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How One Community Bank’s RTP Journey Offers A Path For Others

Legacy banks and financial institutions (FIs) keep scrambling to add new consumer-centric bank tech and digital experiences that layer sizzling consumerization onto sluggish B2B payments.

PYMNTS’ latest Real-Time Payments Report done in collaboration with The Clearing House looks at the matter through numerous use cases, none more informative than that of New Jersey-based community bank Cross River, with its enthusiastic embrace of real-time payments (RTP).

If only enthusiasm were enough. Per the new Real-Time Payments Report, “Building an effective payment rail is only part of the battle to bring business-to-business (B2B) commerce up to a real-time pace. An extensive — if not unanimous — swath of the financial sector must also tap into that rail for it to be effective because buyers will find little advantage in a transaction tool if only a small portion of their vendors are able to use it.”

“Ay, there’s the rub,” as Hamlet famously said when asked about the frictions of tech adoption. Yet banks and FIs are making the move to RTP. For it to work, they must do so together.

Preparing For Complexity

As the latest Report states, “Financial players can either integrate directly with payment rails or gain access by going through third parties that already have those integrations — and deciding between these two approaches is no small choice. Companies that want to integrate directly are lining themselves up for a major technical undertaking.”

Jesse Honigberg, technology chief of staff at community bank Cross River, told PYMNTS, “Integrating to the network required certification in multiple environments, with multiple different test cases. It was quite a bit of work. Be prepared for some complexity, but with the right level of tech competence, it can be done.”

To achieve that level of competence, Cross River dedicated five employees to the RTP project for five months. Per the latest Report, “The bank also sought to keep this workload manageable by focusing first on facilitating certain specific, clearly defined use cases rather than attempting to enable everything all at once. That meant launching capabilities to allow clients to send and receive funds via the RTP network but holding off on adding functionalities such as request for pay, which was not widely supported until later, for example.”

Forward With Phased Implementation

What makes the Cross River use case so instructive is how the bank is deploying real-time capabilities in ways that conform to client’s patterns, not those dictated by the network.

“The entirety of the platform we offer for RTP is all API-driven,” Honigberg told PYMNTS. “When we were building [into] RTP specifically, we knew there was such lack of definition. While other [payment networks] were extremely prescriptive of what the experience was going to feel like, TCH was almost the antithesis of that. We didn’t want to lock our clients into a specific experience that felt like X, Y or Z. We wanted … to give them the most control over the user experience as possible.”

Phased implementations such as this is a way forward to RTP, especially for smaller FIs.

“FIs with limited resources are also attempting to avoid overwhelming their teams or overspending by making limited and gradual adoptions. A phased approach can help control costs, with the FIs rolling out faster payment rail access only to certain customer segments at a time or marking a slower path to rolling out access in general,” per the latest Real-Time Payments Report.

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