Independent Banker - February 2022 - 32

PORTFOLIO
in our selection of who we partner
with to offer FedNow. "
" We intend to cut our teeth on the
business side to ensure we get a good
grasp on how to support customers
and how to control risk before we start
offering a solution for consumers. "
-BLAYNE FUREY, FREEDOM BANK
should consider how FedNow
interacts or affects other products,
services and initiatives and assess
the value it may provide in support of
those efforts.
" Instant payments will deliver
benefits beyond speed, " says Deborah
Matthews Phillips, ICBA's senior
vice president of payments and
technology policy. " When banks
see the value of these benefits,
such as 'good funds,' eliminating or
mitigating exception processing for
their business customers and more,
they will be inspired to prioritize
their readiness. "
Go-to-market preparations
As community banks plan to take
the solution to market, how they
structure the customer-facing
product will be central to the user
experience and ongoing adoption.
" The FedNow Service is a
payments platform ... There's not
going to be an app that a customer
can use that is put out by the Fed, "
says Blayne Furey, management
information systems officer at
$138 million-asset Freedom Bank in
Columbia Falls, Mont., and another
pilot bank. " The Federal Reserve is
creating this FedNow Service that
applications can connect to or utilize
for that instant send-receive-settle
action for payments. "
The Federal Reserve is hoping
to spur market development of
customer-facing solutions through its
Ecosystem Accelerator Group. This
group has been established to help
encourage futher development with
the FedNow Service as it evolves.
The Fed also will offer a service
provider showcase, featuring entries
from members of the accelerator
group, which will include video
and narrative profiles of service
providers who intend to use the
FedNow Service.
Finding the right technology
partner may be a central part of
community bank planning. Far
beyond basic connection links, banks
can utilize vendor partners who can
provide necessary applications for
a safe on-ramp for participation,
particularly in this first phase when
expansive fraud mitigation tools may
not be available from the Fed.
" Our institution has taken a
strong focus on fraud as we prepare
for FedNow, " Furey says. " We've
formed a fraud team, and we're
working on incorporating things
like the Fraud Classifier Model to
help us spot trends early, as well as
identify similarities or differences
between cases we encounter. [Fraud
mitigation] will be a crucial element
Placing parameters around the
initial product rollout will also
enable community banks to limit
exposures and test the waters
before making FedNow more
widely available. " We are looking
at solutions we can offer to our
business clients first, " Furey says.
" Reason being, we can mitigate and
control risk much more easily with
our business clients. We intend to
cut our teeth on the business side to
ensure we get a good grasp on how
to support customers and how to
control risk before we start offering
a solution for consumers. "
Easy does it
Reagin also plans to introduce
FedNow via a phased
implementation. " Initially, we will
roll it out to our employees and
certain customers who have shown
interest, " she says. " Then, I foresee a
broader rollout to other customers.
My thought is once we get started on
it, it's just going to really take off and
grow at a very quick pace. "
So, what can community banks do
today? Experts recommend speaking
to core providers, industry partners
and Federal Reserve account
representatives in the near term.
Not only will these conversations
reiterate interest in the service, they
also will spark dialogue around
the steps to be service ready and
encourage faster third-party product
development. In short, they will help
community banks be ready to go
when the Fed is.
As Stanescu says, " Now is the
time to engage with the Federal
Reserve and other partners to
prepare for the FedNow Service. " 
Colleen Morrison is a writer
in Maryland.
32 Q ICBA Independent Banker Q February 2022
Independent Banker - February 2022

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