In Q3 2022, NEACH sat down with several major third-party providers to gain insights into what’s happening with payments. Maria Schuld, SVP, Banking Solutions at FIS shared thoughts on how payments are shifting and what to expect in the coming months. What follows is a summary of the dialogue.
NEACH: Financial institutions customer and member payments behaviors have shifted because of COVID. What are you seeing as the next big shift in payments that banks and credit unions need to be considering?
Schuld: I believe that the next big shift in payments will be coming from the consumerization of commercial payments. Everyone has been working from home and mixing how they make payments from personal to business. Consumers expect that the way they make business payments should be as easy as it is to make personal payments, with the same speed and simple, elegant UI/UX. Consumers and business owners are becoming one in the same and as an industry we need to understand that they want payments to follow suit.
NEACH: How has the growth in payments digitization (i.e., e- and m-commerce, digital wallet use, P2P digital payments, etc.) changed what FIs need from their providers? How are you responding to that shift? Are there solutions that all FIs should have as table stakes today?
Schuld: I believe FIs are looking for their providers to be a partner that drives innovation faster and at a cost that allows the FI to buy more wow factor for their business and consumer bases. It is our job to drive that vision for the FIs and to partner with them to drive that vision internally with FI stakeholders. We also need to get to the point where we can sell bundled products with an enhanced dashboard view of these products, so FIs and their clients have a one stop/SSO option to manage all payments.
NEACH: FedNowSM comes online in 2023. As a pilot participant, what can you share about preparations? When do you anticipate being ready to begin onboarding FIs?
Schuld: FIS has been meeting with Federal Reserve representatives one on one for the past two years to provide service provider viewpoints on the new payment scheme. FIS is part of both the early testing and pilot test groups and has actively participated in all planning sessions conducted by the Fed. We have certified our connectivity with the Fed network for FedNow and are developing the software. We anticipate onboarding FIs in the staged production rollout phase which the Fed is targeting for late Q2/early Q3 of 2023.
NEACH: To that point, what do you expect the FedNow onboarding experience to be like for FIs? How similar/different will it be from your RTP experience?
Schuld: We expect the FedNow onboarding experience to be very similar to the RTP experience currently offered by FIS. We will support on premise, premium hosted and multi-tenant deployment options based on the requirements of the FI. Along with those options, an FI may choose to handle RTP operations themselves, have FIS support the operations or choose a hybrid model where FIS provides off-hour/weekend support.
NEACH: What do you suggest FIs do now to start preparing for FedNow? Why?
Schuld: Key decisions for an FI are:
- Do we start with receive only, send and receive, or send, receive and request for payment?
- If send is offered, what is the mechanism for my customers to initiate the payment requests?
- How will my account be funded – through my own Fed account or via another FI?
- What is my model for operational support – within the bank or contracted to a service provider such as FIS?
RTP volumes continue to grow, and the belief is that FedNow will rapidly accelerate the ubiquity of instant payments. Instant payments will be a standard requirement from many customer segments and FIs need to be ready to fill that service need in order to retain their customers or attract new ones.
NEACH: Switching topics, cryptocurrency not only has had a lot of buzz of late, but it has also been gaining traction as a less fringe/more mainstream as a payment type. What role do you see banks and credit unions playing in the cryptocurrency space?
Schuld: Banks and credit unions remain trusted entities in providing financial services. We see ways for banks to partner in integrating the cryptocurrency opportunity into current bank products. Our initial use case is the partnership opportunity to offer consumers with options to buy, sell, or hold cryptocurrency within a bank’s current mobile offerings.
NEACH: Similarly, between executive orders and requests for comment, Central Bank Digital Currency (CBDC) has been gaining a lot of attention in the U.S. How do you see this impacting FIs offerings and plans now and in the future?
Schuld: We are certainly watching the evolution of the Central Bank Digital Currency discussion. CBDC can expand access to the general public. We see this as an opportunity to further expand financial inclusion within the United States. This is an important area of focus and education as it evolves.
NEACH: With these new payment options coming to fruition, FIs are finding FinTech partnerships even more necessary. How do you support your banks and credit unions in engaging with FinTechs? What innovations should FIs expect from their core, and what innovations do you think your customers would be surprised by?
Schuld: FIS has been in the forefront of advancing the opportunities for FinTechs and banks to partner. Through the FIS FinTech Accelerator, FIS is curating best-in-class experiences for FinTechs and banks to collaborate and advance. We believe this accelerator experience:
- Accelerates innovation in financial services
- Creates partnership and investment opportunities with emerging tech
- Drives the innovation process and differentiated offerings to market leveraging our FIS clients.
NEACH: What recent or forthcoming product rollouts do you have that FIs should be exploring?
Schuld: FIS is excited about our Banking as a Service and Embedded Finance offerings. Through this innovation, with our partners, FIS is able to bring FinTechs and banks together in providing banking services. Consumers want to interact with an increasing number of providers across an increasing number of devices and apps. FIS is able to provide FinTechs, banks and corporations with new ways to quickly and efficiently launch new products and services to allow this.
NEACH: What else would you like to add?
Schuld: Technology continues to create exciting new opportunities for financial institutions. FIS will continue to invest in modernizing of our existing capabilities while working with partners and FinTechs to advance the Industry and harness innovations as they arrive.
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.