Viewpoint

Information is Real-time, Money Should be Too

Tyler Sherwin, Senior Business Development Lead, Payments & Crypto

August 28, 2023

3 min read
Money as information and the advent of real-time settlement  

 

Money has three fundamental properties:  

  • Medium of exchange 

  • Store of value 

  • Unit of account 

As technology has evolved, these characteristics remain constant, but money’s form factors have changed. Where societies once used shells, rocks, or coins, today we use paper, plastic or digital. Whether we pay for a muffin with our credit card or paper currency, we’re communicating the same information: “I’m good for it”.  

At its core, money is just information, often recorded in a digital database. And technology allows us to record and communicate that information faster than ever before.  

Ever since the first Diners Club card in 1950, money has transcended physical limitations. Today, money lives in a lot of different places: cash in your pocket, your bank account balance, a card network sending an authorization to a merchant. Thanks to innovations in fintech and digital banking, it’s likely that you use digital money to manage your payment obligations more often than physical coins or paper.  

But has core bank technology kept pace with this innovation?  

 

The legacy banking bottleneck 

It might surprise you to know that today, many banks exclusively use mainframe technology and file-based bank cores. The processing power and security offered by on-premises infrastructure like mainframe computers has been a staple of the banking industry for decades. But platforms that exclusively use batch processing and file-based systems slow down the flow of information, delaying notification as well as settlement. 

While information speeds around the globe in milliseconds, the settlement of money often lags.  This creates pockets of capital tied up in various stages of the payment process.  As interest rates have risen this capital has become more and more expensive, adding more cost to legacy batch settlement processes. Payment platforms have built intricate settlement networks to handle payments, abstracting the complexities of delayed, batch settlement and reaping significant rewards in the process. Although fintech platforms can innovate by speeding up the flow of information, they cannot innovate at the base layer of the financial stack: bank infrastructure. Without the right bank partner, this becomes a bottleneck resulting in friction for fintechs and consumers alike.  

If fintechs want to stay ahead of an increasingly interconnected world, they must enhance their technology stack with cloud-based and API-centric tooling at the base layer: bank infrastructure. 

 

Enter Cross River Operating System (COS) 

As an FDIC chartered bank, we have built a real-time core bank infrastructure, allowing fintech partners to tap into various payment rails seamlessly. Where other banks use file-based, legacy bank cores, COS has been built from the ground up to meet the specific needs of today’s fastest growing fintechs. And with the advent of real-time settlement networks like RTP® and FedNow™, the bank is no longer a bottleneck.  With COS, money finally has a database that is reliable, real-time, and reconcilable at any given moment.  

  • Built for fintechs: Our API platform is tailor-made for fintechs, enabling payments across various rails, from Wire, ACH, and Push-to-Card, to the latest innovation in real-time settlement like RTP® and FedNow. 

  • Real-time at its core: COS enables instant reconciliation and real-time event notifications through robust webhooks. 

  • Banking as a Service (BaaS): Store value, create wallets/accounts, and even issue debit cards against those accounts. 

  • Payments on your terms: Move money at your customer’s direction with routable virtual accounts (subledgers) for speedy reconciliation. 

 

Money’s real-time database 

Money’s evolution from tangible assets to digital information only underscores the need for banking infrastructure that is robust and agile. Because information moves instantly, our financial systems need to keep pace. Cross River bridges the gap between traditional bank safety and the latest technological innovation. 

By offering real-time solutions and seamless payment infrastructure through COS, money can now move at the speed of information.