Gain additional insight into bankers’ thoughts on real-time payments and where they ranked on their list of priorities by scanning the QR code to read CSI’s 2023 Banking Priorities Executive Report. https://csi.foleon.com/bp-2023-doc/bp23/ By processing payments in real time, banks can minimize the need to hold onto funds for extended periods, resulting in lower operating costs and improved liquidity. In addition, to mitigate the risk of fraud and errors that are often tied to traditional payment processing methods, the FedNow Service integrates robust security measures. Real-time payment monitoring and validation systems allow for instant detection of suspicious activities, facilitating immediate action to prevent and rectify instances of fraud. PREPARING TO PARTICIPATE IN THE FEDNOW SERVICE As the FedNow Service continues to gain traction and expand its reach, financial institutions should embrace this transformational technology to stay ahead in the market. The era of instant payments has arrived, bringing numerous opportunities for institutions to enhance their services, drive innovation and deliver exceptional value to their customers. Here are a few ways banks can prepare to participate in the national instant payment network from the Federal Reserve: • Upgrade Technological Infrastructure To leverage the benefits of the FedNow Service, banks must ensure they have the necessary technological infrastructure in place. This includes upgrading existing payment systems to handle real-time processing and integrating with the FedNow network. To that end, banks should assess their current infrastructure, identify any gaps and work toward enhancing their capabilities. • Provide Customer Education Introducing FedNow Instant Payments to customers will require proactive education and communication efforts. Banks should familiarize customers with the new system’s benefits and functionality. Education and communication will build trust and encourage adoption, so it should be provided through various channels, including websites and digital banking platforms. • Explore Collaboration and Partnership Opportunities The successful implementation of the FedNow Service will require collaboration among banks, payment processors and technology providers. Banks should partner with financial technology providers specializing in real-time payments, leveraging their expertise and infrastructure. Collaborative efforts will accelerate the integration process and provide customers with seamless experiences. HOW FINANCIAL TECHNOLOGY PARTNERS CAN HELP PREPARE BANKS FOR THE FEDNOW SERVICE In the fast-paced world of financial technology, banks often rely on partnerships to enhance their capabilities and stay ahead of industry developments. Regarding the FedNow Service, banks can significantly benefit from the support and expertise of their core banking technology partners. Banks should work with their core banking partner to ensure seamless integration of their existing systems with the FedNow network. This involves developing and implementing necessary APIs to facilitate real-time payment processing. By collaborating on technical integration, financial technology partners can help institutions minimize disruptions and streamline the adoption of the FedNow instant payments. Technology partners should also collaborate with banks to enhance the user experience for their customers using FedNow Instant Payments, including developing intuitive and user-friendly interfaces and payment platforms that enable customers to send and receive real-time payments seamlessly. Technology partners should stay at the forefront of technological advancements and market trends to offer innovative solutions that help banks leverage the full potential of the FedNow Service. THE NEW ERA OF INSTANT PAYMENTS The FedNow Service’s real-time capabilities empower banks to provide their customers with faster, more efficient services while driving economic growth and innovation. By preparing their technological infrastructure, focusing on security and compliance, educating customers and fostering collaborations, banks can ensure a smooth transition to the new era of instant payments, meet the growing consumer demand and encourage competition and innovation in the payment industry. Greg Aumann is a Sr. Product Manager for ACH, Wire and FedNow. He is responsible for ensuring the applications remain competitive and compliant in today’s rapidly evolving payments landscape. Greg also holds accreditations as an AAP — Accredited ACH Professional and CTP — Certified Treasury Professional. In addition, Greg is an active participant in payment industry work groups working to help advise the industry on the future of payments. Greg is also a member of EPCOR’s Education Committee, working to help provide guidance, direction and support for EPCOR’s Payments Education offerings. INDEPENDENT REPORT | 19
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