Real-time payments are reshaping the landscape of financial transactions, compelling banks and financial institutions to reassess their existing infrastructure. Customers now expect money transfers to be swift, reliable, and transparent, regardless of the payment channel. This shift is not merely a technical upgrade; it demands a strategic overhaul, according to Marjorie Tart, director of product management at i2c.
From Technical Necessity to Strategic Opportunity
For many issuers, viewing real-time payments solely as a technical challenge can be limiting. Tart emphasizes that those who approach this innovation from a business perspective often find greater success. “Institutions focused solely on connecting to a payment rail miss opportunities for growth,” she stated during an interview.
Successful issuers view real-time payments as a chance to reinvent their customer interactions, funding methods, and operational processes. By doing so, they can reduce support costs and accelerate innovation, rather than simply adding real-time capabilities to outdated batch systems. “At i2c, we observe that issuers who treat real-time payments as a growth lever are the ones who thrive,” Tart noted.
Identifying Weaknesses in Legacy Systems
Real-time payment use cases often highlight the vulnerabilities of legacy infrastructures. Instant disbursements, account funding, and transfers between accounts reveal critical pressure points. Tart explained, “In traditional systems, batch error processes lead to delays and require manual intervention. Real-time availability of funds is essential for these transactions.”
The rise of marketplace and gig economy payouts further intensifies the demand for speed. Quick transactions are no longer optional; they are a competitive edge for businesses. Yet, achieving this requires more than just access to a payment rail. “To enable these use cases, you need real-time posting, configurable workflows, fraud controls, and effective exception management,” Tart added. When these elements function seamlessly, issuers can better monetize their real-time capabilities.
Customer expectations reflect a need for clarity and reliability. Whether for personal or business transactions, users want instantaneous payments, clear status updates, and a consistent experience across all platforms. Problems arise when issuers rely on disconnected systems to deliver these services, leading to inconsistent outcomes.
“When institutions try to provide a unified experience through fragmented systems, they ultimately fall short,” Tart warned.
Challenges of Fragmented Connectivity
The internal organization of issuers significantly impacts their real-time payment capabilities. Some treat each payment rail as an isolated operation, complicating integration efforts with separate workflows and controls. This fragmentation hinders scalability and governance.
Conversely, issuers that utilize a unified orchestration layer can streamline operations, avoiding the need to rebuild systems for each new integration. “A unified orchestration means issuers connect once,” Tart explained, emphasizing the efficiency of a single connection managed by i2c, which links to FedNow, real-time payments, and ACH through a consolidated API.
This approach mitigates the risk of reintroducing the complexities that real-time payments aim to eliminate. The integration of legacy systems into a continuous operational model becomes crucial in meeting modern customer demands.
Embracing an Always-On Financial Environment
In today’s fast-paced digital economy, reliance on batch-based systems is increasingly untenable. Issuers must adopt real-time ledgering and posting as standard practices rather than optional features. Funding models, limit management, and exception handling all require a rethink in an always-on environment. Processes that once sufficed on an overnight basis are no longer adequate when customer expectations are measured in seconds.
Real-time payments also compress decision-making timelines for fraud detection, anti-money laundering, and transaction authorization. Tart noted that post-transaction monitoring is insufficient in this new paradigm. “Continuous intelligence is essential,” she said. This includes utilizing behavioral analytics, velocity controls, and dynamic limits that can adjust automatically.
Having a unified risk scoring system across different payment rails is critical. An anomaly detected in one channel should inform decisions in others, necessitating centralized governance that aligns fraud, compliance, treasury, and product teams around consistent data and rules.
Real-Time Payments as a Foundation for Innovation
As transaction volumes increase, issuers are recognizing that real-time payments are not merely about speed; they represent resilience, transparency, and confidence. “When combined effectively, these capabilities empower issuers to innovate more rapidly and operate with significantly greater assurance,” Tart concluded.
The evolution of real-time payments is a call to action for banks and financial institutions to rethink their infrastructure fundamentally. As the digital economy continues to demand faster and more reliable transactions, adapting to these changes will be crucial for long-term success.
