By Ray Birch
PLANO, Tex.—What’s top of mind with credit unions when it comes to payments in 2024?
“It's really faster payments,” according to Bruce Fox, president and CEO of Catalyst Corporate CU.
And that includes the new FedNow Service currently in use by more than 300 financial institutions, including credit unions. But Fox said CUs have been taking careful steps with the new platform by developing a “playbook” first.
“As you know, the Fed came out with their instant payment platform in July of this year. That's really become the focus of most credit unions right now—trying to get a final strategy, to work that into their overall payments strategy,” explained Fox. “I think most credit unions will be adopting a faster payment solution in the next 12 to 18 months.”
Fox shared with CUToday.info his insights into what credit unions should be looking at when it comes to FedNow, especially as the overall market continues to move toward faster payments.
Where to Start
Bruce Fox
“It's really starts with evaluating the options they have,” he said. “I think this is the first payments platform that's been introduced in the United States in many, many years. So, yes, it's not something credit unions and financial institutions in general do every five or ten years. They have to have a playbook to go by. I think everyone's trying to do their background work, educate themselves on instant payments, and then they will make a decision on what model and what features within a model are best for their members and their organization.”
Fox emphasized that while Catalyst has been a leader in offering the FedNow Service and is working with the Federal Reserve to develop the platform, the corporate CU has no target for signing credit unions to the new payments solution.
As CUToday.info reported, the Federal Reserve stated FedNow had 331 institutions participating as senders or receivers on the network by the end of 2023.
“We don't have a specific goal,” he said. “But based on the work that we've done in the last four to five months on this, and the strong interest that we're seeing, I would not hesitate to think we could have over 100 credit unions—maybe between 100 to 200 credit unions—signed in the next 12-months.”
‘Actively Involved’
Catalyst began onboarding credit unions in October.
“Our team has been actively involved in the faster payment industry workgroup since they began,” Fox explained. “I think it was about eight years ago. So, this is something that we've been focused on for a long time. We participated in the development of the new payment channel as we saw the need to expand this service for our members.”
As CUToday.info reported, in May of 2020, Catalyst acquired 100% ownership interest in Atlanta-based fintech APTY Solutions.
“We were intrigued by the opportunity to collaborate with them on building a bridge for the instant payments infrastructure,” Fox said. “The purpose of this was to help us to quickly deliver a secure solution for sending and receiving instant payments through the Fed.”
In July of 2023, Catalyst was the first financial institution in the Fed’s 11th district to go live on the FedNow service, Fox said.
CUs Going Live
“Now, we have several credit unions live on the service and hundreds in various stages of discussion or in the queue for on boarding the service,” Fox said. “Our credit unions can get access to an exceptionally flexible solution that could be integrated with any core, online or mobile banking platform and that offers a premium settlement service, such as dedicated sub accounts, booked now transactions and basically greater interest earnings with the extended settlement hours for those funds.
“Finally, those credit unions that want to send or receive real-time payments through the Clearing House RTP network, or initiate a payment through our mobile app can do that through the same platform, as well,” continued Fox. “It's kind of a comprehensive platform now that only not only deals with traditional electronic payments, but it addresses the entire range of faster payment or instant payment solutions.”
Fox added that interest from credit unions in Catalyst’s offering is coming from all over the nation.
The Current issues
What are some issues credit unions are facing now, or are concerned with when it comes to faster payments?
“I think it's just finding a solution. We've been talking about faster payments for years and now it's upon us with the FedNow. I don't think there's a business significant adoption rate yet. A lot of credit unions are trying to find what solution will fit their business models, as I said,” Fox noted. “Credit unions are just now starting to make that decision on who their provider will be for instant payments, and what that model will look at in their individual credit union. As I said, I think credit unions are just trying to figure out what solution will be the best for them. It just came upon everyone fast.”