Financial firms in the US are highly interested in faster payment networks, with 78 per cent saying it is a ‘must-have’ for their organisation; according to Volante Technologies, the payments-as-a-service (PaaS) firm.
With the FedNow Service launch in July 2023, most institutions have established firm FedNow plans, with a 50 per cent year-over-year uptick in respondents who said they plan to connect within the year or sooner. More than a quarter of those planning to connect to the Clearing House RTP (TCH RTP) Network expect to do so within the following year.
Erika Bauman, director of commercial banking and payments practice at Datos Insights, discussed the growing importance of real-time payments: “The interest in real-time payments and the impressive adoption rate of real-time payment usage across the networks underline a transformative shift in the payments ecosystem.
“Once seen as a nice-to-have, 24/7 real-time payment experiences are increasingly a core requirement for consumers and businesses.”
Volante customers appear to share this sentiment, with several banks already using the Volante PaaS platform for TCH RTP or FedNow Instant Payments Service or are about to certify on these networks.
PaaS and cloud growth
PaaS is also on track to displace bank data centres as the preferred method for payment processing. Half of all mid-tier institutions are either already using or implementing it, a significant increase from only 11 per cent in 2021 – driven by the fact that ubiquity and cost remain top challenges. In fact, 92 per cent see payment system interoperability as a top issue, consistent over the four annual surveys.
Deepak Gupta, EVP of product, engineering, and services at Volante Technologies, also added: “With a renewed focus on deposit protection and customer retention, financial businesses now realise that providing superior payments services, specifically instant and real-time payments, provides an ideal way to meet their customers’ shifting needs.
“Furthermore, the industry is converging on PaaS as the fastest, lowest-risk way to achieve payment modernisation. As a result, it is an efficient and effective way for our customers to extract meaningful value from technology.”
The annual mid-tier bank payments modernisation survey report is based on data collected throughout 2023. It offers invaluable insights into the evolving payments landscape among US mid-tier banks and credit unions with assets between $1billion to $50billion. The data encompasses responses from diverse payment professionals, from business and technology executives to front-line systems operators.