This article identifies a wide range of concerns that demand banks create a new data layer that operates in real-time. The problem is that the article argues banks are quickly running out of time. In reality, most of the use cases the article identifies can be addressed independently by the impacted business units. Faster Payments will need faster fraud detection, but that is likely to be built directly on the payments platform with hooks into the account holder authentication process, combined with a fraud tool that looks at data from multiple banks using aggregation.
“Bank product leaders are demanding instant, responsive, and personalized services, and bank technology leaders need to quickly execute a “real-time data” strategy.
Why? Because everywhere you look, time is being wrung out of financial processes.
For example, equity and other investment trades used to be processed and settled in three days (T+3 processing, in security trading parlance), but in September 2017 settlement was condensed to two days (T+2). The industry is currently working on T+1 settlement.
Credit card transactions seem fast at the terminal, but they’re actually much slower than they appear. Card transactions are only “authorized” in seconds; the actual payment settlement happens a day or two (or sometimes four!) later. Now, instant payments like Single Euro Payments Area (SEPA) in Europe; the RTP Network from The Clearing House in the United States and the Federal Reserve’s FedNow service, are fully settled with funds available in seconds.
If fully irrevocable payments are settled in seconds, it follows that fraud detection and anti-money laundering checks will need to happen in sub-second time.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
