These days, you can get same-day delivery, immediately post your thoughts and pictures on social media, and reach out to friends and family with a quick text. However, when it comes to your money, it can take days for funds to show up in your account. Fortunately, the Federal Reserve is looking to change that.
Recently, the Fed announced its plans to create FedNow, an around-the-clock real-time payment and settlement service. One of the primary objectives of FedNow is to help U.S. banks offer real-time payments by 2024, which is part of an open banking financial movement already taking place in Europe.
Unfortunately, the U.S. payment system, much like the rest of the world, is not set up to support the instantaneous transfer of funds. Due to the way the IT infrastructure of banks has evolved, the majority of today’s banks rely on mainframe computers as their system of record.
In a recent Forbes article, GT Software President, Steve Hassett, summarizes the IT evolution of the United States payment system from the Fed’s creation in the early 20th century to now, pointing out that:
“Although mainframes are fantastic at computing millions of transactions in seconds, they struggle to communicate with modern systems. The banking industry’s applications are decades old and designed for a batch world.”
For years, GT Software has helped banks modernize their legacy systems and accelerate their ability to innovate. In fact, one of the world’s largest banks used Ivory to become the first bank to execute a real-time payment in France.
Click here to read more about the history of banks and mainframes.