Three retail central bank digital currencies (rCBDCs) have been issued in the Caribbean, but thus far all have struggled to achieve expected adoption from both consumers and merchants. The efforts to launch these rCDBCs offer three takeaways: 1) the underlying technologies of rCBDCs may have little effect on adoption; 2) an rCBDC may need to demonstrate value added to entice consumers to use it; and 3) an rCBDC platform may need to be integrated into the larger financial ecosystem to be widely adopted.
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Franklin Noll
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April 10, 2024
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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.
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Julian Alcazar
Sam Baird
Emma Cronenweth
Fumiko Hayashi
Ken Isaacson
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March 27, 2024
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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 Many of these “core banking systems” are outdated and unable to fully accommodate modern services, such as open banking and instant payments.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.
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Julian Alcazar
Sam Baird
Emma Cronenweth
Fumiko Hayashi
Ken Isaacson
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February 28, 2024
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Nonbank transaction accounts—such as prepaid card accounts or accounts with online payment service providers—can help unbanked households make safe and affordable digital payments. But data suggest that they may not be sufficient to achieve digital payments inclusion. Less than half of unbanked households had these accounts in 2021; the rest either used paper-based transaction products or relied solely on cash.
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Ying Lei Toh
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November 29, 2023
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Younger generations—specifically, millennials and Gen Z—increasingly turn to social media for personal finance purposes, such as making and receiving payments, crowdfunding, shopping, and financial education. While the financial tools provided by social media offer benefits, such as convenience and community, they also come with risks, such as increased fraud and misinformation.
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Sam Baird
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October 11, 2023
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Bitcoin ATMs, standalone machines that convert cash to cryptocurrency, are a relatively new and less examined part of the cryptocurrency world. This controversial industry has garnered criticism in the press as well as the U.S. government for its association with illegal or financially predatory practices. However, despite the recent downturn in cryptocurrency prices, some U.S. consumers are still using Bitcoin ATMs, suggesting the industry meets a demand from consumers who want an alternative to crypto exchanges.
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Franklin Noll
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August 30, 2023
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Fintechs, credit bureaus, and financial institutions are collecting alternative data to develop new scoring models that supplement traditional credit reports. Studies, providers, and pilot programs suggest that these alternative data can improve credit reporting and thereby expand access to fair credit. However, use of alternative data is still low due to both uncertainty about the benefits relative to the cost and consumer concerns about use and privacy.
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Terri Bradford
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June 28, 2023
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Although researchers continue to discuss the possibility of a central bank digital currency (CBDC) for retail payments in the United States, the success of a CBDC will depend on consumer adoption. To understand how a CBDC could provide a good user experience, recent surveys in the United States and in other countries have asked consumers about their wants and needs for a potential CBDC. In the United States, a majority of respondents to these surveys seek dependability, convenience, and security.
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Franklin Noll
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March 29, 2023
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Walmart and Apple have announced plans to offer traditional financial accounts. Walmart’s consumer checking account may advance financial inclusion by increasing account access to unbanked and underbanked consumers. Apple’s consumer savings account may change how credit card issuers offer rewards to their customers. Both offerings are likely to increase competition in the financial services industry, though whether they ultimately benefit consumers remains to be seen.
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Terri Bradford
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November 30, 2022
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In recent decades, entities in both the public and private sectors have worked to promote payment inclusion in the United States, whether by expanding the supply of transaction accounts or boosting consumer demand for them. However, more research and data collection are needed to better define and measure payment inclusion as well as evaluate how effective efforts have been to improve it.
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Ying Lei Toh
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October 7, 2022
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