This yahoo!finance posting discusses a recently conducted phone survey of payment operations specialists in mid-tier US banks and credit unions, in which findings suggest that payment volumes executed through The Clearing House’s RTP system are poised to substantially increase during the coming year. We have been tracking developments around RTP since its launch in late 2017 as the first new U.S. payments rail in 40 years. In our most recent member research covering all faster payments and real-time use cases, we projected about 55% CAGR in general faster payments from 2020-2024, with an even higher rate of growth for RTP. This referenced survey, which was commissioned by Volante Technologies, an enterprise payments technology company based in New Jersey, indicates that many of the smaller and mid-sized institutions are finally freeing up resources to connect to RTP.
‘Volante Technologies, the global leader in cloud payments and financial messaging, today revealed findings from its payments modernization survey aimed at mid-tier banks and credit unions in the U.S. with assets between USD 2.5B and USD 25B. The results show that real-time payments connections are expected to triple within the year, and that cloud Payments as a Service (PaaS) is a growing industry priority….The study, conducted in Q1 of 2021, samples a sizeable portion of the mid-tier market segment. It highlights the dire need for improved productivity to support rising payment volumes and the complexity of maintaining multiple payment platforms. The challenges span all payment types, from domestic wire, real-time, and ACH to cross-border payments.’
The full survey can be downloaded from the referenced article through a provided link. There are a number of findings besides the RTP data that interested readers can review. One perhaps surprising finding is that the upcoming ISO 20022 conversion for Fedwire and CHIPS is only mentioned as a challenge by only 10% of respondents, which seems rather low to us. This could mean that it is not yet top of mind since the conversion dates have been delayed by COVID. It is also interesting that although 15% of respondents are already connected to RTP and 45% expect to do so within the next year, fully 40% of respondents had no plans to connect. This could mean that many are waiting on the FedNow launch in 2023 or that they can’t currently justify a business case for real-time payments. The survey also indicates a high interest in the PaaS delivery model, which again reinforces an increasing bank movement towards cloud-based operations. Worth a look see.
“Financial institutions are seeking to streamline their operations to prepare for the eventual prevalence of real-time 24×7 payments and the increased operational complexity this will bring,” said John Farrell, SVP Global Product Management, Volante Technologies. “There is a strong desire for capabilities related to digital transformation, ranging from increased automation to improved reporting and lower operating costs.”
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group