For banks, energizing back-end systems while improving customer experience is a never-ending endeavor.
And in the midst of the great digital shift, as digital payment volumes increase and the world wants payments to be faster and faster, they are kicking off.
Running at 100 miles per hour.
While spinning the plates.
Choose your metaphor.
As FIS Data Director Bob Legters said Karen Webster of PYMNTS, in an effort to modernize, and particularly as part of efforts to more fully introduce real-time payments to the field, “There’s a bit of divide and conquer going on. “
At a high level, he said, banks find their resources — infrastructure and staff — a bit limited. They are improving their digital platforms, but they are also making sure not to run out of non-fungible tokens (NFTs) and cryptocurrencies. However, an overriding and essential strategic imperative is instant payments.
Simply put: consumers want them, but the experience has been less than stellar, even though dozens of real-time payment systems have taken shape and are ready to go around the world (more than 50 so far) .
As Legters said, the focus of instant payments is now on real-time settlement and the availability of those funds being relayed to the consumer, who still has to wait three days for the transaction to settle.
“It’s been a little disappointing for consumers in a lot of cases,” he said, against expectations that recipients would receive their funds instantly.
“People are happy to get the message,” he told Webster, “but now they’re demanding the ‘backside’ of it, where the money is there when it’s needed, that the transaction is complete and everything is safe. Above all, they want certainty – and they don’t want to constantly check account balances to see when (and if) there is money left or if money has been received.
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This disappointment also extends to the B2B domain. Legters noted that FIS’ own banking customers have been working to integrate with vendors and vendors, to drive wider adoption of integrated accounts payable to ensure money can flow faster.
The urgency is there, he said, as transaction volume is increasing across all forms of engagement, from simple payments to subscriptions to streaming media. But, at least for now, the guardrails surrounding instant payments that secure them are so tight that convenience is starting to ebb.
Legters said security can be enhanced at the time of enrollment, where devices can be certified during the onboarding process, and advanced technologies, including artificial intelligence (AI) and machine learning, can greatly facilitate the management and verification of identity – which eliminates all the friction associated with instant payments.
Banks and providers, including FIS, are better able than ever to connect data sets to validate information. A key use case that shines a light on better security emerging: Legters noted that there are new ways for banks to pause mortgage repayments when selling or refinancing homes, as huge sums of money change hands.
Real-time identity management is therefore on the horizon.
Although banks are making investments to narrow the window between transactions and settlements, at least part of the gap cannot be controlled. So for now, he said, financial institutions have stepped up their communications about what happens with a payment, step by step, relaying this information to the user to reassure them and make them transparent (via a app or text).
“I call it the Amazon tracking effect,” he told Webster. Messaging offers a gateway to a new payments landscape that benefits both the bank and the consumer.
“If the consumer has to call you, you’ve definitely failed,” he said.
Trust and comfort – and transparency too
It’s the bank’s job to keep customers informed and comfortable all the time.
In doing so, he said, the ambitious goal is one of a zero-service model, where consumers can control how their money is directed from point to point. In the process, banks’ already stretched margins may see some relief (and no one has to be on hold for 20 minutes waiting for the call center rep to pick up).
Related: Why Every Bank Can and Should Be a Banking Services Company
Legters noted that beyond the desire for instant payments, consumers trust their banks and trust them to provide data security. In the meantime, banks can use this same data to better serve these customers and retain them, and therefore in partnership with FinTechs. Advanced analytics can help predict which banking products and services might be needed down the line.
Deposit activity, for example, can signal that children’s college savings accounts need to be inflated. Consumers and families, of course, have a stake in improving their financial well-being in today’s economy, and smart, personalized budgeting tools and contextual offers can help them do just that.
This intuitive relationship and a central dashboard to navigate eliminates the spreadsheets and multiple websites consumers have cobbled together to try to improve their household finances.
Looking ahead, he said, even as early as next year, as payments accelerate and banks have more data, we will see the great unbundling of financial services, made possible by digital channels.
For example, someone walking into a car dealership can see the vehicle they want, provision bank financing, and avoid the need for certified checks and reduce paper documentation. A furniture store can fund and issue a single-use virtual card (and the bank collects interchange revenue).
“I’m excited for the day when you won’t even remove the card from your wallet, you’ll just pay and your wallet will decide the best way for you to pay, and even get the most rewards points,” he said. -he declares. said.