In the late 1990s, long before he founded Finzly, Booshan Rengachari arrived in the U.S. from India at age 21, with no friends and only $500 to his name. He first dove into software engineering, but several years later began a new career at a bank.
"I saw there were a lot of problems to solve at banks, and how far behind the U.S. was in payments technology compared with China, India and Brazil," said Rengachari, who worked at banks including Wachovia and Wells Fargo before launching a payments-focused fintech in 2012.
Initially called SwapsTech and focused on giving banks a turnkey approach to handling cross-border payments, Rengachari's company – now called Finzly – pivoted in 2019 to offer banks a service that can broadly customize domestic and international payments for consumers and corporate customers.
Last month, Finzly was among the first to provide its bank customers with an API link to FedNow's faster-payments pilot, through Finzly OS, a parallel core platform banks can use with their existing core platform to access a multi-rail domestic and payment hub, according to Rengachari.
"Most banks still offer different payments – cross-border or treasury services – through different channels, but we've created a single point where they can add any combination of rails as needed," Rengachari said.
Rengachari's eagerness to be at the forefront of faster payments dates back to 2015, when he was a founding member of the Faster Payments Task Force, a group of 300 financial technology firms and experts who contributed to a pivotal white paper that helped lay the groundwork for FedNow.
"The task force's work ended a few years ago, but being part of it helped me envision what the future of faster payments would look like," Rengachari said.
With its zippier name and tighter focus on customizing faster payments, Finzly has signed deals with 27 different banks that may use its single API connection to access ACH, Fedwire, RTP, FedNow and Swift to support cross-border payments with foreign exchange, trade finance and treasury services, customizable by adding or subtracting features as needed, he said. RTP is The Clearing House's real-time payments network.
The 110-person firm's customers include Pittsburgh-based First National Bank of Pennsylvania, Phoenix-based Western Alliance Bank and Dallas-based Veritex Community Bank.
Veritex is using Finzly to consolidate its ACH and Fedwire payments in a single platform, with the option of adding RTP and FedNow later, the bank said in a press release. The bank's commercial customers may access treasury services through Finzly's hub, which is embedded in Q2, Veritex's core provider, according to the bank.
Since rolling out its API link to FedNow last month, several of Finzly's customers have extended the emerging faster-payments rail to their commercial and fintech customers, Rengachari said. "We're sending and receiving messages in test mode until FedNow goes live, and banks are seeing the benefits," he said.
Banks are likely to begin with just a few FedNow-powered services, which will likely take years for most banks to adopt, according to Rengachari.
"The immediate use cases for FedNow are in commercial payments and disbursements like insurance and loan payouts, but we expect to eventually see its adoption for request-to-pay services at the POS, for e-commerce, bill payment and payrolls," he said.
Many banks are likely to take adoption of faster payments more slowly, he added.
Finzly adds new costs, but it dramatically cuts the work required to support separate, older payment systems, according to Rengachari.
"Not every bank wants to add FedNow right away, but they'd like to have the option, so we tell them to start with RTP and they can add other capabilities later," Rengachari said.
Corporate bank customers are another force driving banks to modernize their commercial and cross-border payments, according to Neil Hartman, a senior partner in financial services technology and innovation at the Chicago-based consulting firm West Monroe.
"The bank customers' experiences with the Amazons and the Apples have really shaped the way they look at all financial interactions, and banks need to catch up. This is an area that's really ripe for disruption, and even in the commercial payments area, banks are getting help from fintechs," Hartman said.
The coming launch of FedNow and new, more nimble cross-border payments options may prompt more fintechs to work with banks to support faster payments and app-powered remittances, Hartman said.
"Fintechs that are partnering with banks to lift the entire tide of the financial services industry through collaboration are going to see strong results as faster payments expand," he said.
Rengachari says that while banks continue to be rocked by economic jolts and nontraditional rivals nibbling away at their revenue streams, faster payments present a huge opportunity to retake control.
"By working with fintechs to make faster payments more accessible and versatile for their customers, banks can retain the upper hand in the financial ecosystem," he said.
