The banking industry is shifting from periodic transactions to continuous, high-frequency financial interactions. This evolution driven by artificial intelligence (AI), open banking and embedded finance, is enabling seamless digital experiences. As customers expect real-time services, financial institutions must rethink their approach to speed, integration and user experience.

Steve Monahan, former chief innovation officer at DBS, emphasised that in a world driven by real-time digital interactions, banking remains largely tethered to outdated cycles.

High-frequency banking unlocks instant capital and efficiency

High-frequency banking enables real-time capital exchange, eliminating delays in financial transactions. Powered by AI, quantum computing and blockchain, it allows continuous fund transfers, improving liquidity, reducing costs and enhancing financial efficiency. Unlike traditional systems that settle payments over days or weeks, high-frequency banking ensures money moves instantly.

By accelerating capital flows, businesses can optimise cash management and unlock financial gains. Monahan cited Toyota’s data to illustrate the impact, noting that "even if you just optimise capital between two trading partners, your EBIT (earnings before interest and taxes) will go up 0.9%, and their EBIT would go up 2.7%." 

The same principle applies to governments, where faster financial settlements could ease national debt burdens.

Yet, many financial processes remain tied to outdated time cycles. Salary payments, credit settlements and mortgages still follow a 30-day lunar cycle, a structure dating back to Sumerian goat trading and later codified by Roman law. Monahan highlighted the inefficiency of embedded credit, where employees unknowingly lend money to employers through delayed salaries. Faster payments could eliminate this, ensuring workers receive earnings as soon as they are due.

"Time is risk. If we can compress time, we reduce risk and enhance capital returns," he explained. Credit markets have failed to adapt, allowing unnecessary risk to persist. High-frequency banking removes these inefficiencies, making financial systems faster and more effective. Moving beyond ancient time structures is not just about speed but it is about unlocking capital, improving returns and rethinking how money moves in a real-time economy.

Open banking as the foundation of high-frequency finance

As AI and quantum computing accelerate financial transactions, banks relying on outdated models risk falling behind. Open banking plays a crucial role in staying competitive by enabling secure data sharing through application programming interfaces (APIs), laying the groundwork for high-frequency banking. It allows real-time financial insights, faster liquidity management and smarter decision-making. “It’s no longer just about the transaction; it’s about information,” Monahan explained.

High-frequency banking thrives on speed and efficiency, and open banking eliminates inefficiencies in payments, lending and capital allocation. Those that embrace faster financial flows gain a major advantage. “Any time you change the cycle time of liquidity, you gain a huge competitive advantage,” said Monahan. Real-time capital access reduces financial bottlenecks, enhances cash flow and improves economic efficiency, positioning open banking as a necessity for financial institutions in a real-time economy.

APIs power high-frequency transactions

APIs transform the financial sector by enabling seamless integration between banks and fintech companies. Traditionally, banks operated in closed systems, but open banking regulations have forced them to share data through APIs, fostering innovation. 

Takafumi Ochiai, head of Policy Research Institute, noted that "Japan was among the first to introduce open banking regulations in 2018, with over 130 banks now providing APIs." Despite this progress, Japan still lags behind countries like the United Kingdom, South Korea and Australia due to a lack of standardised APIs. John Owens, founder and senior digital financial services advisor at Digital Financial Advisory Services, explained, "Unlike these countries, Japan’s approach is voluntary, making fintech integration more challenging."

The high cost of API adoption further slows progress. Kaido Chivata, co-founder and CEO of Bill Pay, shared that “For fintechs, initial cost is a big topic and a big theme.” Smaller companies in Japan, with limited developers and high integration costs, struggle to compete with larger financial institutions. Without standardised, affordable solutions, fintech innovation is stifled.

APIs are also driving embedded finance, a trend where financial services are integrated into non-financial platforms like e-commerce and payroll services. "In Japan, embedded finance has a lot of focus, particularly in e-commerce and retail platforms," Owens said. Fintechs like PayPay are offering lower-cost payment solutions, reducing fees for small merchants, which benefits businesses by improving their bottom lines. 

Looking ahead, Chivata suggested a potential shift in the role of traditional banks in an open banking and embedded finance ecosystem. “Rather than creating their own services or front-end, banks can position themselves as back-end infrastructure providers and rely on fintechs for front-end services.” This shift allows banks to focus on providing secure, compliant infrastructure while fintech companies enhance user experiences and develop customised financial products. AI-powered APIs will also enable real-time fraud detection, credit scoring and open finance, integrating banking, insurance and investments into one unified ecosystem.

High-frequency embedded finance transforming customer experiences

Fintechs, retailers and big tech firms are embed financial services directly into customer experiences. Chivata shared how Bill Pay leverages open banking and virtual bank accounts to streamline cross-border fee collection for Japanese payers, reducing transaction complexity and costs for both senders and merchants.  

Rakuten and Line Pay are leading the adoption of embedded finance in Japan, integrating payments, digital wallets and lending into their platforms. By making financial services seamless and “invisible”, they enhance user convenience while expanding access to financial services for more people. These innovations show how open banking and embedded finance are transforming transactions, simplifying payments and aligning with evolving consumer expectations. 

AI, quantum computing and instant liquidity shape high-frequency banking

Financial institutions must use AI-driven automation and standardised APIs to enhance efficiency and accessibility. Regulators should enforce common API frameworks to lower integration costs and foster fintech-bank collaboration. Expanding regulatory sandboxes will drive innovation and accelerate the adoption of embedded finance and open banking.

Security and compliance must be a priority, as open banking evolves into open finance. Strong regulatory oversight, combined with AI-driven fraud detection and encryption, will be critical to managing risks. Lowering barriers for fintechs to access banking infrastructure should be balanced with stringent data protection measures.

Banks must transition from gatekeepers to infrastructure providers, enabling fintechs to enhance payments, lending and wealth management. Standardised APIs will facilitate seamless, high-frequency transactions, improve liquidity management and streamline cross-border payments. AI and quantum computing will strengthen risk assessment and fraud detection, ensuring real-time financial decision-making.

The shift towards open finance will integrate banking, insurance and investment services into a single ecosystem. Financial institutions must embrace automation, interoperability and security to remain competitive. Those that invest in technology, regulatory alignment and fintech partnerships will drive the next phase of digital finance and high-frequency banking.