Real-time payments or (RTP) has become the latest catchphrase in the payment industry. It’s growth in popularity is attributed to its ability to provide speed, safety, as well as convenience.
RTP has a lot to offer. It makes funds available immediately, the settlement is finalized, there is an instant confirmation, and “integrated information flows”. All this is included with the payment processed in a matter of seconds. It is clearly the best solution to an age-old challenge.
According to Mike Ranta, payments practice lead at Alacriti, 2021 will be the banner year for financial institutions to transition into RTP at record levels.
The Case For Real-Time Payments
In this increasingly rapid-changing digital world, customers are demanding to instantly send and receive their money. Currently, the use of a mobile app to carry out these transactions are meeting their needs.
Financial institutions are quickly realizing that they must compete at the customer service level. This goes for non-banking institutions and banks. Constant evolution is necessary to keep up with these customer demands. If they fail on this front, their customers will conduct their business elsewhere.
Banks that refuse or simply flounder at getting involved with real-time payments stand to lose competitive advantage. Faster payments are becoming a primary selling point in order to provide top-level customer service. In terms of long-term strategic planning, it’s critical that these FIs start looking closer at getting involved with RTP.
By offering RTP, it will help to greatly improve the customer experience. It will also greatly reduce “attrition rates”, and even help with the monetization of consumer engagement. By offering a highly valued RTP, customers can look into the FI’s website for more financial products to use, opening them up for cross-selling.
The current pandemic has ushered in more demand for RTP than ever. With dramatically less face-to-face interaction, consumers need RTP in order to face these uncertain times. Millions of people are facing unstable incomes, businesses are seeing their profits diminish, while still having to meet their financial responsibilities.
Banks and FIs that deliver RTP, especially during the current COVID-19 crisis, will position themselves as leaders and innovators, addressing the pain points that many consumers and businesses are facing. They will be seen as solution providers, well beyond the health crisis.
The use of outdated legacy systems that are clunky and complex will simply not do in the current economy. Real-time payment options are what consumers are requiring today.
More US Deposit Accounts Have Access To RTP Network
According to The Clearing House, FIs that hold 70% of “demand deposit accounts” or (DDA) will now have access to RTP through banking technology providers that are currently connected to the RTP network.
This greatly facilitates banks and credit unions to provide RTP services for their customers.
Steve Ledford, Senior Vice President of Product Development and Strategy at The Clearing House had this to say:
“In addition to institutions that are already processing on the network, we have over 150 banks and credit unions of all sizes signed up to join the network during the next few months and the network now has the technical capability to reach thousands of more financial institutions.”
The Future Lies In Real-Time Payments
If the current economic climate is any indication, more FIs are beginning to see the urgent need to provide payments for their customers safely and quickly. As more FIs jump on board, more instant payment needs will be met, mitigating the financial interruptions that millions have already faced during the pandemic.