Payments modernization strategies can be tricky. On the one hand, many organizations, from large multinational banks to smaller local credit unions, have well-established payment operations to support existing volume and products today. On the other hand, the U.S. is starting to adopt faster and real-time payments en masse, opening up a slew of questions on how to support the new use cases and growing demand from their client bases—within the confines of those well-established payments operations. This conundrum puts pressure on financial institutions, 9,500+ in all, to rethink their payments strategies, and look to modernization. However, there is still a need to support the existing payment needs for heritage payment types including ACH and Fedwire. Which leads us to our question of the day, what should you look for in a new payments platform?
Fedwire isn’t a new payment type in the U.S. In fact, it’s far from it. I have mentioned in prior blogs that it is the “OG” when it comes to real-time payments in the U.S. since it is and has been our Real-Time Gross Settlement system since well before my time. The system itself pre-dates the Titanic and has moved along a digital journey through most of the 20th century, with upgrades coming as technology advanced from telephonic to internet-based. In today’s market, the solutions that support Fedwire, for the most part, rolled off the production line more than 25 years ago and have been cranking away ever since. As the years have rolled on, the Fedwire process itself hasn’t changed that much. The window still opens in the morning and closes at night, much like it did when bankers would bring their instructions down to the Federal Bank of New York in the early 1900s to settle their accounts and enter their transactions. Overnight the systems on both ends run through their batch-based processing cycles, and they’re up and running again (so long as it is a Monday-Friday and non-holiday).
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