Webinar Report: Instant Payments is a game of inches in the US
As part of InstaPay’s thought leadership in the world of instant payments our latest webinar, ‘Real time payments in the United Stated: A game of inches’, investigated the how the instant payments landscape in the US is progressing. With over 10,000 financial institutions, 21 million business payers, and an $18 trillion economy, the U.S. is the world’s largest and most complex marketplace for payment services. Compared with nations where a relatively small number of banks dominate the entire financial system, any plans for real-time payments in the U.S. must consider the concerns of an exceptionally large and diverse set of stakeholders.
Lael Brainard, Member of US Federal Reserve Board of Governors & Chair of Payments, Clearing and Settlements Committee was quoted as saying, “to meet the expectations of our 24/7 app economy, there is a growing demand for broadly and nationally accessible faster payments to make funds available immediately”. Although the US has lagged somewhat behind other jurisdictions in implementing instant payments, The Clearing House launched RTP in November 2017, to meet these goals. Other instant payments solutions exist in the US such as PayPal’s Venmo and Early Warning’s Zelle.
Without any top-down mandates, encouraging innovation via a market-driven approach relying on voluntary collaboration among payment services and stakeholders can be a real challenge. How are payments players reacting? This webinar explored how payments players are reacting and how the industry is progressing towards the Federal Reserve’s 2020 deadline for ubiquitous instant payments.
The need for instant payments is at the heart of the payments transformation
The payments industry is undergoing significant change to meet the needs of end users. Instant payments offers a brand new payment experience fit for purpose for the modern digital economy. The first speaker to present, Matt Richardson, Head of Product Solutions at Citizens Bank began by outlining the appeal of real time payments. Speaking on this Matt noted that the ‘US financial services ecosystem recognises the importance of moving forward, and there is great excitement’. He added ‘Citizens Bank and Avidia are just two banks adopting instant payments; getting thousands to move is difficult but the US market realises it is important to go beyond ACH and Wire transfers’.
Speaking next was Bob Conery, Chief Operating Officer at Avidia Bank. Avidia Bank was the first smaller bank to join The Clearing House RTP system. Bob outlined the banks experience throughout this process and noted that ‘joining RTP wasn’t much of an option for the bank’. He added ‘there is no loyalty in the digital age of retail banking and the bank needed a newer, better, faster product.’
Differentiation is key
The webinar observed that there is a strong need to differentiate yourselves as a bank in the payments space. Banks must be able to acquire new customers as well as retain an existing customer base and this requires a level of differentiation by providing new features. Bob highlighted the importance of ‘getting your feet wet’. It is important for banks to explore new possibilities with fintechs and by using open, flexible architecture it will enable quicker speed to market.
New features and functionality should focus on corporate as well as retail customers. Conrad Sheehan, Managing Director, Accenture, North America Payments outlined that ‘globally, corporates are starting to leverage instant payments’. Citing an example in Australia, Conrad explained that utilising the instant payments system in Australia a car sales company is able to receive funds from a sale within four seconds. Conrad noted that ‘as instant payments take off we will start to see a lot more examples like this’.
It was clear from audience engagement in the Q&A that there are questions about the investment necessary to be successful in delivering instant payments. But it is clear from the panellists, it is not a question of ‘if’ but rather ‘when’.
You can listen to the webinar here.