In conversations and meetings about faster payments, someone is bound to say at some point that faster payments is not really about transaction speed. (Payments Canada may have it right, calling their country’s initiative, Payments Modernization Program). The real value may be found in the potential behind the data that accompanies a payment. An opinion piece in PaymentsSource advocates that those organizations that have a good strategy already in place for faster payments adoption may now want to think about how they will make the most of the data. And not just for creating more accurate reconcilement, but how to generate insights to drive revenue:
Real-time payments are still relatively new, so related best practices are still evolving.
Nevertheless, waiting to leverage the inherent value of payment data could mean losing valuable opportunities. Banking leaders who are eager to understand account holders on a deeper level and maximize returns should move in this direction immediately.
Data from real-time payments creates powerful opportunities for upselling and cross-selling because it reveals what, when, and how people and businesses actually consume. Banks will gain powerful predictive capabilities as soon as they’re able to effectively analyze this payment data on a large enough scale.
This payment data isn’t just about what people are buying. Real-time payments analytics enable banks to determine what people are likely to buy and how liquid they are likely to be when they buy it.
For example, if the data shows that a borrower has sufficient equity in her home and will soon be completing payments on a vehicle, then she may soon have a debt-to-income ratio that qualifies her for a home equity line of credit.
For businesses, liquidity improvement month over month means they can use cash more strategically, and the bank can assist them in their options. This type of information will enable a bank to engage in more targeted marketing efforts, discover new lending opportunities, and even possibly disrupt a competitor’s lending process.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group