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Briefing
Market Structure of Core Banking Services Providers
Three core providers dominate the market for core banking systems for depository institutions (DIs). These providers also have a large presence in vertically related markets, such as card network services; payment processing services for DIs, merchants, or governments; and banking-as-a-service. This market structure may make it difficult for DIs to switch their core providers, affecting their ability to offer new services and stay competitive.
Briefing
Core Banking Systems and Options for Modernization
Each U.S. depository institution (DI)—including banks and credit unions—uses a back-end information technology system to process daily transactions and manage financial accounts. Many of these “core banking systems” are outdated and unable to fully accommodate modern services, such as open banking and instant payments. Modernizing these systems is a complex process, and DIs may consider a full replacement, a component-based replacement, or augmenting their existing system.
Discussion Paper
An Examination of First-Mover Advantage for a CBDC
This paper explores whether there could be a first-mover advantage for a jurisdiction issuing a central bank digital currency (CBDC) compared to other jurisdictions that subsequently issue their own CBDC. Conventional academic literature provides a framework by which one can assess a CBDC in the domestic payments market, the international payments market, and the technology markets that support payments. However, a CBDC may be more than just a means of payment and thus first-mover advantage is examined for both the asset component of reserve currency and a future financial system built on ...
Briefing
The Role of Core Banking Services Providers in Facilitating Instant Payments
Core banking services providers play key roles helping depository institutions (DIs) offer instant payments. Specifically, core providers process transactions in real time and connect DIs to instant payments system operators, upgrade customer-facing solutions, and facilitate open banking and embedded finance. As the United States implements instant payments systems, the market structure surrounding core providers may evolve, and competition between fintechs and DIs for end users may intensify.
Working Paper
Introducing a Framework for Measuring the Quantitative Benefits of Privacy-Enhancing Technologies
This paper reviews privacy-enhancing technologies (PETs) and explores their benefits when used to make traditional payment processes more private. PETs can decrease privacy risk by reducing the amount of sensitive information accessible to payment-processing personnel and systems. This paper proposes a framework for quantifying the risk-reduction benefits of PETs. This method can be used to calculate the amount of privacy-risk exposure that may be created by a set of payment activities, estimate the amount by which PETs can decrease that exposure, and compare that quantified benefit against ...