💵 FedNow to Come in Summer
Amid the banking crisis, the Fed confirmed the July launch of FedNow.
🟦 𝐖𝐡𝐚𝐭 𝐅𝐞𝐝𝐍𝐨𝐰
FedNow is the instant payment service developed by the Federal Reserve for 10,000+ financial institutions in the US. It enables real-time payment 24x7x365.
🟦 𝐖𝐡𝐲 𝐍𝐨𝐰
The project has been 3 years in the making. It was announced in 2020. The pilot was launched in 2022.
📌 Consumers and businesses need real-time payment solutions to better manage their finance.
📌 For the critical payment infrastructure, it is always good to have another service besides RTP - the Real-Time Payment Network launched by The Clearing House in 2017.
🟦 𝐍𝐨𝐰 𝐖𝐡𝐚𝐭
🟢 New Opportunities
There will be less need for traditional products such as payday loan/check cashing. More opportunities for payment innovation and competition.
🟡 Fraud Risk
The authorized push payment fraud (scam) could become an even bigger issue, as what happens to Zelle. This calls for a balanced payment fraud strategy to create “good friction”.
🔴 Liquidity Risk
One thing we learned from the SVB saga is how fast the fund can flow out of a bank now. The additional infrastructure continues to raise the bar for banks to prudently manage their financial risk.