Welcome to the Oct. 2023 Innovating Payments Executive Summary — FedNow® Service Hits New Milestone with More Than 100 Participating Organizations. In this issue, the Federal Reserve announced that the FedNow Service has experienced strong growth, with 108 institutions now sending and receiving on the network. Also in the news, Boston Fed First Vice President and Chief Operating Officer (COO) Kenneth C. Montgomery announced his plans to retire in the spring of 2024, after 40 years of service to the Federal Reserve System.
In other news, credit union members are seeking innovative cryptocurrency services from their financial institutions. Meanwhile, U.S. Bancorp reported on Oct. 2, “U.S. corporate finance leaders have firmly pivoted their focus from revenue growth to cost control as they navigate through an uncertain economic environment and rapidly changing business landscape, according to the 2023 U.S. Bank CFO Insights Report.”
Read on to learn more.
FedNow® Service Hits New Milestone with More than 100 Participating Organizations
The Federal Reserve announced on Oct. 3 that the FedNow Service has experienced strong growth following its launch in July 2023, with 108 institutions now sending and receiving on the network.
In addition, 21 financial institutions are providing liquidity and settlement services, and 20 service providers are supporting payment processing in the instant payments infrastructure.
“The momentum and interest we’re seeing in the FedNow Service in the weeks after launch reflects the noteworthy support from early adopters and underscores the changing U.S. payments landscape,” Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive was quoted as saying in the news release. "We anticipate widespread adoption and ubiquity will build over time, bringing the benefits of instant payments to communities nationwide and improving how households, businesses, and governments send and receive payments."
With participation growing, the Federal Reserve continues to prioritize enhancements to the service with plans to add new features and functionality in the coming months. Updates will include select risk management and operational enhancements of the service focused on providing additional fraud prevention tools, among other features.
These features are in addition to those available at launch, including a digital onboarding solution to help organizations and internal teams automate form signing and track progress through the onboarding process. Also included were fraud mitigation capabilities, including the ability to set negative lists and identify and investigate instances of fraud or errors.
Boston Fed First VP, COO Kenneth C. Montgomery to Retire; National Search for Next FVP and COO Launches
The Federal Reserve Bank of Boston announced on Oct. 2 that First Vice President (FVP) and Chief Operating Officer (COO) Kenneth C. Montgomery plans to retire in the spring after 40 years of service to the Federal Reserve System. The Fed is also launching a national search for its next First Vice President and COO.
"Ken set a standard with his dedication to excellence and innovation in the Federal Reserve System; his service within the civic community; and his leadership in finance, payments, technology, and operations," said Boston Fed President and CEO Susan M. Collins in the Fed announcement. "The role of first vice president and COO represents a tremendous opportunity to build on that foundation and advance the Fed's contributions to a vibrant economy and financial system."
The Boston Fed’s Board of Directors has formed a committee to lead the search for the next FVP and COO, retaining executive search firm Bridge Partners to assist. The full description of the position is on their website.
More information about the position and the search is available on the Bank's website under First Vice President Search.
Are credit unions ready to offer cryptocurrencies? That’s the question PYMNTS’ Sept./Oct. Credit Union Tracker Series attempts to answer. Whether credit unions are ready or not, CU members seek innovative cryptocurrency services from their financial institutions.
According to the Sept./Oct. Tracker:
- 57% of cryptocurrency owners are eager to leverage their FI to transact with cryptocurrencies.
- 33% of consumers want to change FIs to access innovative cryptocurrency products.
- $1B is the total amount lost to cryptocurrency scams since 2021, leaving many credit unions hesitant about cryptocurrency's investment volatility and its potential for fraud and scams.
The Tracker concludes:
"Experts predict that the global market size for cryptocurrency could grow at a compound annual growth rate (CAGR) of about 17% between 2023 and 2028. It should be noted, however, that cryptocurrencies are known for their rapid and dramatic fluctuations in value, and cryptocurrency exchanges could potentially evaporate without warning, just as FTX did last year. CUs exploring cryptocurrency options should make contingency plans for short-term changes to reap long-term growth success."
For more on credit unions and cryptocurrencies, download the Sept./Oct. Credit Union Tracker Series: Are Credit Unions Ready to Offer Cryptocurrencies?
U.S. Bank CFO Insights Report: Finance Leaders Shift to Defense Mode
“U.S. corporate finance leaders have firmly pivoted their focus from revenue growth to cost control as they navigate through an uncertain economic environment and rapidly changing business landscape, according to the 2023 U.S. Bank CFO Insights Report,” reported U.S. Bancorp on Oct. 2.
As noted in the news release, key survey findings include:
- Rising interest rates, while still not a top risk, jumped from the least concerning risk last year to the middle of the pack this year (23%). Similarly, regulatory changes (25%) moved up in the risk rankings this year.
- Finance leaders ranked talent shortage (43%), pace of technology change/digital disruption (40%), and high inflation (38%) as the top risks facing their businesses. California finance leaders said high inflation is their top business risk, much higher than finance leaders nationwide.
- Only 33% of finance leaders are more than somewhat confident in their company’s ability to manage inflation risks; Only 6% are highly confident.
The survey also showed an increased appetite for digital payments.
- 68% of respondents intend to use instant payments (RTP® Network, FedNow Service) two years from now. The survey found that 42% currently use real-time payments, up from 38% in 2022.
- Respondents from consumer and retail (56%) and hospitality and leisure (54%) were more likely to say they used instant payments today than industries such as oil and gas (34%) and aerospace and defense (30%).
- Improved working capital (46%) resulting from faster payments processing, and improved customer and supplier experiences (43%) are the two primary drivers for adoption of instant payments.
To learn more, view the full 2023 CFO Insights Report.
Join us for the 2023 Future of Payments Symposium, Nov. 2-3, 2023. This one-of-a-kind event brings together industry leaders to talk about the latest developments in payments and what the future may hold.
To learn more about this event and to register, visit the 2023 Future of Payments Symposium website.
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.