Instant Payments Explained: What Banks and Credit Unions Need to Know About FedNow and RTP – Part 2
In Part 1 of our Q&A series, Doug Hendricks, Senior Product Manager for Payments at Alogent, explored the fundamentals of instant payments and shared adoption trends shaping the market. In Part 2, we dive deeper—examining fraud risks, infrastructure requirements, key vendor considerations, and practical steps banks and credit unions can take to prepare for a real-time payments ecosystem.
1. What does fraud and risk management look like in a 24x7x365 payments environment?
In a real-time environment, fraud and risk management must shift from reactive to proactive prevention. Given the speed and finality of settlement, financial institutions must depend on solutions that act at or before a payment is initiated. Traditional fraud mitigation based only on static rules or after-the-fact review will be inadequate in an instant environment.
Real-time analysis and risk scoring:
Use AI and machine learning (ML) to detect anomalies and assign risk scores before funds move. Models must be adaptive, incorporating behavioral analytics, geolocation data, as well as other real-time indicators since historical data relationships may not exist when introducing new payment rails.
Consortium intelligence:
Leverage shared data across institutions to detect network-wide threats and patterns that may not be visible to a single institution
Centralized, unified systems:
Aggregate transaction data under a single, unified system to eliminate multi-system data siloes, improve visibility, and reduce friction.
User education:
Train account holders to recognize authorized push payment (APP) scams, phishing, and social engineering.
Technical controls:
Implement confirmation steps, transaction alerts, and multi-factor authentication to complement other fraud mitigation tools.
2. What does it mean to future-proof a payments environment for faster payments utilization?
Future-proofing a payments environment means prioritizing system modernization. Banks and credit unions must transform legacy systems into agile, modular, and scalable platforms capable of supporting the next generation of payment rails. Platforms designed with API-driven architectures, resilient microservices, and cloud-native technologies offer the flexibility institutions need to adapt, grow, and respond to evolving industry trends.
3. What steps can financial institutions take today to ensure their infrastructure is ready for instant payments?
Financial institutions can start by modernizing their infrastructure and partnering with solution providers who understand the instant payments landscape. A strong first step is implementing a single console, API-driven payments hub that connects all deposit channels – including in-branch, remote, and the back-office. This unified approach reduces the need for multiple integration points, simplifies operations, and speeds go-to-market efforts. The next step is enabling receive-only capabilities. a low-risk, low-effort step to test and learn before enabling full send functionality. Choosing the right partner that offers both implementation and ongoing consultative support is key – especially for institutions without dedicated internal resources.
4. How can financial institutions evaluate vendors to support instant payments and multi-rail processing?
Not all vendors provide the same capabilities. Banks and credit unions should look for partners who specialize in payments processing and initiation, not just payments management.
Financial institutions should ask questions such as:
- Do you support real-time fraud prevention workflows?
- Do you support multi-rail processing (including RTP, FedNow, and other prevalent payment mechanisms)?
- What level of end-to-end visibility and reporting do you offer across all payment types?
- What does support look like post-implementation?
5. How does Alogent support financial institutions in the instant payments evolution?
Alogent’s Unify platform serves as a single hub for payments processing, connecting multiple item processing channels, back-office operations, and advanced fraud mitigation capabilities. As instant payments become more widely adopted, Unify will continue to evolve to include native support for real-time payment capabilities. Future enhancements will allow institutions to process instant payments directly within the platform, eliminating the need for fragmented systems and ensuring consistency, visibility, security, and scalability across all channels.
Alogent also embraces a consultative approach, guiding clients through every stage of adoption, implementation, and utilization.
Contact us to learn more about instant payments and how we can support your modernization journey.
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