Some credit unions and also community banks are looking askance at some of the newer and faster payment solutions now launching. For person-to-person payments, there has been a vocal debate if Zelle is the right product for customers and members of smaller institutions. Some of the arguments articulated against joining Zelle include:
- It’s expensive to launch and maintain without a direct revenue opportunity,
- Zelle is owned by some of the largest financial institutions through Early Warning Systems so non-owner banks are not crazy about paying money that will benefit their larger competitors,
- There might be another P2P solution that emerges as an overlay product to TCH or maybe, possibly, someday a Federal Reserve backed product,
- Many financial institutions already have a P2P solution either purchased from another processor or home-grown and in the list of things to do, transitioning to a new P2P solution is just not a near-term priority.
In an opinion column in Credit Union Times by Todd Clark, president and CEO for CO-OP Financial Services, makes the pro-Zelle argument that the momentum that Zelle has achieved, and the consumer demand for this service cannot be ignored and credit unions in the long run will be better off making the investment in P2P sooner rather than later:
There can be value in taking a contrarian point of view. It creates a dialogue, generates diversity of thought and battles the pack mentality that can often take hold in business. Still, overt skepticism – especially when it comes to the promises of emerging technologies in payments – is as risky as over-optimism.
Take Zelle, for example. The P2P platform continues to surpass all expectations for growth. There are several factors contributing to the steady in-roads Zelle is making with issuers and consumers. Each proves that disruption in payments is a fast-moving train – one financial institutions will be better off boarding than ignoring.
CO-OP’s research indicates a direct link between primary financial institution status and a strong payments strategy. It’s why we advise credit unions to offer as many different ways to pay as possible. P2P is growing in demand, and the solutions that only work within a credit union’s existing membership miss a major opportunity to promote themselves and their brand to prospective members. As consumers increasingly expect seamless connections between the digital brands they love (Apple, Google, Facebook … and perhaps one day, Zelle) the credit unions capable of providing that will have a massive competitive advantage.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group