In Q1 2024, NEACH sat down with several major third-party providers to gain insights into what’s happening with payments. Mihail Duta, Director, Solution Consulting, Payments, Americas, shared his thoughts on how payments are shifting and what to expect in the coming months. What follows is a summary of our conversation.
NEACH: With so much talk about data and AI, are/how are these technologies playing into your plans for supporting banks and credit unions? Why?
Duta: At Finastra, we view GenAI as a tool to help alleviate and streamline more administrative tasks such as summarization and semantic search and back-end operations by digesting large amounts of data and minimizing errors. We’re partnering with companies that allow us to provide financial institutions of all sizes with GenAI solutions that will enable them to spend more time delivering best-in-class services, while streamlining back-end processes that have traditionally been time-consuming and document intensive. Pairing this technology with our open API solutions will allow financial institutions to leverage their data more efficiently, fortify compliance, and improve customer satisfaction.
NEACH: FI’s customers/members have increasing expectations in today’s evolving industry. How are these expectations driving FI strategies?
Duta: Customers want their financial institutions to meet them where they are with regards to how they prefer to access their accounts and the banking solutions they need. Financial institutions can address these expectations by providing more personalized digital banking services. Working with a technology partner with an open API model helps them do this, because it allows financial institutions to integrate additional services on their platform, which customers can use without leaving their financial institution's ecosystem. One important thing to note is that offering integrated services allows financial institutions to learn more about their customers—such as how and when they engage with their finances—and, in turn, leverage that data to enhance their overall customer experience and offerings.
Additionally, financial institutions are learning more and more consumers want their financial services embedded in context, and they are adapting accordingly here, too. In Finastra's most recent State of the Nation survey, close to two-thirds (64%) of respondents in the United States noted having improved or deployed BaaS services in the last year.
NEACH: FedNow® and RTP® are both live. What is the onboarding experience like for FIs, and what are you hearing from early adopters?
Duta: As one of the members of the FedNow pilot group, we have been working closely with financial institutions of all sizes since July of 2023 to onboard them to the FedNow Service. This type of inexpensive payment experience has been long overdue and desired by customers, so meeting that demand while ensuring financial institutions can comply from a technical and financial standpoint is key.
Common challenges we encountered centered around whether or not financial institutions were prepared operationally to support the 24x7 demand of FedNow, such as exception management, operational management, client support, and services. We offer customers a light-touch implementation process, where we take on the operational overhead, meaning financial institutions do not need to devote a vast amount of their internal resources.
When working with smaller financial institutions, we drive home to them that they can start small. This can look like only receiving and not sending transactions via FedNow. Finastra and FedNow offer this option, and we're seeing it as a popular approach for dipping a foot into the water with immediate payments.
NEACH: FI/FinTech partnerships are becoming table stakes. How do you support your banks and credit unions in engaging with FinTechs?
Duta: Our products and services are based on an open-API model. This allows our customers, no matter their size, to seamlessly integrate third-party solutions into their existing offerings without creating additional complexity or onboarding. Understanding the importance of being nimble and flexible, we created our financial ecosystem, an open platform that allows financial institutions to access innovative apps, enabling further collaboration between FinTechs and traditional financial institutions.
In our most recent Financial Services State of the Nation Survey 2023, 84% of respondents agreed that consumers increasingly want their financial services embedded in context, meaning they are looking for various services under one roof. It is clear that customers see the value of these types of services and partnerships. It is interesting that we're seeing adoption rising because financial institutions increasingly recognize its importance and the wide-ranging use cases as they encounter a more fragmented financial services environment.
As the financial services space becomes more fragmented, especially from a banking solution perspective, the financial institutions that remain successful will be those that can meet that customer demand and identify partnerships that enhance their current platform and offerings.
Mihail Duta, Director, Solution Consulting, Payments, Americas
Mihail Duta is Director, Solution Consulting for Payments, Americas at Finastra. He has been supporting Finastra’s payments solutions in various roles since 2000, where he has developed strong and enduring client relationships throughout his tenure. He is currently liaison to Finastra’s U.S. payment wires and ACH user boards, as well as the company’s main point of contact for the Federal Reserve Bank.