Real-time payments have enjoyed optional status up to this point. But they are quickly becoming an essential competitive factor for financial institutions (FIs), especially in sectors like real estate and daily payroll.
According to Jill Capicchioni, product director, payments at NCR Voyix, there’s a lack of urgency in adoption from some FIs, and it could cost them current and future customers.
FIs must be more proactive in considering not only the needs of their current customer base but also the expectations of future clients, Capicchioni told PYMNTS. In doing so, they can secure a pivotal role in the emerging financial ecosystem, characterized by efficiency, immediacy and security.
By the numbers, only several hundred of roughly 10,000 FIs have joined either The Clearing House RTP® Network or the FedNow® Service network, which is evidence that after a decade of anticipation, banks — particularly smaller banks — may not believe that real-time payment networks will lead to a true transformation of banking.
“I’ve been counseling anyone who asks me,” she said, “that this is the year of adoption, and of [FIs] getting set up to receive [instant payments], and that’s a good first step.”
But many banking executives, she said, are concerned about payments security, given the fact that real-time payment rails, especially in Europe, have experienced higher fraud rates. Moving toward ubiquity, she added, will certainly garner the attention of bad actors and new attack vectors.
Advanced technologies such as artificial intelligence (AI), and its use in detecting anomalous transactions, will go a long way toward assuaging those fears over security — and foiling the fraudsters, too, before a transaction is even sent. AI, said Capicchioni, “needs to be utilized within layers of the digital channel” and can be used on both the sending and receiving sides of the fund flows.
In addition, when asked about further headwinds, she said “there’s also a technology hurdle and a cost hurdle.”
Some banking executives are concerned that getting set up to receive instant payments may result in a negative return on investment, as they fret about seeing a reduction in fee income from other payment rails. The pricing tied to getting set up with providers and connected to real-time rails may also prove daunting, she added.
There are some green shoots emerging, as Capicchioni said, even though there’s no emergence yet of a “killer app” spurring widespread adoption. There has been significant interest in instant payments from larger business customers — as firms such as Uber, Grubhub, PayPal and Venmo have sought to reduce their expense of processing on the card rail.
“We’re also seeing a lot of daily payroll opportunities,” she said, with a nod toward the transformation of how consumers expect to get paid. “They want to get paid instantly,” she said. There’s a significant opportunity to bring instant payments to smaller business customers.
Requests for payment “holds the most promise” for consumers, she said. And in looking ahead, she said that “we need to start thinking outside the box about different opportunities” for requests for payment. It will take time, but we’ll see a shift in industries like real estate, where transactions can happen outside of bankers’ hours (and the windows tied to batch payments and wire transfers).
Capicchioni cautioned that true ubiquity needs to be underpinned by interoperability between FedNow and the RTP networks.
The lack of interoperability, she said, “has created some confusion for financial institutions, as to whether they need to be on one network or both. I think interoperability would certainly drive more adoption,” even though initiators of larger transactions know they need to be on both networks.
As banks mull the reasons why they should sign on to instant payments rails now, Capicchioni told PYMNTS that executives “should not be concerned with their existing customers asking for this technology. They should be concerned with the future customers that are not going to bank with them” if they don’t embrace instant payments. “The customers of the future are making decisions, right now, about who they want to transact with.”
As she told PYMNTS, “now’s the time to get set up — and you don’t want to be late to the party.”
Here at PYMNTS we cover the Connected Economy as well as banking and payments. You can call it the smart economy or the digital economy. However, as Karen Webster wrote when she introduced the concept and our research methodology for defining it, “that connected economy will be the result of the full force of the Internet of Things (IoT) in action. Just about every device will be connected to the internet and capable of enabling a transaction – between every possible permutation of machines, people and businesses. In this new connected economy, we will find ourselves living in a world where new networks, intermediaries and enablers will change what is today considered the payments and commerce status quo.”
We bet Amazon was listening with Alexa. It presaged the popularity of digital wallets. You could even say it predicted the rise of artificial intelligence (AI).
The connective tissue for the connected economy comes in the form of devices with the phone at the center. And it’s shaping consumer’s day-to-day interactions. A new PYMNTS report, “How People Pay: Consumer Preference for Connected Technology,” uncovers how device ownership is shaping payment behavior and what it means for financial services professionals.
“This isn’t just about smartphones anymore,” states an article about the report. “Consumers are accumulating an array of connected devices, from smartwatches and tablets to voice-activated speakers and even cars with built-in capabilities. The report dives into how this increasing connectivity influences payment preferences, revealing that those with more devices are likelier to embrace digital wallets and online shopping. It segments consumers into distinct personas — Basic Tech, Mainstream Tech and Connected Tech — based on their affinity for and ownership of connected devices. Understanding these personas is crucial for businesses looking to stay ahead of the curve in the rapidly evolving payments landscape.”
There’s some brilliant stuff out there in the smart or connected device world. Check out LG’s smart mirror refrigerator that connects to Instacart. But there’s a lot of other “connected” or “smart” products that have us shaking our heads. Remember “there’s an app for that” a few years ago? Get ready for “my app is cooking my pizza.” Here’s a decidedly incomplete list of somewhat bizarre, connected devices because well, you might need one.
Tired of the arduous task of controlling your toilet manually? The Kohler PureWash E930 Bidet Seat transforms your humble porcelain throne into a voice-activated command center. Compatible with both Google Assistant and Amazon Alexa, this connected commode responds ponds to verbal instructions to clean itself, activate bidet spray functions or turn on the dryer.
Narcissism reaches new heights with the Selfie Toaster, a $70 smart appliance that burns your facial likeness onto bread. Using laser technology similar to a printer, this culinary curiosity transforms ordinary toast into a vaguely recognizable version of your face. While the results might not capture your best features (and often lean toward the unsettling), there’s something uniquely post-modern about literally consuming your own image for breakfast.
For those who find manually sprinkling sodium chloride too taxing, the connected salt shaker brings app-controlled seasoning to your dining table. This battery-powered salt dispenser connects to your smartphone, allowing you to adjust the quantity of salt dispensed with precision, track your sodium intake, and presumably impress dinner guests with your commitment to tech-enhanced condiments. At several times the price of a traditional salt shaker, this gadget proves that even the simplest kitchen implements aren’t safe from the compulsion to add Bluetooth.
The HAPIfork takes dining discipline to new digital heights by vibrating whenever you eat too quickly. Programmed to ensure you extend your meal to at least 20 minutes, this connected utensil monitors the speed of fork-to-mouth movements and provides haptic feedback when you’re shoveling food too rapidly.
WordPad’s MouthPad transforms your tongue into a computer mouse through a dental-grade resin mouthpiece that sits on the roof of your mouth. This 3D-printed oral intrusion allows users to navigate iOS, Android, PC, and Mac interfaces through tongue movements. While ostensibly designed as an accessibility tool, the concept of turning your mouth into an input device raises questions about both hygiene and social acceptability. Imagine the conversation starter at your next business meeting: “Sorry for the mumbling, I’m just scrolling through my presentation with my tongue.”
Looking suspiciously like a character from “Among Us,” Samsung’s Ballie is a mobile spherical robot equipped with a projector that follows you around your home. This AI-powered companion can project YouTube videos onto any surface, including your ceiling, and uses its cameras to detect your position, monitor your sleep, and presumably watch you when you least expect it. While the technology is undeniably impressive, there’s something slightly unsettling about an autonomous ball rolling through your home, projecting content and collecting data while you sleep.
For those plagued by egg-related anxiety, the Egg Minder connects your refrigerator’s egg tray to WiFi, allowing an app to track how many eggs remain and when they’re approaching expiration. This solution handily replaces such complex egg freshness detection methods as “looking at the date on the carton” or “the float test.” With built-in LED lights that indicate which egg has been in the tray longest, this smart egg babysitter ensures you’ll never again face the existential crisis of egg uncertainty—provided you remember to place each egg precisely in its designated sensor-equipped slot and regularly check the companion app.
While the Internet of Things has genuinely transformed industries and improved efficiency in meaningful ways, these particular innovations remind us that connectivity doesn’t automatically equal utility. As we continue advancing into an ever-more connected future, perhaps the most valuable skill will be discerning which smart devices actually make life better and which will end up in a tongue-in-cheek roundup on PYMNTS.