Rob Ames is head of digital delivery at Salem Five Bank (Off-site), a regional mutual bank helping to meet the complex financial needs of families and businesses throughout New England.
We spoke with Ames to learn more about what instant payments implementation through the FedNow® Service means for his customers and the future of evolving innovation across the industry.
Q: Why did Salem Five decide to adopt the FedNow Service? Were there any insights from customers that helped determine the use cases to prioritize?
A: “We see a pressing need for innovation within traditional banking bill pay solutions. Our customers’ bill pay usage over the past few years has shown a portion of transactions migrating from our bill pay solution to direct billers, meaning some consumers are paying bills using a direct biller to receive real-time acknowledgement of the payment. We look forward to the day when our bill pay solution has an instant payment option, because it can reduce that migration. For consumers, consolidating bill pay at their financial institution means better reporting options and stronger visibility into the entirety of their payments.”
Q: With the FedNow Service launch right around the corner, where does Salem Five Bank stand in terms of readiness for adoption?
A: “We are breaking down implementation into distinct categories. At launch, we are planning to go live with receive-only first, so our customers will be able to receive payments originated by others through the FedNow Service. Looking beyond launch, we are working to understand how existing products offered by our service provider will be enhanced to offer faster money movement with instant payments. The bill pay solution I mentioned is one of those examples, and there will be many others as innovative payment solutions emerge across the industry.”
Q: What have been some of your biggest learnings during implementation and resource planning?
A: “It has been an enterprise-wide effort, with strong interest from our senior management team and a desire for Salem Five to be involved with instant payments early on. It’s about getting involved, paying attention, following what's happening and being prepared with a tangible deliverable on day one. That has been our mantra since the beginning. As the process unfolded, we had to determine how best to participate in instant payments. It can be a lot to take in, but having a longer strategic view helps to get you through the nuts and bolts of implementation.”
Q: You joined the FedNow Pilot Program in 2019. Are there any advantages in preparing early?
A: “Getting an early start means benefitting from having foundational and operational elements in place. When the opportunities start to come at the product level, it’s a matter of ‘turning them on’ to leverage an infrastructure already in place and operational. By doing it this way, we are positioned for launch and will be more confident when instant payments become mainstream. We have been in the FedNow Pilot Program since the beginning, and it’s easy to forget how much we have learned over that time. Taking advantage of instant payment education resources on FedNow Explorer (Off-site) is a good first step for organizations wanting to understand more about how the service will work.”
Q: What are some of the long-term implications for how instant payments will evolve over time?
A: “The FedNow Service is a behind-the-scenes payments infrastructure that’s available for financial institutions to build product on top of, so we are watching the broader fintech sector for new products that we don't know about – or can't even imagine – to hit the marketplace. One can envision a day when a customer is at a retailer waving their phone over a device to move a payment using new instant payment rails instead of card rails. It could be a sea change for how merchants accept payments and how consumers interact with those payments.”
Pioneers of Now represent engaged financial institutions and service providers united by their commitment to early adoption of the FedNow Service (Off-site), which will launch in July 2023. This is the eighth in a series of ongoing Pioneers of Now features (Off-site).
