Bringing Zelle to Community Banks and Credit Unions

Sep  12 
Jeff McCrory  Director of Product Marketing, Electronic Payments, Fiserv 

Why P2P is a must-have for community banks and credit unions

Sometimes technological changes are not incremental. Mention digital person-to-person (P2P) payments to a banker or a consumer a few years ago and you might have been met with a blank stare. The rising popularity of P2P applications, including Zelle®, is quickly changing that.

Online and mobile P2P capabilities have been available for more than a decade. However, increasing consumer adoption in the past two years has moved them from a nice-to-have solution to a competitive imperative for financial institutions of all sizes.

Early Warning Services, LLC, the network operator behind Zelle, last year reported that 85 percent of participants in the Zelle Network® are regional and community financial institutions with assets less than or equal to $10 billion, and 77 percent list assets less than or equal to $1 billion.

Many financial institutions, especially smaller organizations, may have once wondered if their customers and members would fully embrace P2P payments. Those questions have seemingly been answered. Customers and members of more than 5,400 financial institutions are using Zelle to make P2P payments and more than 100,000 people enroll in the service every day.

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 P2P Payments

People appreciate the convenience, speed and security of P2P payments offered through financial institutions. P2P payments through a financial organization are viewed as secure by 52 percent of consumers with banking accounts, according to recent Fiserv research.

For financial institutions, it's about relationship-building and staying relevant in consumers' day-to-day finances. But it's also about continuing to play a critical role in the client experience, even as financial institutions face the erosion of the banking relationship by Fintechs and other third-party providers and applications.

Consumers go where there's value and they're finding value in lots of new places. Often, Fintechs and other providers are able to fill gaps in the offerings of traditional banks and credit unions. Innovative solutions can provide points of differentiation for community banks and credit unions.

Here's how Zelle can benefit your financial institution:

Consumer expectations. People intuitively turn to their financial institutions when they need to send money. 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.

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.

Cost savings. Issuing a paper check is estimated to cost $5.91 per check, on average, including postage, bank fees, error handling, back-office labor, reissuance, customer service, tracking and reconciliation. Because digital transactions cost a fraction of that, financial institutions that transfer even a small percentage of checks to digital can reap big rewards.

Real-time benefits and user experience.  Seventy-six percent of consumers say fast payment delivery is at least somewhat important, according to consumer trends research from Fiserv. Moving payments in quickly, from origination directly to reconciliation, enhances the customer experience.

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

Consumers want a fast, safe and easy way to send money to friends and family. As the number of Zelle users has grown exponentially, so have the opportunities for financial institutions of every size to deliver a P2P payment experience that meets and exceeds consumer expectations.

 

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.