Real-time payment (RTP) networks are booming in the global financial sector. Experts already estimate that by 2026 this type of payment will account for 25% of electronic payments, driving a new banking ecosystem that meets the current needs of customers.
The specialized Fintech publication Finextra, in its article What the banks vs fintech debate gets wrong, explains how the rise of this payment system is forcing traditional banks to adopt decisions that are altering their business model, such as cloud migration: “While instant payments are increasingly embedded into non-financial digital apps and services to provide a more hyper-connected experience, modernising these payment processes depends on the decisions of individual financial institutions. To win in this expanding competitive landscape, many are now reinventing operating systems for a new real-time, cloud-first and data-centric business environment.”
Cloud computing and its impact on real-time payments
Indeed, traditional banks have already long focused their attention on Fintech and Open Banking systems in order to take a step further in their digital transformation processes. And which technology is accelerating the pace of this digitization? According to Marc Alcón, CTO of Latinia, “cloud platforms have the necessary potential to make a new banking system possible, one that is much more agile, efficient and with the capacity to adapt to what the current moment requires, notably improving processes that involve a high volume of data, such as real-time payments”.
The consulting firm Capgemini, in its annual report Top Trends in Retail Banking 2023, also highlights the role that cloud technology is currently playing as a development driver for “leveraging new technologies such as artificial intelligence, blockchain, robotic process automation, super-fast network protocols like 5G, and edge computing. Moreover, cloud infrastructure is required to build the digital foundation for banking platforms”.
Advantages of real-time payments
The rise of real-time payments, as Finextra explains, is attributed to their ability “to meet evolving consumer and business needs […] and deliver an enhanced experience for customers looking for a hyper-connected, frictionless experience”.
In reality, all economic agents can benefit from real-time payments, whether they be companies, consumers, households or public administrations. These are some of the advantages:
- Increased liquidity. Real-time payments improve the liquidity of small businesses, generating a positive impact on their cash flow and providing quicker access to funds.
- Cost reduction. Real-time payment networks are much more efficient and cost less. According to the study Economic impact of real-time payments, prepared by Deloitte, the adoption of an instant payment system could save companies 8% by reducing the cost of billing and payments compared to traditional payment systems.
- A much more innovative ecosystem. Real-time payments are just one of the many innovations in this new digital ecosystem, which are bringing new growth opportunities to the sector.
- Prevention of digital fraud. Allows for the detection and monitoring of fraudulent transactions, helping to increase confidence in the use of digital tools on behalf of customers.
“Committing to a real-time payment system highlights the need to increase bank-customer communication flows by upgrading bank alert services, such as those offered by Latinia to respond to the demands of bank users, based on more personalization, immediacy and consistency,” concludes Marc Alcón.