What is keeping traditional financial institutions from offering instant payments?

251 views2 Upvotes4 Comments

CTO in Software, 11 - 50 employees
There's been a bunch of chatter lately about instant payments and instant cross-border payments and QR codes and overall security. I don't feel like banks are properly incentivized to do anything instantaneously. My personal view is that they want to abstract. They don't want to make anything fully digital. They want to hide the abstract, hide the details of how this happens, and then they don't want to make it instant because, let's be honest, they make money on the float. This notion of instant payments and kind of PayPal or Venmo approach to overall banking seems counterproductive to their overall strategy.
Building from scratch (FinTech) in Finance (non-banking), 2 - 10 employees
From my perspective, real-time payments are coming. And the way the traditional banks have made money on floats is actually going to get transformed and changed, period. What the question really boils down to is how fast, because the P2P apps, such as Venmo and PayPal, are changing the way we are doing transactions, from a vendor-consumer perspective. Small and medium-sized business are already doing those kinds of payments. Contactless has made it more commonplace, especially for smaller transactions. While digital wallet transactions make it look like real-time payments from a consumer standpoint, they are not since the transfer happens between wallets, not bank accounts. 

The real-time payment networks have become better in the recent years and will continue to evolve. Improved cash-flow, less fraud and other benefits will lead to customers and businesses demanding this be adopted widely.
1 1 Reply
CTO in Software, 11 - 50 employees

So I think, to summarize, the banking industry is very much batch oriented and you used the term wallet, the term wallet is very overloaded. Like a wallet means different things to different people and digital wallet means different things to different people. It has to be grounded in some form of KYC (know your customer identity) that's been validated, and being able to track that transaction. I think the appropriate term for cross border payments or transactions is remittances. And there's no great jurisdictional business requirements going from any country to any country. So there's delays, either intentional or unintentional. But there's this, once again, this is why the financial networks are very latent and frustrating. Like if I want to wire money to somebody, it's a very cumbersome activity and process, it shouldn't be. Everything else these days happens in real-time or near real-time, but the banking and payments sector has not.

Chief Information Officer in Manufacturing, 10,001+ employees
There needs to be a reason or incentive for a bank or financial institution to offer instant payments.  It comes down to what do they get out of offering instant payments?

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