A recent report from the Federal Reserve shows that there are now over 500 financial institutions live on the FedNow faster payments service and every day more FIs are signing up to get on board. This is truly great news. Perhaps your institution has had FedNow on the back burner, waiting to see some indication of when it would become strategic for you to implement. While cooking up the menu of services that will position you as a financial services leader for your customers, it is apparent that enabling FedNow access for your customers is a front burner issue. Most of the 500 FIs on FedNow have elected to initially be Receive only. Those institutions know when a key customer, perhaps a high net worth consumer, a board member or a local business, has the opportunity to receive a real-time FedNow credit, but you are not able to receive that credit, you may not get another chance. Customers can and do “vote with their feet.” Remember, no customers used your ATM or your remote deposit service until you rolled it out to them. There is an argument that until there are more FedNow Send institutions, what’s the big hurry to sign up as a Receiving institution? Here are two scenarios to consider: Large FIs are FedNow Sending Institutions – Chase, Wells Fargo and U.S. Bank, just to name a few, are using FedNow. Given that the largest 15 FIs control roughly 75% of all U.S. checking accounts, it is not unusual to think that customers at these large FI FedNow Senders might need your customers to be the recipient of a real-time FedNow credit. Wouldn’t it be nice if your customers could receive those transactions? Think about it this way, you have no way to know how many FedNow push credits targeting your customers have been abandoned by willing senders. If You Were a FedNow Send Institution, You Would Create Your Own Receive Volume – The ability to Send FedNow is especially useful for business customers. Businesses of all sizes can make use of the “Request to Pay” feature of FedNow. A large plumbing supply distributor or a local plumber can equally use FedNow to request an instant payment for the delivery of goods or services. However, what value would that request be to their customers, who are your customers, if they are unable to send the payment to satisfy the request? Enabling Send gives you the power to not only market extensively to your existing business customers but reach out to businesses you may wish to target for acquisition but have not had a compelling argument to move their account. In my experience, when a banker shows up with something that moves the needle for a business’ gross margin, business executives are listening. Getting on board now with Receive capability means you are ready to serve any of your customers. Getting on board with Receive and Send means you are ready to advance a narrative to consumers and businesses that you are ready for the future of payments today. If you are not sure about how you might acquire the ability to process FedNow for Receive or Send, consider reaching out to FNBB and asking about Instant Pay. This is FNBB’s service that provides you an alternative for processing FedNow payments through your core provider. At a minimum, you should know that alternatives to your core exist and should receive service and pricing information to enable you to make an informed choice. One element you must decide upon signing up for FedNow is where you will settle FedNow transactions. FNBB has enabled the ability for its customers to settle those push credits through our correspondent DDA service. Adding the FedNow service changes liquidity into a 24 x 7 issue. Regardless of whether you have a Fed account or not, settling with FNBB is streamlined and eliminates the issue of dealing with daylight overdrafts. As of this writing, twenty five FNBB customer FIs have signed up to settle FedNow through us and that number will certainly grow in the coming months. We’d love the opportunity to show you how we can support your FedNow efforts through our Service Beyond Comparison. One last important thing, please let us know if you sign up for FedNow through your core and execute Appendix 2 of the FedNow agreement, signifying to the Fed that FNBB will be your settlement agent. Have other questions regarding Instant Pay? Contact fasterpayments@bankers-bank.com. References https://wallethub.com/edu/sa/bank-market-share-by-deposits/25587 The views expressed in this blog are for informational purposes. All information shared should be independently evaluated as to its applicability or efficacy. FNBB does not endorse, recommend or promote any specific service or company that may be named or implied in any blog post.