P2P payments aren’t just for big institutions

 

Digital, person-to-person (P2P) payments have emerged as the latest payment type to rapidly rise in popularity. In only a short time, consumer adoption has moved them from a nice-to-have solution to a competitive imperative for financial institutions of all sizes. And Zelle^® is at the forefront of the P2P movement.

Zelle^® is a P2P payment solution created by and for financial institutions, and can be found in nearly 2,000 banking apps, with more institutions signing up every day. It’s a great way for consumers to send, request or receive money from friends, family and others, simply by using a recipient's email address or U.S. mobile phone number. In most cases, the funds transferred are available in minutes.

The widespread acceptance of Zelle^® is one more indication that we have arrived at a new kind of financial services experience – a kind that serves real people with immediacy in an increasingly digital and connected world. Anything that can be done digitally, will be – and probably already is.

 

Demand is heating up

The pace of change is accelerating; the demand for faster payments is proliferating in the industry among large and small financial institutions alike. Market forces have combined to develop significant momentum around real-time payments, placing financial institutions that enable them at the heart of payments modernization.

Zelle^® has, in no small way, accelerated this evolution. However, there are still a few community banks and credit unions lagging behind the move to real-time, digital P2P payments

These institutions need to understand: Zelle^® is definitely not just for the big banks!

Early Warning Services, LLC, the network operator behind Zelle^®, reports that financial institutions with $10B or less in assets comprise almost all the institutions signed on the Zelle Network^®. And financial institutions with less than $1B in assets represent nearly two-thirds of all Zelle^® users.

Banks and credit unions that don’t offer P2P payments as part of their online and mobile channels send consumers searching for other options outside their financial institutions.

 

The business case

For financial institutions, P2P payments are about relationship-building and staying relevant in consumers’ day-to-day finances. Your customers want what they want when they want it – especially when it involves paying friends, family and others. It’s about continuing to play a critical role in the customer experience, even as financial institutions face the potential erosion of the banking relationship due to the influence of fintechs and other third-party providers and applications.

Zelle^® is a tool that can help keep banks and credit unions at the forefront of the digital payment ecosystem. Here’s how Zelle^® can benefit your financial institution:

 

Meet consumer expectations. 

According to data from Javelin Strategy & Research, 75% of consumers say it’s important to be able to receive payments and have access to their funds instantly. That’s especially true with younger consumers, with 90% of Gen Z and 93% of Gen Y citing the importance of having access to funds in real time.

 

Increased revenue opportunities.

Fiserv conducted a study for the purpose of understanding the value of a digital member and maximizing usage. The results were illuminating. Once a member starts using Zelle^®, we see an increase in profit and a decrease in expense for the financial institution compared to a Zelle^® nonuser over the same time period. For example, Zelle^® users show 18% higher net profit and 25% higher deposit balances compared to Zelle^® nonusers. 

In addition, Curinos and Early Warning recently partnered on a study to identify and evaluate the benefits that Zelle^® offered financial institutions. Their findings mirror those from Fiserv. Customers who started using Zelle^® became more engaged, which enabled them to derive more value from their banking relationship while also generating more revenue for the financial institution. Specifically, new Zelle^® customers increased year-over-year revenue by an average of $25 more than customers not using Zelle^®.

Cost savings. The median cost of issuing a check is estimated at $4.00, plus upwards of $2.00 for processing. Because digital transactions cost a fraction of that, financial institutions that move even a small percentage of check transactions to digital can reap big rewards.

Brand building. Consumers want it all – convenience, speed and experiences that combine the latest in digital banking with human interactions. Offering digital options, including P2P payments, helps establish your brand as innovative.

Monetization. Think of your website and mobile app as virtual sales tools. Maximize the opportunity for cross-sales with every visit.

Safety. Tens of millions of consumers safely use Zelle^® every day with more than 99.9% of payments sent without any report of fraud or scams.