As consumers and businesses increasingly demand faster and more convenient payment methods, real-time payments are moving toward becoming a fundamental expectation rather than an emerging technology.
For financial institutions, particularly community banks, adapting to this new landscape is crucial for maintaining relevance.
United Bankers Bank (UBB), a correspondent financial institution serving over 1,000 community banks across the U.S., recognized that smaller banks often lack the extensive internal resources of larger institutions for in-house development or complex integrations.
To address this, UBB partnered with Pidgin, a real-time payments platform provider, to provide the necessary infrastructure for its network of banks to offer instant payment services via FedNow, RTP or the Automated Clearinghouse (ACH). The result has since earned it recognition from American Banker as an Innovation of the Year.
Navigating the complexities of instant payments
Many community banks rely on legacy core systems not designed for 24/7, instantaneous processing, according to Jim Perry, a senior strategist with consulting firm Market Insights. Upgrading or integrating these systems with new real-time rails like FedNow and RTP involves substantial technical complexities and high costs.
“On top of that, many smaller institutions lack the in-house resources to implement and manage the shift,” Perry said. “In other words, it is resource-intensive and complex.”
Many bankers (35%) cited adoption costs as a top-two issue slowing the growth of real-time payments in the U.S., according to
Beyond technology, real-time payments introduce operational complexities. The nonstop availability of these systems eliminates traditional “float” periods, requiring banks to maintain sufficient liquidity buffers at all times, leading to continuous liquidity pressure and increased intraday volatility.
Treasury teams must operate with heightened vigilance, using real-time monitoring and automated controls to prevent overdrafts. The differing operational models for FedNow (settlement through a Fed master account) and RTP (real-time settlement via a joint, prefunded account) further complicate daily cash management, especially for send capabilities.
Security and fraud also pose significant concerns. The instantaneous and irrevocable nature of real-time transfers leaves little time to detect and stop fraudulent activities.
Two in five (40%) bankers cited fraud and security concerns as the first or second biggest inhibitor slowing the growth of real-time payments in the U.S., according to the American Banker survey.
This necessitates sophisticated risk models and investments in advanced fraud detection technologies, including behavioral analytics and AI-powered monitoring, which can be resource intensive for smaller institutions.
Compliance requirements also become more stringent, demanding continuous sanctions list monitoring and sub-second screening algorithms to ensure regulatory adherence without delaying transactions.
Pidgin’s platform offers a centralized solution
Pidgin is designed as a secure, real-time payments platform that acts as the “connective tissue and plumbing” for financial institutions, according to a spokesperson for the fintech. It enables banks to offer instant payment services by routing transactions through FedNow, RTP and ACH, providing a comprehensive solution for diverse payment needs.
The platform offers 24/7/365 access, ensuring payments can be sent and received at any time, with funds posted directly to the customer’s account for immediate availability.
“The UBB–Pidgin partnership directly addresses many of the barriers community banks face — simplifying integration, reducing costs and providing the support smaller institutions often lack,” Perry said.
A key security feature of Pidgin is it’s designed to keep funds within the financial institution, rather than routing them through a third-party holding account or virtual wallet. This approach enhances security, reduces interbank settlement risk and strengthens customer retention by maintaining the bank as the primary financial custodian, according to the fintech.
Pidgin supports a wide range of transaction types for both consumers and businesses, including peer-to-peer (P2P) transfers, consumer-to-business (C2B) payments for services or e-commerce, business-to-consumer (B2C) disbursements like immediate payroll or insurance payouts, and business-to-business (B2B) payments for on-demand supplier invoices.
The platform also facilitates government and municipal payments, such as instant tax payments or refunds. By supporting both “receive” and “send” capabilities, Pidgin allows banks to fully leverage real-time payments for competitive advantage.
UBB enables banks through Pidgin partnership
United Bankers Bank, as a correspondent institution, provides its network of over 1,000 community banks with access to technologies without competing with its member banks.
UBB initiated a pilot program for faster payments with Pidgin approximately one year before the official launch of the FedNow service. This involved thorough testing with a customer bank, including liquidity management transfers and other real-time transaction capabilities. This preparatory phase allowed UBB to seamlessly integrate the solution, enabling them to go live with Pidgin the day after FedNow service officially launched.
Since going live, UBB has observed a consistent increase in the number of partner banks participating in the FedNow service through the Pidgin platform, growing by 5-10% each month. UBB anticipates this trajectory to accelerate as more institutions recognize the benefits of the new real-time rail.
One thing that the UBB-Pidgin partnership does not solve, according to Perry, is the demand gap.
In markets with older or rural customer bases, customers may not feel the urgency of real-time payments, according to Perry. As such, the pressure on these customers’ banks to adopt remains low, even if the technology is now within reach.
“Nevertheless, for small banks that want to modernize their payments infrastructure and stay competitive, real-time payments would simply not be possible without this kind of collaboration,” Perry said.
Broader implications and future outlook
The UBB-Pidgin project underscores the critical role of partnerships with fintechs in enabling traditional financial institutions, particularly smaller ones, to adopt advanced technologies efficiently and cost-effectively.
Few banks (12%) choose to connect to faster payments directly. Most choose to do so through a core banking provider (47%), partner financial institution (12%) or third-party software provider (29%), according to
The initiative also serves as a blueprint for how correspondent banks can effectively empower smaller financial institutions to adapt to the rapidly evolving payments landscape — namely, with a fintech partner.
The UBB-Pidgin partnership also gives community banks a way to stay relevant in their local economies, offering modern financial services that meet the growing demands of both consumers and businesses.
The real-time payments landscape itself continues to evolve, as well. Transaction limits on networks like RTP are increasing significantly, with RTP raising its cap to $10 million on February 9, and similar increases in the works for FedNow. This trajectory suggests a future where real-time payments will handle an even broader range of high-value transactions, further emphasizing the critical need for robust and adaptable real-time infrastructure.