Innovation | 08.05.20
A Solid Digital Payments Experience Helps Tee-Up Long Game – Advisory & Planning
The foursome of fifty-something-aged golfing buddies were thrilled to once again meet up on the links this past July – even if it meant wearing masks and riding in carts solo.
Customary side bets were paid differently, too.
"We're not throwing twenty-dollar bills around anymore," said one of the golfers, Tom, a New York area hospital administrator. "Suddenly, we’re all using Venmo or Quick Pay."
Digital payments — for the past several years, mostly the domain of the younger generation — are increasingly more embedded more into the fabric of everybody’s everyday life since the pandemic took hold. Phone-based apps make score settlements or beer tab reimbursements easier to accomplish.
And, experts say, quick and easy payment facilitations are now an integral part of how banks and credit unions touch their customers.
"It’s no longer just millennials who want to use digital tools," said Prasanna Narayan, head of product at Santa Clara, California-based Ondot Systems, in a recent white paper posted in conjunction with financial services resource provider BAI.
"A majority of people in every generation now see digital as a primary channel for interacting with their financial institution," Narayan said.
Payments are the most common and frequent interaction customers will have with any financial institution. If a bank or credit union were looking to start somewhere with something to get more digitally savvy, then the realm of payments is a sensible place to start, said several consultants and third party providers.
“The financial services industry had to be dragged to the brink of the largest digital revolution of our lifetime,” said Keena Pettijohn in a recent BISA Portfolio post.
Pettijohn, who advises organizations on transforming their customers’ experiences via digital engagement tools, said the proliferation of partnerships between financial institutions and third-party FinTech players has brought the industry to point where almost anything is possible.
Basic paving stones must be laid down sturdily in terms of importance to a bank’s broader, overall goals, e.g., sales of investment products such as individual retirement accounts.
Chase, in recent years, has put its “Chase QuickPay with Zelle” squarely into a fray that features FinTech upstarts — such as PayPal and Venmo — and also giant tech companies, such as Apple and Google; all vying for a piece of an burgeoning personal space: person-to-person payment services.
Banks Can Have an Edge on Tech
Because these tech companies don't have much or any expertise in actually making loans, issuing cards — advising on investments — banks and credit unions might have an edge in that tech expertise can be easily and quickly outsourced, akin to a scenario in which a gifted, lifelong student of Brazilian jiu-jitsu is asked to add arm wrestling into his repertoire. An arm wrestler, meanwhile, might require years to master Brazilian jiu-jitsu.
As digital payments become more ubiquitous, banks, FinTech and big tech will all be fighting like street urchins in a Rio de Janeiro alleyway, scrapping for market share; anything resembling a chokehold will require something…effortless (from the standpoint of the consumer).
Through consultants and third party partners, banks and credit unions are poised to quickly add/improve/utterly transform payments capabilities and deliver a quality customer experience, Narayan said.
“Consumers are not attracted to products, he said. "They are attracted to experiences."
Here are a few key things to keep in mind with respect to upping your payments game:
• Streamline the everyday. A winning digital experience enables clients to truly engage with and better understand their spending. All in just a few taps, according to Narayan.
• Empower cardholders. Offering spend insights, budgeting tools, alerts and card controls can help build their loyalty and wallet share. Millennials have had more financial headwinds than other generations, including student loans and two major recessions. As a result, they want to feel in control of their money and spending, with 73% saying they stick to a budget, Ondot research shows.
“They will be more comfortable choosing a top of wallet card that helps them be aware of their spending and feel in control,” Narayan said.
The COVID-19 pandemic is accelerating the pace of efforts geared toward customer acquisition, BAI said. “Banks are meeting the rush to digital with personal attention to drive new account openings and keep existing clients happy,” the nonprofit said in a new report.
Chase Quick Pay is a good example of a bank giving the tech players a run for their money, said Listen Money Matters' David Lautaret.
For one, Quick Pay’s user interface is more streamlined than Paypal, and it’s not trying to be a new social media account like Venmo. “You just quickly and safely send and receive money,” Lautaret said.
With PayPal, you have to pay a fee for the money to show up right away; otherwise, it arrives in your checking account the next business day, he said.
Note to PayPal and competitive golf buddies: Banks can do payments quicker than that.