PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Why—and How—Banks Should Be Modernizing Wire Transfers

PaymentsJournal by PaymentsJournal
October 5, 2020
in Featured Content, Wire
0
How to Leverage and Monetize Transaction Data—without Compromising Security—Amid COVID-19 and Beyond - PaymentsJournal

Analytics Plan Strategy Insight and technology concept.Business women working digital tablet and computer laptop with big data digital design diagram in coffee shop cafe.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Across all aspects of the payments industry, legacy payments infrastructure and services are continuously reviewed by financial institutions and corporations for modernization projects. The motivation behind doing so is simple: modernizing payments infrastructure makes it possible for products to meet rising customer expectations and for organizations to remain competitive in an increasingly digitized market.

Reliable but aging wire transfer payment capabilities need to be part of the mix. By modernizing traditional approaches to payment processing for wire (Fedwire and CHIPS) and ACH, banks can offer more competitive and efficient processing and a wider variety of corporate payment services.

To further explore wire transfers as a key aspect of payments modernization, Volante Technologies sponsored a Mercator Advisory Group executive brief titled Modernizing Wire Transfers.

Wires remain foundational in the United States…

Today, there are two wire transfer systems in the United States. The first, Fedwire, is operated by the Federal Reserve. The second is the Clearing House Interbank Payments System (CHIPS), operated by The Clearing House (TCH).

Both systems are used for high value, non-commerce funds movements in a slew of domestic transactional use cases, including B2B commercial payments, bank reserve account requirements, Fed Funds, repurchase agreements, trading account obligations, corporate client deposits and liquidity needs, and payroll. 

Wires are also the predominant choice for initiating cross border payments, filling the same use cases as they do for domestic payments. Wires represented 85% of all value transfers in 2019, and have seen year-over-year growth even amid the COVID-19 pandemic, during which there has been a sharp decline in check usage. Clearly, wires remain a critical payment method.

… But there are notable areas for improvement   

Despite their obvious staying power, wire payments simply do not deliver the same convenient experience as latest generation real-time systems like The Clearing House’s RTP, Nacha’s Same Day ACH, and the eventual arrival of FedNow, The Federal Reserve’s forthcoming real-time rail. As a result, it is time for a new approach to Fedwire processing. By reimagining overall delivery methods and leveraging technology partners and cloud services, banks can successfully incorporate wires into their comprehensive modernization plans.

“Banks across all asset classes should be including their mission critical wire transfer systems and operations” in their modernization efforts, noted the executive brief. Legacy infrastructure improvement, migration to ISO 20022, the Fed’s expansion of operational hours, and other competitive modernization efforts are covered in more depth within the report.

Options for effecting change

There are multiple methods available to corporations and banks to accomplish the much-needed modernization of wire services.

First, banks can offer wire services to clients through their own direct connection to Fedwire and CHIPS through an in-house software interface. A more popular option is to buy or license a third-party service provider as a gateway connection. Typically, these third-party service providers offer additional services such as core systems and e-banking platforms which can be accessed through private or hybrid clouds.

In recent years, more banks have become interested in the platform approach, which can range from overall bank experiences at scale to the provisioning of an entire product capability via a cloud Payments-as-a-Service (PaaS) environment.

The following chart, provided by Mercator Advisory Group, outlines the pros and cons of the different approaches to providing wire services:

PaaS is a positive option for modernizing wires in a dynamic enviroment

First American Trust FSB, a provider of banking solutions in the escrow and real estate industries, is one example of an organization that opted to enable wire processing through a cloud PaaS environment. In June, the company announced that it will replace its legacy Fedwire processing solution with Volante’s US Wire Payments as a Service.

“Volante’s payments as a service (PaaS) in the cloud meets our business requirements, supports our growth, and ensures that we will be able to quickly roll out new payment services in the future,” said Robert Lawson, SVP of Strategic Initiatives at First American Trust FSB, at the time of the announcement.

To learn more about why wire transfer capabilities are a key aspect of payments modernization, access the Volante-sponsored executive brief, Modernizing Wire Transfers, by filling out the form below.

    Download the complimentary whitepaper - MODERNIZING WIRE TRANSFERS

    Tags: B2BCommercial PaymentsCovid-19FedNowISO 20022Mercator Advisory GroupPaaSReal Time PaymentsSame-day ACHVolante Technologies Inc.
    0
    SHARES
    0
    VIEWS
    Share on FacebookShare on TwitterShare on LinkedIn

      Analyst Coverage, Payments Data, and News Delivered Daily

      Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

      Must Reads

      faster payments

      Faster Payments Are Set to Revolutionize Modern Digital Payments

      January 26, 2023
      How AI can Help Manage Payments Risk in 2023

      How AI can Help Manage Payments Risk in 2023

      January 25, 2023
      cross-border payments

      How to Implement Effective and Innovative Cross-Border Payment Strategies

      January 24, 2023
      credit card experiences, digital payments, b2b payments

      Will Consumer-to-Business Payment Trends Drive B2B Global Growth in 2023?

      January 23, 2023
      Faster Payments Faster Identity Verification, connected car, payments

      2023 Predictions: Authentication, Digital Identity, and In-Car Payments

      January 20, 2023
      bank data

      Interconnectivity, Data Sharing, and Security Are Vital for Banks to Thrive

      January 19, 2023
      B2B Payments, cryptocurrency

      Crypto as a Practical Solution to B2B Payments

      January 18, 2023
      AR, accounts receivable

      Digitizing AR Would Address One of Executives’ Biggest Concerns About Economic Instability

      January 17, 2023

      • Advertise With Us
      • About Us
      • Terms of Use
      • Privacy Policy
      • Subscribe
      ADVERTISEMENT
      • Analysts Coverage
      • Truth In Data
      • Podcasts
      • Videos
      • Industry Opinions
      • News
      • Resources

      © 2022 PaymentsJournal.com

      • Analysts Coverage
      • Truth In Data
      • Podcasts
      • Industry Opinions
      • Faster Payments
      • News
      • Jobs
      • Events
      No Result
      View All Result