First, SPEED offers an obvious benefit. Using real-time payments, the receipt of funds can be reduced from days to seconds. This is a convenience among friends for person-to-person payments. It facilitates the quick resolution of splitting a meal and it facilitates getting money from your parents fast – when you need it. On the business side, however… this offers a huge opportunity to improve working capital. The receipt of funds can be expedited, which in turn can allow for realization of discounts, cost-effective inventory management and reduced time managing cash position. Financial institutions can offer real value-add services to their business clients based on the speed alone.
Now add the DATA. While data has long been available to ACH and wire payments, the data format is now the ISO 20022 standard. This means it is more flexible and easy to integrate into other systems. There are more tools available to do this that are compatible with ISO 20022, which offers the benefit of automated reconciliation. But the value goes even further, as the data can be used in all sorts of ways, given the advances in data mining as well as the machine learning predictive models that can be built. Understanding the data enables financial institutions to better cross-sell opportunities. It facilitates providing a better service to customers, such as forecasting tools and automated transfer services.
The small business segment is especially ripe with opportunity for real-time payments. These are the businesses that have an appetite for improvements in their financial management and don’t have the same degree of integration with the back-office to introduce new capabilities. A study done by YouGov in 2017 on behalf of ACI reveals that the majority of SMEs would consider switching banks for the offer of real-time payments.
Source: Global YouGov survey 2017
The Request for Payment offered by The Clearing House RTP system brings the data and the speed together. It facilitates the data exchange along with enabling the speedy payment. This is done using a credit transfer mechanism, which keeps the control with the payer. The messages are exchanged entirely over a secure network, which protects the flow end to end, offering value to the end client and the opportunity for financial institutions to provide value-add services around this capability—enhancing the relationship with both consumers and business customers.
Real-time is here. The Clearing House RTP system is live. It’s now time to leverage that speed and data in new ways to improve customer experience while driving new revenue sources for your financial institution.
Join Sandra Horn at NACHA Payments 2018 for her talk on “Exploring the Charted Territories of Real-Time Payments: What Maturing Markets Reveal,” Tuesday, May 1 at 4:35pm.