GFT to Guide U.S. Banks and Financial Institutions Through Integrations with FedNow

Following its work to introduce new payment capabilities globally, digital transformation company GFT is turning its focus to the U.S. GFT will draw on its experience with Pix in Brazil and the Universal Digital Payments Network (UDPN) to provide a roadmap for digitization as banks and financial institutions prepare for FedNow. The company will introduce the architecture and compliance measures these institutions need to participate in the instant payments program. GFT will additionally enable companies to significantly scale transaction volume and introduce never-before-seen instant payments use cases.

FedNow Drives Opportunities to Outpace Existing Instant Payments Offerings in the U.S.

Prior to FedNow, U.S. banks have been dependent on closed, third-party services for instant payments. Even the most established service has less than 300 out of thousands of banks using it. As a result, consumers can only make and receive payments between banks that are enrolled in the same services. Some of these services don’t process transactions in real-time and lack the security of a centrally regulated system.

FedNow will enable all U.S. banks and financial institutions to transcend these limitations by becoming part of the country’s first regulated, universal instant payments network. Their participation, however, will require a delicate balancing act of introducing new infrastructure on top of existing, often legacy, architectures.

GFT’s Three-Part Approach for Banks to Integrate with FedNow

GFT’s approach is built around three key challenges organizations will face before, during and after the launch of FedNow. The company will work hand-in-hand with financial institutions to design, build and implement digital capabilities necessary for overcoming these challenges, including:

• Introducing the digital and data architecture necessary to massively scale and process transactions in real time. Many banks already have modern API-based layers in place to send and receive instant payments transactions. But not all of them are ready to deploy financial information from their underlying data systems. GFT will enable banks to integrate these two layers both internally and with other banks. This ultimately ensures that APIs can access data needed on the backend to carry out consumer-facing functionality on the front end.
   
• Complying with elevated regulations, even as they evolve over time. In contrast to instant payments offerings from fintechs, FedNow will have strict regulatory requirements for participating banks. As these regulations evolve, GFT will help banks adapt their offerings to remain in constant compliance without compromising time to market or user friendliness. Traditional banks will also be in a unique position to ensure federal protection of consumers’ financial data and fund transfers. On their own, fintechs cannot guarantee this same level of security.
   
• Scaling transaction volume and introducing new revenue streams on top of their instant payments infrastructure. As banks integrate with FedNow, GFT will ensure that their internal systems can deliver on significantly increased transaction volumes. From there, the company will enable banks to introduce entirely new instant payments use cases and business models. For instance, enabling merchants to offer instant payments as a checkout option. Instead of going through an approval process and then releasing money to the merchant, banks will be able to do it all in real time. These types of emerging use cases will result in new business for banks and immediate revenue for their clients.

Throughout its 35+ year history, GFT has worked with global banks and financial institutions to introduce new payments experiences at scale. The company has additionally worked on the regulatory side of payments, joining forces with the Brazilian Banks Federation (FEBRABAN) to develop the framework for its open banking standards. GFT also contributed to building the technology for UDPN, the world’s most advanced digital currency payments project announced at this year’s World Economic Forum.