Volante Technologies: Faster Payments Priority for US banks

Mid-tier US banks are crying out for faster payment networks, according to the results of an annual survey carried out by Volante Technologies.

Amid high interest and enthusiasm across the industry, almost four in five (78%) American financial institutions say increasing the speed of payments is a “must” for their organisation

Volante, a leader in payments as a service (PaaS) and partner to financial businesses across the globe, spoke to more than 70 mid-ranking banks and credit unions to glean insights into their current payment operations and shed light on their strategic plans for system modernisation over the next 12 months.

These institutions had assets ranging from US$1 billion to US$50bn.

“Interest in real-time payments and the impressive adoption rate of real-time payment usage across the networks underline a transformative shift in the payments ecosystem,” comments Erika Bauman, Director of the Commercial Banking & Payments Practice at Datos Insights.

“Once seen as a ‘nice-to-have’, 24/7 real-time payments experiences are increasingly a core requirement for consumers and businesses.”

Banks move towards FedNow and TCH RTP

With the FedNow Service having been launched in July, most institutions have firm FedNow plans, with a 50% year-on-year uptick in respondents who revealed they plan to connect within the year or sooner. 

Meanwhile, more than a quarter of those planning to connect to The Clearing House Real-Time Payments (TCH RTP) network expect to do so within the following year. 

Volante discovered that connecting to either network – or both – is the top modernisation priority across all asset tiers. 

Replacing legacy wire payment processing systems ranked second on the list of modernisation priorities, likely due to the Federal Reserve’s rapidly-approaching deadline for organisations to adopt the global ISO 20022 messaging standard by March 2025. 

In the ACH realm, respondents were less focused on system replacement, but a third identified rising ACH volumes as their biggest challenge, with reporting and fraud associated problem areas. 

The rise of PaaS

Volante’s research also highlights the growth of cloud and PaaS, with the latter on track to displace bank data centres as the preferred method for payment processing. 

Half of mid-tier institutions were found to already be using or implementing it, a significant increase from just 11% in 2021, but not a surprise given ubiquity and cost remain top challenges.

In fact, 92% see payment system interoperability as a top issue, consistent over the four annual surveys.  

“With a renewed focus on deposit protection and customer retention, financial businesses now realise that providing superior payments services, specifically instant and real-time payments, provides an ideal way to meet their customers’ shifting needs,” adds Deepak Gupta, EVP Product, Engineering and Services at Volante Technologies.  

“Furthermore, the industry is converging on PaaS as the fastest, lowest-risk way to achieve payments modernisation.”

Read the full report – Payments Modernization: US Mid-Tier Banks

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