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This article doesn't really go into much detail, but this shouldn't be surprising. IT in financial services is the most insanely complicated, heavily regulated,

This article doesn't really go into much detail, but this shouldn't be surprising. IT in financial services is the most insanely complicated, heavily regulated, mishmash of every technology under the sun going back about 60 years that it's a miracle it works as well as it does. This is also why fintech/insuretech/etc startups tend to fail so spectacularly...because in almost every case they severely underestimate the difficulty and don't understand the enormous scale and expense of the past several decades of that were carried out by established and already very profitable companies. It's incredibly hard to justify getting rid of something that already provably works (what every single person that thinks we should flip a switch and get instant payments is advocating). There is a tendency to portray financial IT services as being risk-averse...there is maybe some truth to that but I'd characterize it more like a situation where those on the outside are simply not aware of the enormous amount of risk already being taken just to make minor improvements to existing systems with 50+ years of business rules encoded into them. For all of those reasons, FedNow looks to me like it's actually been a fantastic success so far. I'm not sure what the WSJ was expecting to see. They aren't (to my knowledge) hundreds of billions over budget and a half decade past due...that is about as good as one could have hoped for.

creakingstairs 3y ago
> but this shouldn't be surprising Then is it surprising that other nations have had near instant payments for a good while?
- akosoghaaafjdr 3y ago
  No that isn't surprising because those were new buildouts of brand new systems that didn't exist before. In a lot of cases, those countries skipped over a whole bunch of in between phases, like how China skipped over a bunch of telecom infrastructure buildout and so managed to avoid a lot of similar issues there. The US digitalized it's financial industries the earliest and so it has the most pre-existing infrastructure to maintain and past decisions to deal with the consequences of. The finance industry was quite literally the first major industry to computerize in the US, most other countries got started decades later due to a lot of factors but mostly either poverty, being behind the iron curtain, or lack of access to reliable computers. It's always more difficult when you have millions of active users and SLAs to abide by, and regulators and auditors that are aware of every possible thing that can go wrong and that they should be asking questions about.
  - grecy 3y ago
    > most other countries got started decades later due to a lot of factors but mostly either poverty, being behind the iron curtain, or lack of access to reliable computers You are completely ignoring many countries here that have had instant, free transfers since the 90s. It never ceases to amaze the lengths Americans will go to explaining why they are behind the rest of the world in some way or other while trying as hard as possible not to say "because profit".
    - ex3ndr 3y ago
      Like what? Most countries in europe still don't have transfers by phone number?
      - manuelmoreale 3y ago
        What would be the benefit of that if you don’t mind me asking?
      - lxgr 3y ago
        Yes, because they have the real thing: Instant and free cross-country transfers by bank account number. Why use something strictly less powerful? A phone number based transfer service can be implemented as a directory service on top of that much more easily.
      - cornholio 3y ago
        You mean like MPesa, the exploitative pseudo banking system popular in African countries where mobile phones are more likely to be available than electricity and running water?
    - thecodedmessage 3y ago
      “Because profit” is a bad explanation. It’s super incomplete.
  - lxgr 3y ago
    All European countries have been doing banking for a while now, with some institutions predating computers by a couple of centuries, yet they still somehow managed to roll out SEPA Instant. And to give another counterexample: The US has had cell phone networks much longer than many other countries, yet the 5G deployment here is pretty competitive internationally. The second mover advantage is real, but I don’t think it can explain the holdup here.
- cuteboy19 3y ago
  I thought so too but the US has so many banks that UPI's 120 don't sound quite as impressive
  - viraptor 3y ago
    I don't get the "many banks" angle. Many banks may be too small to implement it. What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers? "Bank with us and get quick payments to other good banks" Australia implemented Osko from scratch in 4 years and it took maybe 2 more before every main bank was using it. There's no need to wait for everyone.
    - naniwaduni 3y ago
      They did! At least twice! Politics happened!
    - kalleboo 3y ago
      > What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers They did https://en.wikipedia.org/wiki/Zelle https://en.wikipedia.org/wiki/Zelle
      - pfranz 3y ago
        I don't think Zelle is the same thing at all. > The initial release of the FedNow Service provides baseline functionality supporting market needs for a range of use cases, including those growing in demand such as account-to-account (A2A) transfers and bill pay. https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about.... I've never seen Zelle suggested for bill pay. I've tried to use Zelle for account-to-account transfers, but it was obvious this wasn't the intention; I think I had one bank account tied to my email and another to a bank account tried to my phone number so I could send money to myself (the intention seems to be a person only sends/receives from one bank account) and the limits are very, very low. When I was trying this, the cap seemed to be secret and vary institution to institution. [1] https://www.zellepay.com/faq/there-limit-how-much-money-i-can-send-or-receive https://www.zellepay.com/faq/there-limit-how-much-money-i-ca...
- loxias 3y ago
  God no, hah! Not surprising at all. They didn't have first mover disadvantage. There's a cost to being the first to invent infrastructure. Others can stand on your shoulders and build improvements, while you're stuck with "version 1.0". Other nations might have instant payments for a good while, but the US had viable banking and a postal service for more than 200 years. The cost of being first is sometimes being last to upgrade. :/ see also: China and trains. edit: come at me!
  - Symbiote 3y ago
    Barclays Bank was founded before the USA, and it's not even the oldest British bank, let alone the oldest European one. The postal services of many European countries also predate the USA.
FireBeyond 3y ago
> IT in financial services is the most insanely complicated, heavily regulated, mishmash of every technology under the sun going back about 60 years that it's a miracle it works as well as it does. Australia in the late 90s had instant intra bank ACH transfers. Even inter bank was within 15 minutes. And not exactly a regulation free market.
- deleted 3y ago
  [deleted]
- dalyons 3y ago
  Australia has 4ish banks. The US has 4000. It’s just not the same problem
  - viraptor 3y ago
    It's the same problem for the biggest 4 banks. The rest can join the "future" in their own time. It's after the first 4 that you go from trillions to billions in assets. They should have some reasonable pull. 10 should be still a low enough number to make an agreement and effectively make the rest follow or lose out.
    - naniwaduni 3y ago
      The biggest 4 banks ... do support near-instant transfers? Probably in at least three forms each pairwise? I'm not sure why we're pretending the US doesn't have infrastructure for instant transfers, there are like at least four directly supported systems, a couple accidental ones, and a whole host of third-parties in the space, each with a different set of tradeoffs and spotty support.
      - viraptor 3y ago
        Yeah... That's not really a solution, is it? They're not pushing a common standard that way and the small banks will have to play stupid games instead of implementing "the" solution.
xvector 3y ago
The mishmash of systems and the 50+ years of rules is not something to be proud of, it's a cancer that speaks of incompetence and regulatory capture. Neither the government nor the banks can compete with tech startups in, well, tech, so they do so with overwrought legislation, nonsense rules, horribly outdated and absurd security practices, and more. God, everything about the banking industry in the US is such shit. From a complete misunderstanding of the very fundamentals of security to forming a sort of moat with regulation to the government's incompetent inability to actually push FedNow to completion and adoption. It's just a shameful, massive clusterfuck that describes everything wrong with the government's and the banks' approach to technology.
DonsDiscountGas 3y ago
>The CEOs of Citi and Bank of America both told lawmakers at a Dec. 6 Senate hearing that they were preparing to join the network in the coming months. Assuming this is actually correct, I agree with you that this would be pretty successful. Although it still seems like FedNow should've existed years ago. I can deposit a check using the supercomputer/high-res-camera I carry around in my pocket, using a global information network. But it still takes 3 days for ACH to do its things. Companies can do hard things with the right incentives. >Big banks, which spent more than $1 billion on their own real-time payments system, lobbied to stop the Fed from developing FedNow, which would compete with their network. Seems like the incentives were in the wrong direction.
- astrange 3y ago
  ACH largely takes one day these days; the extra delay is just if your bank doesn't trust the sender to be real. But your paycheck comes in a day because it's always from the same place.
bdavbdav 3y ago
In the US at least - in Europe and other regions, the tech is fairly progressive. In the UK we’ve had “faster payments” for eons.
- someNameIG 3y ago
  Same in Australia, we've had virtually instant transfers for years.
NoPicklez 3y ago
Here in Australia we have very old banking systems. However there have been newer payment platforms put over the top of existing systems to facilitate near instant payments. All of our major banks have PayID, which means you send money to a mobile number and the transaction is instant. I agree 100% what you have said. Just showing that there is improvement in this space. Having said that, Australia had Visa Paywave completely rolled out and ubiquitous before the US did... believe it or not

creakingstairs 3y ago

> but this shouldn't be surprising Then is it surprising that other nations have had near instant payments for a good while?

akosoghaaafjdr 3y ago
No that isn't surprising because those were new buildouts of brand new systems that didn't exist before. In a lot of cases, those countries skipped over a whole bunch of in between phases, like how China skipped over a bunch of telecom infrastructure buildout and so managed to avoid a lot of similar issues there. The US digitalized it's financial industries the earliest and so it has the most pre-existing infrastructure to maintain and past decisions to deal with the consequences of. The finance industry was quite literally the first major industry to computerize in the US, most other countries got started decades later due to a lot of factors but mostly either poverty, being behind the iron curtain, or lack of access to reliable computers. It's always more difficult when you have millions of active users and SLAs to abide by, and regulators and auditors that are aware of every possible thing that can go wrong and that they should be asking questions about.
- grecy 3y ago
  > most other countries got started decades later due to a lot of factors but mostly either poverty, being behind the iron curtain, or lack of access to reliable computers You are completely ignoring many countries here that have had instant, free transfers since the 90s. It never ceases to amaze the lengths Americans will go to explaining why they are behind the rest of the world in some way or other while trying as hard as possible not to say "because profit".
  - ex3ndr 3y ago
    Like what? Most countries in europe still don't have transfers by phone number?
    - manuelmoreale 3y ago
      What would be the benefit of that if you don’t mind me asking?
    - lxgr 3y ago
      Yes, because they have the real thing: Instant and free cross-country transfers by bank account number. Why use something strictly less powerful? A phone number based transfer service can be implemented as a directory service on top of that much more easily.
    - cornholio 3y ago
      You mean like MPesa, the exploitative pseudo banking system popular in African countries where mobile phones are more likely to be available than electricity and running water?
  - thecodedmessage 3y ago
    “Because profit” is a bad explanation. It’s super incomplete.
- lxgr 3y ago
  All European countries have been doing banking for a while now, with some institutions predating computers by a couple of centuries, yet they still somehow managed to roll out SEPA Instant. And to give another counterexample: The US has had cell phone networks much longer than many other countries, yet the 5G deployment here is pretty competitive internationally. The second mover advantage is real, but I don’t think it can explain the holdup here.
cuteboy19 3y ago
I thought so too but the US has so many banks that UPI's 120 don't sound quite as impressive
- viraptor 3y ago
  I don't get the "many banks" angle. Many banks may be too small to implement it. What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers? "Bank with us and get quick payments to other good banks" Australia implemented Osko from scratch in 4 years and it took maybe 2 more before every main bank was using it. There's no need to wait for everyone.
  - naniwaduni 3y ago
    They did! At least twice! Politics happened!
  - kalleboo 3y ago
    > What prevented the biggest 5 or so from implementing it a decade ago and using it as a feature to get more customers They did https://en.wikipedia.org/wiki/Zelle https://en.wikipedia.org/wiki/Zelle
    - pfranz 3y ago
      I don't think Zelle is the same thing at all. > The initial release of the FedNow Service provides baseline functionality supporting market needs for a range of use cases, including those growing in demand such as account-to-account (A2A) transfers and bill pay. https://www.frbservices.org/financial-services/fednow/about.html https://www.frbservices.org/financial-services/fednow/about.... I've never seen Zelle suggested for bill pay. I've tried to use Zelle for account-to-account transfers, but it was obvious this wasn't the intention; I think I had one bank account tied to my email and another to a bank account tried to my phone number so I could send money to myself (the intention seems to be a person only sends/receives from one bank account) and the limits are very, very low. When I was trying this, the cap seemed to be secret and vary institution to institution. [1] https://www.zellepay.com/faq/there-limit-how-much-money-i-can-send-or-receive https://www.zellepay.com/faq/there-limit-how-much-money-i-ca...
loxias 3y ago
God no, hah! Not surprising at all. They didn't have first mover disadvantage. There's a cost to being the first to invent infrastructure. Others can stand on your shoulders and build improvements, while you're stuck with "version 1.0". Other nations might have instant payments for a good while, but the US had viable banking and a postal service for more than 200 years. The cost of being first is sometimes being last to upgrade. :/ see also: China and trains. edit: come at me!
- Symbiote 3y ago
  Barclays Bank was founded before the USA, and it's not even the oldest British bank, let alone the oldest European one. The postal services of many European countries also predate the USA.

FireBeyond 3y ago

> IT in financial services is the most insanely complicated, heavily regulated, mishmash of every technology under the sun going back about 60 years that it's a miracle it works as well as it does. Australia in the late 90s had instant intra bank ACH transfers. Even inter bank was within 15 minutes. And not exactly a regulation free market.

deleted 3y ago
[deleted]
dalyons 3y ago
Australia has 4ish banks. The US has 4000. It’s just not the same problem
- viraptor 3y ago
  It's the same problem for the biggest 4 banks. The rest can join the "future" in their own time. It's after the first 4 that you go from trillions to billions in assets. They should have some reasonable pull. 10 should be still a low enough number to make an agreement and effectively make the rest follow or lose out.
  - naniwaduni 3y ago
    The biggest 4 banks ... do support near-instant transfers? Probably in at least three forms each pairwise? I'm not sure why we're pretending the US doesn't have infrastructure for instant transfers, there are like at least four directly supported systems, a couple accidental ones, and a whole host of third-parties in the space, each with a different set of tradeoffs and spotty support.
    - viraptor 3y ago
      Yeah... That's not really a solution, is it? They're not pushing a common standard that way and the small banks will have to play stupid games instead of implementing "the" solution.

xvector 3y ago

The mishmash of systems and the 50+ years of rules is not something to be proud of, it's a cancer that speaks of incompetence and regulatory capture. Neither the government nor the banks can compete with tech startups in, well, tech, so they do so with overwrought legislation, nonsense rules, horribly outdated and absurd security practices, and more. God, everything about the banking industry in the US is such shit. From a complete misunderstanding of the very fundamentals of security to forming a sort of moat with regulation to the government's incompetent inability to actually push FedNow to completion and adoption. It's just a shameful, massive clusterfuck that describes everything wrong with the government's and the banks' approach to technology.

DonsDiscountGas 3y ago

>The CEOs of Citi and Bank of America both told lawmakers at a Dec. 6 Senate hearing that they were preparing to join the network in the coming months. Assuming this is actually correct, I agree with you that this would be pretty successful. Although it still seems like FedNow should've existed years ago. I can deposit a check using the supercomputer/high-res-camera I carry around in my pocket, using a global information network. But it still takes 3 days for ACH to do its things. Companies can do hard things with the right incentives. >Big banks, which spent more than $1 billion on their own real-time payments system, lobbied to stop the Fed from developing FedNow, which would compete with their network. Seems like the incentives were in the wrong direction.

astrange 3y ago
ACH largely takes one day these days; the extra delay is just if your bank doesn't trust the sender to be real. But your paycheck comes in a day because it's always from the same place.

bdavbdav 3y ago

In the US at least - in Europe and other regions, the tech is fairly progressive. In the UK we’ve had “faster payments” for eons.

someNameIG 3y ago
Same in Australia, we've had virtually instant transfers for years.

NoPicklez 3y ago

Here in Australia we have very old banking systems. However there have been newer payment platforms put over the top of existing systems to facilitate near instant payments. All of our major banks have PayID, which means you send money to a mobile number and the transaction is instant. I agree 100% what you have said. Just showing that there is improvement in this space. Having said that, Australia had Visa Paywave completely rolled out and ubiquitous before the US did... believe it or not