WASHINGTON–More than 1,500 financial institutions now use FedNow, up from 35 when the service launched. The growth comes at the same time Federal Reserve research has found 78% of consumers prefer faster payments, and half hold funds with nonbanks.
According to an analysis by PYMNTS, the competition between banks and nonbanks is intensifying “as customers demand faster, always-available ways to move money.”
In an interview with PYMNTS, FedNow Chief Executive Nick Stanescu said consumer demand is driving the growth.
“Seventy-eight percent of consumers choose faster payments as their preferred option,” Stanescu told PYMNTS. “Half of those hold balances with nonbank providers.” He added that this pattern shows how instant payments have become a way for banks and credit unions to compete directly with nonbanks that offer convenience and immediacy.
What Was Also Found
The data also shows that expectations are increasing, with six in 10 consumers saying it is important for their financial institution to offer instant payments, PYMNTS reported. Among Gen Z consumers, 78% rate it as important, which is a 14-point increase from the previous year.
“Instant payments are not becoming less important,” Stanescu told the publication. “If anything, they are becoming more important.”
Businesses Express Similar Interest
Businesses show the same pattern, according to the report, with the FedNow survey finding 66% of firms say they are likely to use instant payments if offered by their main financial institution, and those that do report 10% higher satisfaction.
Competition and Customer Pull
Stanescu told PYMNTS adoption is being driven both by customer expectations and by competition among banks. “Customers are pulling banks into this by expecting these experiences,” he told the publication. “At the same time, competitive pressure is real.”
Smaller Banks, Credit Unions Join
Stanescu added that community banks and credit unions are also expanding their participation.
“The service is flexible,” Stanescu said. “They can start by receiving payments to manage risk and then expand to send capabilities by segment.”
