Erika Baumann

Banks hesitate to make a large technology investment to accommodate a new payment workstream without fully understanding the market demand and having a realistic expectation for adoption.  

The stakes are higher with the launch of The Clearing House’s real-time payments (RTP) system. However, banks urgently need to develop a strategy, or they risk falling behind the market expectations.  

Aite Group conducted a survey of executives from the top 20 U.S. banks to understand their adoptions of real-time payment systems and the market expectations of the industry. The executives surveyed between January and March of this year are responsible for forming and implementing real-time payment strategies at their organizations and have titles such as “real-time payments product manager” and “director of strategy.” 

Since The Clearing House has launched the RTP system, the first new payment workstream in the U.S. in 40 years, banks have been catching on to their example. Real-time payments are a reality in the U.S., and some banks have already fully enabled their corporate clients to receive and initiate real-time payments. 

Corporate bank clients expect their banks to keep up with market trends in new technology, including technology that they may not yet be ready to utilize. Banks recognize the need to keep up with market trends to meet customer expectations, specifically around payments. 

Because of these trends, these are many implications effecting the traditional payment structures banks have utilized. Aging infrastructure does not easily accommodate new payment workstreams, and technology investment is needed. Banks that do not currently offer or have plans to offer real-time payments capabilities to their corporate clients risk falling behind their competitors.  

Banks are also being forced to consider a business-to-business (B2B) real-time strategy before market adoption is clear because of the growing market demand. These banking institutions are either actively developing use cases for their clients or watching the market closely for go-to-market indicators around B2B real-time payments.  

Confusion Around Industry Verticals 

Real-time B2B payments have arrived in the U.S., but banks lack consensus on use cases. 

According to Aite Group’s survey, several U.S. banks said that one of the greatest barriers to building out a viable business case for real time B2B payments is the lack of use cases among their client base and ambiguity around which specific industry verticals to target.  

It is fairly common for banks to create strategies around particular industry verticals when marketing a product or solution. This helps banks showcase expertise and understanding of a particular industry and create a repeatable process for selling or cross-selling to similar businesses. Real-time payments for corporate clients are no exception, with 45 percent of banks choosing to focus on specific industry verticals in Aite Group’s survey.  

Aite Group recommends that banks should make assumptions based on low-value wire transactions and same-day ACH transactions to help predict volumes for a brand-new payment workstream or system. Allowing receipt but waiting to enable initiation of real-time payments for corporate customers is delaying an increase in volume.  

Aite Group also found that understanding the strategy and timing of real-time B2B payments enablement in your technology solution is key for communication through sales and marketing channels. Targeting specific industry verticals, especially those that see benefits in request-for-payment messages, is a quick way to see return on the investment.  

Erica Baumann is a senior research analyst on Aite Group’s wholesale banking and payments team. To learn more about Aite Group’s research coverage of wholesale banking and payments, please contact Aite Group at info@aitegroup.com.