What is the Right Strategy for Marketing FedNow?

I recently met with an FNBB customer that has licensed our Instant Pay service. We had a great conversation about FedNow, including how to utilize all of the components of the service and how and when to start marketing to bank customers.  Following that discussion, I had several insights on a bank’s deployment of FedNow that I believe are important to share.

If a bank has FedNow Receive capability, it is important that they educate their frontline staff and make their customers aware. While it’s true that customers can receive credit transactions without any prior knowledge, they may be having contemporaneous discussions with their employer or another third party about getting paid by FedNow. Customers may not be signing up for FedNow as a payment option if they think their bank is not ready.   All customers need to know your institution is live on FedNow, and they can receive any FedNow inbound credits.

FNBB customers using Instant Pay have full capability to receive, send, initiate Request for Pay (RFP) messages and reply to RFPs. The customer I referenced above is posting FedNow Receive transactions and contacted their online banking and mobile banking vendor to ascertain the options for their customers to be able to use Send and RFP via an API to Instant Pay. In the meantime, the bank’s customers do not have the ability to create a Send or RFP transaction or reply to an RFP via their OLB/mobile banking apps. What does the bank and customers who need to initiate FedNow transactions do in the meantime?

There is merit to the concern bankers have about offering Send capabilities to customers without having the OLB / mobile banking user interfaces available. However, this can be an opportune time for the bank to reach out to select customers who are in a position to initiate a FedNow Send.  This is possible because in addition to its automated transactions, Instant Pay is unique in that it provides for the creation of manual entries for all FedNow message types. This feature gives FIs the ability to initiate and respond to FedNow messages and transactions for themselves or on behalf of their customer. A bank might have a strategy to allow a limited deployment of Send transactions, giving the bank the opportunity to track transactions in a live environment and evaluate any necessary modifications to applicable procedures. Instant Pay becomes an interim solution to enable the bank to execute Send transactions on behalf of customers until the OLB/mobile banking user interface is available.

As FedNow and demand for it matures, every online banking or mobile banking vendor will support FedNow.  Some OLB/mobile vendors will use an Application Programming Interface (API) that enables them to build their own screens to support Send and RFP transactions, where the API connects the data entered by the customer to the Instant Pay service.  Other vendors may elect to use a Software Development Kit (SDK). The SDK essentially provides all of the screens and functionality necessary to enable a customer to enter data for Send and RFP transactions and connect to Instant Pay.  It’s important to know that both the API and SDK options to interface to Instant Pay are available now.

If your bank has implemented FedNow, get the word out.  Begin marketing it to all of your customers.  If you are not ready to market Send capabilities, at least let your customers know they can receive FedNow transactions. Most importantly, educate all customer facing staff to know that your institution has the capability to perform a manual Send on behalf of any customer. Like any new payment system, enabling FedNow will not immediately yield significant transaction volumes, but it is a strategic payment service you should be deploying sooner than later. It shows your community bank is innovative and a leader in the payments industry.   Plus, you’ll support the customers that need FedNow … sooner than later. If you have not enabled Send, rethink your decision. The number of banks offering this service is increasing every month and more businesses and consumers will want real-time payments. Seize the opportunity to competitively compete with the regional and national banks in your market.

 

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.