Federal Reserve’s New Instant Payment System FedNow® Service Goes Live

Regulatory Developments

Federal Reserve’s New Instant Payment System FedNow® Service Goes Live
On July 20, the Federal Reserve launched FedNow®, its new system for instant payments. FedNow® permits banks and credit unions to instantly transfer their customers’ money, improving the speed and convenience of digital payments. By using FedNow®, consumers can immediately pay bills and receive paychecks; companies can instantly access funds and more effectively manage cash flows without processing delays.

Thirty-five banks and credit unions, along with the Treasury's Bureau of the Fiscal Service, will adopt the service as part of the initial soft launch. Early adopters include JP Morgan Chase, U.S. Bank, and Wells Fargo. The Federal Reserve will work with other banks and credit unions to expand the availability of FedNow® for consumers over time.

"The Federal Reserve built the FedNow® Service to help make everyday payments over the coming years faster and more convenient. Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid."
- Jerome H. Powell, Chair, Federal Reserve

The FDIC reminded IDIs that if an IDI has deposit accounts with balances in excess of the federal deposit insurance limit that it has collateralized by pledging assets, then the IDI should make a reasonable estimate of the portion of the deposits that is uninsured using data available from its information systems.

Call Report forms and instructions can be accessed from the FDIC Call Reports webpage.

OCC Hosts Risk Governance and Capital Markets Workshops in Cincinnati
On July 20, the OCC announced that it is hosting two workshops on August 8 and 9 in Cincinnati, Ohio, for directors, senior management, and other key executives of national community banks and federal savings associations. The Risk Governance: Improving Effectiveness workshop on August 8 will combine “lectures, discussion, and exercises to provide practical information for participants to effectively identify, measure, monitor, and control risk,” and the Capital Markets: Keeping Current workshop on August 9 “is designed to help bank leadership better understand balance sheet management risks such as interest rate risk, liquidity risk, and risks associated with the investment portfolio.” These workshops will focus on the OCC’s approach to risk-based supervision, major risks in the financial industry, and discuss the quantifying balance sheet risk related to assets and liabilities.

FCA Publishes Feedback Statement on Potential Competition Impacts of Big Tech Entry and Expansion in Retail Financial Services
On July 12, the UK Financial Conduct Authority (FCA) published Feedback Statement 23/4: The potential competition impacts of Big Tech entry and expansion in retail financial services (FS23/4). This summarized the feedback received in relation to its October 2022 discussion paper (DP22/5) and sets out the key actions it intends to take in response.

Fintech Flash – Generative AI and Financial Services: A Recent View From the UK Regulator
In a recent speech, Nikhil Rathi, CEO of the UK FCA, set out the FCA’s latest views on the role of artificial intelligence (AI) in financial services. The speech highlights many benefits but also shines a light on the risks for the FCA and builds on the points made in a joint paper published by the Bank of England and FCA on AI.

Read more about this topic in a recent Fintech Flash.

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