Fintech experts have many predictions for the future of the industry. A recent Forbes report predicts that 2023 will witness the rise of embedded financing and blockchain technology, among other trends.
Yet there’s one particular development that has caught the attention of the team at the Federal Reserve Bank of Chicago. The financial leader is currently focused on the surge of instant payments, which has spawned an exciting phase of innovation.
A FINANCIAL FORTRESS
In conjunction with 12 regional reserve banks across the United States and the Board of Governors in Washington, D.C., the Federal Reserve Bank of Chicago serves as the nation’s central bank. The organization conducts economic research, bank supervision and central bank services, guided by its mission to create a strong economy and a stable financial system.
Patrick Adler, senior VP and head of architecture and business platforms, said the bank acknowledges its status as the backbone of the U.S. economy, which is why the team must develop products that can support this critical transformation. And so far, the organization has succeeded in its efforts.
Later this year, the team will launch its newly developed 24/7 instant payment service, FedNowSM Service. The product will enable businesses and individuals to send and receive payments conveniently, unlocking immediate access to funds.
According to Adler, this latest development opens up countless opportunities across the industry, including early wage access and faster settlement of business invoices. Overall, this new product won’t simply drive progress in the instant payments realm — it will also help speed up the nation’s economy.
Built In Chicago caught up with Adler to garner his perspectives on the future of fintech and how his team’s new product will drive progress across the industry and the economy as a whole.
What’s a new trend in the fintech industry that you’re keeping a close eye on, and what’s driving it?
One of the biggest trends happening in the industry is the shift to instant payments. This includes advancing interoperability through standards like ISO 20022, improving risk and fraud tools to deal with instant value transfer and changes related to how consumers and businesses interact with instant payment services.
How will this trend impact the industry as a whole in addition to the work your team is doing?
As the industry shifts toward new operating models that support 24/7 instant payments, organizations need to change the approaches and technologies they use to ensure payment products are secure, safe and resilient and meet the needs of an increasingly digitized payment system. Building products that support world-class instant payments requires staying up to date on the latest advances in cloud, AI, encryption technologies and more.
The Federal Reserve builds products that power the backbone of the U.S. economy and payment system. Our aim is to ensure these products meet the highest standards and can support the industry’s shift to instant payments through the use of innovative technology.
Our aim is to ensure these products meet the highest standards and can support the industry’s shift to instant payments through the use of innovative technology.”
What’s a recent project your team worked on that embodies your vision for the future of fintech?
One of our most exciting recent efforts revolves around the work we’re doing to develop the FedNowSM Service, a new 24/7 instant payment service that will be launched later this year. Once financial institutions begin participating in this service, businesses and individuals will be able to send and receive instant payments conveniently, offering greater flexibility with managing money and making time-sensitive payments. Because the FedNowSM Service will provide immediate access to funds, there are countless new use cases that can be made possible in partnership with the broader industry, ranging from early wage access to faster settlement of business invoices, which will improve how quickly the economy moves as a whole.
