Financial institutions are finally working on making transfers faster, easier and a lot more convenient.

Following recent news that 40 of the world’s leading banks are already experimenting with blockchain technology, today Reuters reported that seven major US banks – including JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co and U.S. Bancorp – are collaborating on a jointly-owned solution that will speed up and simplify person-to-person transfers.

Known as clearXchange, the system will allow customers to transfer funds between accounts instantly, and looks like it could be particularly useful for things like splitting dinner checks, rent payments or vacation bills.

With this initiative banks are hoping to catch up with similar online payment services like PayPal’s Venmo and Facebook Payments.

“What we are doing now is delivering payments in real time, which is what our customers have asked for,” commented Mary Harman, managing director for payments at Bank of America.

But here’s the catch: transferring (at least for now) will be only possible between account holders whose banks are already plugged into the clearXchange system.

So far, U.S. Bancorp and Bank of America are among the first ones to go live with clearXchange, but others are also expected to launch later this year.

Experts agree that if the system is fast, functional and user-friendly, it could be a valuable opportunity for banks to catch up in the race against FinTech startups and gain popularity among the younger generations that prefer to handle their cash online.

To succeed, clearXchange will need to establish a large customer base so that account holders can readily exchange funds among friends, relatives and colleagues, which means that banks will need to put aside their squabbles before more nimble competitors enter the space.

➤ Big U.S. banks to take on tech rivals with instant payments [Reuters]

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