For banks, boosting back-end systems while improving the customer experience is a never-ending effort.
And amid the great digital shift, as digital payments volumes swell and the world wants payments to get ever faster, they’re hitting the ground running.
Running at 100 miles an hour.
While spinning the plates.
Choose your metaphor.
As FIS Chief Data Officer Bob Legters told PYMNTS’ Karen Webster, in the bid to modernize, and especially amid the efforts to get real-time payments more fully into the field, “There’s a little divide and conquer going on.”
At a high level, he said, banks are finding their resources — the infrastructure and the staff — a bit constrained. They’re improving their digital platforms, but they are also making sure they don’t miss out on non-fungible tokens (NFTs) and cryptocurrencies. However, one overarching, critical strategic imperative lies with instant payments.
Simply put: Consumers want them, but the experience has been less than stellar, even though dozens of real-time payment schemes have taken shape and are ready to go around the world (more than 50 as of this writing).
As Legters said, the big focus on instant payments now is the real-time settlement and the availability of those funds relayed back to the consumer, who still has to wait three days for the transaction to settle.
“It’s been a bit of a letdown for consumers in many cases,” he said, against expectations that recipients would get their funds instantly.
“People are happy to get the message,” he told Webster, “but now they’re demanding the ‘backside’ of it,” where money is there as soon as it is needed, that the transaction is complete and everything is safe. Above all else, they want certainty — and they don’t want to constantly be checking account balances to see when (and if) money’s left or money’s been received.
That disappointment also extends to the B2B realm. Legters noted that FIS’ own banking clients have been working to integrate with suppliers and vendors, to foster a wider embrace of integrated payables to make sure that money can move faster.
The urgency is there, he said, as the sheer volume of transactions is on the rise across all manners of engagement, from simple payments to streaming media subscriptions. But, at least for the moment, the guardrails surrounding instant payments that make them secure are so tight that the convenience starts to ebb.
Legters said security can be improved at the point of enrollment, where devices can be certified during the onboarding process, and advanced technologies including artificial intelligence (AI) and machine learning can greatly aid identity management and verification — all of which remove the frictions tied to instant payments.
Banks and providers, including FIS, are better able than ever to connect data sets in order to validate information. One key use case that spotlights the better security that takes shape: Legters noted that there are new ways for banks to interrupt the payoff of mortgages when selling or refinancing homes, as huge sums of money change hands.
Real-time identity management, then, is on the horizon.
Though the banks are making the investments to narrow the window between transactions and settlements, at least some of the gap cannot be controlled. So for right now, he said, the financial institutions have stepped up their communications about what is happening with a payment, step by step, relaying that information back to the user for reassurance and transparency (via app or text).
“I call it the Amazon tracking effect,” he told Webster. The messaging offers a bridge toward a new payments landscape that benefits the bank and the consumer.
“If the consumer has to call you’ve, you’ve failed for sure,” he said.
Confidence and Comfort — and Transparency, Too
It’s the bank’s job to keep clients informed and comfortable all the time.
In doing so, he said, the aspirational goal is one toward a zero-service model, where consumers can be in control of how their money is shepherded from point to point. In the process, banks’ already stretched margins can see a bit of relief (and no one has to be on hold for 20 minutes waiting for the call center representative to pick up).
Legters noted that beyond the desire for instant payments, consumers trust their banks and trust them to keep data safe. In the meantime, the banks can leverage that same data to better serve those clients and keep them loyal, and so in partnership with FinTechs. Advanced analytics can help predict what banking products and services may be needed down the line.
Deposit activity, for example, can signal that kids’ college savings accounts need to be bulked up. Consumers and families, of course, have an interest in improving their financial wellness in the current economy, and intelligent, personalized budgeting tools and contextual offers can help them get there.
That intuitive relationship and a central dashboard through which to navigate it all eliminates the spreadsheets and multiple websites that consumers have cobbled together to try to improve their household finances.
Looking ahead, he said, even as soon as next year, as payments get faster and banks have more data to work with, we’ll see the great unbundling of financial services — made possible by digital channels.
For instance, someone walking into a car dealership can see the vehicle they want, provision the funding from the bank and sidestep the need for certified checks, and cut down on the paper documentation. A furniture store can provision and issue a virtual card for one-time use (and the bank gets some interchange revenue).
“I’m excited for the day when you won’t even pick the card out of 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.