Focus on invisible payments, the customer journey

Expect real-time payments to gain momentum, writes Clayton Weir, CEO and co-founder of FISPAN, in the PYMNTS e-book “Baseline 2022: What the Next Six Months Holds” – for the benefit of retailers, banks and, perhaps most importantly, their customers.

What we have seen, what has always been true, and what we have understood is that all of our efforts must be customer focused. Our decisions should be based on improving the customer journey, and our products and solutions should eliminate any friction that exists in that journey.

So the baseline for the rest of 2022 and into the future really should be “How does this support the customer?” with a focus on payments putting customer experience first. The core being fast, easy to use, transparent and ultimately invisible payment types.

This includes payment types such as real-time payments (RTP) and bank-selected payments. Real-time payments aren’t new, but have certainly gained momentum as customers demand faster payment processing. Bank-selected payments, where the customer sends the payment and the bank determines the best, most cost-effective, and fastest type of payment to send it, also shows an increase in demand.

These invisible systems operate behind the scenes to the great benefit of the client, allowing either increased cash management or optimization of costs and types of payment. Different payment types, but both benefit the customer while providing a smooth and frictionless customer experience.

Financial institutions are still absent from the SME market

For a long time, banks have focused on their large and medium customers as they have traditionally been a smaller group and the biggest revenue generators. However, small and medium-sized enterprises (SMEs) are a critical driver of the US economy, and SME customers represent a significant portion of many banks’ customer base. There needs to be a bigger change to serve this group.

Neobanks are an example of non-banks that are focused on serving this market and are gaining traction with their low barriers and highly targeted approach. SMBs are demanding faster and more seamless B2B experiences because cash management is critical to their survival. Traditional banks have the means to be competitive and should use their first digital offers to retain existing customers and attract new SME customers.

Banks that pay attention to and serve this market will become the banks of choice for large, growing SMEs and will win in the long run.

Bank-FinTech partnerships will be key to banks’ success

We have seen a shift in the partnership landscape as new bank-FinTech partnerships are rapidly emerging as banks realize the many benefits that can come with them.

APIs have had the most significant impact on innovation in recent times, and fintech can develop the technology needed to support new API-powered features, such as integrated banking.

Banks can certainly build API solutions in-house, but tend to struggle with development timelines, speed to market, and general maintenance required. However, FinTechs have consistently shown that they can efficiently design, deliver and support these digital solutions in a much faster time to market.

The digitization gap in the financial sector will continue to grow and will be more pronounced between early digital adopters and those who wait. The time to act was really yesterday.

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NEW PYMNTS DATA: HOW UTILITIES AND CONSUMER FINANCE COMPANIES CAN IMPROVE THE BILL PAYMENT EXPERIENCE

About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.

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