Riding Real-Time Rails Into 2021

Real-time payments (RTP) are ready for their closeup, and decisions are happening behind the scenes now as banks and financial institutions (FIs) consider their RTP strategy for 2021.

PYMNTS December 2020 Real-Time Payments Report done in collaboration with The Clearing House (TCH), looks at the RTP access question from all sides, none more so than the banks and FIs that must now find ways to utilize RTP rails for their respective client constituencies.

As Elena Whisler, senior vice president of sales and relationship management at The Clearing House, told PYMNTS, “Customers are not going to return to payment processes where uncertainty is prevalent after they have experienced the instant availability that is a characteristic of real-time payments. And just because a customer hasn’t asked for real-time payments doesn’t mean they don’t want it or aren’t already using it. If customers are transferring money from FinTech apps, that means they may be using those apps’ faster payment features.”

That’s called throwing down the gauntlet, as FinTechs flaunt their agility and smartphone popularity versus that of legacy FIs. With partners and solutions at the ready, however, RTP promises to be a rich, inclusive ecosystem benefitting customers and institutions alike.

The Need For Speed

Factors that slowed RTP’s adoption are negligible now as new economic and payments realities are being thrust upon the banking sector. Speed is now the most urgent need, and RTP has it.

TCH Senior Vice president of Products and Strategy Steve Ledford told PYMNTS, “The slow uptake is due to both inertia on the part of companies and the fact that firms are still learning about what the RTP network can mean for them. More companies are considering digital payment methods now that the pandemic has made transacting with paper checks more cumbersome.”

That they are. The December Real-Time Payments Report states that community and regional banks are interested though uncertain of next steps, while “Larger banks and CUs are more likely to have the IT staff and financial resources to more easily manage such a transition.”

The new report added, “FIs appear well-aware of their business customers’ interest in real-time payments,” noting one recent survey wherein “92 percent of bank and credit union (CU) respondents expected that implementing the RTP® network would ‘benefit’ corporate clients.”

Different Pathways To RTP Adoption

FIs can elect to connect to RTP rails in a few different ways, and not all have the necessary resources or internal wherewithal to deploy it themselves. Fortunately, there are options.

“Banks and credit unions with the technical know-how may choose to forge direct connections with payment rail providers to get more control over how they use the service. This kind of direct link provides FIs with improved ability to tailor how they leverage it to suit their particular needs,” per December’s Real-Time Payments Report.

“Building this connection can be costly and requires tech-savvy personnel to handle it, though, which can put it outside the price point of some institutions. Some FIs looking to reduce their workloads and avoid some costs may instead take a middle route, turning to third-party service providers that can offer the connectivity for them or supply some capabilities while the FIs then handle other aspects of the faster payments experience in-house.”