Today’s rapidly evolving market landscape, combined with the ongoing impacts of the COVID-19 pandemic, is forcing financial institutions to reimagine their digital payment strategies in an effort to stay relevant. And although convenience and safety are the leading drivers for the use of digital bill payments, consumers are demanding more than they currently get from their online payments experiences.
To learn more about the opportunities that exist for financial institutions to deliver simpler and smarter bill payment experiences, PaymentsJournal spoke with Brad Jones, Vice President and General Manager of Bill Pay Product Suite at Fiserv, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.
Digital banking trends in the COVID-19 world
During this unprecedented year, consumer payment habits are changing more quickly than ever before, making financial institutions reconsider their digital payment strategies. According to Grotta, there are several trends that financial institutions should be aware of:
- While credit and debit card transactions were down in the first half of 2020, debit card dollar volume was up. This means that the average transaction amount has grown, coinciding with the shift to e-commerce channels.
- Contactless has grown significantly year over year, now accounting for 4% of total debit activity.
- Even though cash use is down, ATM activity is up; consumers have used ATMs as a branch substitute in response to in-person branches closing or reducing hours due to COVID-19
- Online and mobile banking is increasing, with a rising number of digital P2P, mobile, remote deposit capture, and bill pay product users.
“There is no doubt that COVID-19 has driven an accelerated use of digital payments,” said Jones. Grotta agreed, adding that in particular, “there are really few payments more critical to consumers than paying their bills.”
For FIs, embracing digital banking is no longer optional
While some consumers will revert to their old ways of banking post-COVID, much of the shift to digital banking behavior is here to stay. Even after the pandemic, banking from a distance will continue, meaning financial institutions have no choice but to embrace digital platforms to maintain valued relationships with customers.
It’s well-known that modern customer expectations revolve around a simpler, faster payments experience that many legacy technologies simply cannot provide. “As FIs enhance those digital experiences to move beyond the foundation of convenience and safety, bill pay has to keep pace,” explained Jones. For example, Fiserv’s next generation bill pay offering incorporates intuitive guidance, personalized alerts, and financial wellness elements that enhance the overall payment experience for consumers.
FIs also need to consider how existing data can be leveraged to deliver differentiated, intelligent, and engaging experiences. Part of this entails leveraging data to identify the types of information and coaching that customers need to better manage their financial lives.
Just as important, financial institutions need to work to remove friction from every aspect of the bill pay experience. According to Jones, this means addressing a few key questions:
- How can bill pay be made simpler? Using intelligent functionality and automation makes the end-user experience less stressful.
- How can bill pay be made smarter? This requires understanding customers and how they pay and using data to provide a more predictive customer experience.
- How can bill pay be made faster? By implementing real-time payments, financial institutions can deliver the control that keeps consumers coming back.
A user-centric design is key for modern bill pay solutions
Consumers are looking for smarter, simpler, and faster ways to conduct money movement activity, and bill pay solutions are no exception. User-centric designs require financial institutions to look at every aspect of a solution through the eyes of their customers. “We can no longer dictate to consumers what features are available or how to consume them; we have to deliver experiences that provide value on their terms,” said Jones.
Fiserv research has indicated that there are four ways financial institutions can meet or exceed customer expectations for bill pay and other digital banking experiences:
- Personalize the experience. Consumers are receptive to sharing personal data when they know it will benefit them and improve their experience. By building trust with consumers and being transparent, FIs can use data to anticipate their customers’ needs and provide them with relevant and personalized experiences.
- Be the advisor. Financial institutions have unique visibility into consumers’ lives, from direct deposits to incoming and outgoing bills, transfers, and even balances in retirement accounts. FIs can advise customers on not just paying bills, but “the broader, more comprehensive need to manage money in anticipation of achieving the goals they have for their lives,” explained Jones. By providing immediate reassurance that consumers’ needs will be met and simplifying financial routines, financial institutions can become increasingly active advisors in people’s lives.
- Automate the experience. Data enables personalized, seamless experiences and enables FIs to quickly match billers to payments and provide real-time information about payments. By leveraging data, financial advisors can remove friction from the bill payment experience for their customers.
- Provide relevant real-time notifications. It can be difficult for consumers to stay on top of all of their bills and payment activities. By offering real-time billing and payment alerts, FIs help their customers to “calm the chaos,” making life easier and allowing them to focus on other day-to-day responsibilities.
Now is the time to take action
Customer expectations are evolving rapidly, with digitally native millennials and Gen Z members making up over half of the U.S. population. Because of this, it is no longer possible for financial institutions to remain competitive based on product or price alone. The new battleground is customer experience.
With the influx of digitally native consumers and COVID-related acceleration towards digital banking, now is a pivotal time for financial institutions to make digital banking options more innovative and engaging. Through a data-driven approach, FIs can meet the financial management and payment needs of customers and offer personalized digital bill payment experiences, which are a crucial component of financial health and wellness.