Regulators encourage, and customers demand real-time payments. Equipping your bank for on-time payments is critical to staying competitive. 

Growing at a remarkable CAGR of 35.4% from 2024 to 2032, the global real-time payments market is forecasted to reach $284.49 billion.

Electronic payments have come a long way from wire transfers to mobile-initiated transactions. Challenger FIs are leveraging cutting-edge technologies to create unique offerings and delivering them to customers using banking infrastructure. Real-time payment settlement has been a force of change for the anytime-anywhere digital world.

Top Innovations Driving Real-Time Payments 

Technology is at the heart of 21st century financial services. The top advancements fuelling the growth of real-time payments are:

Application Programming Interfaces 

APIs simplify communication among disparate payment systems. Seamless integration of banking, FinTech, e-commerce, and other digital systems paves the way for efficient operations. This helps forward transaction messages and process requests faster. APIs empower banks to augment their platforms with RTP offerings to stay competitive. 

Cloud Computing 

Cloud-native technologies foster flexibility and scalability. Migration of data and payment processing to the cloud increases a bank’s capacity to handle high-volume transactions. Subscription- and need-based cloud infrastructure models allow banks to expand their transaction-processing capacity on a needs basis. This helps maintain the quality of customer experience without having to maintain large technology infrastructures even during leaner business periods. Ensuring profitable operations, cloud technologies are encouraging banks to adopt real-time payments. 

Migrating to the cloud can be overwhelming. Head to our blog to discover the top Migration Strategies for Banks: Transitioning to Real-Time Payment Systems from Legacy Environments.

Artificial Intelligence 

Smart fraud detection technologies are redefining cybersecurity. Machine learning-based behavioral analytics and anomaly detection help enhance real-time threat mitigation. Self-learning AI models instill greater accuracy and reduce false alarms, making threat detection more accurate. Automated threat mitigation and incidence management protocols significantly reduce the scope of damage and enhance the bank’s instant payment security.  

“When deploying AI, whether you focus on top-line growth or bottom-line profitability, start with the customer and work backward.”

~ Rob Garf, Salesforce

AI is a critical tool for enhancing internal operations and customer experience.

Discover the crucial role of AI in Banking and Payments in our whitepaper.

Blockchain 

Distributed ledger technologies have paved the way for intermediary-free transactions. These reduce costs and delays. Further, the immutability of the blockchain instills greater transparency in the transaction management system. Plus, smart contracts help banks make financial transactions more secure. Blockchain-induced speed, security, and transparency in cross-border transactions are driving banks to adopt faster payment systems to stay relevant in the times to come.

Tokenization 

Tokenization of payment data, user credentials, account holder PII (personally identifiable information), etc. help bolster payment security and reduce account-based fraud. These can be simplified for the convenience of the end user without compromising on the level of security they offer. Tokenization improves payment security, and reduces the impact surface of an incident, without affecting customer behavior or authentication practices. Improved security measures pave the way for banks to include secure on-time payments in their offerings. It also helps banks and PSPs achieve PCI DSS compliance by minimizing the sensitive data stored on their platforms.

Super Apps 

The global super-apps market is forecasted to be worth $918.41 billion by 2033.

The emergence of super apps, which bring together multiple financial activities on to one place for individual users, is also a key propeller of real-time payments. Rich functionalities, seamless integrations, and open banking-based operations keep customer convenience at the fore. While these may push banking to the background, their success lies in the instant payment infrastructure that bank builds.

Legislative Changes Driving RTP Adoption 

Financial authorities worldwide are encouraging RTP adoption among banks. Here’s a look.

US: FedNow 

While The Clearing House and Zelle had already introduced users across the USA to RTP, FedNow completely changed the game. The subscription-based service allows banks in the country to settle payments instantly. The real-time payment rail empowers small and medium-sized financial institutions to compete with larger networks in America. The trust enjoyed due to the federal government’s backing positions the banks using the service ahead of the competition in the RTP space in the USA. 

Read More: Innovations Driving Real-Time Payment Adoption in Banking