TCH Sees ‘Mindset Shift’ Driving Integrated Instant Payments Gains

As much as COVID-19 gave digital tech and payments a boost, many industry experts think the next three years may hold similarly grand advancements, particularly when it comes to faster payments.

For Peter Davey, senior vice president and head of product innovation at The Clearing House, the road to 2025 will be a greenfield opportunity for instant payments gains on a global basis, with a focus on integration first, followed by innovation later.

“The infancy of APIs — which we’ve been in for the last couple of years — will lead toward more embedded services, embedded commerce and embedded banking,” Davey said, pointing to the growing adoption of the RTP network, TCH’s real-time payments system, and the mid-2023 launch and gradual uptake of FedNow.

Simplification will be critical, he said, “and the smart money is already making those investments right now.”

Silos Gotta Go

Davey said there will be a natural progression as institutions and businesses start to collaborate more fully to integrate and automate their systems. Breaking down some of these silos will require some standardization of technology for data sharing. Standardization will lead to further automation of business processes, he said.

“At around year four or five,” he said, “you are going to start to see these investments really pay off.”

To get there, he said, FIs and third parties will focus on working together to create the ecosystems that can unleash the power inherent in real-time payments. That power comes as a result of the communications that flow across all manner of business and consumer payments.

With APIs, in tandem with the cloud, he said, a significant amount of the technological heavy lifting is made easier, as there’s the ability to create layers of integration to make sure payments flow freely and securely.

“The mindset shift is harder,” he told PYMNTS, referencing how companies and providers will have to take down some of the “walled gardens” that have been erected over the past several decades by older legacy technology.

Davey said these enterprises will better serve customers upon realizing that users embrace different product sets and services for various circumstances and ecosystems.

The shift will take some time, he said, as wires, cards, ACH payments, and even checks, are firmly entrenched, and businesses have gotten used to making payments across these conduits. More FIs and FinTechs, he added, are seeking providers to help integrate into real-time-payment rails and manage payments exceptions as they occur. RTP, he said, can help ensure that businesses can leverage the benefits of faster payments without any associated back-office hiccups.

Three years of investment and collaboration, he told PYMNTS, “will plant the seeds that lead to consumer and business delight.”