PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

5 Key Ways Consumers Win With Real-Time Payments

Rachel Gore by Rachel Gore
February 28, 2020
in Banking, Customer Experience, Featured Content
0
real-time payments
50
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The payments industry is expanding rapidly, with exciting new developments and technological capabilities constantly emerging. Real-time payments (RTP) is one such area of expansion, as RTP systems allow financial institutions (FIs) to step away from operating manual decision-making processes and focus their energy elsewhere.

Beyond that, banks now have the opportunity to leverage analytics to improve the end user experience. And at the same time, platformification and collaboration between banks and fintechs continue to propel payments capabilities forward.

To take a deeper dive into these topics, PaymentsJournal sat down to speak with Robert Mancini, Head of Payments Solutions, Americas at Finastra, about what to expect for the future of payments systems in the modern world’s globalized economy.

1. Real-time payments will finally gain traction in the U.S.

Unlike other countries, real-time payment implementation is not mandated by any regulations in the United States. This means that banks have been free to add RTPs at their own pace, making implementation slow to roll out. Now, things are beginning to change.

A common misconception in the marketplace is that RTP exclusively refers to the ability to send a payment faster, but that isn’t necessarily true. “Rather, it’s about sending a payment on demand,” explained Mancini. RTPs processes can be built around a number of use cases. For example, if consumers want to send a business-to-business (B2B) payment, financial institutions can build a system that allows them to send the payment immediately if a set of conditions are satisfied.

Though RTPs were originally intended to be used for B2B payments, person-to-person (P2P) payments are what really launched the now “hockey-stick” growth of real-time payments. Even so, the takeoff in RTP system implementation has led many financial institutions to resume pushing their RTP B2B capabilities onto corporate and commercial customers.

2. Real-time payments will open up opportunities for financial institutions and consumers

The adoption of real-time payments in the U.S. has been largely driven by banks’ shifting mindsets regarding RTPs. A year ago, banks were primarily concerned with whether they had the business case to implement RTPs. But they are now beginning to approach it more strategically as a way to further differentiate their value proposition to consumers.

Enabling real-time payments does more than add value to consumers. As banks work toward a technology-driven systematic approach, and introduce artificial intelligence (AI) and machine learning (ML) capabilities, they are rewarded with improved operational efficiencies. This is particularly true in comparison to traditional payment channels, such as paper checks and money wires, which require manual intervention or internal approvals during processing.

To drive the enablement of RTPs, banks must be up to the task of boosting their technological capabilities. This includes prioritizing security related to RTPs by improving technology in a number of areas to specifically mitigate the risks associated with payments being initiated in real time.

3. Banks will leverage analytics to improve the end-user experience

“When it comes to using data, the conversation starts to shift from RTP to platforms, APIs, and leveraging the broader ecosystem,” noted Mancini. Financial institutions today are still very structured and siloed in terms of data storage. Banks have vast amounts of data, but don’t know how to effectively manage or use it. This challenge with data is largely caused by it being held in too many different systems and business groups, which reduces visibility across the data set.

By changing how this data is used, FIs can offer a more insightful user experience. In other words, “by using a platform and leveraging APIs and micro-services in real-time fashion, financial institutions can start filling these use cases.” added Mancini. “The power comes in using the platform as a collaborative tool to innovate throughout the ecosystem.”

4. Banks will partner with fintechs to drive the payments experience forward while remaining cautious about data sharing

“Banks won’t just readily hand all of their customers’ data to fintechs. It’s going to be a journey, and one that will be very limited in terms of taking a cautionary approach and seeing how it goes.”

Robert Mancini, Head of Payments Solutions, Americas at Finastra

Many fintechs offer platforms that enable the broader digital experience bankers are trying to create. However, banks continue to be very conservative and cautious with how they are sharing data with their fintech partners. But by leveraging a platform, and by having fintechs and technology companies integrated and certified on that platform, banks can better manage what data fintechs have access to.

For example, there may be a fintech that would allow a bank to enable a broader digital consumer experience, and it only needs a handful of specific data sets to do so. By leveraging the platform, banks don’t have to be as concerned about going through extensive partner management efforts, as it will have the checks and balances in place to mitigate security risks and disclose only necessary data.

“Banks won’t just readily hand all of their customers’ data to fintechs,” said Mancini, who added that “it’s going to be a journey, and one that will be very limited in terms of taking a cautionary approach and seeing how it goes.”

5. The customer experience will become even more seamless

Despite the lack of a RTP regulatory mandate, U.S. banks are still facing a significant amount of market pressure to implement RTPs into their offerings. Just as mobile banking drastically changed consumers’ expectations for retail and e-commerce transactions, consumer expectations will similarly drive the adoption of RTPs and other seamless payments experiences.

Speculating upon what consumer-centric features banks will offer in the future, Mancini said that “banks may be able to pay consumers’ bills at the end of the month, invest surplus money in their accounts according to cash flow, future commitments, and risk factors, and really manage their entire cash flow and financial needs to transform banking.”

This transformation could change banking similarly to how Tesla is changing driving. Just as Tesla has shifted toward driverless, banks could shift toward a “driverless” consumer experience that largely eliminates the need for consumers to manage their own finances.

Mancini anticipates banks will undergo this transformation in three phases:

  1. Building platforms, moving to the cloud, and leveraging APIs to build cross-functional solutions that transform the digital experience for customers.
  2. Transforming themselves from the inside out by re-imagining the banking experience.
  3. Implementing “driverless” banking experiences into its services.

When it comes to enabling tech, timing matters

Though there has been some concern within the industry that big tech companies such as Apple, Google, and Microsoft will take over banking, Mancini doesn’t see that as an immediate threat. Traditional financial institutions have the advantage of trust, as consumers are much more distrustful and wary of tech companies than they are banks.

One threat that tech companies do pose to banks, however, is timing. If banks wait too long to invest in technological advancements needed to improve the customer experience, they are putting themselves at risk of losing customers. Early-to-adopt banks will have an advantage, as the current model ultimately won’t meet consumer expectations moving forward.   

The takeaway? Consumer demands drive technological capabilities forward 

Banks need to strike a balance between adjusting their internal structures and operating models as they adopt the technology needed to keep up with consumer demands. Real-time payments, improving the end-user experience, and banks partnering with fintechs all come down to one underlying theme: meeting consumer needs and demands. 

Tags: API enablementBankscustomer experienceData Analyticsdata managementFinastrafintechsPayment PlatformReal Time Paymentstechnology
50
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    check fraud

    Check Fraud: The Threat is Real

    June 6, 2023
    smart banking

    Smart(er) Banking Requires More Than Just Tech

    June 5, 2023
    Google Wallet Expands Features

    Google Wallet Continues to Bet on Digital with Expanded Features

    June 2, 2023
    digital value

    How Embracing Digital Value Can Help Solve the B2C Payments Conundrum

    June 1, 2023
    instant payments, real-time payments, RTP

    Banks Developing Instant Payments Products in the U.S. Should Focus on Billers to Generate New Revenue Streams  

    May 31, 2023
    Digital Wallet Use Delivers on Convenience and Security

    Digital Wallet Use Delivers on Convenience and Security

    May 30, 2023
    5 Ways to Protect Your Financial Institution from a Cyberattack

    5 Ways to Protect Your Financial Institution from a Cyberattack

    May 26, 2023
    traditional banks

    How Traditional Banks Can Modernize Without Risk

    May 25, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result