My fellow participants included bankers, regulators, and industry market analysts.
During our two-hour conversation, we discussed a variety of issues that other countries have had to address as faster payments were being developed in their respective countries: how soon will faster payments be available? Which department within the bank will “own” them? Will they cannibalize existing products? What is the business case?
Interestingly, I found the responses to the question I posed to the group somewhat surprising.
I introduced the question by stating that in most (but not all) countries, the government had regulated, or had threatened to regulate, the banking industry into developing a faster payments network.
In most of those countries, bank participation in the scheme had proceeded fairly quickly. In contrast, in countries where the government had not interceded, such as Poland, the bank uptake is reported to have been much slower.
So I asked the attendees whether faster payments could quickly take hold in the United States without a regulatory mandate.
To my surprise, the bankers and regulators in the room indicated that life would be so much easier if the Federal Reserve Bank (or Congress) would “just issue a mandate already.”
You read correctly. Life would be easier.
Rather than resent a governmental intrusion into the free market, the bankers in the room confided that a mandate would eliminate:
✔ Rounds of effort in building a business case;
✔ Weighing whether or not to start exploratory efforts;
✔ Determining if there will be budget to initiate preparations.
The roundtable operated under the Chatham House Rule, which prevents identifying who attended or which banks were represented. But it would be fair to say that the banks are household names.
Establishing a mandate would enable the banks “to get on with it” rather than consuming time and expense in debating the merits of faster payments…particularly as faster payments are increasingly seen as fait accompli.
That is not a knock on the Fed’s Faster Payments Task Force (on which I serve), which is continuing to do a terrific job shepherding 300 payments industry members through a process of defining what a US faster payments network will provide and how it will operate.
Rather, it’s the bankers themselves that would appreciate an affirmative declaration by the government; it would result in the banks focusing their attention, harnessing their internal energies, and likely accelerating the inevitable arrival of faster payments in the United States.