While smaller community banks and credit unions are applauding FedNow, it's meeting resistance from large banks:
Tech companies with an eye on entering the banking space are also excited for the accessibility FedNow could provide. Tech companies that wanted to break into offering banking would previously have had to work with The Clearing House and, by doing so, accept major banks as the gatekeepers to the industry.
A standardized system from the government would enable nonbanks to bypass banks. And the Fed would legally only need to show that it canon its system, meaning that it could end up being cheaper in the end for tech companies to use FedNow for offering functions like P2P transfers or payments directly from banks.
FedNow could spur greater usage of online banking because of the speed and reliability it could provide. With a standardized real-time payments system from the government in place, banks could, for example, offer a feature allowing their customers to instantaneously pay bills directly from their mobile banking app regardless of which bank the recipient uses.
The convenience of this functionality could lead to elevated usage of digital banking tools, bringing them into greater focus as distinguishing factors when consumers are choosing banks.pass to Business Insider Intelligence and gain immediate access to the Banking Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally.
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