Why it's taking so long for Americans to get payments instantly

Post by bob1029 » Sun, Dec 17, 2023, 10:52 AM UTC

SideburnsOfDoom wrote: post #66

lxgr wrote: post #34

Earlier quoted context omitted.

Sure, yet there are still a small handful of too-big-to-fail banks at the top, and a long tail of too-small-to-upgrade-their-tech-and-processes ones at the bottom. I’d rather have 50 large banks than 5 humongous and 5000 tiny ones from a resilience and efficiency point of view.

The many small banks will buy most of the IT backend "as a service". There are a small number of vendors for this, FiServ comes to mind (1). And that industry is very concentrated - the number of competitors to FiServ for actually running a bank will be in single digits. 1) https://en.wikipedia.org/wiki/Fiserv https://www.fiserv.com/

Post by esrauch » Sun, Dec 17, 2023, 12:20 PM UTC

naniwaduni wrote: post #47

viraptor wrote: post #23

Earlier quoted context omitted.

It's the same problem for the biggest 4 banks. The rest can join the "future" in their own time. It's after the first 4 that you go from trillions to billions in assets. They should have some reasonable pull. 10 should be still a low enough number to make an agreement and effectively make the rest follow or lose out.

The biggest 4 banks ... do support near-instant transfers? Probably in at least three forms each pairwise? I'm not sure why we're pretending the US doesn't have infrastructure for instant transfers, there are like at least four directly supported systems, a couple accidental ones, and a whole host of third-parties in the space, each with a different set of tradeoffs and spotty support.

Post by klooney » Sun, Dec 17, 2023, 3:01 PM UTC

lxgr wrote: post #30

chadash wrote: post #25

Earlier quoted context omitted.

Except the parts that don’t scale. For example, some banks specialize in servicing specific communities (e.g., Chinese immigrants). Other banks understand local geographic areas well. For example, they might be able to give you a better rate on financing a gut remodel because they know your contractor does good work and your plans for the remodel will be desirable in a specific neighborhood. It’s hard to do that when…

I hear that argument often, but I’m not convinced. Why should efficient lending decisions somehow be uniquely hard to make in a large corporation with many local branch offices? We’ve seen massive consolidation in mobile phone networks (where local knowledge should arguably matter just as much for where to build the next tower), supermarkets (I’d assume preferences and spending habits to also vary widely), media, and…

Post by AndrewKemendo » Sun, Dec 17, 2023, 3:44 PM UTC

bob1029 wrote: post #90

toenail wrote: post #48

Earlier quoted context omitted.

> and a long tail of too-small-to-upgrade-their-tech-and-processes ones Sounds like a business opportunity. Heh, I wonder why the market is so broken that this wasn't fixed yet, there's obviously money in dealing with money.

This is our business. Believe me we are trying. It's more of a people problem than anything else. Wrapping the future in a palatable package for risk adverse bankers is truly a cursed problem. Everyone needs their medicine coated in some exquisite form of custom sugar or they won't even look at it. Traction has been acquired though. We've got word of mouth doing the rounds and customers are coming to us out of the co…

Post by missedthecue » Sun, Dec 17, 2023, 4:31 PM UTC

otterley wrote: post #98

csdreamer7 wrote: post #11

> The more than 300 banks it has said are using the platform represent a fraction of the roughly 9,000 U.S. banks and credit unions. The article claims big banks lobbying with their own competitor to FedNow delayed the rollout of real-time payments, according to those industry officials. But another factor I want to point out is that the USA has more small banks (and, I assume, credit unions) than any other country o…

Banks are probably a bit hesitant to unlock instant payments because they can’t be reversed and so they will be a juicy target for perpetrating fraud. I’m confident they’ll be rolled out eventually but I think it’s going to take a little time for banks to figure out what the right controls for the feature should be.