Banks Offering Instant Payments Say Bills Are Top Consumer Use

For banks still on the fence about real-time payments, here’s a reality check: Not offering instant payments doesn’t just mean losing potential new customers — it could mean losing existing ones.

Think of instant payments as the financial industry’s version of same-day delivery. Consumers and businesses want their money to move as quickly as their Uber Eats or Amazon orders. Increasingly, they’re willing to switch financial providers to get it.

The PYMNTS Intelligence report “Real-Time Readiness: Bridging Gaps in FIs’ Instant Payments Adoption,” a collaboration with The Clearing House, found that 93% of financial institutions (FIs) that offer instant payments see at least some positive impact on customer retention. However, while big banks are going all-in, with 92% of large FIs connected to an instant payments network, small FIs are dragging their feet — and they may be underestimating just how much their hesitation could cost them.

Customers want speed and convenience, so banks that fail to offer real-time transactions risk losing out to competitors that do.

The Instant Payments Hook Banks Need to Keep Customers Engaged

According to the report, 52% of FIs offering instant payments said bill payments are the top use case driving innovation in the space. Another 60% cited customers’ ability to receive P2P transfers as a reason for adopting real-time capabilities.

Translation? People want to move their money in real time, whether they’re paying rent, splitting a dinner check or covering a last-minute bill. And if a bank doesn’t provide that option, customers will find one that does.

It’s not just about individuals, either. Businesses are also looking for speed, and they get it more than consumers. The report revealed that 80% of FIs enable enterprises to send instant payments, compared to 58% that offer the same functionality to individual consumers. FIs that prioritize enterprise customers risk alienating regular banking customers, who may start looking elsewhere for faster payment options.

If there’s one thing big banks understand, it’s that speed equals loyalty. The report found that 57% of large FIs are already connected to instant payment networks the FedNow® Service and the RTP® network. But for small institutions, it’s a different story.

Read also: Small Banks Report Business Model Uncertainty as Barrier to Real-Time Payments Adoption

Some banks hesitate due to integration complexity and cost concerns, but case studies of successful real-time payments implementation can demystify the process.

The report revealed that 3 in 10 banks that don’t yet offer instant payments said it’s because they simply don’t have a plan in place. Meanwhile, security concerns and integration costs were also cited as major roadblocks.

According to the report, 81% of FIs that provide instant payments allow enterprises to receive them, while only 59% allow the same for consumers. This means everyday customers are still being left behind in the instant payments revolution, even though they’re the ones most likely to switch banks over it.

The problem? Customers aren’t willing to wait for banks to figure it out. The financial world moves fast, and institutions that lag in real-time payments adoption risk losing ground to digital-first competitors.

And here’s the kicker: Large banks are more likely than their small counterparts to believe that real-time payments can benefit community banks and credit unions. While 23% of large FIs said they see local banks as potential winners in the instant payments race, only 16% of small institutions agreed. That suggests many small FIs may not even realize the competitive advantage they’re missing out on.

With 9 in 10 banks planning to upgrade their instant payment offerings within the next three years, the industry is moving full speed ahead. Small FIs that delay innovation could find themselves playing catch-up in a game where speed is everything.