The results of Payments Modernization: The Big Survey, conducted by Finextra Research in collaboration with Volante, provide an in-depth review of the current state and future course of payment systems around the world.

In this blog, we’ll zoom in on key trends impacting the US market, including the recent launch of the FedNow instant payments service and the upcoming migration of Fedwire to the ISO 20022 standard, both of which have significant implications for the broader global payments landscape.

ISO 20022 compliance for Fedwire

One of the major concerns for US banks is their readiness for ISO 20022 compliance, particularly the mandated transition of all Fedwire payments to the international standard by March 31, 2025, as well as the related deadline set to be in testing by the end of 2024.

According to the survey, only 35% of North American respondents are highly confident in delivering cost-effective ISO 20022 compliance for Fedwire, meaning that nearly two-thirds still feel inadequately prepared, despite looming deadlines. And while this statistic is concerning, it’s also largely unsurprising, as banks often find adjusting to new regulatory standards more complex and time-consuming than they initially expected.

Migrating existing systems to ISO 20022 standards is, in fact, a complex undertaking that requires extensive planning, considerable investment, and a thorough understanding of regulatory requirements. In some cases, tactical translation solutions to insulate legacy systems from the new standards will suffice. However, in other cases, the only viable solution will be fully replacing legacy systems.

Speed to market for new products

Another highlight of the survey is that North American banks are improving their speed to market, with 44% now able to bring new products to market in six weeks or less, higher than their European counterparts.

However, this also means that more than half of institutions cannot hit that six-week mark, with many still struggling to deliver in under six months. Given that rapid deployment is critical in today’s highly competitive markets, where customer expectations of service speed and quality are higher than ever, accelerating progress in this area should continue to be a top priority.

The impact of FedNow and instant/real-time payments

The launch of the FedNow instant payment service in July of 2023 is also greatly impacting North American banks’ modernization plans. More specifically, 54% of banks are now connected to more than one US domestic real-time network, a 10% increase from last year, when complementary real-time network options were limited to The Clearing House RTP and Zelle.

Moreover, with 39% planning to integrate FedNow within the next 18 months, adoption of the service in a multi-network context appears set to accelerate considerably in the coming months.

Renewed focus on cross-border payments

Another primary focus of US banks is cross-border payments, with 90% of respondents planning to add at least one extra cross-border real-time payments network within the coming year. This expansion is driven by a need to improve the speed and cost-effectiveness of international transactions, which are critical for maintaining competitiveness in a global market. In fact, in North America, efficiency and speed of cross-border payments was ranked as the top customer pain point.

Investing in payments modernization

Over half of the survey respondents stated that their budgets for payment modernization would increase over the next 12 months. Of the participants, 72% of North American banks are planning to make additional investments of $500,000—a much higher figure than the 51% of European banks. This is a clear indication that North American banks are increasingly aware of the challenges of payment modernization and are gearing up to increase investment as a result.

To learn more about payment modernization in the U.S., download your copy of the full report.