Why is instant access to money still a myth?
They say time is money, right? Well, what about time to money – how long it takes for money to be available for you to use.
In the age of instant everything, there are few things more annoying, not to mention anxiety-inducing, than not being able to instantly access your own money. As the very wise Ayo Omojola points out, time to money is the ultimate competitive advantage.
As a Certified Financial Planner (CFP), I’ve spent decades of my career observing how the time-to-money problem manifests itself. How something as simple as not being able to access money from an account at night or on the weekends holds back the willingness to even save or invest in the first place.
We deserve better
Despite strong adoption worldwide, US financial institutions have been slow to embrace real-time payments. The reluctance is largely due to the complexity of the financial landscape and established consumer payment habits. Essentially, financial institutions haven’t been forced to speed things up, but that doesn’t mean we aren’t at a tipping point.
Essentially, financial institutions haven’t been forced to speed things up, but that doesn’t mean we aren’t at a tipping point.
You see, the ability is there. Our banking system built and launched a real-time way to move money, but it’s been sitting basically unused since 2017 (wild, I know). Only select US banks have connected to the Real-Time Payments (RTP) network, meaning the system simply has not been broadly accessible and financial services products across the spectrum still have to rely on the slow, broken model of an Automated Clearing House (ACH). This is exactly what inspired me to start Orum (there were ~75 million RTP transactions in the first half of 2022 v. 7.3 billion transactions on ACH).
Take the brokerage system, for instance. Much like other financial institutions, these firms have relied on a 50-year-old system where accessing your own money has historically been 3+ days during the week and 5+ if you want it out of hours.
This is why Orum is partnering with companies like investing platform Public.com to enhance their products with real-time withdrawals and instant access to money. Just like Martin Ferreiro Subi, Senior Product Manager at Public.com told me, we don’t talk about financial infrastructure in the news a lot, ”but it’s a key challenge to overcome in our mission to make the public markets work for all people.”
So how do we do this? Not by hoping new payment rails (which are national infrastructure) will solve all known challenges, but by smartly working with all the rails currently available (including RTP and FedNow, once available). That means Orum will manage the complexity of payments, not our customers. Our embeddable solutions, which take the form of a single API, can be dropped right into existing programmes to easily harness the best of all existing payment rails without the hassles of a bank integration. By harnessing all existing payment rails, Momentum can settle payments instantly and around the clock, including overnight, at weekends, and on holidays.
Without solutions like ours, it’s hard for companies to set up bank integrations and figure out which rails to route each payment through. There’s a LOT that goes on behind the scenes! That, coupled with prior generations being accustomed to having to wait days on end for their money to move, meant that there wasn’t as much pressure to move funds quickly. Our customers do not have to change their banking relationships - they are empowered to derive higher value by embedding 24/7 payment capability within the existing relationships.
Now that we’re moving in that direction, I see a key unlock for financial inclusion and innovation. In fact, I argue that the slow pace of money movement is one of the main things that has been holding back broader financial innovation. If money moved 24/7/365 and it was all orchestrated with speed, risk and cost in mind, the time to build a new financial services product goes from years to months (maybe even weeks). If the cost to embed payments goes down, we get more efficient economics for consumer-facing financial products, driving up financial access and inclusion.
In fact, I argue that the slow pace of money movement is one of the main things that has been holding back broader financial innovation.
Why are we letting the 50-year-old ACH system dictate how financial products like paychecks, insurance payouts, mortgage payments, car payments and savings dollars get from point A to point B when something better now exists? Why would we continue to put a ‘speed tax’ on the American wallet and lock everyday households from even accessing most financial products that could help their financial wellbeing? This is why every day I show up filled with curiosity, passion and determination to power a better financial system where everyone has the ability to build to their potential.
