Instant Payments Surge, But Smaller Credit Unions Are Falling Behind
By CU Today Staff —
NEW YORK--Financial institutions are rapidly embracing instant business-to-business payments, but smaller banks and credit unions are significantly behind their largest competitors, according to new research from PYMNTS Intelligence and The Clearing House.
Just 58% of institutions with less than $5 billion in assets offer the RTP network, compared with 90% of institutions with at least $100 billion. The FedNow gap is even wider: 19% versus 55%.
The findings come from The Bankers’ Playbook: The ROI Case for Instant B2B Payments, written by PYMNTS Intelligence and produced in collaboration with The Clearing House. PYMNTS said it retained editorial control over the findings and analysis. Researchers surveyed 100 senior payments, product development and treasury management executives at U.S. financial institutions serving businesses from March 18-31.
The incentive to catch up appears substantial. Eighty-eight percent of financial institutions surveyed rated the ROI from real-time B2B payment rails as high or very high, including 82% of institutions that have not yet adopted an instant rail. Moreover, 92% of RTP holdouts and 95% of FedNow holdouts said they plan to enable the respective networks within two years.
For credit unions, the report highlights how heavily many still rely on older payment methods. Credit unions use regular ACH for an average 37% of their B2B payment volume, while traditional payment methods overall account for 70% to 77% of B2B dollar volume across the institution types studied. Currently, 76% of surveyed financial institutions offer the RTP network to business clients, while 40% offer FedNow.
The payoff may extend beyond simply moving money faster. Among institutions offering at least one instant rail, 88% reported growth in the lifetime value of their business-client relationships during the past three years, compared with 73% of institutions offering neither. Among RTP users specifically, 92% reported increasing client lifetime value versus 67% of nonusers. The authors cautioned that the data do not establish whether instant payments cause stronger relationships or whether higher-performing institutions simply adopt the technology sooner.
Credit union executives surveyed also pointed to operational and product opportunities. One $5 billion-to-$9.99 billion credit union that uses both RTP and FedNow said, “Instant rails give us a strategic opportunity to build new commercial payment packages that combine speed with data-rich reporting.”
Another credit union, a $500 million-to-$999.9 million institution that had not adopted either network, said, “Real-time payments reduce failed and exception payments with real-time validation capabilities.”
Originally reported by CU Today.