Case Study: BankNewport’s RTP Network Implementation Experience

When John Sullivan, Executive Vice President and Chief Information Officer for the $2 billion-asset BankNewport, initially heard about The Clearing House’s (TCH) RTP^® network, a new real-time payments rail, he recognized faster payments could be a market differentiator for his bank. So, when his core provider, COCC, approached him about being an RTP pilot bank, he jumped at the opportunity.

“We viewed joining the RTP network as very low risk for high reward, even for receiving capabilities only,” says Sullivan. “We saw it as an arrow in our quiver for business customers and an advantage for all of our customers.”

Implementation

In January 2020, the Newport, R.I.-based bank began discussions about RTP implementation, and by February, they had all internal approvals lined up and had engaged with TCH. Then COVID-19 hit, pausing implementation. Yet, even with the challenges that mounted for financial institutions during the early phase of the pandemic, BankNewport was connected to the RTP network by June.

Sullivan reports that the soup-to-nuts implementation took a total of only 20 staff hours. Everything from legal agreements to technical and operational integrations, with the bulk of the effort focused on documentation, was completed in a matter of hours.

“It’s easily the quickest project of this magnitude that I’ve ever been a part of,” Sullivan recounts. “If only all projects were like this!”

According to TCH, BankNewport’s experience was by design and is indicative of what FIs can expect as relates to RTP implementation.

“By working with third-party providers, all of the pieces are in place prior to onboarding the bank or credit union,” says Steve Ledford, Senior Vice President, Products and Strategy at TCH. “We took away heavy lifting from the technical and operational point of view by working closely with processor so the process can go very smoothly.”

In fact, much of the technical implementation is facilitated by the core provider and TCH. The financial institution has a short checklist of three items: executing the legal agreements with the processor and TCH; ensuring the customer-facing functionality and point-of-view are addressed; and updating staff on the new RTP product. The bulk of the FI’s work centers on ensuring how to package and position this new functionality to meet customers’ or members’ needs. (A complete RTP implementation checklist and other preparedness materials are available from TCH in their online document library.)

Volume to Date

In the case of real-time payments, there’s something to be said of the Field of Dreams’ adage, “build it and they will come.” Once BankNewport flipped its RTP switch, volume started off slowly—Sullivan points to only six transactions in that first month—but has built steadily over time. Today, the bank is averaging 873 RTP transactions per month, with their largest month seeing upwards of 1,300 transactions.

To date, the majority of transactions have been consumer payments. Specifically, Sullivan attributes 65% of their RTP network volume to Venmo and another 11% to PayPal. Initially, use cases were small businesses and seasonal businesses in touristy areas using PayPal and Square, but of late, in addition to these retail-type payments, they are witnessing larger volume transactions from title companies, real estate firms, and refinancing organizations.

“On the larger side, our deposits have been in the $50,000 to $60,000 range, and we had one $75,000 transaction,” Sullivan summarizes. “It will be interesting to see what happens if the transaction limit rises to a million dollars in the not-too-distant future.”

And volume will continue to climb as more financial institutions join the network and become send-enabled. Today, TCH reports they have 172 FIs in receive mode, with another 20 set up to send. But they predict the send pipeline will grow in the near-term as core providers launch send functionality for the RTP network.

“We’ll see more broad-based sending,” says Ledford. “Third-party processors are bringing that functionality to market very soon to make it easier to send payments.”

In the meantime, Sullivan advocates for community banks and credit unions to board the RTP receipt bandwagon. With negligible risk on the receive side, he sees the RTP network as a straightforward way to remain competitive in a rapidly shifting marketplace.

“The sooner you get in on this, the better,” concludes Sullivan. “We just saw this movie with Zelle^®. If you want to get in line again and repeat that situation, you can wait, but if you want to do something that’s not only quick to implement but is as simple a process as possible, join the RTP network as soon as you can. There’s a lot of incentive to do it, and on the receive side, the benefits outweigh the risk.”

For more detailed insights into BankNewport’s RTP experience, join us at the virtual Future of Payments Symposium, December 8–9, where both TCH and BankNewport will share a first-hand account of their experience.