One of the biggest changes in the last 45 years in U.S. payments systems happened recently, and it went unnoticed by major media.
Same-day ACH was approved by NACHA's voting membership in May, and this change marks the largest improvement in financial services infrastructure in decades - since the advent of online banking and debit/point of sale. It will be a gradual process to get transactions to move at the speed of light, but same-day ACH marks a major step forward in helping people's financial lives now.
Today's customers expect that their money moves when they want it to move. They believe that it happens instantaneously and that it should. Serving the high-tech industry in Silicon Valley, our members are even more prone to feeling that their payments should move in 4G time - which is why my credit union will leverage same-day ACH as soon as possible. We see it as a really strong pro-consumer move, and it's why we want to be there first.
With same-day ACH, we're taking advantage of a highly efficient, ubiquitous payment network to make faster payments happen. Working with the Federal Reserve as our ACH Operator, we know that our payments will reach anyone via the smallest financial institution or the largest bank in the nation. Our members have certainty that payments they send will be received; and this certainty, this ubiquity is critical to making same-day ACH a viable product - and allowing credit unions to compete.
When I started in this business, I spent an exorbitant amount of time, energy and money educating our members on which ATMs would take their cards and work for them. Unlike the launch of the ATM, with same-day ACH there is no doubt which financial institutions are participating and which aren't. Thankfully, we don't have to go through that painful process again because of the ACH Network's connection to all financial institutions.
Same-day ACH democratizes the fast funds process. As I look at our operations, I see tremendous opportunities for us to do our own development work. With its efficiency and universality, same-day ACH gives us the incentive and ability to really reimagine how we offer P2P and A2A services. It creates a new dynamic for us where we can innovate with our own systems. It means that we may have to rely less on vendors to offer leading-edge products.
There are steps credit unions must take to prepare for same-day ACH implementation; however, operations impacts pale in comparison to the strategic offerings we can now bring to the market. When we offer same-day ACH as a new service, we will not only be able to leverage new products, we also will become more efficient in how we use existing products. For example, for us, wires are a cost center. If we can change member behavior in certain instances to encourage same-day ACH instead of wire transactions, we are going to save resources and still offer our customers excellent service.
There's clearly work that needs to be done to implement same-day ACH; but as Thomas Edison said, "Opportunity is missed by most people because it is dressed in overalls and looks like work." Work now in upgrading our systems will prepare us for tomorrow.
Now that same-day ACH is approved, it's up to financial institutions to make it happen so we can give our customers what they're asking for. I, for one, am rolling up my sleeves and opening the door to new opportunities and the future of payments.
Sam Tuohey is executive vice president and chief operating officer of KeyPoint Credit Union, Santa Clara, Calif.
KeyPoint serves 50,000 members and has $1 billion assets.
