Real-Time Business-to-Business Payments Will Fundamentally Alter the Banking Landscape: ISG
December 06 2022 - 3:00PM
Business Wire
ISG expert discusses the impact of
commercial-scale real-time payments during American Banker virtual
event
Platforms for enabling real-time, commercial-scale payments
between enterprises will fundamentally alter the banking and
financial services industry and present technology and workforce
challenges for enterprises, an expert with Information Services
Group (ISG) (Nasdaq: III), a leading global technology research and
advisory firm, said today.
In a virtual panel discussion, “How real-time payments enable
new customer experiences and drive growth for financial
institutions,” hosted by American Banker, Jay Woldar, director,
banking and financial services with ISG, said enterprises will need
to address the new systems’ operational, technology and people
requirements before reaping the benefits.
“Consumers are quickly turning to real-time payments between
individuals as a seamless replacement for cash or checks,” Woldar
said. “Similarly, real-time payments between enterprises, which are
initiated and settled instantaneously and permanently, will offer
improved business liquidity, visibility and cash flow management
and the possibility of reducing or even eliminating interchange
fees.”
Emerging real-time payment platforms promise to increase
security by conforming to ISO 20022, which enables financial
institutions to send rich data sets with each transaction. The
platforms also eliminate payment reversals and returns and deliver
secure communications, multi-factor authorization, device binding
and confirmation mechanisms, and more secure payment options
through verified channels.
Despite these benefits, Woldar said most enterprises are still
using ACH and wire transfer. ACH transfers take at least one
business day, are not available on weekends or holidays, and
require banks and companies to withhold funds to offset risk while
funds are in motion, making money movement costlier and more
expensive. Wire transfers are faster but are also more
expensive.
“Adding a new payment system may sound like an easy decision,
but the scale of the change disrupts ongoing bank operations and
requires a significant investment in technology and security,” he
said. “As with businesses of all types, banks and non-bank
financial institutions are struggling to find the personnel and
technical expertise to execute this strategic initiative.”
As the U.S. government prepares to launch the FedNow system in
mid-2023, the lure of real-time, business-to-business payments will
grow stronger, Woldar said. FedNow will be available to depository
institutions in the U.S. and will allow them to build value-added
services on the real-time payment capability.
“Demand will change in the coming years as more fintechs and
competitor banks offer real-time payment capabilities,” Woldar
said. “If a bank decides to wait on building a real-time payment
solution, it may miss out.”
Additional information is available on the event website.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 800 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including automation, cloud and data analytics; sourcing advisory;
managed governance and risk services; network carrier services;
strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,300
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20221206005936/en/
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978 518 4520
isg@matternow.com
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