Payment Modernization Strategies for Mid-Sized Banks: Preparing for 2025 and Beyond
The success of banks in FedNow® and RTP® hinges on their ability to send payments through a cutting-edge, API-driven platform that demonstrates a deep understanding of the ecosystem's dynamics.
Are you one of the banks playing it safe and sitting on the fence when it comes to launching instant payments? Well, sometimes it's wise to take a page out of the book of trailblazers. While plenty of banks are stuck in the past, relying on outdated tech to roll out instant payments, the savvy ones understand that it takes a "real-time" infrastructure to unleash its true power.
Leading the charge in powering industry use cases are banks such as US Bank, Stride Bank, Key Bank, and Cross River Bank, who have seized the opportunity to initiate instant payments. The demand for fast transactions extends far beyond the gig economy, permeating diverse sectors including platforms like Airbnb, B2B invoice platforms etc.
So what makes Cross River Bank unique in this space? The bank has been using APIs to enable a variety of payment options for its fintech partners. Cross River Bank accomplished an exceptional milestone by seamlessly processing over a million real-time payments on the RTP network in the last month alone. Pushing the boundaries of BIN sponsorship in merchant services, Cross River Bank has excelled in providing immediate payment settlement services for payroll companies, fleet management and others. Leveraging the power of APIs through Banking as a Service, they have successfully delivered efficient solutions as a hidden challenger.
While car-selling platforms in the UK, such as Cazoo, leverage the capabilities of open banking through API providers like True Layer, their counterparts in the US still rely on banks to facilitate payment settlements. Driveway.com has partnered with US Bank to provide car sellers with an exceptional level of convenience. Through the power of APIs, sellers now have the option to receive instant payment or opt for regular ACH transfers. US Bank's cutting-edge RTP send capabilities enable sellers to enjoy the immediate gratification of receiving payment for their vehicles. In situations where RTP payments are not feasible for the seller's bank, the flexibility of regular ACH transfers ensures a seamless payment experience. As the demand for reliable backup solutions to instant payments continues to rise, platforms are actively exploring Same Day ACH as a viable alternative. To stay ahead in this rapidly evolving landscape, banks equipped with modern payment hubs and intelligent routing capabilities hold a significant advantage. It is evident that more than 50% of banks embracing RTP and FedNow are doing so on a comprehensive and future-proof payment hub to ensure their long-term success.
The RTP network has revolutionized gig payments, enabling seamless transactions for various companies. Many organizations leverage APIs through banks like Stride Bank and JPMorgan to facilitate gig payments on the RTP network:
- DoorDash, a food delivery company processes instant payments to its drivers
- Instacart is a grocery delivery company that uses the RTP network to process payments to its shoppers
- Lyft is a ride-sharing company processes payments instantly to its drivers
No matter the use case or the business model that the bank is planning to adopt, embracing a fresh mindset to move from "batch-based" to "real-time" is paramount when it comes to monetizing and productizing instant payments on platforms like RTP or FedNow. The success of banks in FedNow and RTP hinges on their ability to send payments through a cutting-edge, API-driven platform that demonstrates a deep understanding of the ecosystem's dynamics.
Reach out to Finzly to discover how banks utilizing our solutions for RTP and FedNow can lead the way in delivering unparalleled customer experiences while effectively monetizing industry use cases.
