The Federal Reserve is looking to fintechs to drive the adoption of FedNow across financial institutions.
With FedNow aiming to reach ubiquity in the United States, “we don’t really want that to take 20 years to do,” Mark Gould, chief payments executive for Federal Reserve Financial Services, said last month at Sibos 2023 in Toronto.
So, the Fed is turning to its 20 certified service providers, like ACI Worldwide, CSI, Finastra and FIS, to push banks to join the network, Gould said.
“We’re really thinking about who in the ecosystem might be able to help accelerate the connectivity, help to accelerate the adoption of instant payments,” he said, noting that “fintechs, I believe will play a pretty significant role there.”
Since FedNow rolled out in July, adoption has taken off. In fact, the real-time payment network launched with 35 financial institutions on the network, and as of Sept. 18, 72 financial institutions are now live with FedNow, according to the Fed website
Those live with FedNow include $1.4 billion, Clara City, Minn.-based, Citizens Alliance Bank; $720 million, Clewiston, Fla.-based First Bank; $670 billion, Cincinnati-based U.S. Bank; and $1.9 trillion, San Francisco-based Wells Fargo.
Interoperability
Beyond FedNow adoption, technology providers are working toward improved payment experiences with global ubiquity and interoperability in mind, Mike Kresse, head of business to business and money movement at FIS, told Bank Automation News recently at Sibos.
“I’m hearing from a lot of financial institutions I speak to ‘How do we get to interoperability? How do we get to global ubiquity? How do we make things more seamless, more efficient and [faster]?’”
Not only do FIs want these concerns addressed, but clients today expect instant gratification, and payments is no different, he said.
“We provide the infrastructure for financial institutions to be able to offer those technologies and offer those capabilities [like FedNow] out to their clients,” he said.
By pushing out these services to clients, fintechs are pushing the adoption of these networks, Gould said. “I see great potential in fintechs being a great enabler of connectivity,” he said.
