Tear Sheet
The financial services industry is evolving, with instant payment solutions like FedNow and RTP gaining early traction. For financial institutions, this shift presents both challenges and opportunities as they rethink their approach to payment processing.
To gain insight into this changing landscape, we spoke with Booshan Rengachari, Founder and CEO at Finzly. Rengachari shares his perspective on the hurdles banks face in implementing real-time transactions, the potential for new customer-centric services, and the strategic considerations for financial institutions as they navigate the world of instant payments.
What do you see as the biggest challenges facing financial institutions as they adopt and implement instant payment solutions like FedNow and RTP?
One of the major hurdles for financial institutions is their tendency to view instant payments as just another core-extensible function. However, the reality is that most core systems are not equipped for real-time processing. As a result, institutions often end up with fragmented capabilities that do not truly support 24/7/365 real-time transactions, making the speed of settlement and meeting the requirements put forth by RTP and FedNow a real challenge. This also prevents them from fully leveraging the advantages seen in instant payment systems in other countries. Additionally, the lack of an overarching strategy to simply participate in instant payments means institutions typically accept whatever their core providers offer and must align with their vendors’ readiness cycles, further complicating the situation.
How can banks effectively balance the need for speed in instant payments with robust security and fraud prevention measures? In your view, what are the key factors that will drive consumer and business adoption of instant payment services?
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