Fending off Fintech with Same Day ACH

by Sarah Grotta 0


A blog posted to BankingExchange discussed (maybe even ranted a little) about financial institutions’ (FIs) promotion, or lack of promotion, of the new same day ACH processing capabilities:

“…few banks are marketing same-day ACH and many customers don’t know the functionality is available to them. The same banks that complain and worry about competition from fintech disruptors are slow to adopt and market ACH. And the same banks that lament not having enough fee income or deposits don’t market same-day ACH.”

I have to agree with that point.  In any organization there are competing priorities of course, but same day ACH has been nearly three years in the making.  (ACH credits rolled out in 2016, debits in 2017 and next month, the requirements to post same day ACH by 5:00 p.m. local time comes into effect.)  And it has what other payment types often lack, a clear revenue model. The blogger articulates the unique advantage of same-day to FIs:

Over the next several years, payment velocity will only increase. If your bank struggles with how to be more innovative, this is an easy solution.

Card-based payment rails (Visa, Mastercard, etc.) are available to non-bank payment competitors, and banks can’t let them fill the void. The technology, compliance, fraud prevention, and process methodology for same-day ACH already exists and is available to almost every bank. Failure to provide a real-time payment product to the marketplace is a failure of creativity and strategy rather than a failure of innovation.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

Read the quoted story here