By W.B. King
For years, members at People Driven Credit Union have desired streamlined, person-to-person (P2P) payment rails, explained Peg Lamb, chief risk officer. Thanks to a partnership with Member Driven Technologies (MDT), the credit union’s 25,000-plus membership now has access to the FedNow Service.
“We have had a successful partnership with MDT for our core, which is why we were excited that they were offering FedNow,” Lamb told Finopotamus. “Even though FedNow isn’t widespread yet, we wanted to be ready and well-positioned for when adoption grows.”
The Farmington Hills, Mich.-based CUSO, MDT, hosts the Symitar core processing system from Jack Henry and now also supports live FedNow transactions through Jack Henry’s faster payments hub, JHA PayCenter, noted Christina Yates, manager of training and product management.
“Our credit unions trust our recommendations and products we bring to market. They trust us on our integrations, knowing we will vet the integrations and support them in how it connects to their core and digital banking systems,” Yates said.
“Their memberships want real-time payment connections, and our credit unions are looking to ensure their members have the best experience and that their membership has access to real-time payments,” she added, noting that members have channel choices, such as RTP, FedNow and Zelle, among others.
Testing is Crucial
Based in Southfield, Mich., the $455 million People Driven CU is considered an early FedNow adopter. Lamb conceded that rolling out the service was no “easy feat,” sharing related experiences with Finopotamus.
“One lesson we learned was the importance of giving our team enough time to get comfortable with the new technology before going live,” she said. “Testing is crucial for ironing out any kinks. We’d also advise other credit unions to ensure they have adequate internal staff time and resources to manage all of the moving parts and coordination.”
The credit union’s project management office, Lamb offered, handled the “bulk of the work,” coordinating with MDT, the Federal Reserve, Jack Henry, and Alloya Corporate Federal Credit Union.
“Our IT department played a role in setting up some of the admin functions. We had three employees working on this project, only one is IT-facing,” Lamb continued. “From implementation to training, all three were deeply involved in the whole process. There was a beta testing period, which taught us a lot about what works for us and what areas need improvement.”
MDT’s Product Manager Tara Hana noted that requirements vary depending on the payment network(s) selected, the functionality purchased (send and/or receive), the user interface (UI)/user experience (UX) purchased, and the vendor the credit union selects.
“For clients that work with MDT to purchase JH PayCenter (connectivity) plus Payrailz and/or Zelle UI/UX for send, we handle the connectivity and file transfer automation setup,” she continued. “MDT ensures that when Jack Henry is ready to kick off with an MDT client, our responsibilities are already complete and we are ready to support if any questions arise throughout implementation with Jack Henry.”
An important takeaway, Hana added, was recently discovered during beta testing. “We found that there is more work required of the operations or payments expert at the credit union than anyone on IT,” she shared. “This is tied to signing agreements with the networks, setting up users, attending training for the admin portal, understanding reconciliation processes for each network, etc.”
From contract signing to roll out, MDT’s Yates said for a credit union implementing JH PayCenter plus instant payment connectivity, the project takes approximately 90 days.
“Timing between signing and kicking off can vary depending on how many clients are in the queue. As of end of April, MDT and Jack Henry are currently scheduling kickoffs about 30 days out,” Yates continued. “There is no beta testing required to receive payments on any network. To send instant payments, the credit union will require an additional UI/UX component via their digital solution to guide their members through the payment process.”
Receive Now, Send Later
Since People Driven CU only recently rolled out FedNow, Lamb couldn’t provide user statistics, but noted that the credit union is currently only using the “receive” side of the service.
“We plan to implement the send side when available," Lamb said. "Because we have done the leg work, we will be able to move quickly, giving our members the instant payment functionality they want."
In Hana’s view, credit unions shouldn’t “hold off” on receiving payments, but being a fast follower on sending payments might be a good approach, for now.
“Some pros to holding off can be ability to support highest adoption networks based on transaction data, lower up-front investment (if able to limit network participation based on item above and as RTP and FedNow compete for market share), lower risk on the send side as fraud patterns and trends are identified and solutions are upgraded to proactively mitigate these scenarios,” she said. “And the ability to compare and research more mature UI/UX, fraud, and integration options.”
When Finopotamus asked Lamb to offer FedNow advice to other credit unions considering adopting the platform in 2024, she suggested a “thorough evaluation of members' needs, gaining a solid understanding of the time and resources required and making sure you find the right partner,” she continued.
“Make sure your teams have enough time to get comfortable with the technology and embrace the transition to digital payments—the time and effort spent will certainly pay off in the long run.”
