Money on the Move


Money on the Move
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Cash is quickly becoming a thing of the past, but money is still moving fast. As digital capabilities drive a world focused on instant gratification, banks and credit unions are caught between a place of responsibility and accommodation.

Person-to-person payment apps have changed the way money moves. Splitting the tab at a restaurant? No need for checks or cash, just send it on your phone. These capabilities are overdue, but they also open a window for fraud.

That’s where financial institutions come in. There’s a growing trend among young people to simply leave most of their money in the wallets of P2P applications. Unfortunately, many of the protections that exist when this money is housed at a regulated financial institution aren’t available as these apps are not bound by the same regulations required of FIs. Make no mistake — this is not an attack on P2P applications. It’s the responsibility of the community banking sector to meet this generation of consumers where they are, by providing a quick and safe method of managing money.

The Federal Reserve’s money moving methods are only now starting to come into the 21st century. Banks have been forced to rely on antiquated forms of payment to move money, forms that no longer fit the bill for young account holders. This includes the Automated Clearing House Network. It moves money in a safe, effective way — but it’s slow. Like, "one to three days before it moves" slow. Wires are faster, but expensive and can be risky if the customer doesn’t do their homework. Banks and credit unions are bound to these methods.

Recently, the Federal Reserve began implementing the FedNow payments rail, a product that allows financial institutions to move money instantaneously regardless of FI size or physical location. This move was forced as some organizations gravitated towards The Clearing House’s latest product called Real-Time Payments (RTP). The FedNow Service couldn’t come soon enough and is badly needed for banks and credit unions to compete with outside technology that may be more vulnerable to fraud.

As the customer, you demand this service. And you deserve this service. You should expect your account provider to have these options available to you. You should also require and demand security and peace of mind when moving and managing your money.

Technology has made banking better, faster, and easier. With this increased accessibility, technology has also made banking riskier and less centralized. The responsibility to resolve this falls squarely on us, the financial institution. We need to re-adjust our comfort zone. Our customers deserve the ease and accessibility of banking technology and a responsible, mandatory level of security. But we need the help of our regulators and the Federal Reserve to do so. 

Community banks will continue to adapt and serve our customers for generations to come. Now is the time for us to demand faster, easier, safer technology not for our own peace of mind, but for you.