D+H: US can catch up on immediate payments
American banks have lagged behind - with the US banking system’s intricacies seen as an impediment - but a white paper argues that now is the time to launch real time payments.
American banks have lagged behind - with the US banking system’s intricacies seen as an impediment - but a white paper argues that now is the time to launch real time payments.
The US is lagging behind many countries in its introduction of immediate payments and many feel that the intricacies in the country’s banking system will not allow significant progress, says D+H.
The business technology group has published a white paper, entitled ‘Real-Time Payments and Settlement Comes to the United States’, on how banks can make immediate payments work in the US.
“With more than 30 immediate payments systems already implemented globally, it’s time for the US to fully embrace real time payments (RTP) technology too. Consumers already demand it as they are migrating towards always-on, mobile, 24/7 digital services in all facets of their lives.”
The white paper’s authors include Gene Neyer, head of product management, global transaction banking solutions at D+H and a member of the US Fed’s Faster Payments Task Force. He believes that beyond faster transactions, there are many benefits to embracing RTPs for both customers and businesses.
The white paper makes several recommendations for banks as they prepare for RTPs to be launched in the US:
• Avoid thinking of RTP as a technology change. Instead, banks should look from their customers’ point of view, and think through what currently unmet needs RTP could satisfy, both in terms of financial value and service experience.
• In approaching the move to RTP, it’s also important to appreciate that not everything must go real-time immediately – and that the focus should remain on supporting customers in what they want to do. Starting off by just receiving rather than transmitting RTP messages will benefit bank customers. The bank can then decide in its own time whether to send messages as well.
• Banks need to form their own view on some of the myths that have sprung up around RTP. For example, one is that it will cannibalise wire transfer volumes, causing them to collapse. While there may be some marginal impact on wire traffic, experience elsewhere in markets such as the UK suggests this will probably be minimal, because wire transfers fulfil a largely different purpose from RTP.
• Every financial institution must think hard to identify the use cases that RTP can fulfil for its customers – and then devise products and services to meet those needs.