First Internet Bank has announced that it is joining a pilot program from the Federal Reserves Instant Payments Service which is called FedNow.
The Fed has been looking towards giving a safe and reliable instant payments network for banks in the US and the FedNow Service was started by the Fed in this regard. The idea behind this is to provide such a common service to all the banks under it, which are about 10,000 in number, and this can be used by the large and small banks alike.
The service is expected to be fully available in 2023 and various pilot programs are being done on the network to see how it improves and what kind of reliability it can provide. Many of the banks around the world continue to work with legacy systems that are very slow and which cannot cope up with the latest technology.
But providing a service that has high reliability and state approval as well, the Fed hopes to have a network that would help people and banks to handle time-sensitive payments. This would help the users to avoid late charges and other fees due to time-bound payments having missed their deadline.
This would also help to increase the flow of payments within the system as the concept of instant payments would encourage more and more users to use them and thus increase cash flow in due course of time for everyone within the systems including the banks and small businesses.
“Since its inception, First Internet Bank has sought to deliver a more flexible banking model to meet the evolving needs of our personal and small business customers,” said Anne Sharkey, SVP of Operations. “Our participation in the FedNow pilot allows us to bring two decades of leadership in the industry to foster change within the instant payment sector.”
Sharkey further commented saying, “The FedNow Service benefits both consumers and small businesses, giving consumers and small businesses real-time insights about where they stand in terms of actual funds in their accounts. Additionally, FedNow provides consumers with a truly instant payment option, so they can easily avoid late fees and overdrafts, while allowing businesses to receive funds immediately, eliminating the use of checks and avoiding certain processing fees.”
By being a part of this pilot, First Internet Bank would be able to test out the various features of the pilot and give feedback for upgrades and improvement and would also be able to collect the user feedback. This would help to improve the performance even further in the future and would help the bank become a truly online-only bank, a first of its kind in the US.