In the build-up to the Federal Reserve‘s FedNow launch in July 2023, Finastra, a global provider of financial software applications and marketplaces, has completed testing and certification for the service. With years in the making, FedNow will provide an instant payment service with the aim of providing a safe and efficient instant payment service for financial institutions across the US.
FedNow will be integrated into Finastra’s Payments To Go with plans for it to be later included to its Global PAYplus too. This provides financial institutions across the US with instant payment capabilities on the cloud. Combining Payments To Go with Finastra’s Total Messaging Gateway, banks will be able to deliver instant payment services around the clock. The speed at which all financial institutions can provide instant payments is made simpler through Finastra’s certified connection to the FedNow Service.
Using an open API, business customers’ ease of access was kept in mind during the FedNow Service’s creation. As such, users can use an intuitive portal, enabling them to seamlessly initiate payments and submit payment requests.
Integrating Payments To Go
Among the first financial institutions using Finastra’s Payments To Go for FedNow services is Texas-based Amarillo National Bank. Ross Kerns, senior vice resident and CFO at Amarillo National Bank said: “We are excited that we’ll soon be able to offer the benefits of FedNow to our customers. We selected Finastra’s Payments To Go solution because we found it to be the right tool to help us enhance our customer experience and advance our innovation strategy. We’re thankful that our partners at Finastra are enabling us to meet and exceed our business objectives.”
“It has always been important to Finastra that we empower financial institutions to stay ahead of market developments as consumers and businesses now expect instant payments to the norm. The FedNow Service enables new avenues for elevated customer experiences and unlocks revenue-generating opportunities that are critical to the success of institutions across the country,” said Barry Rodrigues, EVP of Finastra’s Payments Business Unit.
“With our many years of experience innovating in the instant payments space across the globe, we are pleased to be a FedNow certified provider and look forward to equipping our customers with this new tool so they can be successful for years to come.”
First to use the FedNow Service
Finastra’s participation in the FedNow pilot program, which supports the development, testing and adoption of the service, allows its customers to be among the first financial institutions to go live quickly and efficiently as soon as the service launches this summer.
Joseph T. Baptista Jr., president and CEO of Mechanics Cooperative Bank said: “Finastra’s inclusion in the FedNow pilot, and now its early certification, is helping us stay a step ahead of the competition, giving us an edge as we await the official launch of the new payment rail.
“Adopting an agile and cloud-based payments hub was important to our team, so we turned to our long-time partners at Finastra to help us achieve our goals in the payments space. We look forward to working closely with Finastra over the coming months as we ensure our readiness to adopt the service.”
Instant payment services are the way of the future. However, according to research from Aite-Novarica Group, supported by Finastra, 76 per cent of businesses believe legacy payments systems are an obstacle to instant payment adoption.
However, according to the research 91 per cent of banks are contemplating a transition of payments processing to the cloud. They are doing so because cloud implementations and Payments-as-a-Service (PaaS) solutions create greater accessibility to payments solutions.
“Payments as a Service solutions and payments hubs, being much more accessible than ever before, are key to the success of community banks, credit unions, and other financial institutions as they work to remain competitive against the larger banks and fintechs,” said Erika Baumann, director, commercial banking and payments at Aite-Novarica Group.
“It is important that financial institutions modernize their payments systems to meet customer demand for access to faster payments, accelerate their time to market, and to help reduce their risks and overall operational costs.”