Booshan Rengachari of Finzly: Instant payments signal a “mind shift” in money movement
3/20/2024
Booshan Rengachari is founder and chief executive officer of Finzly (Off-site), a provider of banking and payment infrastructure for financial institutions and a certified FedNow® service provider.
We spoke with Rengachari about recent instant payment trends, use cases gaining traction in the market, and key takeaways from customers that are live on the FedNow Service.
Q: What instant payments trends are you seeing among the financial institutions you work with?
A: “Financial institutions are aware of the importance of adapting to meet the behavior changes and expectations of their customers — for many, the introduction of the FedNow Service has helped make this a possibility. Like any innovation, the move to instant payments represents a mind shift, and financial institutions and their customers are getting to rethink how money can move more efficiently day to day.
“In recent years, consumers and businesses have been relying on fintechs to deliver the always-on payment experience we expect today, which can result in a loss of business for banks. Today, we are seeing these transactions come back to banks as these institutions respond to demand by transforming their platforms and offering instant payment capabilities.”
Q: What instant payment use cases are you seeing gain traction in the market?
A: “Request for payment is a big use case right now. There is also notable interest in pay-by-bank as a use case, where a customer can pay directly from their bank account with a QR code rather than using a debit or credit card. We’re seeing real-world scenarios where instant payments can be used to avoid fees associated with card payments. If a merchant can accept payments through pay-by-bank with a reduced fee or no fee, it’s a very attractive alternative to credit card transactions which may charge a up to 3.5% fee. Having instant payments accepted in retail shops will change the game, but third-party innovation is needed to help expand use cases and drive adoption. Ultimately, the potential use cases are endless, especially as we continue this shift in the broader pattern of how we use payments.”
Q: Your organization participated in the FedNow Pilot Program as well as the Faster Payments Taskforce. Can you describe why instant payments have remained a consistent priority for Finzly?
A: “From our earliest involvement, we understood the urgency and need to innovate with instant payments. We saw the need for more payment options across many industries, particularly faster payment options that can meet the demands of a virtually connected, real-time world. As technology advances, of course money movement will change to meet this speed and interconnectivity. We understand the importance of a connected, real-time economy and really believe in the benefits of widespread instant payments.”
Q: How does Finzly help financial institutions streamline their payment systems and why is this important?
A: “If you look at how payments operate within banks today, the process is different depending on whether you choose to send an ACH or wire payment, with instant payments adding a third variable. Yet, customers just want to tell their banks where to send money and how fast to send it — they aren’t worried about which rail it’s sent on. For example, your experience at the post office will be the same whether you choose to ship a package next-day air or standard ground, and customers should see the same simplicity with payments. Finzly has this end-to-end approach, offering customers a quick and straightforward payment experience without unnecessary friction.
“Our unified application programming interface (API) can also simplify many of the back-end concerns for financial institutions. Instead of dealing with three different systems, three different teams and three different upgrades, for example, we can combine that in one platform with one system, one team, and can run one upgrade when we need to. If an institution wants to adopt the FedNow Service but isn’t ready to upgrade their whole system, we can meet the organization where they are now and set up an instant payments connection with the goal of centralizing the payment processing for other rails over time.”
Q: What advice would you offer to financial institutions looking to adopt the FedNow Service this year?
A: “Focus on your customers or members as you prioritize instant payments. If my coworker gets paid instantly after every shift, but my bank doesn’t offer that capability, I’m not going to wait for them to get up to speed and I won’t take the time to reach out to my bank to ask about it. Instead, I’ll ask my friend where she’s banking and change my banking relationship. When customers are not happy, they are going to go elsewhere, so it is important that financial institutions take their adoption of instant payments very seriously.”
Want to learn more about the real-world impact of instant payments? Read more FedNow Q&As here.