Scaling for Faster Payments Without Leaving Your Check Infrastructure Behind

Scaling Faster Payments BlogAre you keeping up with the growing number of faster payment types? The number of new payment types are on the rise. In the Federal Reserve’s Faster Payments Task Force Report, Part Two, issued in 2017, they numbered well over 20 different real-time payment types. Since then, many more have been introduced while some have disappeared.

The Fed stresses the importance of ubiquity, efficiency, speed, governance, and the need for security across the entire payment type industry. According to the report: “The payment system is critical to the economic vitality and competitiveness of the United States and must continually evolve to meet the needs of an economy that is becoming more global, digitally-interconnected, real-time and information-driven. The Faster Payments Task Force believes “the United States must leverage new technologies and new paradigms around speed, security and efficiency to create a better payment system: one that is faster, ubiquitous, broadly inclusive, safe, highly secure, and efficient.”

While the players and payment types have changed, even in the two years since the report, the upward trend is growing. Additionally, recent acquisitions made by two of the largest financial services companies reveal a strategy to establish a foothold into emerging payments, from point-of-sale all the way into core banking solutions.

While new payment types are growing, the number of checks being written is declining. Various data sources indicate the rate of decline is anywhere between 3-to-7% annually. That decline, however, does not affect check retrieval and access. Banking customers expect reliable and immediate retrieval of their check data, both through mobile and online, at an increasing rate. As a result, even though fewer checks are written, financial institutions may be seeing an increase in the percentage of check images retrieved. Access is everything, from the end customer perspective.

This is an interesting, sometimes confusing, and rapidly changing banking paradigm. How does an organization explore and implement new payment types (with limited resources and no idea how they might take hold and grow overnight) while servicing existing payment types? And don’t forget about meeting customer demands. Daunting isn’t it?

Luckily the financial institutions that leverage cloud providers for check storage already know the solution – utilize the same cloud economics that allows you to manage the decline of the check to also handle your new payment types. Financial institutions in the cloud have access to what they need, when they need it, with cost predictability through per unit pricing.

Why does this strategy make sense?

It allows your business to:

  • Keep pace with evolving payment types
  • Satisfy on-demand customer expectations
  • Meet the needs of your business units
  • Reduce IT expenses
  • Optimize regulatory processes
  • Control vendor due diligence cost
  • Respond to compliance audits

Expanding your current archive into a true payment archive provides the most straightforward path to handling new payment types. First, it minimizes a financial institution’s upfront investment – reducing resources needed to build something new while easing integration with other systems and managing yet another pool of data. There are also the added cost benefits that may not be as apparent – using an existing vendor that is already trusted to hold your data, and dependable enough to serve your customers is of enormous value. Regulators know them, your auditors know them, and you know them. Your business units will thank you as well because they do not have to integrate with an entirely new system every time a new payment type pops up.

The most important reason, though? Your customers. Having a single, unified repository of all payment-related documents, images and related metadata provides an entry point to a cross-payment overview of your customers. Consolidate all real-time payments, ACH, wire, checks, lockbox, statements and other ISO 20022 payment types into a single, secure and scalable archive and free up your resources to focus on business projects rather than infrastructure projects.

If you are not already in the cloud for payment archiving, yes, you are behind, but it is easy to catch up. Start by finding a cloud provider specializing in financial institution payment data. Additionally, leverage the large number of checks you need archived to reduce the per item charge of the minimal volume of newer payment types. Then, deploy to the cloud to meet your current and future payment processing demands.

A private cloud, purpose-built as the system of record for financial institutions, can take care of your institution today and tomorrow, regardless of what payment types are thrown at you.

By Richard Luchak | May 14, 2019| Payments


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Richard Luchak

Mr. Luchak, with more than 15 years of experience in the financial services industry, focuses on Viewpointe’s payment products. Since joining Viewpointe in 2001, Richard has provided thought leadership in image exchange and settlement, contributing to the building of the company’s business. He is a contributor to X9 and the Check Image Collaborative in the authoring of various financial industry standards including the X9.100-187 standard and the subsequent Universal Companion Document. Richard holds a M.B.A. from LeTourneau University. Full-time father of two active teenagers under the driving age, Richard moonlights as a chauffeur. He is a big fan of the Houston Texans, roots actively against the Dallas Cowboys, and volunteers tirelessly for various organizations when football season is over.

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