The global banking system's reliance on batch processing for interbank transfers creates unnecessary delays, especially during weekends and holidays. This outdated approach benefits banks through float income but harms consumers and businesses with urgent payment needs. A potential solution could involve creating a new clearing house that enables real-time, 24/7 transfers, bypassing the limitations of legacy systems.

How It Could Work

One way to modernize interbank transfers would be to establish a continuous settlement system that operates around the clock. This could work by:

• Using real-time gross settlement (RTGS) technology to process transactions instantly
• Creating liquidity pools where partner banks maintain pre-funded accounts
• Offering API access for seamless integration with existing banking apps and fintech platforms

When a user initiates a transfer, the system would instantly debit and credit the relevant banks' pooled accounts, with internal reconciliations happening later. This approach could work for both domestic and cross-border transactions.

Potential Benefits and Challenges

The main beneficiaries could include:

• Consumers needing urgent payments (gig workers, families sending remittances)
• Businesses requiring flexible payroll solutions
• Banks and fintechs looking to offer competitive services

Key challenges might include convincing traditional banks to participate (since they'd lose float income) and maintaining sufficient liquidity. These could potentially be addressed through revenue-sharing models and partnerships with central banks.

Implementation Approach

A phased implementation might help manage risks:

1. Start with a domestic pilot using existing RTGS infrastructure
2. Expand to cross-border transfers after regulatory approvals
3. Eventually incorporate advanced features like AI fraud detection

This approach could potentially coexist with and complement existing systems like SWIFT or national real-time payment networks, while offering the unique advantage of truly continuous operation.

While ambitious, such a system could address a significant inefficiency in global finance. The growing demand for instant payments suggests there might be substantial market potential for this type of solution.