, not heft, defines competitive advantage. The monuments that impress today will become tomorrow’s footnotes, while the refined operations that seem invisible now will form the foundations of the financial system ahead. 

Nurdianah Md Nur
Section editor for DigitalEdge at The Edge Singapore