NEW YORK — KeyBank is hesitant to join the Federal Reserve’s real-time payments network FedNow until the payments rail shows some growth.
The $184 billion bank wants FedNow to reach 5% of demand deposit accounts (DDA) before joining the payment network. DDAs allow deposited funds to be withdrawn at any time, Jon Briggs, head of commercial payments and innovation at KeyBank, told Bank Automation News at Finovate Fall 2024. FedNow’s current reach is 2% DDA.
“There’s not quite enough of an incentive to go [on FedNow], but we monitor it closely,” Briggs said.
While FedNow continues to onboard banks, reaching ubiquity may be another matter. As of Sept. 9, FedNow had onboarded more than 950 financial institutions, including JPMorgan Chase and Wells Fargo, according to the Federal Reserve.
Other financial institutions, like Meritrust Credit Union, are also watching the growth of FedNow before joining the network.
“In my personal opinion, FedNow is not quite there yet,” Wade Bruendl, chief digital officer at Meritrust Credit Union, previously told BAN. “It’s going to build out at some point, it’s inevitable, but it just does not have enough mass there to make me want to get in.”
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