Levvel Blog - Video Blog: Real-time Payments Strategy—Decision Making for Mid-tier Banks and Credit Unions

Video Blog: Real-time Payments Strategy—Decision Making for Mid-tier Banks and Credit Unions


This video blog series covers real-time payments strategy and how smaller financial institutions can capitalize on the opportunity it provides. Throughout the series we’ll provide answers to frequently asked questions, like whether RTP should be an immediate or long-term roadmap item, what are the main decision points, how to navigate with limited resources and funding, what should be involved in vendor analysis, how to get started with real-time payments, and much more.

Episode 1: How and Why Banks Should Build Consensus

Episode 1 Transcription

Greg Lloyd: Banks should look to do three things to capitalize upon the opportunity that RTP presents them. First, they need to understand their what and why, and build consensus around it. If a bank’s just merely looking to launch RTP for the sake of table stakes, and just providing a basic product to their client, then that means they can approach it more simply. That simplifies the vendor process of how they’re looking at it and the effort they need to put in. That also simplifies what organizational support they might need behind it.

Is your financial institution ready for real-time payments? Find out with our 2019 Real-time Payments Readiness Report.

Alternatively, if a bank is viewing RTP as an opportunity to change more broadly, to perhaps enter a new market, broaden the product set in business banking or small business, or maybe launch a commercial bank, then that requires additional effort. That requires greater organizational support.

Either way though, it’s important to make sure you have support across the organization, because RTP is a significant enough effort, particularly for smaller institutions, that you need to ensure you have support from leadership on making fast decisions, as well as the financial support that’ll be necessary.

Episode 2: The Product Set and Your Offerings

Episode 2 Transcription

Greg Lloyd: Are you offering it across all products and all customer segments or are you focusing it in specific areas? Second thing I’d recommend is looking at your product set. Look at what products you offer, what areas. Are you going across the enterprise or are you only focusing on one area?

If you have a retail bank and a small business bank, you need to decide if you want to offer RTP to both of those customer sets. And then even within one of those, for example, your retail bank, are you offering it across all products and all customer segments, or are you focusing it in specific areas? For example, one bank might decided to focus RTP offerings only on their small business deposits customers.

It’s important to know these things so that again, you can gain alignment across your organization, but can also guide a lot of the future decisions you have to make around vendors, around money and around technology capabilities you’ll need to work on in house.

Episode 3: Understanding and Challenging Limitations

Episode 3 Transcription

Greg Lloyd: You need to understand these things so that you know how to approach RTP. Third and most importantly, you need to make sure you thoroughly look at and document all of your limitations. And this can go across a variety of different areas.

First, from a technology perspective, and also from a vendor perspective. What is your current technology stack? How are you currently structured? Do you have a single vendor? Do you have a mix of different vendors? How do they plug in together? How do they interact with each other? You need to understand these things so that you know how to approach RTP.

For example, in some cases a bank might have one or two vendors that handle the majority of their work, but those vendors don’t have end points for certain things. Or for those that have a third party fraud provider, that may not easily plug in to a new provider. So you need to look at what end points they have. Do they have APIs, or some other services that a new provider for RTP could easily plug into, particularly in a real-time environment?

Use our 2019 RTP Implementation Checklist to help guide your decisions and ensure you are on the right track.

The last thing I want to leave you is to make sure you don’t short-change your experience with RTP. RTP can be a huge impetus for change. It can be the reason for you to solve other problems your organization has been facing.

For example, we talk to institutions where they’ve wanted to implement a new fraud system for example, and they’d been trying to get the funding for that for five years. Given how RTP has the potential to change everything you do as a financial institution, this can serve as the impetus to support your business case, to support your reasoning to senior leadership for why you need a new fraud system. Because maybe you need that new fraud system enabled to support 24/7, 365 analysis. Or to be able to tie data together in a better way across different customer relationships. So again, don’t short-change this experience.

If you decide RTP isn’t your impetus for large change, that’s fine. Just make sure you put the thought into it, because you don’t want to get six months down the road and realize, oh, you wish you had gone bigger, and you didn’t, and now it’s too late to go back and seize the opportunity to again, drive broader change across your organization.

Episode 4: Vendor Analysis and Choosing a Partner

Episode 4 Transcription

Kara Ford: Fraud reviews and liquidity checks: will you be doing them as an operational team or will your third-party processor be doing that for you?

Choosing a partner for RTP: the first part of vendor analysis that you want to do is to do an internal review. You’ll want to look at your current operations, set up, how your technology stack is today, what your architecture looks like, and then identify any internal needs that you might have above and beyond payment processing.

Operationally, you’re going to want to determine from a strategic plan, will you be processing payments in-house or will you be using a third party to process those payments on your behalf? You’ll also want to look at some of the ancillary processes for payments like fraud reviews and liquidity checks. Will you be doing them as an operational team or will your third-party processor be doing that for you? During this operational review, you’ll be able to understand if you want to strategically maintain status quo by using a third party, or if you want to start bringing payment processing in house and build out an operations team that can support real-time payments and potentially your other payments like wire and ACH.

Episode 5: Architecture and Technology Review

Episode 5 Transcription

Kara Ford: From an architectural standpoint, you’ll need to understand where you are in a current state. You’ll want to know where you are from your current state so you can understand what the vendor can do today, but then you’ll also be looking at your future state goals and understand what you need to do to get there, so that way you can look for a vendor who can support that future state as well.

Is your financial institution ready for real-time payments? Find out with our 2019 Real-time Payments Readiness Report.

From a technology standpoint, you’ll want to understand how your internal applications communicate to each other. Are they using ISO messages to communicate or do you have a custom internal file type that you use that your real-time payment’s application will need to plug into in order to communicate with those applications.

The second piece of that is understanding if your internal communications can support the new volume that will be needed for real-time payments. If it can support ISO messaging in terms of an output in order to get the payment to the real-time payment rail, and then if it can respond in real time to support things like balanced checks, fraud reviews, and liquidity reviews.

Episode 6

Episode 6 will be released shortly. Check back soon!

See more from our Financial Services team:

Greg Lloyd

Greg Lloyd

Senior Director of Payments

Greg is a Senior Director of the Payments Practice at Levvel where he is responsible for leading client engagements and building relationships with customers ranging from top-10 banks to payments enablers to start-ups. Prior to Levvel, Greg spent 7 years at Bank of America, most recently leading business-efforts in the launch of Apple Pay, Android Pay, and Samsung Pay. Prior to Bank of America, Greg held a variety of financial services roles at eSpeed / Cantor Fitzgerald and Reuters. Greg holds an M.B.A. from the Darden School at the University of Virginia and a B.S. from the College of William and Mary. He currently resides in Charlotte, NC with his wife and three children.

Kara Ford

Kara Ford

Senior Payments Consultant

Kara Ford is a Senior Payments Consultant who works with financial institutions, merchants and enterprises of all sizes to help them identify and implement their payment strategies. She comes to Levvel with 7+ years of experience in banking as a payments professional with deep knowledge in financial services offerings for commercial and retail customers. She has focused the last three years on P2P and Real-time payments with a focus on product strategy, architecture, and implementation of the services for customers.

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