Independent Banker - July 2019 - 17

Next: What loan officers can learn by thinking like examiners
But The Clearing House's RTP network isn't the only
player in town. Other faster payments possibilities continue
to emerge. For example, Mastercard and Visa are
announcing partnerships with Stripe and others to move
money faster. Nonbank providers like PayPal and its payment
app Venmo tout near-immediate payments and are
linking into The Clearing House's RTP network infrastructure
to further expedite offerings. Same-day ACH offers
new windows to move traditional transactions faster. Community
banks face opportunity, laced with competition,
throughout the faster payments space.
It's no wonder that when the Federal Reserve issued
an invitation for public comment (see sidebar below) on
its role in real-time gross settlement, community banks
applauded. Yet, experts caution community banks to consider
the impact of waiting for the Fed.
" If the Fed decides to be an operator, how long do we
think it will be for it to be operational? " asks Jennifer Lucas,
managing director in EY's Financial Services Advisory payments
practice. " You're giving the critical mass of DDA
[demand deposit accounts] providers possibly a three-year
head start, and then you're coming out of the starting block.
The catch-up period is something I would take into serious
consideration when determining my payments strategy. "
A faster payments path
The frenetic pace of industry change may leave a community
banker's head spinning. The good news is that banks'
current strategies create the guideposts for incorporating
Timeline: The faster payments race
November 2018: Born out of
the industry-inclusive Faster
Payments Task Force, the U.S.
Faster Payments Council launches.
This nonprofit membership
association boasts a mission
to " work toward the goal of a
ubiquitous, world-class payment
system that allows Americans to
safely and securely pay anyone,
anywhere, at any time and with
near-immediate funds availability. "
December 2018: More than 400
comments pour in as a response
to the Federal Reserve's October
2018 request for comment on
faster payments, and resources exist to help them. ICBA
Bancard's Payments Strategy Guide will offer a step-bystep
solution that helps community banks explore how to
incorporate faster payments into their current strategies.
And EY's Considerations for a Real-Time Payments Strategy
white paper provides underlying principles for a faster
payments framework. The report details four core tenets
community banks want to evaluate when considering faster
payments: individual business strategies, technology delivery
mechanisms, operations readiness, and regulatory and
risk controls.
" You need to find solutions that are flexible and not tied
to one end product, " says Michael Bilski, CEO of $550 million-asset
North American Banking Company in Roseville,
Minn. " You have to spend a little money to set up the right
things for your customers. If you're afraid to buy technology
because something new is going to be around tomorrow,
well, you're already behind. "
And, as the race to faster payments continues, community
bankers remain central to its evolution. " Community banks
are vital to the future of faster payments, " says Kevin Christensen,
acting executive director of the nonprofit U.S. Faster
Payments Council (FPC). " They serve as a pivotal connecting
link, ensuring faster payments reach all end users. By
incorporating faster payments into their business strategies,
community banks will remain well positioned to meet the
needs of commercial and retail customers. "
Colleen Morrison is a writer in Maryland.
real-time gross settlement. To
date, the Fed has been mum on
next steps.
Mid-March 2019: The Federal
Reserve Board informed NACHA
that it would need more time to
enable a new window to extend
Same Day ACH submission times
until 4:45 p.m. ET. Because of this
delay, the implementation of this
new window will be pushed back
six months to March 2021.
Late March 2019: The Clearing
House issued two real-time
payments announcements
with relevance to community
banks: one focusing on business
principles of the RTP network,
the other emphasizing a role
for community banks and credit
unions in its RTP Business
Committee.
And beyond: In such a dynamic
industry, new developments
continue to affect the way
community banks think about
faster payments. A concrete
payments strategy that aligns
with overall business objectives
remains a community bank's
grounding force for all that is to
come.
independentbanker.org Q 17
http://www.independentbanker.org
Independent Banker - July 2019

Table of Contents for the Digital Edition of Independent Banker - July 2019
