As the financial services industry pushes to make instant payments more accessible, CU*Answers is enlisting the help of
The Grand Rapids, Michigan-based credit union service organization began discussions with the $4.3 billion-asset Corporate One last year around designing a framework for integrating into
Using Corporate One's certification as a third-party service provider for the RTP network, and as a funding agent to assist with settlement, the platform will allow CU*Answers' core clients to connect to the RTP payment rail and facilitate real-time receipt of funds for member accounts.
"There are so many different solution providers out there, and I don't think there's a single solution that covers everything, so the opportunity for any institution to have access to a variety of options based on the membership base that they serve," will grant a competitive edge, said Geoff Johnson, chief executive of CU*Answers.
Six institutions are currently in the testing phase for receiving only, but both Corporate One and CU*Answers plan to pursue sending capabilities and transaction alerts, depending on the initial results.
One such organization is Bluestone Federal Credit Union in Sioux Falls, South Dakota, which had been following the progress of Corporate One's work with real-time payments prior to the partnership with CU*Answers. Bluestone decided to opt in as part of the initial cohort of testers.
While integration support and confidence in Corporate One's research for the initiative were driving factors behind participating, it ultimately came down to the potential benefit to members, said Jeff Jorgensen, president and CEO of the $185 million-asset Bluestone.
"Existing bill pay and [peer-to-peer] models, even if offered safely and conveniently inside our mobile app and home banking tool sets, cannot meet our members' demands for timely payment settlement services in the future," Jorgensen said. "RTP is one more arrow in our quiver for our members to consider and utilize."
The credit union is slated to go live with the RTP network this week.
While joining rails like RTP and FedNow will enable the faster clearing of transactions, some experts warn that factors such as
"The biggest challenge beyond the initial integration is that unlike other systems, instant payments are a 24 hours a day, seven days a week operation. … Meaning at least some parts of the [financial institution] must become a perpetually operational environment," said Aaron Press, research director of worldwide payment strategies for IDC.
Other advisors highlighted that as more organizations flock toward qualified core providers seeking integrations, the amount of time needed for development and the degree of customization are negatively impacted, said Aaron McPherson, principal at AFM Consulting LLC.
"[Development] can be a major undertaking, which is why I predict most smaller institutions will wait until they can get it from their core provider," McPherson said.
Both McPherson and Press predicted that real-time payment systems will increase in use throughout the financial services space despite these hurdles.
"In line with our mission of finding ways to partner with and help more credit unions, this was the perfect way to bring [real-time payments] to many credit unions at a more economical price," said Melissa Ashley, president and chief executive of Corporate One.
