If you missed our November 2022 Executive Payments Summit, below are 6 quick takeaways from the event. Even better, you have another chance to attend EPS on March 14 & 15 immediately following ePayConnect 2023 at Disney's Swan and Dolphin Resort in Orlando!
1. Faster payments are like shipping options - how quickly does it need to get there and what type of assurances do you need?
In the United States, individuals have an average of eight accounts, Visa Direct’s Global Product Lead, Poornima Narayanan said. Each payment channel is about using the right tool at the right time for the best possible user experience.
The faster payments pie is getting larger due to the increase in transaction volume. For example, traditional payroll ranges of weekly to monthly have given way to on-demand payroll, creating multiple transactions daily. It is not a zero-sum game; Narayanan said the domestic value for faster payments is an estimated $65 trillion, more than enough to go around.
The growth of Same Day ACH (SDA) from Q1 to Q2 2022 exceeded all the SDA growth in 2021. Nacha’s Senior Director of ACH Network Administration, Devon Marsh, said 2023 is the first year since inception that Nacha doesn’t have planned enhancements for Same Day ACH; however, that does not mean SDA will not continue to evolve. Potential enhancements include aligning with the close of business on the West Coast, weekend hours, increased dollar limits, and a domestic component of IAT entries.
2. Many financial Institutions say their customers are not asking for faster/instant/real-time payments, and that is true only because they are already using them.
Faster payments is defined as the settlement of the payment and message simultaneously – in real-time, with assured delivery, and irrevocable, according to Sue Meyer, VP, RTP Product Development at The Clearing House.
Faster isn't always real-time, according to Erik Van Bramer, SVP, Head of Customer Relations at The Federal Reserve Bank of Chicago. SDA and Zelle, for example, are faster, but not real-time, unless the Zelle transaction is done over the RTP network.
It is imperative for financial institutions to buy into the concept of real-time payments because consumers are using them.
Not all customers need all options, but for those who do, it is important for the end user AND the financial Institution to understand how the payments puzzle fits together. Consumers need to know the requirements and consequences of payments and financial Institutions should comprehend how their payments settle.
Offering faster payments isn’t a small undertaking. It requires collaboration, whether through partnerships with fintechs or core providers.
3. Your competition isn’t large financial Institutions with technology budgets of a billion dollars. Your competition is digital wallets and apps.
The COVID-19 pandemic has continued to affect the way U.S. consumers use and hold cash, according to the2022 findings from the Federal Reserve's Diary of Consumer Payment Choice.
The use of digital wallets such as PayPal, Venmo, and CashApp is increasing as the amount of cash held per person is decreasing.
Peter Davey, SVP, Head of Product Innovation & Labs at The Clearing House said consumers don’t care about payments – they just want to do transactions. It’s up to the financial institution to offer the latest innovations to consumers or they will move on.
4. As the number of financial Institutions decreases, focus is shifting to heightened awareness of end-to-end user experience (UX or CX) and figuring out how to make your institution stand out from the competition.
Fintech is changing the game, according to JP Nicols, Cofounder of Alloy Labs.
Financial institutions are now transitioning from the era of efficiency and execution to the era of agility. While financial institutions tend to focus on operations versus expense in relation to new technology, innovation needs to be more about what it can do for the end-user more than what it can do for the financial institution.
Programs designed to help smaller community banks identify shared resources to solve common problems, such as Nicols’ Fintech Forge, allow financial institutions to be nimbler and take advantage of opportunities that might otherwise pass them by or take too long to implement.
The best way to predict the future, Nicols said, is to create it.
5. Planning and investing in client conversions can save your financial institution time, money, and stress.
Knowing the timeline when you’re investing in client conversion is key; it can set you up for success or failure.
Start planning immediately with a project manager – someone who can make decisions without adding hours and days to the project. Be careful to identify ALL affected areas and departments.
When testing new products, create client tiers. Smaller groups are easier to manage and allow for faster reaction when things don’t go according to plan. It’s important to implement an ongoing client outreach plan, including a plan for the 20 percent of clients that drive 80 percent of your business and a strategy to minimize user abandonment.
“The scary part is the world will never move this slowly again,” Colin Holden, Vice President of Technology Solutions at Superior Press, said.
6. Financial institutions are being held more accountable for scams.
Expect to see more friction in the payments experience. Richard Bradfute, EVP/CIO of James Polk Stone Community Bank, said if the receiving institutions are expected to protect consumers from scams they often willingly participate in, he supports allocating the loss equally across all parties: 1/3 each to the sending and receiving institutions and 1/3 to the consumer.
Have ongoing discussions with your fraud team, not just when fraud is happening! Preventing fraud means staying on top of it.
Bradfute said his institution saw a drop in fraud losses when it refined its messaging about sharing codes. He recommends changing your messaging from "Do not share this code with anyone" to "Anyone asking for this code is a fraudster." Ensuring the end user is invested in mitigating fraud loss is key.
Learn more about the March 2023 Executive Payments Summit at executivepaymentssummit.org.