As real-time payments become integral to growth strategies, small financial institutions are increasingly signing on with instant payment rail FedNow to boost transaction volume and improve efficiency. 

Of the 990 financial institutions FedNow has onboarded since its July 2023 launch, 80% are community banks and credit unions, according to data from the Federal Reserve updated Sept. 30. 

Most recently, Whittier, Calif.-based First Pacific Bank announced Sept. 23 it has tapped U.K. fintech and certified FedNow service provider Finastra to enable the payments rail through its instant payment platform Payments To Go, Mihail Duta, director of solution consulting and transaction banking at Finastra, told Bank Automation News. 

The $430 million bank will start with FedNow’s receive-only services through Finastra and add send services later, Duta said. 

Payments To Go will drive First Pacific Bank growth by “enabling more effective cash flow management,” Sharokin Badal, senior vice president and director of deposit and treasury services at First Pacific Bank, told BAN. 

Comprehensive service

To achieve its goal of more comprehensive banking relationships, First Pacific Bank realized it needed to refine and expand product offerings, Badal said. 

Payments To Go allows the bank to “meet the lending, deposit and cash management needs of our commercial customers — while better positioning us to attract new customers,” he said. 

Finastra was a part of the FedNow pilot program as a certified provider in 2023 and has worked to onboard smaller FIs through its platform since, Duta said. 

“If you’re waiting until your competition down the street already has FedNow, you’re already late to the game,” he said. “I think it may not appear so right now, but there is an urgency to adopting FedNow.” 

Other institutions selecting Finastra this year for FedNow onboarding include Logan, Utah-based $3 million Cache Valley Bank; and San Antonio, Texas-based $3 billion Jefferson Bank. 

Community banks and credit unions are “looking for a way to modernize,” Duta said. “They’re looking for a way to better serve their customers by offering additional capabilities like instant payments.”