The Clearing House (TCH) launched their real-time payments platform, RTP, a year and a half ago. The largest banks are offering RTP and other faster payment solutions already. Large regional banks are on board or are close to launching as well. Does that mean that the financial institutions that aren’t already on board or a couple of years from launching too late and in danger of losing their corporate customers who may find value in real time? The answer likely will be dependent on the type of businesses that a specific bank serves and the importance that faster payments with more transaction detail could have to their operations. And of course, price. If real-time and faster payments are price competitive, then adoption will be swift.
A recent study conducted by Citizen’s Bank interviewed 150 businesses to ask about how important real-time payments are or will soon become to their operations. A summary of the results were included in an American Banker article. Some excerpts from that article:
More than 41% of the roughly 150 companies surveyed by Citizens Financial Group are in talks with their banks about the real-time payments network, or they are having discussion about doing so. The Providence, R.I., regional bank conducted its survey in March and April.
While nearly 90% of the businesses polled said they were content with the current payments system, Michael Cummins, who heads treasury solutions at Citizens, said banks shouldn’t rely on that finding as a rationale to delay converting to real-time payments. Those that wait too long run a real risk of losing customers, he said.
I’m a firm believer that real-time payments should be adopted by all banks because it is market leading. It’s the first new payment rail in over 40 years. It’s going to help customers be more efficient. … At the end of the day, as a banker that’s our job, to help our clients.
The infrastructure is there. If you look at Citizens, we have the capability to receive and send real-time payments. We’re up and running. The Clearing House’s rails are running. The product has been built. There are a number of banks on the rails.
Depending on how quickly companies and consumers adopt real-time payments, it could have an impact on a smaller community bank that has not bought into the technology, either through some kind of consortium or building the technology. I think it would impact their chances of being competitive. I don’t think conversion is cost prohibitive.
I imagine credit unions are having the same kinds of discussions as community banks.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
