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Scott Young of HawaiiUSA Federal Credit Union: The FedNow® Service 'levels the playing field'

Scott Young is the vice president of payment operations at HawaiiUSA Federal Credit Union (Off-site), a community-centered credit union operating 14 branches across the state of Hawaii.

We spoke with Young to discuss HawaiiUSA’s early FedNow Service adoption and the impact instant payments has on credit unions and their members.

Q: Thinking specifically of your unique member base, how do instant payments align with HawaiiUSA’s priorities and mission?

A: As one of Hawaii’s largest credit unions, we think of our organization as a leader in the community, dedicated to sustainable financial health for individuals and businesses across the state of Hawaii. We’re people-focused, which means we prioritize offering products and services similar to those at larger banks but with an emphasis on personalized service. The FedNow Service levels the playing field for us in several ways, enabling credit unions such as HawaiiUSA to offer the same type of instant payment service as a larger bank.

Q: What are the top instant payment use cases you are seeing now from your members? What do you expect to see in the future?

A: Right now, we’re seeing a prevalence of account-to-account transfers and loan payments as our top use cases. Our members are enjoying the ability to instantly pay their credit union loans from accounts at other institutions.

We’re also targeting several specific use cases in the future as we expand from receive-only participation to send and receive: bill pay, instant disbursement for loan proceeds, sending and receiving paychecks, and the ability to send and receive requests for payment. We’re partnering closely with our service providers to integrate instant payments into our online and mobile banking interfaces, maximizing the options we’re able to offer our members.

Q: You were a member of the FedNow Service Pilot Program and went live the day the service launched. How did you identify a demand for instant payments from your members early on?

A: When we looked at the transaction habits of our members, we noticed that many of them were already using faster payment platforms in their daily transactions. So, while they didn’t come to us and ask for the FedNow Service by name, we realized that to keep up with our members, we needed to look for innovative ways that money could be moved to and from our credit union.

We also were looking for a solution that would involve us in these transactions and help solve for some of the challenges we face, especially those unique to us as a Hawaiian financial institution. The FedNow Service ultimately has been a good fit and helps us meet our goal to be a full-service choice for our members.

Q: What are some of those unique challenges that the FedNow Service helps you solve?

A: Instant payments are helpful to us as a smaller financial institution because they reduce the buildup of interbank obligations. With transactions settling in seconds, we can scrutinize our operating expenses and identify cost-saving opportunities.

There are logistical benefits, as well. Hawaii is in the middle of the Pacific Ocean and in one of the last time zones in the world. We’re starting our day when a lot of the banks on the East Coast are ending the day, so we haven’t always been able to take advantage of the sending windows for other payment services. With a 24x7x365 service, we don’t have those window limitations and it opens a lot of possibilities for us and our members.

Q: How will increased adoption of instant payments benefit credit unions and their members?

A: Increased adoption will keep credit unions relevant to their members. If a credit union can be involved at the start and end of an instant payment transaction, then that money stays within the credit union environment and our members don’t have to turn to bigger banks or fintech companies to meet their needs.

From a member perspective, education and awareness are key. It’s our task to make sure that our members and customers understand how instant payments can benefit them. We want them to understand not just what makes an instant payment different, but also how HawaiiUSA can provide the solutions they’re looking for in their day-to-day transactions.

Pioneers of Now represent engaged financial institutions and service providers united by their commitment to early adoption of the FedNow Service (Off-site), which launched in July 2023. This is part of an ongoing series of Pioneers of Now features (Off-site).