Every dollar spent in the global economy can be funnelled into one of two categories: commercial or consumer. In most cases, consumer transactions are the golden child, benefiting from the latest innovations and most forward-thinking processes. Every day customers interacting with businesses are to be delighted, assured, and made to feel special.
Think about the last time you bought a coffee at an airport without even touching your wallet or settled a group lunch tab with a quick swipe of an app (or, in some cases, even the empty palm of your hand). The world of consumer payments is spoiled for choice and flush with convenience.
On the other hand, commercial payments, a notably less glamorous market, can sometimes feel decades behind the consumer world in terms of innovation and features. Though overlooked in comparison, according to Accenture’s research, Reinventing commercial payments for profitable growth, the B2B payments market is projected to reach USD 1.26 trillion by 2028.
One of the challenges in the US commercial payments market, compared to other modern economies, has been its lack of a public standard for real-time payments for financial institutions. Since the 1970s, banks have utilised the Automated Clearing House Network (ACH) to handle transactions, a process that can take a full business day to clear or, if you’re unlucky enough to send a payment over a holiday weekend, several days. Bank-owned payment solutions like Zelle have also gained popularity in recent years, but their most valuable use cases have been mostly in peer-to-peer (P2P) applications.
And while The Clearing House’s real-time payments platform (RTP) has been an option for several years, overall adoption is still low. As of mid-last year, banks have had the option to use a new programme called FedNow, a solution from the Federal Reserve, that allows financial institutions to make real-time payments. FedNow has the potential to be a safe and affordable instant payments solution for banks and is a solid answer to other global economies' real-time payment programmes.
The solution has been a long time in the making and specific emerging use cases show clear benefits for both banks and their customers. But, as with any large-scale change, there are those that have made implementing FedNow a priority, and those who have not. Here are the top three reasons keeping banks from fully embracing the solution and some compelling reasons they should.
In this digital age, banks are under constant pressure to modernise their core systems to stay ahead of customer preferences, regulatory demands, and challenges from fintechs. For example, banks are already contending with mandated regulatory changes such as Fedwire’s move to ISO 20022 in March 2025, the standard message format that FedNow also uses. Banks understandably need to allocate resources to meet regulatory mandates over adding another real-time payment option that still has unclear differentiation and business cases.
Beyond compliance, there is a long list of priority implementations on bank leaderships’ plates. Take artificial intelligence (AI), for example, one of the hottest business topics of the last decade. We found that only 30% of banks report having adopted high levels of AI in their commercial payments division for tasks like automating back-office work and generating customer-facing content.
As of February 2024, only about 500 banks have signed up for FedNow of the roughly 9,000 eligible US financial institutions. Unlike other government programmes, there is no Office of the Comptroller of the Currency (OCC) or Consumer Financial Protection Bureau (CFPB) mandate or deadline for firms to adopt FedNow.
From our experience working with clients, banks are naturally eager to be the receivers of real-time payments, but many are still hesitant to be senders of those transactions. They don't want to miss out on incoming deposits from customers, but many don't yet feel the demand for real-time outbound payments from their clients. For better or worse, banks have been given the choice of when to implement the programme, meaning there will often be a more pressing job at hand for resource-strapped institutions.
When asked, 59% of banks said the speed of real-time payments was an important attribute of their services for commercial clients. Getting payments through banks and into the hands of customers in seconds rather than days is an obvious selling point, but resistance to change remains in the industry.
More specifically, the emerging FedNow use cases that could drive the most volume for banks are found in areas where existing payment methods don’t meet every need – such as employee/contractor payroll, refunds, and insurance payouts. Other potential use cases are being hindered by banks’ concerns that it may detract from existing payment options customers are already comfortable using and have higher revenue per transaction.
Almost every major payment type ever invented is still in use — from the barter system to digital currency. Each system has found its ideal applications in different parts of the economy and real-time payments is finding its niche use cases in areas where it makes the most impact. Demonstrating and communicating the benefits in these clear use cases will be a key driver for getting banks on board with FedNow.
Fraud and security challenges remain a constant concern for financial institutions. In addition to straightforward real-time payments fraud that most often happens because the client is tricked into sending a payment they don't want to make, technologies like AI and quantum computing require security experts to constantly reevaluate how they’re keeping their customers safe. Our colleague has pointed out that digital payments fraud has grown by about 25% in recent years from all sources.
Fraud prevention was paramount for the Federal Reserve when designing this programme and it has been intentional in communicating the built in safeguards that include areas like transaction limits and negative lists, participant reporting and notification of fraud, risk management and error resolution, and information security.
By addressing these data privacy and security challenges from the onset, FedNow is building trust with banks and businesses and paving the way for more widespread adoption. That said, financial institutions will continue to play a primary role in educating customers about fraud prevention best practices. FedNow launched a supplemental website that includes information about risk management and fraud to help smaller banks understand the inherent risks of instant payments and how to mitigate them.
For banks that have dedicated the resources to adopt the FedNow instant payments programme, the immediate benefits and long-term positioning are clear. In addition to making funds available to the beneficiary in a matter of seconds, banks are also afforded the certainty of the settlement and can serve clients 24 hours a day, seven days a week.
As a functionality, real-time instant payments have been available in the US for several years, as have peer-to-peer money transfer services in the form of popular consumer-facing apps.
FedNow is less of a revolution for the industry but is more of an equaliser, especially for smaller banks that have been hesitant to adopt The Clearing House RTP or other private options. Now that the Federal Reserve has come out with a solution built to benefit every bank and is manageable for smaller banks, the burden of progress lies with those financial institutions that stand to gain the most from adopting it.
This is not a one-off or ‘nice to have’ initiative for banks that may be looking to boost their next quarterly earnings report, this programme is a vital step in modernising the way American financial institutions do business and will ensure the competitiveness of our banks in the coming decades.
Serving as Payments lead for North America, Kim brings over 25 years of experience in Accenture’s Financial Services practice. She has helped large and mid-size banks improve every aspect of their Commercial Banking business from sales to servicing.
Tim serves as a managing director for Accenture’s Payments practice for North America, working to help clients create the future of payments with new products and market strategies.
Accenture is a leading global professional services company that helps the world’s leading businesses, governments, and other organisations build their digital core, optimise their operations, accelerate revenue growth, and enhance citizen services—creating tangible value at speed and scale. We are a talent- and innovation-led company with approximately 742,000 people serving clients in more than 120 countries.
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