The Federal Reserve System today announced that First Vice President Kenneth C. Montgomery will lead the development of a new FedNowSM Service to support faster payments in the United States with interbank real-time gross settlement (RTGS) and integrated clearing. The Federal Reserve Board of Governors announced its decision that the Reserve Banks will offer this RTGS service in a Federal Register notice last week.
“Ken brings deep financial services insights and technical expertise to his new role,” said Esther George, president and chief executive officer, Federal Reserve Bank of Kansas City, and sponsor of the Federal Reserve’s payments improvement initiative. “He is a natural fit to lead FedNow given his success in previous Federal Reserve technology and business management roles, and his leadership of our payments security efforts.”
The development of FedNow is a multi-year effort that will be informed by public comments on the current Federal Register notice. A product description that more fully defines the FedNow offering will be published in a subsequent Federal Register notice. Once in place, FedNow will provide critical infrastructure to enable financial institutions of all sizes to offer real-time payments services to their retail and commercial customers.
“This is an exciting milestone in U.S. payments modernization, as the Federal Reserve works toward fulfilling the payments industry’s request for a service that will support safe and efficient faster payments for all financial institutions – and by extension, provide the benefits of real-time payments to all Americans,” Montgomery said. “The FedNow team is gathering industry input on desired features and functionality so we can solidify FedNow’s product design and further define the pathway to launch.”
Montgomery will retain his current position as Federal Reserve Bank of Boston first vice president and chief operating officer, where his responsibilities include financial and treasury services, information technology and strategic planning. Earlier, as executive vice president and Federal Reserve System chief technology officer, Montgomery headed the National Information Technology Architecture and Standards Division. This included Federal Reserve System-wide responsibility for business consulting, technology and strategic planning, standards development, information security policy, risk management and high-intensity solutions engineering.
About the FedNow Service
The FedNow Service would support financial institutions’ provision of end-to-end faster payment services to their customers by allowing real-time, payment-by-payment, final settlement of interbank obligations through debits and credits to financial institutions’ balances in their accounts at the Reserve Banks. FedNow also would incorporate clearing functionality into the process of settling each payment, allowing financial institutions to exchange the information needed to make debits and credits to customer accounts and notify customers of completed (or failed) payments. FedNow will provide access through the Federal Reserve’s FedLine® network, which currently provides Reserve Bank payment and information services to more than 10,000 financial institutions, either directly or through their agents. For more information, visit FRBServices.org and FedPaymentsImprovement.org.
The Reserve Banks provide financial services to more than 10,000 financial institutions in the United States in support of an efficient, healthy payments ecosystem. The Federal Reserve Financial Services suite of services and access solutions can be customized to meet the needs of any size financial institution. Offerings include Fedwire® Funds Service for wire transfers; FedACH® Services for electronic exchange of debit and credit transactions through the Automated Clearing House (ACH) network; and FedLine Advantage®, which offers electronic access to these and other Federal Reserve payments and information services. Visit FRBservices.org for additional information.