The Feedback Loop: FedNow Pilot Program Update
Since the FedNow Pilot Program began in January 2021, participants have expanded their knowledge of the FedNow Service to fine-tune their organizations’ strategies for implementing instant payments. At the Federal Reserve, we have been learning too – participant feedback has offered insight into the range of business needs, use cases and challenges for financial institutions, service providers and other organizations in the instant payments ecosystem.
There have been more than 20 pilot sessions held to date as part of the program’s initial advisory phase. Pilot participants have covered topics such as launch features and roadmap plans, ISO® 20022 specifications, FedNow profiles for service providers, onboarding and credit and liquidity management transfers (LMT). Read on to learn about our key learnings and takeaways from these sessions.
In-house, outsourced and hybrid options
During pilot sessions, we have heard from a number of financial institutions planning to partner with service providers to offer one or more instant payment solutions, including payment processing, connectivity and end-user applications.
Common questions and feedback on this topic have involved choosing and beginning meaningful conversations with service providers, specifically surrounding planning for implementation and facilitating adoption. This underscores the important role service providers play and highlights the need for financial institutions to consider unique business use cases and customer needs when deciding between in-house, outsourced or hybrid options for instant payments. The Federal Reserve is currently collaborating with participants on options for connecting with service providers to explore and evaluate strategies for implementation.
Stakeholders feedback is key
A stated objective of the FedNow Pilot Program advisory phase is to gather participant feedback to ensure the FedNow Service meets industry needs. Examples of areas where participant feedback has been incorporated into the FedNow Service and future roadmap include:
- The request-for-payment workflow, including opportunities to decrease incomplete or rejected messages.
- Design of the FedNow interface, which will be available via FedLine® Solutions.
- Development of the onboarding process and reports related to supporting accounting and reconcilement activities.
- LMT hours of operation, value limit, and correspondent controls and sign-off capabilities.
The Federal Reserve’s collaboration with the industry also stretches beyond the FedNow Pilot Program. The FedNow Community has been a forum for collaboration through virtual roundtables, working groups and webinars. Community members have covered a variety of topics relevant to the FedNow Service roadmap, including instant payments use cases, ISO 20022 standards and fraud.
Education bridges the divide
Instant payments implementation involves many considerations and decision points. As the FedNow Pilot Program progresses, service providers, financial institutions and the broader ecosystem continue to explore the best approach to leverage the flexibility of the FedNow Service.
Given pilot participants’ interest in deep-dive sessions on FedNow features and functionality, the Federal Reserve has instituted monthly educational opportunities for participants to engage directly with subject matter experts in addition to regular pilot sessions. This demand for education and resources is also driving the creation of new content, which is regularly published to support the instant payments education journey. Additionally, educational resources will be curated to support unique use cases and service implementation.
FedNow Pilot Program participants will continue to meet regularly in preparation for the testing phase of the service. Follow along for periodic updates on the program’s efforts as we refine our broader industry readiness strategy, expand ongoing education initiatives and work toward service implementation and adoption.