The U.S. banking industry’s push to play a pivotal role in a modernized payments system got a boost Wednesday from Federal Reserve Gov. Jerome Powell.

During a speech in New York, Powell sketched out a future in which banks remain at the center of commerce — a role that they have long played but that has been called into question by the rise of payments-focused technology firms.

“Given their importance in holding and transferring funds, banks continue to have a key role to play in the design and safety of more efficient retail payment systems,” Powell said, according to a written transcript of his remarks. “Without bank participation, it would be difficult to change how funds are transferred in a way that brings pervasive benefits to consumers.”

Fed Gov. Jay Powell
“Without bank participation, it would be difficult to change how funds are transferred in a way that brings pervasive benefits to consumers,” said Federal Reserve Board Gov. Jerome Powell. Bloomberg News

Powell acknowledged that certain payment systems already allow consumers to transfer funds within their own closed networks on a real-time basis. PayPal are Venmo are examples, although the speech did not cite any companies by name.

“But achieving these benefits on a broad scale would be challenging without the banking system’s participation,” he added.

Powell’s speech came on the heels of a multi-year process led by the Fed in which private-sector firms worked together to develop a roadmap for a real-time U.S. payments system. Members of the task force included both banks and technology firms, and the Fed sought to be a neutral party in the process.

Companies that submitted proposals for a real-time payments system to the Fed-convened task force included the financial technology firms Ripple Labs and Dwolla.

The Clearing House, which is owned by the nation’s largest banks and submitted its own proposal to the task force, is generally considered the front-runner in the race to modernize the nation’s aging payments infrastructure.

There are also ongoing tensions between large banks and some small banks, which are concerned that their larger peers will establish the prices and rules in a modernized payment system, but Powell did not address that fault line in his speech Wednesday.

Powell, who joined the Federal Reserve’s board of governors in 2012, is reportedly on President Trump’s list of five finalists for Fed chairman.

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