A Framework for SMB Real-time Payments Adoption

JULY 15, 2025

By: Tyler Brown

Real-Time Payments

Seventy-two percent of millennial-run small businesses don’t use real-time payments, instead leveraging business credit and debit cards, PayPal, and ACH, according to a Datos survey. The top reason why a company doesn’t use real-time payments is their bank doesn’t offer it. Outside of a lack of need, this is followed by not enough knowledge about how real-time payments can be used, then cost. Availability, lack of understanding, and cost add up to 81% of the respondents who don’t use real-time payments.

With FedNow live at 1,405 financial institutions (FIs) and RTP live at 965, a critical mass of FIs may be able to offer small-business customers real-time payments. The millennial cohort is especially important as they age and increasingly start their own businesses. With a full suite of real-time payments functionality, including send, receive, and request for payment, small businesses may increase their working capital by having customer payments settle instantly and paying vendors and employees “just in time.”

The three hurdles to these businesses’ adoption of real-time payments — availability, customer education, and cost — are all issues a bank can solve:

• Availability is a business and technology decision for the bank. The business decision is to ask which payment methods small businesses are using now, and which ones have or may have the greatest benefit to the FI’s bottom line in the long run. The benefit may be based on processing revenue, revenue from payments-adjacent products and services, and total relationship value with its small-business customers. For the bank, key considerations are also the upfront costs and operating expenses related to a real-time payments option.

• Education about the use cases for real-time payments is incumbent partly on small businesses themselves when they think about their payment needs and partly on relationship managers at their bank. Small-business owners need to know what real-time payments are for and that they’re available. The bank’s motivation to educate their small business customers will come when real-time payments are ultimately a profit-driver for the relationship.

• Cost is a product of the expenses a bank passes through to its customers, what it charges for processing and value-added services, and which products and services customers buy that may subsidize real-time payments. For example, the bank can take a loss on real-time payments in the interest of capturing deposits and selling small-business loans or design real-time payments as a revenue source. It is the bank’s choice whether real-time payments are “too expensive” for small-business customers after startup costs are accounted for.

Banks should ask themselves how real-time payments can enhance small-business relationships, especially when it comes to younger owners who may be inclined to appreciate the efficiency, given how their expectations have been conditioned elsewhere. Banks should start by articulating clear business use cases for real-time payments, like accelerating the settlement of accounts receivable or eliminating negative float for vendor payouts and payroll. For banks, real-time payments offered to businesses present opportunities to grow deposits, support the delivery of new cash management products, and cross-sell business lending.

The Future of Consulting: Why Strategy Is King

By: Paul Schaus

July 16, 2025

When I look up the definition of consultant in Merriam-Webster, it says, “one who gives professional advice or services.” When I ask ChatGPT, I get, “A consultant is a professional who provides expert advice, guidance, or services in a specific area of expertise to businesses, organizations, or individuals. They are typically brought in to help solve problems, improve performance, implement changes, or offer an outside perspective.”

Here’s my definition: Consultants bring an external perspective, leveraging best practices and domain knowledge to address challenges such as regulatory changes, technological advancements, and competitive pressures. This includes a wide range of services, from strategy and operations to technology, risk management, and procurement. In my world, a bank consultant needs to take into consideration the business strategy of the client.

Bank consulting encompasses a diverse array of services, each addressing specific needs within financial institutions. The following table outlines the primary types of consulting services, their descriptions, and examples, reflecting the industry’s multifaceted demands:

Types of Consulting in Banking

Strategy-centered consultants offer services across these domains, ensuring a holistic approach.

The importance of strategy-centered consulting

In the dynamic and often turbulent financial landscape, the traditional consulting model is no longer sufficient. I contend that strategy-centered consulting is not just an advantage, but an absolute necessity for banks to ensure survival and sustainable growth. This approach moves beyond isolated problem-solving to integrate all consulting engagements with a client’s core business strategy, fostering alignment and resilience.

Not long ago, banks were hyper focused on innovation. There was plenty of enthusiasm for the future. In that context, consultants can easily thrive. But today, the help banks are asking for is different. It is still centered on the future, but it is a much more serious discussion about survival. Taking a strategic approach to consulting, one that is tightly integrated with clients and their unique needs, is the only way to navigate this kind of environment. For those who’ve always made strategy-centered consulting a focal point, there isn’t much to change.

A clear example of how this plays out is in procurement. Negotiating vendor contracts is a task often outsourced to consultants. This can manifest as a simple price negotiation exercise with no real regard for the bank’s strategy or long-term plans. However, by optimizing procurement within a strategic framework, banks can achieve immediate savings while ensuring their contracts support future growth and objectives.

Distinguishing strategy-centered from tactical consulting

Understanding the nuances between different consulting approaches is crucial. Some of the fundamental differences between a strategy-centered consultant and a more tactical or specialized consultant include:

• Scope: Strategy-centered consultants offer a broad, holistic view across multiple domains (e.g., operations, technology, risk management, procurement), always with the client’s overarching business strategy in mind. In contrast, tactical or specialized consultants have a narrower focus on a specific function or problem.

• Strategic alignment: Strategy-centered consultants prioritize ensuring that all solutions and recommendations align with the client’s long-term business strategy and regulatory requirements. Tactical consultants, conversely, may prioritize immediate problem-solving or efficiency gains within their specific area.

• Outcome focus: While both can achieve tangible results, strategy-centered consulting aims for sustainable outcomes that drive long-term strategic impact and enhance organizational capabilities. Tactical consulting primarily focuses on immediate, often isolated, improvements or cost compression within their specialized domain.

Example: Hiring a strategy-centered consultant vs. a procurement consultant

There are significant advantages to hiring a strategy-centered consultant for all consulting types.

Using procurement as an example, these advantages include:

• Holistic alignment with business strategy: Strategy-centered consultants ensure all engagement areas align with the bank’s long-term goals.

• Comprehensive expertise across domains: A strategy-centered consultant brings expertise across multiple areas, ensuring consistency and coherence.

• Regulatory compliance and technology alignment: Given the regulatory requirement that an institution’s technology must support the business strategy, a strategy-centered consultant is better positioned to ensure compliance. They can assess digital maturity, develop roadmaps, and use advanced tools like AI for resilience, ensuring procurement decisions align with strategic goals.

• Cost savings with strategic impact: Strategy-centered consultants can achieve significant cost savings in procurement while maintaining strategic alignment.

• Change management and capability building: Strategy-centered consultants often include change management in their services, working side by side with bank teams to ensure sustainable results.

If you only need to renegotiate a vendor relationship and don’t need to consider broader strategic implications, a procurement consultant might be more efficient. My colleagues call them “price compression firms.” They specialize in cost-saving tactics. However:

• They may not ensure technology choices align with your business strategy, which could pose risks under regulatory scrutiny.

• The focus is on the cost of ownership and contract value. They push for longer terms since they get a percentage of the savings, and vendors will provide larger discounts for longer terms.

• Renegotiating a core banking system contract, a procurement focus might miss strategic alignment or business terms that need to be in your contract.

Strategy-Centered vs. Procurement Consultants

A strategy-centered consultant ensures technology aligns with business goals, offers holistic expertise, and achieves cost savings with strategic impact. However, for purely tactical vendor renegotiations without strategic implications, a procurement consultant might be sufficient. Always keep in mind, though, caveat emptor, “let the buyer beware.”

The future of consulting in 2025

Just as banking is changing, bank consulting is also changing. As we all adjust to the challenges of the moment, there are several key trends shaping the landscape. I expect these trends will lead more consultants to take a strategy-centered approach as they change the game and create new and different challenges and opportunities for clients. They include:

• AI and digital transformation: AI is revolutionizing banking by enabling personalized customer experiences and optimizing organizational processes. I predict by 2030, widespread AI adoption will make banking universally accessible and far more efficient. Consultants will be key enablers guiding its integration.

• Regulatory and economic pressures: Increasing regulatory scrutiny and economic uncertainties require banks to adopt bold strategies and technology-driven solutions. Consultants need to be able to help institutions respond to these pressures without stunting future opportunities.

• Sustainable growth: In a low-growth, lower-rate environment, banks need consultants to reinforce foundations for sustainable growth, particularly in operations and procurement. A focus on what makes each institution unique is key.

• Client-centric customization: Clients increasingly demand tailored solutions, which is pushing consulting firms to align services with specific needs and long-term goals.

Helping banks tackle these trends requires understanding not only each one, but also how they converge. For example, creating sustainable growth can often run up against regulatory and economic pressures. As we move forward, it will only become more important for consultants to embed themselves with their clients and solve problems in a collaborative way.