In response to fraud attacks that increasingly target individuals, there have been continued calls to ramp up consumer education. Many financial institutions have introduced security centers in mobile banking apps that are designed to keep customers informed on the latest threats.

Although this is a positive step, as Lea Nonninger, Digital Banking Analyst with Javelin Strategy & Research, found in the reportSecurity Centers in Digital Banking: How to Tell an Empowering Story of Prevention, Detection, and Resolution that many security centers still have room to improve.

Shifting to Empowerment

In the past, financial institutions largely took the tack that security matters were better handled behind the scenes. The thinking was that it was best not to worry customers with a constant barrage of updates about potential threats.

“What we’ve seen the last five years is the banks are shifting that narrative and focusing on providing tools for the customer to improve security, because the customers are often the weakest link themselves,” Nonninger said. “There are so many things that customers aren’t doing to protect their accounts and security measures that they might not know about.”

As more financial institutions have realized that consumers are an integral part of security, they should now focus on including more education within their security centers. This can pay dividends by helping customers feel more confident in spotting and addressing fraud. In turn, they are more satisfied with their banking relationship.

Although banks have made substantial progress, creating a security center is just one step of a fraud protection plan—one that will be largely ineffectual if financial institutions stop there.

“Do they truly help to empower the customer?” Nonninger said. “One big thing that we talk about in digital banking is not just security, but security empowerment. It’s not just about being secure, but ensuring customers feel confident about their security and know what they can do to improve it.”

Measuring the Effectiveness

To measure the effectiveness of security centers, the Javelin report focused on three aspects: prevention, detection, and resolution. After a deeper examination, it became clear that financial institutions have significant room to improve.

“We looked at selected security center features to assess the availability across banks and quickly saw support for a holistic suite of features dropping,” Nonninger said. “Even though a lot of banks have security centers, they don’t often include all the necessary features that help customers prevent fraud.

“It doesn’t really help customers detect the fraud if it does occur. Then, if in the worst case it does occur, they can’t really resolve it. This is where the big problem comes in, is that we have all these security centers, but how useful are they really?”

The first step in fighting fraud, and ideally the only step, would be to prevent it from occurring.

One way to prevent fraud is to update consumers on emerging attacks. For instance, there has been a rise in phishing emails that impersonate well-known brands or government agencies. Such attacks are designed to manipulate users into making a mistake.

A dedicated article in a security center that informs readers about the hallmarks of these attacks could go a long way toward prevention. However, the study found that there was often more generalized information in security centers, which were lacking in relevant articles and interactive media that could make an impact with users.

Additionally, the way the information was organized in the security center was frequently opaque. A customer might be presented with a list of items to review or a series of menus to delve through, which could deter some deeper dives.

The End of the Road

For effective fraud detection, consumers need to understand how to monitor who has access to their account and how their money is moving. Alerts can play a significant role by notifying a customer when there is any activity that is outside the norm.

The last aspect that Nonninger measured was fraud resolution, which has been a long-term struggle for many institutions.

“It is especially important to provide tools that let customers resolve fraud in an end-to-end digital solution, which is what we saw basically at none of the banks,” Nonninger said. “That’s a big gap that if a customer even tries to stay on top of fraud—they have detected something and then they’re at the end of the road—they don’t know where to go from there.

“They can maybe call the bank, they can go to the branch, but there isn’t much in terms of digital features available to resolve this on their own.”

Fine-Tuning the Story

Another area of opportunity for banks is to centralize their educational material. Often, an article or guide might appear on the public site but isn’t integrated into digital banking.

“It should all be centralized because if the customer goes out of the way to go to the security center, that’s such a great step, and if they don’t find what they’re looking for then and there, they might not visit it again,” Nonninger said. “It’s all about creating that good experience and having everything available.”

Despite these gaps, financial institutions have made significant strides in consumer education.

“I think for me what was interesting for this report was just seeing that we are headed in the right direction,” Nonninger said. “Banks are taking note of the importance of empowering customers, and I think now it’s all about fine-tuning the security center, making sure it has all the essential parts and at the same time trying not to overwhelm customers.

“Just tell a coherent story of security features rather than just dumping everything into one place and letting the customer fend for themselves to find what’s important. It’s all about directing the customer and guiding them.”

The post Telling the Security Story: How FIs Can Leverage Security Centers to Fight Fraud appeared first on PaymentsJournal.

Money movement is arguably the most essential function of a financial institution. However, now that there are more ways to move funds than ever before, many institutions’ mobile banking apps aren’t quite the centralized solutions customers have come to expect.

In Money Movement Hubs: Boosting the Value of FIs’ Most Commoditized Features, Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research, assessed the apps of six of the largest financial institutions based on navigation, ease of use, rail selection, and next-gen features. The report gives actionable steps financial institutions can take to optimize these indispensable services.

Consolidating for Space and Navigation

One of the key criteria in the navigation category was whether the bank organized its money movement options in one place. This makes it easy for consumers to discover new features and saves financial institutions space in their valuable anchored link positions in the app.

“The strategic goal is to create a central, anchored pay-and-transfer hub rather than placing transfers here, bill pay here, and Zelle here,” Magana said. “That traditional model uses up the navigational bar mostly for money movement. That’s invaluable real estate that a bank can use to highlight value beyond transactional speed.”

All the money movement options should be together in a portal that has an anchored link on the home screen. This makes it as easy as possible for customers to open the app and proceed directly to the money movement features they need.

Additionally, the apps were examined to see if customers could add quick links at the top of their home screen with the money movement options they frequently use. For example, customers who mostly come to the app to pay bills should be able to customize their app to have bill pay front-and-center when they log in.

Although most of the financial institutions supported these navigational features, they lagged in supporting many money movement options. Features like wire transfers, real-time payments through FedNow, and ACH transfers were off the beaten path.

“It’s important to remember that these other money-movement-adjacent type things and newer features, and the more tangential ones that you might want to offer, they should all be consolidated,” Magana said. “But broadly speaking, the navigational aspect of the Fis’ apps was one of the better money movement spots for them.”

Picking a Payment Rail

Although navigation was a strong suit for the banks’ mobile apps, they were not as adept at helping users pick the best payment option. One of the key criteria was if the banks offered customers guidance, especially on aspects like when funds will move.

“First off, do you offer any guidance at all, Mr. FI?” Magana said. “Does it include imprecise language like banking days and business days? Do you hedge by saying, ‘This may leave your account before, on, or after the day that you ask it to?’ We refer to this less than affectionately as the from-here-to-eternity disclaimer—unfortunately, it is too common.”

Though all the financial institutions provided money movement guidance in general terms, many fell short in the finer details.               

“Do you describe it with a calendar?’” Magana said. “Can you tell me that this is leaving your account today and it’s going to get there on Friday, or the 14^th, or some actual human-language day? That’s a bit of a weaker spot.”

Another area of opportunity for FIs lies in providing advanced guidance to customers on the best way to route a payment. For example, if the customer knows who they want to pay, how much, and when, they could consult a comparison grid to make the best choice.

Only one institution gave their customers a consolidated comparison grid for choosing between payment rails. In a perfect world, financial institutions would go much further than that do-it-yourself process.

“Our holy grail is intelligent payments routing, where I tell you who I want to pay, how much, and when, and you, the FI, just handle it for me,” Magana said. “I don’t have to see how the sausage is made. I just let you know when this needs to get there, and you take care of it as best you can.

“That’s still out there. That’s going to take a while, and it’s not necessarily the most important feature for power users who have standard payments routines. But it’s the white stag for customers who don’t have established routines and don’t necessarily know which option is the best for sending money, especially where it needs to be as fast as possible.”

Handling the Math

When it comes to ease of use, one of the most essential features is to help customers get a better handle on where their balance stands. This is especially true with recurring payments.

Although all the mobile apps in the study displayed the current account balance on each money movement screen, they were lacking when it comes to giving customers a consolidated view of their money movement activities. This would be a single window that shows upcoming Zelle payments, bill payments, and any other scheduled transfers.

Even less common were features that proactively kept customers informed.

“Are you going to go a step further, rather than just show me that I’ve got $500 coming out of my account in the next two weeks?” Magana said. “Can you say, ‘We’ll handle all the math for you based on what you’ve got coming out. Your balance is going to be down to $500 because you’ve got $600 coming out and you’ve got $1100 as an available balance.’

“There’s very little support for that one right now. Just make it easy-to-use money movement. Don’t make me whip out a calculator and figure this stuff out.”

Next-Gen Money Movement

Some next-generation features have already been integrated into many of the FIs’ apps. One of these aspects is cross-selling peer-to-peer (P2P) payments as a mechanism to pay small businesses.

“If you’ve got a plumber at your house and he works on his own and he’s not part of some big plumbing conglomerate—if there is such a thing—it would probably be beneficial for both you guys if you could just pay by Zelle,” Magana said. “If you do that, you don’t have to worry about paper checks; it transfers automatically. The funds leave your account and hit the target account so fast that it probably happens before he’s even gotten back in the truck.”

Most of the top banks have begun to include bill pay and Zelle in the same window, and some will even suggest Zelle as a payment option if the customer is paying an individual. However, one area where banks can improve their P2P offering is by allowing Zelle users to create groups within the platform so they can split payments.

“This is something that Venmo offers, and PayPal added it late last year,” Magana said. “Make it so I can create my Roommates group, so we can split the utility bill or the dinner bill or the groceries every month. Why does this have to be a pain? Don’t make me do the math, and then we all have to send money back and forth.”

While this area is lacking, one key aspect where financial institutions have improved is in instantly verifying external banking accounts. Most of the larger banks have moved beyond the days when they would send two small deposits to the other account, then the customer would have to verify the amounts.

Though the process of verifying external accounts has improved, it remains rare for financial institutions to offer the capability to authorize external accounts for transfers without extra setup or authentication.

“If you set external accounts up such that you can see their balances and do some of your budgeting with the financial fitness tools that the bank offers, they’re still not available to do transfers until you set them up a second time,” Magana said. “It’s this concept of taking out some of the double-dipping for the customer. Don’t make them set up that account twice.”

Removing this friction is a key step for FIs to take in reaching the end goal for their mobile app: to be the money movement hub for all activities in a customer’s financial life.

The post How Mobile Banking Apps Can Be the Center of Customers’ Money Movement Activities appeared first on PaymentsJournal.

Gift cards have become the preferred gifting choice worldwide, as reflected in China’s gift card market, which has seen a 9.4% compound annual growth rate (CAGR) since the beginning of the decade.

According to a report from ResearchAndMarkets.com, this rapid growth is expected to continue, with China’s gift card market projected to expand at a 7.1% CAGR through 2029. One of the driving forces is the increasing adoption of digital gift cards.

Digital gift cards have gained significant traction in China, largely due to the country’s stringent pandemic lockdowns, which accelerated the shift toward e-commerce. In response, leading e-commerce platforms like Alibaba’s Tmall and JD.com began to offer more digital gift card options and enhanced personalization features, further fueling their popularity.

“The Chinese market really exemplifies the uniformity of gift cards across different cultures and borders,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “The keys to growth align similarly to those in western markets—including rewards and self-use, digitization, and commercial incentives.”

Avid Mobile Payments Adoption

The digitization of payments in China has significantly impacted the prepaid market. China has been a keen adopter of mobile payments, with consumers frequently using platforms like Alipay and WeChat Pay for everyday purchases.

This digital-first shift means that payments using cash and physical gift cards will either create friction at checkout or may not be accepted at all. The prevalence of these payments platforms is only expected to rise in the coming years, further driving the adoption of digital gift cards in China.

The Same Trajectory

The increasing trend of self-use is driving this growth. More consumers than ever are buying gift cards to take advantage of rewards and promotions, with digital gift cards being especially  popular because they can be purchased and used instantly.

While China may experience higher digital gift card growth due to its heavy mobile payments adoption, the rest of the world is following a similar trajectory.

“Growth in the Chinese gift card market, despite its relative newness, is already closely mirroring the continued future growth of the U.S. market—further highlighting the similarity of the macro environment,” Hirschfield said.

The post Digital Gift Cards Surge in China as Payment Apps Thrive appeared first on PaymentsJournal.

After selling out its first crypto phone, Solana will release its highly anticipated follow-up, Seeker, next year.

Seeker is expected to feature a lighter build than its predecessor, Saga, along with an improved camera and longer battery life. It will also include advanced crypto capabilities like an integrated wallet designed to streamline crypto transactions.

“I’ve considered switching to the Solana phone, but until Seeker has a 5x to 10x improvement in UI and crypto navigation, I’m not ready to give up my iPhone,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s simple and relatively inexpensive to use a web-based app like Phantom to conduct transactions on a desktop or an app. Until Solana builds out a significantly better crypto user experience, I won’t make the move.” 

Airdropping Aspects

The less-than-intuitive design was one of the key reasons for Saga’s sluggish sales following its launch. It wasn’t until Solana began airdropping BONK memecoins to its phones that Saga sold out. The value of BONK tokens soared into the hundreds, often rewarding Saga users with more than they had paid for the device.

Solana has leaned into the airdropping feature in its initial marketing for the upcoming Seeker model, though it’s unclear how aggressively the company will pursue this strategy. However, Solana has said that its new phone will track token rewards more efficiently.

A Game Changer

Another main draw for Solana’s crypto phones is its independent decentralized app (dApp) store, which allows users to develop and launch apps without the fees typically associated with Apple’s and Google’s stores.

The combination of the dApp store and Seeker’s airdrop potential has prompted plenty of enthusiasm around Solana’s new offering. The company has already presold over 140,000 units, and at an asking price of $450, this could translate to $63 million in revenue.

“This plays into the decentralized physical infrastructure network narrative of decentralization,” Hugentobler said. “If they have enough sales to hold them through a few more generations, there will likely be enough penetration with decentralized Wi-Fi, GPU compute, and other areas where this type of phone could become a game changer.”

The post Solana Unveils its New Crypto Phone appeared first on PaymentsJournal.

The median age of Gen Z is now 20 years old, and many of the young consumers are aging out of their first bank account. This group is at a stage where most adults choose a bank that will serve them for years to come—or even the rest of their lives.

In his latest report, Gen Z: Building Mobile Banking for a Generation in Transition, Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research, examined Gen Z’s preferences and the actions that financial institutions can take to make inroads with young consumers.

More in Play

In a Javelin digital banking report from 2022, more than 68% of Gen Z consumers said they banked with the five largest consumer-facing banks: Bank of America, Chase, PNC, Wells Fargo and Capital One. In Magana’s latest report, that percentage had dropped to 61%.

It is not immediately clear why Gen Z has shifted away from big banks. It’s possible they initially opened their accounts with the banks their parents used. As Gen Z consumers have entered adulthood, many have gone to college or forged out on their own, leading them to seek out banks with branches that are more conveniently located.

Another factor could be the pandemic lockdowns, which transformed digital banking from a modern convenience to an absolute necessity. Many younger consumers chose to open accounts with larger banks because they offered better digital experiences at the time. Now, Gen Z is branching out.

“You would expect that if Gen Z users started off with banks that have a ton of tech firepower and mobile resources, as the big banks do, there wouldn’t be any reason for them to leave,” Magana said. “Regardless of the reason, Gen Z is even more in play than they were two years ago. They’re at the point where they are the most receptive to any overtures that banks might make, such as low rates and innovative mobile tools.”

However, that window won’t last forever—every year consumers aged 35 and older become less likely to switch banks.

The Iron is Hot

Though Gen Z may not have settled on a primary bank account, they are firmly established with fintechs. In fact, only 25% of Gen Z adults say they don’t use financial services providers. The most popular applications are peer-to-peer payments platforms like Venmo and Cash App, but young consumers are also entrenched with third-party lenders and credit score monitoring companies.

“Another strike-while-the-iron-is-hot point for financial institutions is that many of these platforms, most notably Credit Karma and Venmo, are continually ramping up their services,” Magana said. “P2P payments or credit score monitoring might be the initial product, but these platforms now offer banking products like checking accounts and loans. Venmo particularly wants to be a super-app that includes savings accounts, credit cards, and more.”

Gen Z is well-versed in apps and mobile banking, which is why it is increasingly likely that they will turn to a fintech company for some or all of their banking needs. Mobile banking is essential for Gen Z, and since the 2022 report, their use of mobile banking adoption has jumped 17%.

“Gen Z wants to use their mobile device to handle all their banking behaviors, from checking balances to financial planning,” Magana said. “The mobile banking platform is the number one reason why Gen Z consumers stick with their primary bank. Improving the mobile banking experience is likely to have an outsized impact on those customers’ satisfaction.”

The Search for Guidance

In addition to a robust mobile experience, Gen Z is seeking financial guidance. Their outlook on their finances has trended negative since the 2022 report. Many expressed that if they were out of a job for more than two paychecks, they would struggle to manage. The Javelin report also found that most Gen Z consumers say their financial situation doesn’t allow them to afford the things that make them happy.

Financial institutions can make significant inroads with Gen Z consumers by creating financial fitness tools that are intuitive and integrated into their apps. These solutions should be available from the very beginning of the customer journey. While banks often offer robust customer service options within their mobile banking apps, they frequently fail to extend these resources to the account opening flow.

“We’ve been beating the drum that onboarding is one area where customer service can have an incredibly measurable effect on a bank’s bottom line,” Magana said. “If people get frustrated, especially Gen Z consumers, they know there are other experiences out there, and they’re not afraid to abandon the account opening process and move to another institution.”

Finance 101

Other ways to make an impact with Gen Z include offering a mobile app that provides aggregated oversight, allowing customers to view their entire financial lives within a single app. Gen Z is also likely to respond to gamified lessons with customized challenges. Additionally, financial institutions should offer targeted products that are tailored to their stage of life and provide more personalized communications.

“Gen Z consumers often have to rely on free financial education and advisors because they don’t have any alternative,” Magana said. “Older generations, which are more financially established, have an easier time getting in-person help. There could be a significant return on investment from offering Gen Z consumers Finance 101, so they can boost their financial confidence. “

The post Gen Z Is Reaching Critical Juncture with Financial Institutions appeared first on PaymentsJournal.

French payments app Lydia, which has over eight million users, announced it will split its mobile banking operations into a new brand, Sumeria.

Lydia, launched in 2013, started as a P2P platform but quickly grew to include bank accounts, crypto, personal loans, and stock trading.

The decision to spin off its digital banking aspects and create a challenger bank was spurred by necessity. As the app added features, it estranged many users who appreciated Lydia’s P2P simplicity. The two million users who used the digital banking aspects—and sometimes paid fees to use them—will now be served by Sumeria.

No Carbon Copy

It’s not uncommon for P2P platforms to add mobile banking solutions. PayPal, Venmo, and Cash App have incorporated everything from credit cards to cryptocurrency in their apps. 

It’s less common to fully split out digital banking into a new brand due to concerns about alienating users. Adding to possible confusion for Lydia customers, the company is also relaunching Lydia as a new app that’s solely focused on P2P.

Though Sumeria users receive a bank account and a debit card, the brand aims to be more than a carbon copy of other mobile-first banks. Customers will earn interest on their accounts based on the number of times they use their cards.

For the first three months, customers earn 4% interest so long as they use their cards 15 times per month. After that, users earn 2% interest, regardless of the account, if they meet the requisite number of swipes.

A Local Focus

Beyond the unique interest model, Lydia hopes Sumeria will catch on by setting its sights smaller. While other payments apps have international aspirations, Sumeria will focus on the French, German, and Spanish markets where the company is firmly established. Lydia believes the local focus will attract and engage users who want a personalized banking solution.

Even if the scope is smaller, Lydia has strong ambitions for Sumeria. It will reportedly invest €100 million in the digital bank and hire 400 employees in the next few years. Lydia hopes the digital banking app will have five million users by 2027.

The post French P2P App Lydia Spins Off Digital Banking appeared first on PaymentsJournal.

Mobile-first banks offer consumers a lot of convenience and accessibility, and according to a recent article by Finance Magnates, mobile-first banks are reshaping the banking landscape and have a leg up over legacy banks who haven’t been as quick to adopt and offer digital tools.  

A Mobile-First Digital Transformation 

Although many banks are adopting mobile-centric technology, it should not be confused with having a mobile-only focus. What a mobile-first digital transformation entails is developing a product, delivery, and customer experience with mobile in mind. Because consumers want speed, security, and simplicity, incorporating these new mobile technologies within the banking system is what will enable banks to stay relevant.  

Mobile app analytic tools open a whole new world of key insights that banks can use to provide tailored solutions and experiences for customers. This would drive customer acquisition, customer engagement, and customer loyalty. Additionally, mobile devices have the ability to enhance efficiency by integrating location data, biometrics, robotic process automation, and artificial intelligence.  

Mobile-First Platforms Can Be Cost-Efficient

According to Finance Magnates, by having operations take place exclusively online, banks can save a considerable amount in terms of employee wages, rent, and utilities. With these savings, banks and financial services can charge less costs and commissions as seen typically seen in traditional banks and brokerages.  

By incorporating “intelligent operations,” which involves incorporating an “advanced, data-driven, digital operating model,” banks can begin to see costs lower, freeing up resources to focus more on customer-centric strategies.   

Since the pandemic, mobile banking has seen a dramatic uptick in adoption, with new registrations for mobile banking reaching a 200% increase among 50 of the largest banks, globally.  

Mobile-First Banking Is the Future 

With legacy banking still in operation among many banks, the key to staying competitive is adopting digital banking transformation, and fast. Although the cost for this transformation is daunting, the returns will be substantial.  

The post Mobile-First Banks Can Potentially Disrupt Legacy Banks  appeared first on PaymentsJournal.

A consortium of leading banks including Wells Fargo, JPMorgan Chase and Bank of America in conjunction with Early Warning Services, their partner and operator of Zelle, are developing a new digital wallet to compete with major third-party wallets such as Apple Wallet and PayPal. Jesse Pound adds details at CNBC.com, including feedback from Bernstein analyst Harshita Rawat: 

“Rawat said in a note to clients on Monday that the major banks have ‘likely always had PayPal envy’ but that it would take time for the new wallet to be a serious risk to incumbents. 

‘It simply takes a very long time, a killer customer experience (which needs to be better than incumbents, not just similar), and a compelling merchant value proposition to build the two-sided network effects in payments to achieve scale,’ Rawat said in the note.” 

As noted from Rawat, the uphill climb to displace existing wallets would be an immense challenge. Mercator Advisory Group’s recent North American PaymentsInsights survey indicates several data points that highlight how Apple Pay, Google Pay, and PayPal are already embedded into the daily patters of American consumers. Our data shows that of consumers using a digital wallet in the past 12 months, PayPal is used by 62% of American consumers, followed by Apple Pay at 41% and Google Pay at 34%. Current iterations of bank wallets show usage from just 7% of those responding. In addition, consumers are most likely to use current wallets at the point-of-sale, with 74% using at a physical location followed by another 32% using online.  

This level of consumer behavior indicates a lot of moving parts required for banks to successfully penetrate the market. As a first step consumers need to be convinced that a new wallet, already late to enter the market, would be a preferable choice to replace the wallets already embedded in their daily use patterns. This would also require the bank-supported wallets to move beyond credit and debit cards, but also support closed-loop stored value and gift card payments, loyalty cards, identification, tickets, and other wallet items that are already linked to major third-party applications. Additionally, the banks would require buy-in from retailers, other technology vendors in payment processing and point-of-sale systems as examples, as well as non-payment vendors and agencies. 

While it’s possible for banks to create a complementary product, the late start and broadening scope of digital wallets makes it a difficult road to climb to truly impact the already established marketplace. An open-loop focused wallet would likely be of little interest to consumers who have already implemented their digital wallets to truly replace their entire wallet, as described in my report last summer and further linked recently by my colleague Christopher Miller when describing the specifics of implementing digital identification. 

Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group.

The post Banks and Early Warning Developing Competing Digital Wallet  appeared first on PaymentsJournal.

Over the last few years, mobile banking with financial institutions across the country has soared as consumers happily embrace the shift to digital. It is important for both banks and credits unions to continue to grow their accountholders’ adoption of digital payment methods – specifically mobile check deposits – to not only drive greater end-user satisfaction, but also to address the massive shift to remote and digital transactions. 

To learn more about mobile check deposits, best practices to drive greater accountholder adoption, and the challenges financial institutions face as they continue to search for ways to mitigate risk, PaymentsJournal sat down with Chuck Doherty, Director of Client Relations for Deposit Solutions from Fiserv, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group. 

Checks are still relevant 

For 40 years people have been saying that checks would disappear – and yet they are still in use. Billions of checks were written last year in the U.S. alone, and although check use is steadily declining, checks still account for 7% of all consumer transactions.  

Typically, check users write about three checks per month and the average dollar value of each check is about $300, versus the $87 average across other payment types. Checks are often used for household phone or cable bills, as well as payments for tradespeople such as plumbers or landscapers.  

“Even if a consumer may use a digital interface [for bill pay],” noted Grotta, “on the back end, that actual payment may still go by check.” 

Businesses tend to write even more checks than consumers, in large part because many accounts payables systems are based on paper and those departments are comfortable with checks. Between consumer and business use cases, financial institutions must continue to address the traditional payment form of paper checks. 

“Somebody once referred to payments as a superhighway,” said Doherty. “You don’t necessarily take away lanes… you add another lane, then another lane, as the traffic keeps increasing.”  

Moving towards digital deposits 

Alternatives to depositing paper checks at a branch, such as electronic images and scanning, have been around for years, but financial institutions have been slow to drive customers toward adoption. That is changing as accountholders are asking for easy, quick, and convenient deposit transactions such as mobile deposit.  

Mobile deposit is most prevalent among 18-24-year-olds. It seems the instinct among younger generations is to rid themselves of any physical funds as fast as possible. 

It is not only Gen Z preferences that are shifting towards mobile deposit; the second largest group is ages 45-54, for whom 50% prefer mobile as the most frequent check deposit method. Even among ages 55-64, 32% use mobile deposit most often. Regardless of age, the COVID-19 pandemic caused people to start seeing the convenience of mobile deposit solutions. 

“We used to talk a lot about the digital divide, where the young folks were digital and the rest of us were just kind of lagging behind,” Grotta pointed out. “We’re certainly seeing that change quite a lot. It’s what I call the blurring of the digital divide.” 

Best practices for mobile deposits 

Once upon a time, most bank customers and credit union members preferred to deal with their financial institutions one-on-one and in person, but all signs point in the opposite direction these days. Doherty recommended several ways financial institutions can match current consumer expectations: 

• Raise the deposit limit –  A higher dollar limit increases the likelihood that accountholders will use mobile deposit more often. And the opposite is also true – accountholders have indicated that low limits are a main reason they don’t deposit this way.   
• Increase deposit review thresholds – Financial institutions may initially claim they want their staff to review every mobile deposit that they receive but will quickly realize it consumes too much time. Picking a comfortably high review threshold value and giving clear guidance to staff can make reviews much more efficient. 
• Deploy risk mitigation tools – This technology is key to assuage any charge-off fears that come with higher deposit values. Financial institutions should use tools to verify digital signatures, check for identity alterations and counterfeits, and monitor consumer or member behavioral patterns, deposit velocity, number of deposits, and more. 
• Adjust funds availability policy – Slower access to funds is one of the main reasons people avoid mobile deposits; if someone deposits a $5,000 check and only sees a $100 credit that day, they might be more likely to visit the branch in person, which may provide full same-day credit. 
• Eliminate online banking enrollment – Automatically enable mobile deposits through mobile apps for new customers or members, rather than adding an extra hurdle to the process. 
• Promote mobile deposits – Market the mobile deposit feature through promotions to encourage customers and members to use the mobile deposit channel, regularly. 
• Train and incent staff – Progressive banks and credit unions often have “Digital Ambassadors” who help customers or members figure out how to make mobile deposits, use mobile banking and more. Ensuring consumer-facing staff understand the value and benefits of mobile deposit turns them into advocates for the service. 

Impactful for branches and financial institutions at large 

Mobile check deposits can make a significant difference to banks and credit unions. “It really can lessen the burden on branches and allow the staff to focus on sales or on other things – what a lot of institutions call universal banking,” Doherty explained.  

In addition to driving greater deposit volume, increased mobile deposits can also reduce branch expenses. “There’s been a lot of talk about the Great Resignation… a lot of banks and credit unions have experienced that,” mentioned Doherty. “We’re in a very tough period for hiring and retaining employees. This might be one way of addressing that, since having more deposits coming in digitally would reduce the need to have as many people in the branches.” 

Finally, mobile deposit solutions help banks and credit unions remain competitive. Moreover, these solutions align with broad digital transaction benchmarks that financial institutions might set. At the end of the day, the move towards digital depositing is all about enhancing the accountholder’s experience and driving deposit growth at the financial institution.  

“Bank and credit union customers and members want these products,” concluded Doherty. “They want to be able to make mobile deposits, they want to make other digital deposits, because it just makes their lives so much easier.” 

The post Driving Accountholder Adoption of Mobile Check Deposits  appeared first on PaymentsJournal.

The Neobanking Market is set to grow from its current market value of more than USD 45 billion to over USD 600 billion, as reported in the latest study by Global Market Insights Inc.

With COVID-19 bringing the use of mobile and online banking to the forefront, the global neobanking market is slated to register momentous gains through the forthcoming years. While these services were witnessing rapid adoption even before news of the virus broke, their uptake has picked up significant momentum since the pandemic took hold.

In fact, according to Fidelity National Information Services, an American multinational financial corporation that works with more than 50 of the largest banks in the world, an unprecedented 200% increase in new registrations for mobile banking was reported in early April 2020, with mobile banking traffic jumping 85%.

A plethora of neobanks have successfully leveraged these conducive industry conditions to foray into the sector, so much so that prominent industry players, namely Brazil’s Nubank S.A., Germany’s N26 GmbH, and USA’s Chime Financial, successfully accrued valuations of $10 billion, $3.5 billion, and $14.5 billion respectively by Q4 of 2020.

Explosive growth of industry players

Since the meteoric rise of neobanks, including those aforementioned, during the pandemic, their growth trajectory has consistently risen. In fact, the three players mentioned above have gone ahead to raise their respective valuations in the two-year span of 2020, and 2022.

Nubank’s total valuation hit the $41.5 billion mark, higher than the nation’s biggest bank, as it made its Wall Street debut via an initial public offering in December 2021. The number made Nubank the most valuable publicly listed financial institution across the entirety of South America. In December 2021, the company also raised more than $2.6 billion through a minority stake sale.

Meanwhile, earlier in 2021, Chime raised more than $750 million through a Series G funding round in August, bringing its valuation up to $25 billion. The company managed to effectively raise its valuation by approximately $10 billion within the span of a year, showcasing an incredibly strong investor and consume appetite for neobanking.

The global financial inclusion imperative

A determinant that would be playing a major role in further proliferating industry revenue would be the global financial inclusion imperative. According to the World Bank, being excluded from a formal financial system is recognized as one of the biggest barriers to a society without poverty.

As per the most recent World Bank estimates, more than 1.7 billion people across the world do not have a bank account. The ratio of those banked against the unbanked is particularly more skewed in emerging economies, particularly ones in MEA and the Asia Pacific.

However, this does not necessarily translate to the unbanked leading an inactive financial life. In fact, the so-called gap in the system has made way for an informal financial ecosystem to prop up in such regions, one that heavily relied on physical transactions and did not give way to formal system inclusion for many years.

This scenario changed when COVID-19 spread across the world and crippled the physical transaction-heavy informal system. Neobanks have seen great success in bringing in the unbanked demographic to the fold through mobile money. Service providers and regional governments have both worked in tandem to eliminate hesitancy through favourable policies and offers, laying down the groundwork for neobanks to make the financial inclusion imperative a reality.

Final thoughts

Unlike conventional banking systems, neobanks have shown promise and are being hailed as tools for global financial inclusion. With such ambitious horizons to chase, and the strong investor-consumer appetite they are already witnessing, the neobanking market is ripe to experience a period of distinguished growth in coming years.

The post Growing Popularity of Mobile Banking Platforms to Foster Neobanking Market Outlook Through 2028 appeared first on PaymentsJournal.

Cashless gambling has arrived big time in Las Vegas. That would be at Resorts World, the first mega-resort soon to open in more than a decade on the Strip. The new complex, owned by Malaysian firm, Gentling Group, is partnering with payments vendor Sightline to make the casino floor a totally digital experience. Casino patrons can use a Resorts World mobile app to load a digital wallet, then hunker down at slots and table games hoping to hit it big.

Additionally, the hotel and related dining and entertainment venues are all digital as well. Cashless gambling has been emerging in the past few years with other developers including Everi and Scientific Games getting in on the action, too. Resorts World timing is lucky as post-pandemic demand has brought leisure travelers back to the Strip for that elusive jackpot. But digital or not, keep one thing in mind—the house always wins.

The following excerpt from a Fox5 Vegas article reports more on the topic:

Resorts World, the first ground-up resort development on the Strip in more than a decade, will be the first Las Vegas casino to feature cashless wagering when it debuts on June 24. According to a news release, Resorts World “will be the first Las Vegas casino where consumers can utilize a digital login and cashless wagering experience at both slots and table games.”

According to the release, as part of GamingPlay, guests will have three ways to load their digital wallet: by depositing cash at one of the NEO Kiosks provided by NRT Technology, a global leader in enterprise payment systems for casinos, or at the player services desk, or by enrolling in Sightline’s Play+.

In addition, guests also have three different ways to input and present their loyalty card on the casino floor, including a physical loyalty card, digital loyalty card, or entering their phone number at any slot machine, according to the release.

“Launching cashless gaming solutions at the first major Las Vegas casino opening in a decade presents a tremendous opportunity for Sightline to further the digital transformation of the consumer experience in gaming,” said Joe Pappano, CEO of Sightline Payments.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Resorts World and Sightline Payments Bet On Cashless Casino appeared first on PaymentsJournal.

The American Banker released the results of a survey conducted earlier this year with 494 adults who have used an on-demand earned wage access product within the last year.  For the uninitiated, on-demand earned wage access (EWA) is the ability for a worker to gain access, often immediately, to a portion of their wages before they are credited on the traditional payday.  This is not a payroll advance, not a loan, but an opportunity to receive wages as they are earned to help make ends meet.

There are two points that I thought were interesting coming from this study.  The first is that EWA is not just a solution for those making low wages, albeit those making more money who use EWA services use the funds for different purposes:

The most noticeable contrast in use of EWA funds was demonstrated by the fact that lower income

respondents first used the funds to pay rent while more affluent users did not. One third (33%) of lower-income users (under $50,000 HHI) said that they would use EWA funds to pay their rent or mortgage compared to 21% of middle-income ($50,000-$99,000 HHI) and 16% of higher-income ($100,000+ HHI) users.

The second finding to highlight is that users of EWA would like to receive this option through their financial institution.  Perhaps this will lead to partnerships between the fintechs that are currently spearheading the development of EWA solutions and banks and credit unions:

Overall, 77% of respondents reported that they would be very likely or likely to use an EWA service if it were offered by their bank or credit union, with the highest level among millennials (79%) and the lowest level among Gen Z (64%).

This positive reception to a bank-offered service is a possible indication of an untapped opportunity for financial institutions. Currently, the EWA market is serviced largely by fintechs, many of whom are startups relying on venture funding. Square is one of the sole exceptions, being a public company, but it is not a traditional mainstream bank.

One of the factors behind interest in a bank-offered service is that most EWA users find that their bank is helpful in assisting them with managing their finances. Both millennials and Gen X users scored helpful ratings at 80% while boomers at 70% and Gen Z at 67% were slightly lower.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Earned Wage Access Users Would Like Their Financial Institution to Offer This Service appeared first on PaymentsJournal.

Ever been to a game and missed the big play because you were standing in a long concession stand line? American Express is helping sports fans get back to the action as fast as possible.

The card company is launching its own self-checkout shop at Brooklyn’s Barclay Center, home of the New York Nets. Similar to an Amazon Go type store, customers will find grab-and-go shopping with a seamless payment transaction. There’s only one requirement—only American Express cardholders can enter, so don’t leave home without it.

The following excerpt from a The Points Guy article reports more on the topic:

Following in the footsteps of Amazon’s contactless stores, American Express has opened up its own check-out free store in the Barclay Center arena in Brooklyn. The store, exclusive to Amex cardholders, offers concessions and merchandise to help fans avoid long lines and get back to the action faster. The store is a partnership between Amex and the sports arena to keep fans safe from COVID-19.

According to the American Express Trendex: Experiences Survey, nearly two-thirds of live-entertainment consumers agree that because of COVID-19, contactless payment options have never been more important to them. And 70% say that having a contactless payment option available would make them feel more comfortable returning to live sports, music and entertainment events.

Card members can tap their contactless Amex card, mobile wallet or insert their card to enter the shop. There may be a $1.00 hold on the card, which will be updated after purchases are completed. Technology tracks movements in the store, with each item having a unique weight that is tracked through weight-sensitive shelf sensors.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post American Express Sets Up Autonomous Checkout At Barclays Center appeared first on PaymentsJournal.

Modern customers expect service providers to have a strong digital presence and banks are no exception. According to Business Insider, about 89% of bank account holders in America use mobile banking to manage their accounts. Moreover, only 20% of clients would prefer to visit a physical branch of their bank in order to complete a certain transaction or obtain information while the remaining 80% would prefer digital banking.

These numbers make it clear that online banking has become an essential part of the industry. Hence, in order to retain your clients and keep a competitive advantage, one has to have a mobile banking application. And some of the most important things to keep in mind about it is the functionality of such an app and its most essential features. 

Secure authentication and login

The top priority of any banking application is its security since there is a great amount of sensitive data being processed. Hence, one of the most important features of a banking app is secure login and high-level authentication.

In general, a banking application usually requires a password from a user in order to log in but you can also add biometric authentication. Note though that even biometric authentication can be bypassed by hackers. So in order to enhance the security, you can do the following:

• Store all passwords and PINs either encrypted or hashed. Also, it is highly recommended not to store them in the source code but on a server instead.
• For biometric authentication, store PINs in the verified storage of a specific platform (either Keychain for iOS or Keystore for Android).
• Add SMS confirmation to the log-in.
• Limit the number of login attempts.
• Always make sure to start a new session every time.

Chatbots and customer support

Even though customers prefer digital banking over traditional one, they still need customer support. In a banking app, you can implement it with the help of chatbots.

Chatbots have become immensely popular and are being used across all industries. The main benefit of chatbots is speed and quality of services: when a customer makes an inquiry, the chatbot immediately provides the needed information. This greatly contributes to user satisfaction as customers do not have to wait for a long time to obtain necessary information. Another advantage of having a chatbot implemented in your banking app is that it can be capable of performing simple operations and thus will serve as a personal assistant.

Note though that chatbots are recommended but not obligatory. Either you decide to implement one or not, it is essential to have a few ways to provide support service to your clients. It may be an option to dial the bank right from the app or integration with messengers, depending on what method of contact your customers prefer. Just don’t underestimate the importance of providing efficient customer service and support to your clients, especially if your application is feature-rich and has complex navigation.

Account management

The main idea behind a banking app is to enable users to manage their accounts from any place and any time – hence, it is essential to provide efficient account management.

A user’s account is usually the core of a banking app and its management includes the following options:

• Display of all active and inactive accounts;
• Balance check;
• Display of transaction history;
• Funds transfer;
• Saved payments and “quick payments”;
• Display of available transactions.

Of course, this is not the whole list and there may be many more functions available. Just remember that the main idea is to let a user fully control their bank account from an app without the need to contact bank representatives for assistance.

An integrated map

One more important feature of any banking application is an integrated map. This map usually shows ATMs and bank offices within a chosen area and a user can filter his search by choosing specific filters.

Why is an integrated map so important? First, it allows users to quickly identify what’s the nearest ATM or a bank office and it takes a few seconds only. Second, it usually shows not only the ATMs and offices but also their working hours and other important information that a user might need. In this way, an integrated map saves a lot of user’s time and allows to quickly find all needed information without the need to contact a bank representative.

QR code payments

As stated above, the main idea behind a banking app is convenience and speed. And QR code payments perfectly fit into this description by allowing users to perform financial transactions by simply scanning the code.

While the QR code technology has been around for quite a while, quite a few banking apps have this feature implemented. However, QR code payments are highly efficient due to their speed and simplicity. Plus, this technology does not require a massive investment of resources and finances so every bank should consider implementing it.

Summing up

When working on a banking application, it is important to keep in mind that its main focus should be usability, simplicity, and accessibility of operations. Unlike traditional banking, mobile banking is all about speed and user-friendliness so make sure your application can be easily navigated and managed. And don’t forget to invest some time into finding a good service provider as the future success and performance of an application will depend solely on how well developers will carry out the project.

The post The Essential Features Of A Banking App appeared first on PaymentsJournal.

Earned Wage Access (EWA) solutions that offer payroll to workers on-demand has been the hot new employee benefit in the Human Capital Management market.  In Visa’s quarterly financial announcement on Tuesday (April 27^th), the growth of Visa Direct was attributed, in part, to EWA transactions, so this is also important to the payments industry. 

Today, Fiserv’s Money Network announced that they are partnering with Instant Financial to offer their free EWA solution.   It is free to the employer and free to workers too.  This means that Money Network clients will now have the option to offer workers access to their pay before payday to help bridge the gap that can occur between the time when expenses are due and pay day arrives. 

This is an alternative to avoid costly credit card interest payments and overdraft fees that some workers use to make ends meet.  Employees can request access to earned wages through a mobile app and have funds delivered in near real-time onto a Money Network prepaid card. With the tight labor market that some employers face as activity gets back to pre-pandemic levels, EWA will be an important tool to retain and attract employees.

Here’s an excerpt from the press release:

Earned wage access gives employees the ability to access their wages as they are earned, rather than waiting for a weekly, bi-weekly or monthly payday. Businesses can empower participating employees—especially the millions of unbanked and underbanked Americans—with immediate access to hard-earned income at no cost, giving them the flexibility to access their own money for emergencies or daily expenses.

“The ability to provide faster access to wages and tips can be a significant differentiator for corporations, franchises, governments, and other types of employers challenged with attracting and retaining talent in today’s digital-first world,” said Dom Morea, senior vice president and Head of Prepaid at Fiserv. “Pairing earned wage access with the flexibility of a prepaid payroll program that incorporates budgeting tools and spending insights is a powerful example of how employers’ can help further the financial wellbeing of their employees.”

Employees that are paid via Money Network may monitor budgeting and spending online or via a mobile app, leverage a prepaid debit card to make purchases, access in-network ATMs, transfer funds, and enable a digital wallet. Employers that integrate Money Network with EWA into their time, attendance and payroll systems can easily onboard employees, calculate their on-demand pay, and disburse funds onto a Money Network card.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Fiserv’s Money Network Partners to Launch a Free Earned Wage Access Solution appeared first on PaymentsJournal.

This release in Benzinga discusses the New York-based 2019 startup called Ramp, which has reached unicorn status at $1.6 billion with a new capital infusion of $115 million from various sources.  The company profiles itself as a technology company that develops corporate cards designed to save money for businesses. 

So this very new firm seems to have climbed the valuation ladder fairly quickly.  Ramp is a sponsored issuer of corporate cards, with new and better ways of delivering cost savings in such programs.

‘The round brings total venture and debt financing raised by Ramp to $320M. With a valuation of $1.6B, Ramp has become the fastest growing New York based startup in history, and the first to surpass a $1B valuation in under two years from incorporation….”Ramp has quickly become a key player in the financial services ecosystem by challenging business practices and assumptions that have existed for nearly 50 years,” said Dan Sundheim, Founder and Chief Investment Officer of D1 Capital Partners. “The company attracts new customers by providing value and savings, and empowers CFOs and finance teams to operate at a higher level of efficiency. We look forward to supporting Ramp during its next phase of growth.”  ‘

Now the interesting thing is that due to the lockdowns and lack of business travel during most of 2020 and into 2021, corporate card spend across industries has declined substantially, at least in the traditional ways that corporate cards are used, for T&E that is.  So Ramp seeing large growth in spend (from a smaller base of course) is bucking the trend. 

Since we have not received a detailed briefing we don’t know specific reasons, but a quick view of the website suggests that Ramp is targeting other startups with their pitch and product, and therefore is seeing fresh spend.  The appeal of mobile apps, virtual cards and automated expense management has legs, especially with demographic turnover in the workforce.  

We also expect that some of this volume is associated with MRO spend that would normally be categorized as P card spend.  However, still impressive.

‘Over the past six months, transaction volume on Ramp has grown by approximately 400%, and is nearing annualized transaction volume of $1B. Whether at fast scaling unicorns like Ro, Better, ClickUp, Applied Intuition and more, or at more traditional businesses seeking higher financial efficiency, Ramp has quickly become the spend management platform of choice. A third of Ramp customers switched over from American Express, and more than 90% of customers adopted Ramp as a comprehensive spend management platform, replacing Expensify, Concur or manual solutions. Ramp has saved its customers over $10M through its proprietary software that identifies ways for businesses to spend less on purchases and an additional 5.4 days a month in administrative work for finance teams.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Ramp Raises $115M, Reaches $1.6B Valuation as Fastest Growing Corporate Card appeared first on PaymentsJournal.

Members make a difference by using the Porte #DoorToChange

IRVING, TX (March 22, 2021) – Porte, a mobile banking solution committed to helping members navigate their path toward financial freedom,¹ has added the National Park Foundation (NPF) to its growing list of charitable organizations benefitting from purchases made by Porte members through its #DoorToChange program.²

Through Porte’s #DoorToChange, members know that with every purchase transaction, a donation is made on their behalf to the Porte charity partner that matters most to them and at no cost to the member. The National Park Foundation (https://www.nationalparks.org) joins current charity partners GLAAD, The Humane Society of the United States and Save the Children. Porte has set a goal to donate more than $100,000 to its #DoorToChange partners in 2021.

“Protecting our national parks – their vast landscapes and wilderness, and cultural and historical sites – is protecting our national treasures,” said Melanie Few, Chief Marketing Officer, Populus Financial Group. “When you select the National Park Foundation as your #DoorToChange charity, each debit card purchase helps safeguard over 400 national parks, ensuring future generations the opportunity to enjoy the places we love.”

As the official nonprofit partner of the National Park Service, the National Park Foundation works to protect wildlife and park lands, preserve history and culture, educate and engage youth, and connect people everywhere to the wonder of parks.

“The National Park Foundation is honored to be Porte’s newest partner,” said Stefanie Mathew, senior vice president of corporate partnerships at the National Park Foundation. “We are grateful to Porte and its members for supporting the National Park Foundation’s mission to preserve national parks that open doors of curiosity and wonder for all of us.”

Porte is the mobile banking solution that provides tools and technology to put members on a path toward financial freedom. Representing a modern approach to banking, Porte provides members with real-world insights into their financial challenges and resources to help guide them as they make financial decisions.

Based on feedback from consumers, Porte was designed to deliver key benefits and features in a premium package. #DoorToChange is one of the key features that drives Porte membership because these donations made to select charity partners do not cost members anything and are 100% funded by Porte. In addition, Porte offers an up to 3.00% Annual Percentage Yield Savings Account,³ with members earning up to 60x the national average,⁴ with no monthly fees.⁵

Porte accounts and services have been established with MetaBank^®, National Association, Member FDIC and Netspend. To start your path towards financial freedom, download the Porte app in the App Store or Google Play. For more information on Porte, visit www.portebanking.com.

The post Porte Announces New Charity Partner – the National Park Foundation appeared first on PaymentsJournal.

This WSJ piece speaks to the UX focus for end-users at work, which is nothing new for readers here since we all face this and is one main reason why the new fintech surge exists. While an easy UX is still primarily the domain of consumer software in general and fintech especially, the business (or B2B) space has been attempting to emulate this approach during the past couple of years. 

The ability to ‘consumerize’ the UX is a key for success over the next half-decade. The author uses an example from a Citi situation to make the point.  Some readers will recall a massive and mistaken loan payment sent out by Citi in 2020.

‘In the ensuing litigation as Citi tried to recoup the money, the bank shared images from its software. The screenshots showed a user interface with dense type, low contrast and small buttons and boxes….It is the kind of design that would make executives at consumer-facing companies cringe, including banks offering brightly lit and easy-to-use apps to their checking, savings and credit-card customers, designers and analysts said. But it hardly stands out in a business environment, they said. While people look for best-in-class user experiences as consumers, they are often forced to check those kinds of expectations at the office door.’

When back office software goes back 20 years this is what can happen.  In our 2021 Outlook one of the main success themes for banks is a collaboration to ease the experience, since most institutions do not have the technical savvy to create solutions to meet demand.  So this is a key for the next X years as the industry transitions, particularly with regard to mobile capabilities.  Not to mention the acceleration factor from the pandemic, which has just placed a higher emphasis on digital financial operations. 

‘The good news for workers squinting at dimly lit designs is that the consumer sector is putting pressure on businesses to provide better digital experiences for both clients and employees, according to software executives….“They’re having an influx of users who are demanding easier, simpler, more modern experiences,” said Todd Olson, chief executive of Pendo.io Inc., a product-engagement software company that offers services such as user onboarding and training….However, while changing relatively obvious elements in the user interface can help, that doesn’t always address deeper problems, he said. Companies might need to analyze how long users are spending on certain forms or where they pause, for example, to understand which changes to make.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Business Software Faces Pressure to Update Its User Experience appeared first on PaymentsJournal.

The BNPL model, as we know it, is in a temporary state. Indeed, the pricing model will change when interest rates start to rise.  Investors will undoubtedly begin to watch sky-high credit loss rates, but perhaps not as much as regulators.  And, monoline credit business, there are too many failures along the way to expect one-trick-ponies to survive competition.

However, one of the best things about BNPL for the credit industry is how it woke up banks to merchants’ importance.  Instead of enabling consumers to pay anywhere, the current BNPL puts the merchant at the center point.

The model will change in the short term.  American Express, Citi, and Chase, all top U.S. issuers, have a post-paid model.  Now, in Australia, the market that ignited BNPL lending, comes a new bank model.  Many features make good, practical sense.

The Sydney Morning Herald reports on Commonwealth Banks business model, designed to meet Afterpay directly in the market.

• The Commonwealth Bank is looking to turn up the heat on market darling Afterpay, with the launch of the bank’s buy now, pay later (BNPL) service likely to squeeze the margins enjoyed by the current crop of BNPL operators
• The banking giant on Wednesday said it was joining the rush into the BNPL from the middle of this year, with a digital product allowing customers to make purchases between $100 and $1000, and repay the money in four interest-free fortnightly instalments.

And, BNPL Lenders react.

• In a sign of the pressure the bank’s move could put on margins of BNPL operators such as Afterpay and Zip Co, CBA said it would not charge any extra fees to merchants beyond standard merchant fees of slightly more than 1 per cent of a transaction’s value. In comparison, CBA said retailers on average paid about 4 per cent for BNPL services.
• Amid an ongoing debate about whether BNPL should be regulated as credit, CBA also said it would perform credit checks on all of the customers before allowing them to take out the product.
• While other lenders are closely watching the sector, with Westpac forging a partnership with Afterpay last year, CBA said it was the first BNPL offering from a major Australian bank.

But, it will not be the last bank. U.S. and EU banks, take note.

Commonwealth’s model makes sense.  And it should satisfy many credit policy staff.  News Australia says:

• CommBank BNPL will be a broader product offering allowing the bank’s customers to split payments between $100 and $1000 into four installments for online or physical transactions.
• The service is available for CBA credit or debit cardholders and will run through the MasterCard payments network.
• Missed payments will incur a $10 late fee and will be capped at $120.

If that was not enough bad news for the highly funded fintechs, consider PayPal, PayPal is also entering the Australian  BNPL market, according to DynamicBusiness.  As mentioned here, I did a PayPal Pay-in-4 transaction, and it was an excellent user experience.  PayPal brings a wide range of payment services; it will not face the monoline business issue many fintechs face.

• Called PayPal Pay in 4, the new payment system will be offered to consumers as an option at checkout in the PayPal wallet. Customers will be able to split eligible purchases from $50 to $1,500 over four equal, interest-free installments. Repayments will be automatically drawn every two weeks, with no fees charged for on-time payments.
• Late fees will be applied for late or missed payments. There will be a late payment fee of $10 for purchases under $125, charged one time with a cap at $10. For purchases over $125, there will be a $10 late payment fee for every missed payment, capped at three – $30.

Fintechs, make hay while the sun shines.  You inspired banks across the globe.  Now, get ready for some stiff competition!

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post BNPL Down Under: Banks Strike Back With New Options, and Here Comes PayPal appeared first on PaymentsJournal.

As a tried and true millennial, if you don’t have a mobile banking app, chances are I’m judging you. But it turns out I’m judging a lot more people than I initially thought. According to data analyzed by Finbold, an average of 38.7% of global internet users between the ages of 16 and 64 use banking and other financial apps as of Q3 2020. Less than half of the world’s population has hopped on the mobile banking train, and to a privileged American such as myself…I literally can’t even.

Among the ten countries selected, Japan holds the tenth spot with 24.7% of its citizens using a banking or financial app. China comes in ninth with 27.7%, followed by India with 32.2% and United Arab Emirates with 37.2%. Germany closes out the bottom five with 38.6% of its citizens connected to a banking app. It is surprising to see Germany, China, and Japan in the lower percentile brackets because they are leading economies.

However, there is potential for immense growth in banking app usage amongst these lower ranking countries. According to the Finbold report, “[these countries] operate in regions with advanced technological innovation and regulatory support. At the moment, for example, China’s regulatory concerns might be stopping more consumers from leveraging financial services apps. However, once regulators bring full clarity to the sector, the numbers will potentially surge.”

Asian countries may be lagging right now, but the growth of Alipay and WeChat Pay appears to be unfaltering in China. According to a recent report by Mercator Advisory Group, “fully 90% of mobile payment activity in China is conducted through these two apps, with most of the remainder belonging to China Union Pay’s (CUP) solution, Mobile QuickPass. These two apps have such a commanding hold on payments that The Peoples Bank of China has recently called on The State’s Council Antitrust Committee to consider if these two apps have an unfair position in the market that precludes competition.” Any significant restrictions placed on either of these two apps could cause massive instability in the payments market and disrupt the everyday lives of its users.

For the countries whose user numbers are above the global average, the U.S. brings up the rear (seriously?!) with 43.1% of citizens using banking and financial apps. Canada takes fourth place with 51%, followed by the U.K. (53.3%) and Singapore (55.8%). Thanks to a new set of friendly regulations, Brazil has the most connected users, with 57% using these apps.

Additionally, the Finbold analysis shows that Canada accounts for 82.6% of people age 15+ who have their own credit cards. Japan comes in second with a whopping 14.2% less than the North American leader (68.4%). The U.S. takes third place with 65.6%, followed closely by the U.K. at 65.4%. India (3%) is the only country below the 18.4% global average of the selected countries.

The future of banking and financial services apps seems bright, especially with the accelerated digitization of nearly all aspects of our daily lives following the onslaught of COVID-19. New fintechs are joining up with more traditional financial institutions to shift businesses online, and this will surely increase the presence of such apps on the smartphones of everyday citizens.

The post Do You Even Mobile Bank? appeared first on PaymentsJournal.

 APIs are helping to further refine finance services by supporting seamless omnichannel customer experiences and a more personalized approach.

March 7, 2021. Application programming interfaces—or APIs—have already had a fundamental impact on the digital banking industry by creating grounds for an array of new financial products. According to Marius Galdikas, CEO at ConnectPay, APIs can help further improve financial services, as they create the opportunity to ensure coherent multi-channel services and introduce personalized experiences, fostering repeat usage.

In the payments industry, an API is an intermediary which enables to securely transfer account data between payment service providers (PSPs) and third parties. It is an essential part of open banking, a concept based on open, yet secure access to financial information with the end goal of creating better products for consumers.

According to M. Galdikas, APIs are at the heart of any forward-thinking financial technology company focused on driving innovation. He outlined one example of how APIs can support online businesses to refine the customer experience.

“One crucial consideration for businesses is the consistency at which the services they provide are offered across different digital channels: ‘does it offer the same efficiency, speed, or transparency?’ Ensuring a coherent multi-channel experience may very well be the thing that gives the company that competitive edge. This coherence can be achieved by correctly utilizing APIs – a responsibility that falls upon the payment service provider supporting the business,” explained Galdikas.

“An API is the main element that allows a company to isolate services into something granular and adapt it, with ease, to different channels and platforms. For example, you can easily customize specific elements for different channels, thus creating a more personalized experience for the user,  based on the devices used to access the service,” said Galdikas.

M. Galdikas noted that ConnectPay is also looking to utilize APIs by launching a new payment initiation service for their EU-residing merchant customers. The solution will enable them to securely collect funds from their customers’ bank accounts. For this matter, the company is teaming up with Sensedia – experts in managing complex API ecosystems. Outsourcing an API provider gives more room to focus on innovation, as more resources can be diverted towards the product, instead of building the system from the ground up.

“Our goal is to ensure the same standard of security and compliance, regardless of the channel, thus we chose a trusted partner, who we know can help lay a solid groundwork for our service,” said Mr Galdikas.

Kleber Bacili, CEO at Sensedia, elaborated on how such collaboration drives further growth.

“More than a decade ago, companies would implement new features in-house, on the same systems, which would make it very hard to scale. Now, things are much more modular. Utilizing external, specialized service providers creates more room to develop new applications faster, enabling them to evolve more rapidly,” explained K. Bacili.

Both experts dive into the topic in more depth in Sensedia’s podcast.

APIs remain an integral focus for innovation-driven fintech companies and will ultimately help set new benchmarks for other finance market players. “There is a lot of potential to be utilized with APIs – and many have only scratched the surface. As the open banking industry matures, we’ll see more companies utilizing API-driven infrastructures, increasing service efficiency and, ultimately, setting new market standards to aspire to,” concluded Galdikas.

The post APIs to Take Online Banking Services to Next Level: Omnichannel Experience and Personalized UX appeared first on PaymentsJournal.

Early Warning System’s Zelle money movement app is now a true real-time payments solution.  Zelle has always provided near instant transactions to consumers and businesses using the app, but now they have completed the integration of their settlement process to The Clearing House RTP network. 

This means that money movement for banks and credit unions can also be instant, as long as the financial institution is integrated with RTP. (For most financial institutions settlement typically occurs through ACH). By synchronizing the settlement process, the settlement risk is nearly eliminated. Bank of America and PNC Bank are two banks that have completed this integration as announced in Early Warning’s press release: 

Demand for faster payments has never been higher, and today’s integration milestone eliminates lengthy and costly legacy processes that have long been barriers to many real-time payment settlements between financial institutions,” said Lou Anne Alexander, Chief Product Officer, Early Warning Services. “Our combined foundation will provide all financial institutions an easy solution for new and emerging business use cases, including bill pay.”

Bank of America and PNC Bank are the first to send Zelle payments over the RTP network, providing consumers and businesses a fully-digital payment experience with improved efficiency by leveraging the emerging global ISO 20022 message standard. By sending Zelle payments over the RTP network, financial institutions can enable instant settlement and simpler back-office processing which improves efficiency and reduces costs.

The addition of ISO 20022 messaging with Zelle is interesting.  The adoption of this standard was needed for the integration with RTP, but this also opens up opportunities to include more data with the payment which can be very valuable in some use cases, particularly for the build out of business solutions.

In a conversation with Chris Ward, executive vice president and head of product & operations, PNC Treasury Management, this is certainly their intent.  They are already developing a request-for-pay solution that makes bill pay transactions available in real-time.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Zelle Announces Real-time Settlement with Bank of America and PNC appeared first on PaymentsJournal.

With a slew of new functions – like support for buying and selling cryptocurrencies, budgeting tools, and savings features –  Venmo is poised to become an even greater threat to existing neo-banks, which have distinguished themselves with many of the same tools. Venmo, which considers itself a digital wallet, is owned by PayPal and benefits from that company’s industry experience and deep pockets.

With a parent company as profitable as PayPal, Venmo is spared from the concern over available capital that plagues so many neo-banks. With this freedom, Venmo has the capacity to spend more on innovation and offer more competitive rewards than its neo-bank competitors.

Also working to the digital wallet’s benefit is Venmo’s vast user base. With some 70 million active users, Venmo will be able to market its new banking-oriented offering at very low cost. If Venmo decides to pursue a large share of the neo-bank market in earnest, existing actors in that space will face a significant – if not existential – threat.

Business Insider reports more on this topic:

“Venmo parent company PayPal said during its Q4 2020 earnings that the mobile payments app will get a slew of upgrades, including support for buying and selling cryptocurrencies, a savings feature, and budgeting tools, TechCrunch reports.

PayPal also intends to integrate money-saving service Honey into both the PayPal and Venmo platforms, offering users access to Honey features like a wish list, price monitoring tools, deals, coupons, and rewards.

Combined with other recent additions, Venmo’s latest features bring the mobile payments app to the brink of direct competition with US neobanks. Venmo has offered a debit card since 2018, and it launched a credit card in October complete with personalized rewards. And in January, the payment app introduced a mobile check-cashing feature, announcing that it would waive fees for customers who used the tool to deposit stimulus checks.”

Overview by Laura Handly, Research Analyst at Mercator Advisory Group

The post New Features Make Venmo an Even Greater Threat for Neo-Banks appeared first on PaymentsJournal.

Despite their capacity to attract millions in venture capital, many fintechs struggle on the path towards profitability. They draw customers with promises of fee-free banking, responsive customer service, and innovative technology, but they lack many of the tools that traditional financial institutions use to make money. 

German fintech N26 has overcome this profitability challenge by introducing premium subscription-based accounts and a new “marketplace model,” which allows its customers to take advantage of products like trading and credit, while collecting fees from the third-party providers of these services.

With many fintechs struggling during the Covid-19 pandemic, some are expecting consolidation in the industry. By taking advantage of its subscription and marketplace models, N26 has put itself in a powerful position amongst fintechs and is expected to make its first acquisition shortly. 

CNBC reports more on the topic: 

“A big driver of N26′s revenues has been its premium subscription-based accounts, for which it charges between 4.90 euros to 16.90 euros for a range of additional features.

But Tayenthal said the big focus for 2021 will be a “marketplace” model, where it includes products it can’t offer itself — such as trading and credit — while taking fees from third-party providers in the N26 app.

‘In 2020, we actually brought down the burn significantly,’ Tayenthal said. ‘It is true that, at one point in time, while we are still investing into growth, expansion and building up the team, we also want to get more in the direction of profitability.’

The N26 co-founder said his company plans to hire an additional 200 employees this year. It currently employs 1,500 staff globally. The firm is also planning to expand into Brazil, having recently obtained a banking license in the country.

‘The environment in Brazil is actually very favorable,’ Tayenthal said. ‘Everyone has a bank account in the markets we’re in already; in Brazil, this is obviously not true.’”

Overview by Laura Handly, Research Analyst at Mercator Advisory Group

The post German Mobile Bank N26 Looks Toward the Future With Thoughts of First Acquisition appeared first on PaymentsJournal.

The digital age is upon us, and financial institutions are no exception. Though financial institutions have adopted some online services, there is a class of banks that arose entirely on the internet. Neo-banks — as these online-only banks are sometimes called — represent a radical shift in the business of banking and are worthy of closer examination.

By placing a greater emphasis on convenience and user experience, online-only banks are gaining support faster than their traditional banking competitors. Whether this trend is sustainable, and to what extent this business model is profitable, remains in question.

What are neo-banks and why should we care about them?

A neo-bank is, quite simply, an online-only bank. Compared to traditional, brick-and-mortar financial institutions, online-only banks are a relatively new concept. While there are an estimated 60 million customers who currently bank with online-only financial institutions in North America and Europe, one report estimates that this will surpass 145 million customers by 2024. With such a sizable share of the market so close to their inception, neo-banks are attracting significant Venture Capital backing. Forbes notes that online-only banks attracted some $2.9 billion in VC funding in 2019, up from $2.3 billion the year prior.

Neo-banks offer a different approach to traditional banks, many of which have been in operation for hundreds of years, during which they have necessarily become tied to the banking systems in place and to a costly network of physical bank branches. Online-only banks emphasize that they are more cost-efficient and innovative than their big bank competitors. Neo-banks argue that their focus on maintaining low costs translates to lower interest rates and fewer fees for their customers.

What are the most common neo-banks in the U.S.?

In the US, some of the most buzzed-about neo-banks include Chime, Simple, Varo, N26, and Aspiration.

Founded in 2013 and publicly launched in 2014, Chime is now valued at $14.5 billion, making it the most highly valued fintech neo-bank in the US. Chime offers no-fee mobile banking accounts, debit cards, and ATM access, and focuses on the segment of Americans who earn between $30,000 and $75,000 annually. Chime’s CEO Chris Britt has noted that he thinks of the company as more a consumer software company than a bank.

Simple dates back to 2009, and was the first neo-bank in the US market. In 2014, Simple was acquired by BBVA for $117 million. In 2020, BBVA USA announced its intention to merge with PNC Financial Services Group, and as of January 7, 2021, chose to close Simple and transfer its customers to BBVA USA. Prior to its closing, Simple was popular amongst its customers for its built-in budgeting tools and its fee-free accounts.

While neo-banks tend to operate using partner banks or through a collection of state-specific charters, on July 31, 2020, Varo became the first consumer fintech to gain a national bank charter of its own. This marks an important shift in the company’s capacity to innovate across a range of financial products, and significantly reduces the burden of navigating sometimes incongruent state regulations. Launched in 2017, Varo now hosts nearly two million banking and savings accounts, with account growth up 60% in 2020.

Launched in Germany in 2013, N26 is one of the largest neo-banks in Europe and, as of 2019, expanded its operations to the US. N26’s accounts are free, with no monthly fee, no minimum balance, and no foreign transaction penalties. While N26 operates in Europe on its own banking license, it has partnered with Axos Bank in the US for FDIC-insured banking.

As its name suggests, Aspiration markets itself as an ethical and sustainable financial institution, with a mission of building a better world. Aspiration pledges to donate 10% of its profits to charity, and offers socially-conscious cash management and investment products. Aspiration’s business model has appealed to many, with more than 1.5 million customers and financial banking from celebrities, including Leonardo DiCaprio.

Why are neo-banks rising in popularity?

With their focus on low-cost banking, convenient budgeting tools, and intuitive technology solutions, neo-banks appeal to many customers weary of traditional banking. Though they lack the physical bank branches of large, national banks, neo-banks have created the perception of superior customer service and fewer hidden fees than their traditional competitors. As more people embrace digital banking, and as a new generation begins to generate income, online-only banks have attracted a massive following.

Following the 2008 global financial crisis and the resulting recession, confidence in the banking sector fell to historically low levels. Some cite these experiences as central to the rise of neo-banks, which seek to distance themselves from the powerful banks associated with the speculative investments and limited regulations that led to the loss of millions of jobs.

The neo-banking industry grew much more rapidly in the EU than in the US, due to less stringent governmental regulations and a market that supports open banking. While neo-banks in Europe could readily access national banking charters, those based in the US have struggled on this front, with Varo as the notable exception. Still, neo-banks have cropped up rapidly throughout the world, with Exton reporting an increase from 100 active neo-banks globally in 2017 to almost 300 in 2020.

Are neo-banks safe?

Neo-banks are as safe as any other bank, using their partner banks’ charters to obtain FDIC insurance for their customers’ deposits. While there have been reports of fraud and suspect transactions from Monzo and Revolut, neo-banks devote significant resources to their cyber-security.

As neo-banks exist for their customers in an online-only format, there is the risk of technical challenges that arise from internet or power outages. In October 2019, Chime experienced an outage caused by issues with a third-party payment processor. Some Chime customers had trouble accessing their account in the app and on the web, but Chime worked swiftly to resolve these issues.

What does the future hold for neo-banks?

It’s difficult to say for sure what the future holds for neo-banks. While they have significant financial backing and a sizable share of the market, their pathway to profitability remains unclear. Online-only banks have seen their number of customers skyrocket due in large part to their lack of fees. Though they’re managed to garner significant financial backing, they are far less profitable than their traditional bank competitors. What follows are three possible strategies available to neo-banks on a journey towards profitability.

Three potential pathways towards profitability:

1. Pivoting towards lending and collecting interest.
2. Introducing fees, with the hope that the user experience and available products are sufficient to maintain most of their customer base.
3. Continued growth of customer base with an eye to sell.

Pivoting towards lending and collecting interest.

Currently, neo-banks tend to offer a much more limited range of products and services than traditional banks. Most online-only banks maintain checking accounts and offer debit products, but relatively few have transitioned towards credit and lending services. This may be due to the challenge associated with not holding a banking charter directly, or to a lack of available capital. In any case, as neo-banks continue to grow their customer base and acknowledge their need for profit, they may begin to pursue this path.

Introducing fees, with the hope that the user experience and available products are sufficient to maintain most of their customer base.

Alternatively or in conjunction with the previous approach, neo-banks may consider introducing fees to their customer base. This move would prove risky — after all, the promise of no-fees is how many neo-banks attract customers in the first place. When done very gradually, and with a simultaneous investment in UX design and customer service, neo-banks could pursue this approach to profitability without losing too much of their customer base, provided that they hold a large segment of the market.

Continued growth of customer base with an eye to sell.

This final approach appears to be the one most commonly pursued by neo-banks today. Rather than revise their business model, neo-banks seek to maximize their number of accounts, garnering financial backing to pursue innovative solutions and banking services to their customers. When satisfied with their valuation, neo-banks allow themselves to be bought out by a larger entity with deep pockets, with a profitability strategy of their own. 

The post An Introduction to Neo-Banking appeared first on PaymentsJournal.

This post appears in a news section of Nasdaq and is contributed by a member of The Motley Fool, an investment advisory of sorts.  The piece is commentary about the recent Visa acquisition of YellowPepper, the Miami-based fintech that specializes in mobile banking and payments application for the LAC region. 

The acquisition was actually announced in October and closed about a month later. There are no terms mentioned (nor were they in the original announcements) but one source had YellowPepper’s valuation at between $100-500 million as of late 2018.

As readers paying attention to the payments industry (and surely members of CEP) will know, the major cards networks have been expanding their roles into the broader payments space (most notably in B2B uses) now for several years through strategic acquisitions, partnerships, product development, value added services and positioning as a fintech. Their primary distribution channel remains banks but given the ‘network of networks’ goal, partnerships with other fintechs is core to the effort as well. So this move fits directly into that strategy.

‘In November 2020, Visa completed its acquisition of YellowPepper, a fintech company that enables real-time payments between card, account, and blockchain networks through a set of application programming interfaces (APIs). In other words, the company provides software that makes it easy for clients to send and receive various types of payments. YellowPepper CEO Serge Elkiner has explained the company in this way: “We’re a fintech helping banks keep an edge against big tech firms.” ‘

The author goes into some of the overall strategy and recent connective moves, such as the acquisition of Earthport in 2019. Two of the Visa products touted are Visa Direct, mostly a P2P and B2C play but applicable for small business uses cases as well, and Visa B2B Connect, a pure cross-border business payments play. Look for more of this going forward. Readers should browse the article.

‘Visa’s CEO also said the acquisition would allow for easier integration with Visa Direct and Visa B2B Connect. If that pans out, Visa could more aggressively target opportunities in B2B payments, disbursements (business- or government-to-consumer), and P2P transfers in Latin America — an $8 trillion market opportunity, according to management. In 2020, Visa Direct facilitated 3.5 billion transactions around the world, but this acquisition could drive that figure upwards in the years ahead. Likewise, Visa B2B Connect currently reaches 80 markets globally, but YellowPepper’s platform could help the product gain traction in new markets.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Why Visa Acquired YellowPepper appeared first on PaymentsJournal.

Green Dot, a pioneer in digital banking and financial technology, has launched GO2bank, a new mobile banking platform tailored to meet the needs of Americans living paycheck to paycheck. GO2bank aims to provide affordable, accessible, and reliable financial tools to help users manage their money, avoid costly fees, and build financial security in a challenging economic environment.

Addressing Financial Challenges

For many Americans, living paycheck to paycheck means navigating a precarious financial landscape, where unexpected expenses or a late paycheck can lead to costly overdraft fees, high-interest payday loans, or other financial setbacks. GO2bank is designed to address these challenges by offering features that support financial stability and help users stretch their dollars further.

Key Features of GO2bank

• Early Direct Deposit: GO2bank allows users to receive their paycheck up to two days early, providing quicker access to funds and helping to alleviate the stress of waiting for payday.
• No Hidden Fees: GO2bank is committed to transparency, with no hidden fees and no minimum balance requirements. This approach helps users avoid the surprise charges that can often accompany traditional banking services.
• Overdraft Protection: GO2bank offers overdraft protection up to $200, helping users avoid costly overdraft fees and providing a safety net for those moments when funds run low.
• Cash Back on Purchases: GO2bank users can earn cash back on eligible purchases, allowing them to save money on everyday expenses and stretch their budget further.
• Financial Tools and Resources: GO2bank provides access to a range of financial tools and resources, including budgeting assistance and credit monitoring, to help users manage their finances more effectively and work towards their financial goals.

Empowering Financial Resilience

Green Dot’s launch of GO2bank is part of the company’s broader mission to empower underserved communities with the financial tools they need to achieve stability and resilience. By offering a suite of banking services designed specifically for those living paycheck to paycheck, GO2bank aims to provide users with the support they need to navigate financial challenges and build a more secure future.

The Impact of GO2bank

The introduction of GO2bank is likely to have a significant impact on the financial lives of millions of Americans. By offering accessible, low-cost banking services, GO2bank helps bridge the gap for those who have traditionally been underserved by the financial system. For many, this platform represents an opportunity to break free from the cycle of financial instability and take control of their financial future.

As economic uncertainty continues to affect households across the country, GO2bank’s launch comes at a critical time. With its focus on supporting those who live paycheck to paycheck, Green Dot is making a meaningful contribution to the financial well-being of Americans, offering hope and tangible support in challenging times.

GO2bank by Green Dot is more than just a banking platform; it’s a lifeline for those living paycheck to paycheck, offering the tools and resources needed to navigate financial challenges and build a more secure future.

The post Green Dot Introduces GO2bank for Americans Living Paycheck to Paycheck appeared first on PaymentsJournal.

This piece appears in Finextra and basically uses the eventual full conversion of SWIFT gpi to the ISO 20022 messaging standard as a catalyst to discuss IT ‘build, buy or collaborate’ scenarios. As many readers will know, ISO 20022 is the global standard being used in all new real-time payments systems, including RTP in the U.S.

Fedwire and CHIPS will also be converting over to the standard, although the dates are somewhat iffy now. This set of conversions is causing financial institutions to grapple with payment modernization decisions around the best implementation model for their particular enterprise or organization. So the article does a top line view of decision parameter examples.

‘Complex regulatory requirements, outdated and poorly integrated legacy systems and an increasingly competitive marketplace all put pressure on traditional financial institutions to evaluate opportunities for payments transformation….SWIFT gpi and ISO 20022 migration have set the stage to meet the need for consistent customer experience across multiple access channels and drive standardisation in payments.…These demands have pushed banks to consider major technology investments as well as significant process and cost improvement activities. In this environment, bank executives are challenged to balance a range of considerations: customer experience, technology disruption and regulation.’

The author goes on to two focus areas; first is technology related to ISO 20022 and a SWIFT translator, and second is process optimization and building a payments platform for the future. The buy, build or collaborate with a fintech scenarios are discussed for each, with one example as follows:

Buy? With the buy option, banks have the ability to purchase a solution ready to integrate into their own legacy systems. This eliminates some of the challenges associated with building in-house, but again there are some serious considerations to take into account before taking this route…The main challenge with the buy option is centered around the integration with existing legacy systems, which can be very complex and time-consuming. Once the integration is complete, firms must still contend with the on-going maintenance issues that are present with the build option, around updating changing messaging standards and connectivity costs to the SWIFT network.

Pro – No build effort 

Con – Maintenance 

A worthwhile piece to spend a few minutes reading through.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post ISO 20022 Translators, SWIFT gpi Plugins and Process Optimization appeared first on PaymentsJournal.

First financial platform for Dashers will include no-fee daily direct deposits, cash-back rewards and convenient banking functionality

SAN FRANCISCO and TORONTO, December 14, 2020 – DoorDash (NYSE: DASH) and Payfare are pleased to announce the launch of the DasherDirect platform, a banking solution for DoorDash delivery drivers (Dashers) offering a Business Prepaid Visa Card and mobile banking app. This marks DoorDash’s first-ever financial platform for Dashers, providing them with exclusive new rewards and more flexibility and control over their earnings.

DasherDirect, issued by Stride Bank and powered by Payfare, offers Dashers no-fee daily deposits of their DoorDash earnings, convenient digital banking functionality and cash-back rewards. 

DasherDirect is a card designed specifically for Dashers. With the DasherDirect Business Prepaid Visa Card, every day is payday, with earnings automatically added to the DasherDirect Visa Card daily at no cost to the Dasher. Dashers can check their balance, pay bills, transfer money, set savings goals and find no fee ATMs on the go— without worrying about overdraft fees or minimum account balance requirements. Dashers also earn 2% cash back on fuel at any station, any time.

“We are committed to providing innovative solutions for gig workers that drive financial inclusion, which is why we are thrilled to partner with DoorDash and announce this major initiative,” said Marco Margiotta, CEO of Payfare. “Since the inception of Payfare, we have quickly become a name synonymous with digital banking and instant payout solutions for the on-demand gig economy.”

With the launch of DasherDirect, Payfare and DoorDash are providing Dashers with greater economic freedom, security and financial opportunity by putting money directly into Dashers’ hands every day, free of charge. DasherDirect is now available to Dashers in select regions across the East Coast, with a full nationwide rollout planned for early 2021.

“Over seven million households in the U.S. are without a checking or savings account*, and with the support of our partners we’re proud to provide financial resources to more Americans looking for flexible earnings opportunities,” said Tony Xu, CEO and Cofounder of DoorDash. “This is a major step forward in introducing new tools to empower Dashers who count on DoorDash for reliable, independent and flexible work.”

This launch is part of DoorDash’s Main Street Strong Pledge to empower local communities, which includes enabling Dashers to achieve greater financial empowerment and meet their professional goals. Flexible work opportunities with low barriers to entry are more crucial than ever, which is why DoorDash launched a multi-year partnership with the National Urban League to create a first-of-its-kind program designed for underserved communities to help them attain new job skills and entrepreneurial success through financial literacy training, educational funding, job programs, and more. As part of the Pledge, DoorDash also announced a $12 million Dasher rewards program that will run through May 2021, and which will highlight and recognize the commitment of many dedicated Dashers across the globe.

“This is one of the best ideas DoorDash has had,” said Dasher Roland Pelletier. “The biggest thing I like is that there’s no fee for daily direct deposits, and with the DasherDirect program I have total control of the app and my experience with it so I know what’s in the bank. As a Dasher the gas savings are huge, and I plan to use the card for my daily expenses. At the end of the year, it’s going to be a lot easier to itemize my spending as a Dasher.”

“Economic empowerment requires a thorough understanding of financial transactions, credit building and savings,” National Urban League President and CEO Marc Morial said. “There is a critical need within the African-American community for pre-paid debit cards like Dasher Direct Prepaid Visa that eliminates onerous access fees for users to view their balance and access convenient ATMs. It’s a breath of fresh air when companies like DoorDash make a sincere effort to provide equal access to technology and financial empowerment.”

The post Doordash & Payfare Partner to Launch Dasherdirect Visa Card & Mobile Banking App appeared first on PaymentsJournal.

Admittedly, this is not new news, but in researching a report regarding debit payments in Asia, an article in ITNews from June caught my eye. Australia is considering collapsing some of its national payment networks into a single organization. The objective is to create one, unified and efficient organization that would direct where investments in payments are made. 

Australia, and other countries want their national payments capabilities to adapt more quickly and fend off competition from Tencent and Ant Group in China plus take market share from Mastercard and Visa.

The networks under consideration for consolidation includes:

• BPAY: Financial institution based, bill pay network with online and mobile access. 
• Eftpos: National point of sale solution
• NPP: New Payment Platform offers real time payments domestically.

Some key points from the article:

Both the Commonwealth Bank of Australia and the ANZ Banking Group have lodged submissions with the Reserve Bank of Australia’s review of payments regulation saying the current menagerie of payments schemes and infrastructure needs to be reviewed with a view to an industry-wide platform.

Any final decision to consolidate – which is still a couple years away – would have massive ramifications for literally tens of billions of dollars of bank-owned systems initially rolled out in the 1980s, predominantly on IBM’s zSeries (or earlier) running COBOL and dozens of bespoke and proprietary legacy applications that linger to this day.

Having taken more than a decade of regulatory biffo to come to life – a core skill of Australian banking oligopoly is its capacity to disagree on any common technological innovation unless it’s forced upon institutions – the gradual but relentless growth of the NPP ultimately creates some technological redundancies.

Both BPAY and EFTPOS, which the direct entry system underpins, are the two most obvious low-cost transaction behemoths affected by any consolidation that could potentially see their functions rolled across onto the underlying NPP architecture.

And like the NPP, EFTPOS and BPAY are essentially owned by the main banks and other institutions, hence the ultimate disinclination to keep running three sets of infrastructure.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Australia Plans to Combine its Primary Payment Networks appeared first on PaymentsJournal.

This provocative headline leads a post in Tearsheet about the new API-based service called Stripe Treasury, about which we commented a few days back. The author goes on to discuss the implications for the embedded finance and BaaS space, which is gaining usage as the open banking era unfolds.

Indeed versus regulated mandates in Europe and other selected global markets, in the U.S., open banking is a growing market reality. This is due to the increasing recognition by company resources that their work experiences can and should be closer in nature to other things available to them on a smartphone.  

‘  “Everything about running an online business has been transformed by technology, but business banking has largely been left behind,” said Karim Temsamani, head of banking and financial products at Stripe. “But we’re changing this, just like we set out to change payments a decade ago. Offering a user-centric banking experience should be as easy as spinning up a virtual server — that’s what we’re starting to accomplish at Stripe with our bank partner network”…..The move is emblematic of a larger trend of embedded finance that is layering in banking capabilities within companies in any industry and integrating financial services within platforms already used by customers. Goldman Sachs, one of Stripe’s banking partners, recently launched its own banking as a service offering for transaction banking, TxB.’

Of course the answer to the headline question is no, which the author goes on to explore through a few quotes from industry participants. We also covered these dynamics in our CEP Outlook for 2021, under the theme of collaboration. 

This service is a nice functional improvement on the payments experiences for e-commerce merchants and vendors, and we would expect continued advancement of convergent services across the cash cycle process landscape. Working into financial operations and full treasury requirements is yet another thing, but one would expect continuing demand for easier platform integrations during the next 5-10 years.

‘“Overall, if you look under the hood, Stripe Treasury lacks features that are really needed to build powerful financial products for companies outside the retail space, such as neobanks or fintechs,” said Sankaet Pathak, CEO of Synapse Financial Technologies, a banking as a service platform….Stripe Treasury, disruptive as it appears, may be limited in its applicability to real life use cases.  “It doesn’t make it any easier to develop products for lending or credit, the KYC framework shows room for improvement, and there’s no real bill-pay product – just ACH transfer. There’s also some questions about ATM ubiquity. While most competitors allow more customization, Stripe seems to be going after a very specific use-case of embedding deposit accounts in a modular way,” said Pathak.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Is Stripe Treasury ‘Game Over’ for Banking as a Service? appeared first on PaymentsJournal.

Whelp, we all knew this was coming. Alphabet (a.k.a. Google) announced yesterday that consumers will soon be able to include a Google sponsored bank account to their Google wallet. As I understand it, now a consumer who gets a Google backed bank account can make payments and do mobile banking from the same app. If you have one-half hour to kill you can even watch their announcement video here.

To be clear, Google is not really acting as a bank in this situation. Rather, they are originally partnering with Citi and Stanford Federal Credit Union to offer bank accounts that will operate within the Google wallet. There are plans to extent the partnerships out to nine other banks. Google doesn’t currently have the necessary banking charters and other necessary government approvals to operate as its own bank and therefore has to partner with existing banks.

According to an article in MarketWatch:

The announcement came as part of a broader list of upgrades to the Google Pay wallet, including a way to see transactions in a “conversational view” that shows payments to a group of friends or to a given retailer in separate screens. The company will also let Google Pay users obtain and view rewards from retailers such as Target Corp. and Warby Parker within the app, and it will allow people who’ve linked their bank accounts to the platform to track spending by categories, including granular breakdowns, like transactions made at Mexican restaurants.

Say what you will about this announcement, but this is a serious move by Google to move their wallet or “Pay” app to more than a smartphone based payment card. Moving beyond the pay aspect of digital wallets is the Holy Grail for the tech companies like Google and Apple.

Another article I read in GSMARENA pointed out that this isn’t the first time Google has tried to realize this dream.

Google has already had a debit card in the past. The Google Wallet Card was a MasterCard debit account that pulled funds directly from a Google Wallet balance or from a saved payment method. Back then, the idea of the Google Wallet card more closely rivaled the PayPal debit card, but it was eventually discontinued after a few short years.

Given Google’s resources, data, and infrastructure, we have no doubts it can pull off launching a ‘Google Bank’ of sorts. But Google is also known for launching convenient services and then pulling the rug after it doesn’t go the way it panned out.

Both Google and Apple have their sights set on their own banking capabilities. Facebook and other “big tech” companies have been sniffing around this industry too. I’m not sure how this will al pan out, particularly in the light of growing noises coming from the government and consumer advocacy groups about breaking up big tech.  I do know, however, it is going to be an interesting topic to keep our eyes on.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Google Expands into Banking Again appeared first on PaymentsJournal.

This release is posted on the U.S. Bank website and announces a new product that they are calling AP Optimizer. This is a payables automation solution that includes invoice matching, multiple payment types (ACH, cards, wires, checks) and workflow monitoring to increase the ability for straight-through processing. As most readers will know at this point, there has been a pandemic-inspired pivot to cash cycle systems and process automation among corporates of all sizes in the U.S., which had previously been transforming to digital at tepid pace.

‘“AP Optimizer is a big win for our customers and is part of our strategy to provide an integrated offering to manage Accounts Payables,” said Jeff Jones, head of Corporate Payment and Treasury Solutions for U.S. Bank. “Our customers will have the ability to transform workflows and payments to a digital solution with improved visibility, embedded security and fraud mitigation tools.”

We have not received a briefing on the underlying infrastructure, but the release indicates that those clients adopting AP Optimizer will have access to Bottomline Technologies’ Paymode-X network of 425,000 suppliers. This could mean some existing system is connecting to the network, or that U.S. Bank is utilizing the Paymode-X solution. It could also be a hybrid solution. In any event, bringing packaged digital solutions to the market is what businesses in the U.S. are seeking, so we would expect some adoption success. Automating financial processes was a highly relevant topic at the various remote industry events that we have been attending.

“The combination of connecting our organization with a large B2B electronic payment network, and the ability to have an integrated payables solution offering both virtual pay and ACH leveraging our existing ERP system, made AP Optimizer the obvious solution for us,” said Mitchell Watson, vice president and CFO of Carson Tahoe Health, which participated in a pilot of AP Optimizer and will soon be fully implemented. “Not only will we see the benefit of eliminating our paper processes, but U.S. Bank will handle the heavy lifting for us with vendor outreach and enrollment. And, we gained peace of mind from built-in fraud protection delivered by a trusted bank partner.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post U.S. Bank Simplifies Accounts Payable, Digitally Transforms Invoice-to-Pay Process with AP Optimizer appeared first on PaymentsJournal.

You likely have heard that the Department of Justice (DoJ) is suing Visa to stop their sale of Plaid. Plaid, if you are not familiar, is a data aggregator that collects permissioned (or hopefully permissioned) banking information and funnels that data to an app where consumers can get a consolidate view of their finances to help with budgeting, savings and investing. Plaid also can validate checking accounts for decoupled debit or private label debit programs where consumers can use an app or a physical card to make purchases directly from their checking account. 

And that last point is at the center of the lawsuit.

The DoJ says that they have evidence that Visa felt threatened by Plaid and its potential impact on the debit industry, so much so that Visa paid $5 Billion (not a typo) to buy Plaid just to shut them down. I have to say of all the payments related lawsuits I have read, this is one of the most interesting. I highly recommend reading it here. It is only 30 odd pages long. Spoiler alert: there are several misstatements about the debit and payments industry, plus a sketch of a volcano (again, not a typo).

The payments industry is no stranger to expensive, long drawn out legal battles that can change the future direction for specific products. An article in the Wall Street Journal had this to say about the potential influence of this particular legal action:

Whatever the outcome, for investors the suit could focus attention on how payments might evolve, in particular the potential of pay-by-bank arrangements. Also sometimes called account-to-account payments, pay-by-bank involves transferring money online directly between bank accounts and doesn’t involve a card network like Visa or Mastercard. Today such transfers may be familiar to consumers in some realms, such as paying bills online with checking accounts. But they aren’t yet typically an online shopping payment option for consumers, at least not directly.

I don’t know if Visa violated the Sherman Act or not, but I do know that regardless of Visa’s intended purchase of Plaid, there are still many providers of data aggregation, some much larger than Plaid, and private label debit will continue to grow with or without Visa’s ownership of Plaid. 

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Directing Payment Strategy Through the Courts appeared first on PaymentsJournal.

Facebook has joined the crowded and competitive mobile payments market in India, building on top of the faster payment solution, UPI. TechCrunch noted:

The Facebook-owned service (WhatsApp) said Friday that it is rolling out payments in ten Indian regional languages in the latest stable version of WhatsApp app on Android and iOS. The announcement comes hours after National Payments Corporation of India (NPCI), the body that operates the popular UPI payments infrastructure, said that it had granted approval to WhatsApp to roll out UPI-powered payments in the country.

Like Google, Samsung and a number of other firms, WhatsApp has built its payments service atop UPI, a payments infrastructure built by a coalition of large banks in India. NPCI said WhatsApp, which has amassed over 400 million users in India, can expand payments to its users in a “graded manner,” and to start with, it can only roll out the payments service to 20 million users and has to work with multiple banking partners.

While Facebook may be a little late to the market, there is still room to develop new users and market share is still available to take from other providers.  Note that Paytm use to be the payment wallet of choice, but now Walmart and Google have gained share:

Google and Walmart currently dominate the mobile payments market in India, together commanding roughly 80% of the UPI market share. UPI has emerged as the most popular digital payments method in India, thanks in part to New Delhi’s abrupt move to invalidate more than 85% of the paper cash circulation in the nation in late 2016. UPI’s popularity has diminished the relevance of several firms in India, including SoftBank and Alibaba-backed Paytm that spent years building mobile wallets. Unlike UPI apps, mobile wallets are not interoperable with other mobile wallets, and levy a small fee to consumers.

In an attempt to keep payments from being dominated by just one player,  NPCI announced that they will enforce a limit to ensure that no single app can control more than 30% of the market.

Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group

The post Facebook’s WhatsApp Launches Payments in India appeared first on PaymentsJournal.

Mercator Advisory Group continues to see more payment players interested in the IoT space. Subscription services for automated consumable refills, digital wallets located directly in cars, automated metering infrastructure, telematics-based insurance, 5G opportunities in sports stadiums, and other campaigns continue to bring software, hardware, and financial institutions together.

Payment networks are more interested in the IoT B2B space while manufacturers and others are exploring IoT products infused with IoT payments specifically for the consumer. As an article in Gulfnews notes: “Adoption of smart household devices, especially in more developed markets where connectivity via central internet hubs will facilitate purchases by various household devices.”

Establishing a connection and a real-time data stream to bring visibility into household items or industrial processes results in more optimal decisions for consumers and businesses. Payments networks, processors, gateways, banks, and fraud services all want in on this connection to enable a low-friction payments process, establish a network, lower fraud, and provide an optimized data-driven service.

Overview by David Nelyubin, Research Analyst at Mercator Advisory Group

The post Payments Industry Focuses on IoT appeared first on PaymentsJournal.

The percentage of unbanked households in the U.S. is the lowest it has been since the FDIC starting monitoring this metric in 2009. According to a new report from the FDIC Survey of Household Use of Banking and Financial Services, only 5.4% of American households are unbanked (or approximately 7.1 million households out of a total of about 131 million households).

This is very positive news for many reasons, none the least of which is financial inclusion. Nations are often judged by the proportion of their populous actively involved in the economy. The thinking is that as poorer individuals gain access to financial systems, they have a greater possibility of getting out of poverty. Below is a good definition of financial inclusion and its benefits, drawn from a Business Standard posting:

Financial inclusion is a method of offering banking and financial services to individuals. It aims to include everybody in society by giving them basic financial services regardless of their income or savings. It focuses on providing financial solutions to the economically underprivileged. The term is broadly used to describe the provision of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education.

Here comes the asterisk.

Unfortunately, this is 2020. No good news comes without a dark side. The Executive Summary for this survey points to a few caveats courtesy of the realities of today:

• Rising unemployment – the number of people who have lost their jobs as a result of the pandemic and its effect on the economy has put people out of work and that can lead to a decline in banked households.
• Difficulty accessing credit – as unemployment goes up, more people are in jeopardy of defaulting on their credit, thus banks tend to tighten their credit offerings thus preventing people from getting credit (a key component of financial inclusion).
• Decreased savings – as financial difficulties increase people will be forced to draw down on their savings. If this savings is in a bank, and it is depleted, the account can easily be closed.

Next year, when the FDIC publishes the 2020 results, what will the unbanked numbers look like? We can take guesses, but no one really knows. However, don’t be surprised if the number of unbanked increases thanks to this crazy year.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post The Unbanked Population in the U.S. is Decreasing* appeared first on PaymentsJournal.

While some predicted that “Big Tech” would be the catalyst that transformed consumer behavior in the banking industry, the truth is that banking has already been cruising toward digital transformation – a global pandemic greatly accelerated it. Once physical branches were forced to shutter and consumer concern over physical touch points began to rise, digital banking became the primary consumer resource as mobile banking traffic rose 85% with a 200% jump in new mobile banking registrations in early April.

In addition to traditional mobile banking enrollments skyrocketing, some of the industry’s most popular digital disruptors like PayPal, CashApp and SoFi also took full advantage of the pandemic-induced wave of virtual money management, with CashApp enabling its users to receive their stimulus funds directly through their mobile app.

The pandemic has pushed the “fast forward” button on digital transformation, and now is the time for banks to ride the wave. However, as digital banking emerges as the primary banking method for many Americans and the physical branch takes a back seat to its virtual counterpart, the path to a completely frictionless user experience is still unclear. With financial fraud increasing exponentially and customers expecting a seamless experience as they navigate all financial functions in a remote world, banks need to upscale their services and operations to ensure they do not get left behind the virtual curve. 

To truly ride this wave, banks will need to succeed at true digitization of identity and the complete virtual functionality of bank accounts. This requires a “start strong” proactive approach to fraud and security instead of a reactive one.

Developing customer trust

To make full-fledged digital banking transformation happen, it is imperative that a standard level of trust be established between the bank and its customer and vice versa. For example, if a bank’s website or mobile application repeatedly doesn’t recognize a customer or if the customer’s payments are interrupted, the chances of the customer considering this as a reliable digital extension of their bank full time is slim.

New market entrants have to build a greater sense of trust – and from scratch. For the banks that already have loyal customers, the key is to continue to increase security capabilities while reducing authentication hurdles, all wrapped into a premium customer experience.

A foundational component to removing authentication hurdles while increasing security within the digital experience is by including a deeply enhanced digital identity, authentication and authorization capability within a bank’s consumer-facing service that spans all digital touch points, including card transactions performed at merchant sites – historically difficult dots to connect. It is imperative that user authentication, authorization and digital identity serve as major cornerstones of the user experience.

While the identity and authentication paradigm isn’t going to occur overnight, the conversion to a primarily digital way of banking becomes a bigger challenge without them. Not only would this demonstrate to customers that their bank is prioritizing the protection of their digital identity, but it shows how serious these institutions are about creating an optimal experience for the user by making financial interactions easier than ever before.

Communication between banks and their customers, as well as any intermediaries is key during this time. Banks should be fully transparent with their customers on the additional features they have in the works. This will reassure them that they are not on this digital transformation journey alone and the process can move at their pace (even if the pandemic has inadvertently sped the process up).

Creating a seamless, user-first experience

Digital banking and finance offerings are flooding the market. The services that will ultimately reign supreme will be those that offer a superior user experience and are able to tailor their services to consumer’s specific needs. While some new entrants will use flashy graphics and surface techniques to woo users from legacy service providers, some of these new entrants may forego many of the crucial security/fraud prevention features that customers both want and need.

The next wave of digital banking services need to fully cater to the customer experience, being both agile and easy to use if they are going to be fully adopted – no instructions required. This means that the features and functions within these digital banking services must not only be truly adaptive to customer’s needs, but they also must leverage frictionless technologies (such as digital authentication) to virtually emulate the full-service outcomes that customers that frequented physical branches are used to – with no limits. However, there are many banking functions that may not even be worth the hassle to recreate for the virtual world.

Going digital for banks means a whole new frontier for creating a tailor-made banking experience for specific users, and delineation between accounts specifically designed for digital touch only or physical touch only is key. Said differently, a digital account should have tokenized keys that are unknown to the account owner while physical accounts would have the legacy structure that account owners would have their account details in their possession. 

This approach would segregate risk and allow banks to be more precise in applying security features that greatly reduce friction while laying the foundation for open banking.  This approach has been proven with tokenized transactions and now is the right opportunity to elevate this capability to truly tokenized accounts. 

Tackling fraud head-on 

Fraud is deception and for banks to strengthen their capabilities they must first limit the capabilities that fraudsters have at their disposal. It is amazing that check fraud continues to lead in many loss reports given the amount of time and resources that banks have applied to this form of fraud. However, a deeper dive into reviewing this activity sheds light on this issue as it represents the comingling of the digital and physical worlds. 

With the sophistication of check image interrogation software available, it is surprising that check fraud continues to elude such capabilities; however, account takeover activity tends to open up online access to those images to fraudsters. Conversely, the account and routing numbers being widely available do not lend themselves to a strong, tokenized digital approach.

While we wait for truly delineated account structures, we must acknowledge that 55% of consumers admit they have no plans to update their online banking login information. It is painstakingly clear that the best fraud defenses will need to be a good offense built directly into these digital banking solutions. As banks work to reduce friction they must equally increase customer engagement to ensure users are taking action and utilizing all security tools at their disposal, like behavioral analytics and other digital authentication solutions to better protect transactions. For new enrollments, banks can also take a “start strong” approach to ensure that customers start out on the right foot with the strongest capabilities they have to offer. 

For existing customers, they will need a call to action that is more assertive than previous education approaches.  A new approach of educating customers on the need for self-selecting stronger security requires more precision and insight that feeds directly into the effectiveness of the user experience while simultaneously establishing brand loyalty.

While CISOs at these financial institutions are becoming more engaged with fraud teams, they will need to consider the customer experience and the proactive measures required to ensure fraud protection is fully integrated into the overall security strategy – and not just an afterthought. This requires strategic planning between the fraud and security teams to ensure that resources are maximized and utilized appropriately.

As scams from mobile payment apps continue to grow in popularity and financial fraud is facing an uptick due to the pandemic, consumers need to know that their banks have them fully protected in the digital realm. Everything from multi-factor authentication and password resets to facial recognition, mobile device fingerprinting and other biometric-based digital identity protection tools will be essential as cyberthreats continue to grow in sophistication and more stringent digital identity and authentication practices are needed. 

By taking a direct approach to fraud protection, banks can provide their customers with peace of mind as they rest assured that their data and funds are protected to the highest power regardless of their concerns about going fully digital with their banking.

The pandemic has thrown many components of our everyday lives into a tailspin, but the way in which we bank and handle our finances does not have to be one of them. When it comes to banks and their customers, they need to determine the best ways to collaborate seamlessly. Every customer has the need and right to have easy access to their funds – and digital banking has made this an everyday reality.

As digital banking continues its rise as the primary way of banking (and the physical branches take second place), the banks that have been actively investing in their technology stack over the past few years will not only be well positioned for this genesis – but will thrive in it. The other banks that have neglected their technology infrastructure will find it very difficult to enjoy the digital wave – if they survive it at all.

Amir Nooriala, Chief Strategy Officer of Callsign, helped contribute to this article.

The post COVID and Banking in the New Era: Can Banks Ride the Wave After Decades of Creating It? appeared first on PaymentsJournal.

Ocean Financial Federal Credit Union (OFFCU) today announced its mobile check deposits by members nearly tripled from March to July, from $565,000 to $1.3 million, as a result of members using the mobile check deposit function on their phones during the COVID-19 pandemic lockdown in New York.

“Even though we closed our branch lobbies to protect our members’ health and kept our drive through windows open, it seems more and more people had the confidence in our mobile check deposit capability,” said Joe Tedesco, President & CEO of Ocean Financial Federal Credit Union. “Growing our capabilities like this also allows us to grow our membership for the future.”

In 2019, Ocean Financial members used their mobile devices to deposit $7.8 million into accounts. This year, they have deposited $8.7 million. At its current pace, OFFCU predicts it will exceed $13.5 million in mobile check deposits by year’s end, which would be a record for the traditionally smaller credit union, located on the South Shore of Long Island.

The OFFCU mobile app has offered mobile check deposit capability since 2015, with an upgrade during their rebranding in 2017, and has grown consistently month-over-month, reaching steady highs through 2020. 

“We have worked very hard to put big banking tools like mobile check deposit, Zelle and credit score checks into the hands of our members while maintaining the security and integrity of our members’ accounts,” said David Franco, Chief Information Officer for OFFCU. “It allows us to punch above our weight class while still offering the benefits of a community-focused financial institution.”

About Ocean Financial Federal Credit Union   

Ocean Financial Federal Credit Union was formed in 1969 by a group of Father Joseph O’Connell Knights of Columbus members looking to provide financial services to Brother Knights and their families. Over the years, the credit union has evolved in name and in field of membership, while maintaining ties to their Catholic roots. Today, Ocean Financial has grown to over $349 million in assets, serving members of the Knights of Columbus in New York State, the Diocese of Rockville Centre, and any Catholic interested in the credit union. Inspired by their Catholic values, Ocean Financial provides exceptional products and services to the Catholic community. The credit union takes pride in having Catholic values you can bank on. Ocean Financial promotes these values through the entire organization, down to the logo. To learn more, visit https://www.oceanfinancial.org

The post Ocean Financial Federal Credit Union Reports Mobile Deposits Surge during Six-Month COVID-19 Lockdown appeared first on PaymentsJournal.

An article in the Harvard Business Review examines the success of AliPay, with nearly a billion Chinese users, and Apple Pay that has, well, considerably fewer users. 

It’s an interesting article, but I’m not sure that the comparison between the two is really a fair fight. AliPay is so much more than a mere payment app. It facilitates thousands of mini-apps that provide powerful, useful services to consumers and businesses.  And at the time it was introduced, it solved many issues for consumers and merchants who operated primarily in cash.  Apple Pay, on the other hand, entered one of the most mature payments markets, and the only real advantage it offered was a potentially faster in-person checkout based on near-field communication (NFC). 

Here’s an excerpt from the article:

Though both platforms are growing, AliPay is outperforming its U.S. peer: As of late 2019, Bain & Company found that only 9% of American consumers had adopted Apple Pay while 81% of Chinese consumers used AliPay. Given the size difference between the two countries, the difference between the number of AliPay users in China and Apple Pay users in the U.S. is staggeringly large. What are some of the factors driving this stark contrast?

Based on our extensive financial services industry experience and work with platform companies, we found two key strategic drivers for successful platform adoption: 1) Create value for all parties and 2) Monetize the ecosystem, not just the product. So far, Apple Pay has only marginally accomplished the first while AliPay has mastered both. Other platform leaders can learn from their examples.

I agree that the most successful product launches have something to offer for all parties. Has Apple really done that? The company offers some modest consumer experience value through ease of use, but this was quickly duplicated by several other universal wallets. And are issuers really seeing value? They get the privilege of giving Apple fifteen basis points for every transaction. Seems like the value proposition is a bit more slanted in Apple’s favor.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Comparing Market Positions for AliPay and Apple Pay appeared first on PaymentsJournal.

Across the country and around the world, the novel coronavirus pandemic has reshaped assumptions and prompted some swift and significant changes. While the public health implications and short-term economic impacts have made headlines, there are long-term structural changes for many industries that will persist long after the immediate crisis. The banking sector is one space that has already begun to evolve, with new priorities and perspectives from consumers and financial institutions prompting new partnerships, new technologies and new approaches to creating seamless financial “ecosystems.”

Understanding the nature of these changes is the first step in appreciating the contours of the digital banking landscape—not just in the weeks and months ahead, but for many years to come.

New markets

One increasingly common phenomenon is the propensity for larger banks to connect with smaller players to expand into new markets. For larger financial institutions, the ability to connect with an established customer base in new markets is obviously appealing. Smaller banks are subsequently able to offer new tools and new resources that they were previously unable to provide to their clientele. The scale and scope of these moves are to some extent, dictated by the nature of the regulatory climate (and is therefore, more common in South American markets than in the U.S., for example). Still, it is noteworthy that one of the results of this trend is at a time when historic pandemic-driven economic pressures are widespread around the world. A wider range of both banks and consumers can now access a more diverse and sophisticated range of financial instruments and banking tools.

New tech tools

From new payment systems to point-of-service innovations, the tech landscape of the financial sector is exploding. The proliferation of digital wallets and no-touch point-of-service platforms comes at exactly the right time for a global population understandably focused on health and hygiene. From small purchases to life-changing loans, digital currencies and virtual tools are making remote payments and banking more accessible than ever. Apps like Venmo, payment systems like Apple Pay and Google Pay and conveniences like digital receipts and mobile check deposits have changed the way many people utilize and even think about currency and payments.

New ATMs

From Europe to South America, some markets have benefitted from introducing a new generation of multifunctional ATMs that offer a number of new tech-driven conveniences. From touchless ATMs to terminals that can process loans and other complex financial transactions, today’s automated tellers have far outpaced their predecessors. Some ATMs now allow users to print physical bank cards at the terminal, further reducing the need to visit the bank itself. In the midst of a pandemic, the value proposition of virtual banking is clear.

New partners

Because tech-driven flexibility and efficiency are such a critical piece of the banking puzzle, banks, brands and businesses are becoming much more proactive about establishing professional partnerships with tech companies and larger financial institutions to create fully realized financial “ecosystems.” The resulting connectivity and convenience of digital wallets and other tech conveniences isn’t just appealing to consumers but keeps those consumers inside a proprietary network for all of their banking needs. It also allows retailers to create stand-alone systems, solutions and accounts that enable them to effectively function as a bank.

New integration

Beyond the technology itself, the unifying theme behind the tools and tactics described above is streamlined simplicity and integrated utility. Tech-friendly conveniences are an expectation in today’s world, and the tools to make them possible are becoming more accessible—at the very moment demand for them is rising. Unsurprisingly, this trend has also led to a new push for tech companies with experience working in digital banking—specifically those with experience designing and deploying new digital payment systems and other tech-driven banking technology—and the demonstrated ability to connect those innovative new tools to legacy platforms. When executed correctly, this can create elevated integration and seamlessly coordinated functionality that distinguishes the best of these new digital banking ecosystems. At a moment when pandemic pressures have heightened demand for such tools and platforms, the growth of these tech innovations is not just ideal—it is essential.

The post Taking Account: Pandemic Pressures and a Reshaped Digital Banking Landscape appeared first on PaymentsJournal.

In a recent PaymentsJournal commentary, I noted that Square was continuing to diversify into banking and related financial services. Its POS payment transaction service operates in a crowded field and is limited by a commodity-type pricing model. Now Stripe’s expansion beyond POS transactions is really paying off.

While the company announced a slowdown in payment transaction volume due to the COVID-19 induced retail falloff, Square’s Cash App digital wallet plus merchant banking services showed robust growth. It will take a while for retail markets to come back and many small businesses will not return, but Square has positioned itself well by going outside the box to a wider mix of financial services.

The following excerpt from a Wall St. Journal article reports more on the topic:

Stay-at-home orders are certainly taking their toll on Square, but investors are already looking around the corner. In the second quarter, gross payment volume, the lifeblood of any payments company, dropped 15% from a year earlier at Square. But its gross profit—a measure that excludes certain costs of revenue like transaction processing—actually rose 28%. That growth was driven largely by the company’s Cash App, its digital wallet for consumers, where gross profit was up 167%. By July, Cash’s gross profit was up around 200% from a year earlier, the company said.

Meanwhile the seller business, in which merchants collect payments via Square terminals and online, saw volumes return to year-on-year growth in July. More important for the business, online gross payment volume was up 50% from a year earlier and constituted 25% of seller volume in the second quarter. Online is where you want to be in payments these days, with many stores and shoppers shifting to virtual. Card networks like Visa have been reporting double-digit non-physical-card payment growth in the U.S. in July, while physical-card payments are still down from a year ago.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Square Shows Strength Going Beyond POS Payments appeared first on PaymentsJournal.

As lockdown restrictions ease across the world, we are now entering what can only be described as a ‘new normal’, characterized by social distancing and the wearing of masks in most public places. Nonetheless, COVID-19 has had massive effects on the world’s economy, leading to a drastic drop in spending and changing the way consumers pay for goods and services. We can see the immediate impact on businesses today, particularly in commerce where there has been a rise in contactless transactions and companies undergoing rapid digital transformation or promoting new technologies to ensure a safe and secure check-out.  

It is important to note that not everyone in society will be willing or able to embrace this digitization. However, we expect that the global proportion of people who are digitally-resistant and digitally-reluctant will have decreased. Many have adapted out of necessity, and many have been supported to make the digital transition. For example, in some regions people from low income groups of the economy have been provided with free computers; similarly, younger generations have helped educate older members of their families to help them understand how to access and utilize the power of technology.

However, a significant number are still left behind, not able to afford or use digital solutions. As more services are digitized, there is a danger that, although fewer people will be accessing non-digital services, those who rely on them will find themselves even more alienated and excluded than they have been in the past.

Accelerated adoption of technologies by merchants

In general the coronavirus pandemic is not leading to the development of new technologies; rather we are seeing a much faster and more widespread adoption of those that already existed. In other words, certain technologies are seeing increased relevance due to the effects of the pandemic, and this trend will last beyond the current period of the crisis.

In general, the use cases for existing technologies that we think will witness an acceleration in relevance fall into one of two categories:

In the first category, are those technologies that directly address the needs of the ‘new normal’. These include digital currencies, digital contracts, mobile solutions, 3D printing, Augmented Reality and Virtual Reality (AR/VR), and communication tools to support remote working and collaboration. In terms of payments, we see the Internet of Things (IoT) as an enabler of autonomous zero-contract payments and as an enabler for the pay-as-you-use charging models which we expect will have a higher demand post-crisis. Methods of authentication that do not require any physical contact such as NFC, voice, iris or facial recognition will also become more valuable.

In the second category, are those technologies that enable business resilience through agility. They include Cloud and micro services, Big Data, API first architectures, chatbots and voicebots, and communication infrastructure that meets the connectivity requirements for increased secure online transactions.

What’s next for businesses?

After this crisis, we believe there will be two long-lasting impacts for businesses:

Firstly, investors will value and executives will try to build, companies that can be resilient, even in the face of unpredictable and far reaching global events. To achieve this resilience, organisations will need to be able to adapt in a rapid and agile way to unforeseen circumstances. This will force them to re-evaluate their supply chains and their attitude to cost management.

Secondly, there will be a lasting impact on where and how people work, something we characterize as a shift from teleworking to smart working. Savvy organisations will recognise that working remotely has increased the amount of autonomy people have in their work and the way they are managed: rather than judging people by whether or not they turn up for work, they are being measured on the results they deliver (not by how they achieve them).   We do not expect the world will return to how things were before the crisis. Merchants who have adapted out of necessity during the crisis, will now be seeking to prepare for the lasting impacts that we have described, and planning the next steps for how they can harness technologies in new and valuable ways in the post-COVID-19 world.

The post ‘Essential Digitization’ in Payments Is Accelerating at an Incredible Velocity as a Result of the COVID-19 Pandemic appeared first on PaymentsJournal.

Digitization and technology innovation are reshaping of our world, transforming industries and economies by reinventing traditional models. These unstoppable forces are having a profound impact on payments.

As new real-time payment options emerge and legacy systems are modernized, the payments industry is experiencing a shift from paper to digital processes. This trend is being reinforced by the current challenging environment, which is forcing businesses to rely on the digital environment than ever.

Against this backdrop, it is critical that banks keep pace with the rate of change, supporting clients as they undertake their own digital journeys by providing digital payment services that meet all their payment needs, both now and in the future. So what changes are occurring, and how can banks and their clients reap the rewards?

The new payments culture

 The US payments landscape is undergoing considerable change, with new capabilities coming to the fore that are altering the payments culture as we know it.

The introduction of the US Real Time Payments (RTP®) Network , which enables instant payments and messaging, is fueling the 24/7 business model, with business-hour restrictions and cut-off times becoming a thing of the past. RTP offers substantial benefits to both businesses and consumers. For example, receiving wages in real-time could be a game-changer for many individuals – especially with over 53 million Americans earning income from work that is not a traditional 9-to-5 job with predictable hours. RTP can also speed up value chains, with quicker receipt of payments meaning goods can be dispatched sooner.

Concurrently, the ACH network is leveraging new innovations, introducing Same Day ACH (SDA) to meet the consumer and business demand for more convenient payments. And, by embracing change, the ACH network is now seeing a rise in demand – with payment volumes having increased by 41% in 2019. Further enhancements are also in the pipeline, with plans to introduce more frequent daily settlements, creating a new SDA processing window that will enable increased speed and flexibility.

Addressing barriers

Not only are developments occurring with the payments rails themselves, new overlay services are playing a key role in driving the move from paper to digital.

Currently, checks remain a significant pain point for many cash managers, with their use enduring often due to the simple fact that businesses often do not maintain the account information necessary to complete digital transactions, wishing to forego the inherent risk in doing so.

To help overcome this problem, new platforms, such as Zelle®, are being adopted that redefine the security of business to consumer (B2C) and business to small business (B2SB) payments, with a convenient, user-friendly approach. Zelle allows payees to register their details with a “token” – such as an email address or phone number – to create authenticated profiles. Banks can then leverage this database to securely make and receive electronic payments, without beneficiaries disclosing any sensitive bank information.

By harnessing these networks, banks are not only helping businesses to move away from the cost and manual effort involved in paper checks, they are also advancing organizations’ necessary path towards digitization.

A new era brings new risks

Emerging technologies can be somewhat of a double-edged sword, however, offering on the one hand an array of benefits, while also creating a new set of challenges on the other. As technology has advanced, criminals have been able to apply more complex, sophisticated methods to commit fraud in the payments space, such as account takeover and business email compromise. Real-time transactions are also exposing banks to these new cyber threats in the form of real-time fraud and money laundering. What’s more, there has been a rapid escalation in cybercrime due to the current challenging environment, with the FBI reporting more complaints of fraud by May 2020 than the entirety of 2019.

The ability to provide effective risk mitigation solutions to address such fraud concerns is therefore essential. No matter the channel used – ACH, wire, RTP, or other – providing protection against unauthorized account access and ensuring confidentiality are of paramount importance to the digital transformation of the payments landscape.

For this reason, banks are turning their attention to delivering real-time pre-validation services. Providers, such as Early Warning’s® National Shared Database^SM, offer banks the ability to validate the accuracy of account information – all before a payment is sent. Through such partnerships, banks can help clients effectively manage risk associated with payment processing across a multitude of use cases, increase adoption to electronic payments and improve the quality of transactions.

Adapting to the path ahead

New technology capabilities are driving evolution in the US payments industry. Traditional payment methods are being reinvented and  alternate solutions – like RTP –are emerging. And, in view of the current environmental volatility, it has become clear that digital banking is no longer just optional. But while the incentive to move to digital is growing, it is important to remember that each business is at a different stage of the digital journey, with a range of different requirements.

Banks must therefore provide digital payment services that support clients with all their payment needs, both now and in the future.  As banks look to do this, it is vital that they provide clients with a suite of options and capabilities to meet individual needs. There is not a single, optimal channel that can solve every payments issue and meet all requirements – making it crucial that banks have a variety of tools in their arsenal ready to be deployed.

The views expressed herein are those of the author only and may not reflect the views of BNY Mellon. This does not constitute Treasury Services advice, or any other business or legal advice, and it should not be relied upon as such.

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license. RTP is a registered service mark of The Clearing House Payments Company L.L.C.

The post Payments in the Digital Age appeared first on PaymentsJournal.

With the global pandemic forcing many physical businesses to close and people to remain indoors, the commerce landscape has been severely impacted. Consumers are often unable or unwilling to shop in physical stores, and traditional payment methods such as paper money are increasingly viewed as potential mediums to transmit the deadly COVID-19 virus. Retailers have responded by changing the way they operate, communicate with customers, and support transactions.

For many retailers, these changes revolve around reimaging their digital footprints and digital outreach strategies. These merchants are focusing on aligning their enterprise around the end-to-end experiences that drive customer satisfaction. Such efforts include modernizing existing systems, focusing on increasing authorization rates, and reducing declines.

To better understand how merchants are responding to COVID-19, PaymentsJournal sat down with Peggy Alford, EVP of Global Sales at PayPal, and Ted Iacobuzio, Vice President and Managing Director of Research at Mercator Advisory Group. During the conversation, Alford and Iacobuzio discussed how merchants are now interacting with their customers, what opportunities and challenges exist, and how PayPal is helping companies navigate this new reality.

How COVID-19 has impacted the way merchants and consumers interact

The most salient trend in the retail world brought on by the pandemic has been the accelerated shift from physical to digital. A digital transformation that was expected to take two years has instead been compressed into just the past two months.

In April, for example, PayPal added about 7.4 million new active accounts to its platform, a monthly record for the company. Pre-COVID-19, PayPal would typically see about 100,000 net new users on its platform each day. Now, this number has shot up to almost 300,000 net new users a day.

The uptick in new accounts has been accompanied by an uptick in volume. May 1, 2020 marked the largest single day of transactions in PayPal’s history, eclipsing both Cyber Monday and Black Friday—two of the biggest commercial days of the year. The rise in new users and transaction volume reflect the fact that there is substantial demand for digital payment solutions.

“What that’s indicating is the companies we serve are really looking to continue operations and grow their business by shifting to digital,” said Alford. With consumer behavior changing, this shift toward digital is more or less a requirement; companies that fail to respond will lose out to those that do.

What consumers want in this changing world

While adjusting to the new retail world imposed by COVID-19, companies need to respond to consumer behavior and expectations. One central desire of consumers is that of choice; they want to be able to transact and manage their money through different methods, whether in person or online. Therefore, companies that support different payment methods, ranging from Venmo to Google Pay, are best positioned to stay competitive.

Consumers also want purchasing power and flexible finance options. Businesses can provide this relatively quickly and without making huge upgrades to existing payment infrastructure. Relatedly, consumers are looking to save money. While this has always been true, the economic insecurity caused by the pandemic has made the desire more pronounced. “It’s helpful to support consumers in finding items at prices they can afford through shopping and promotion tools,” said Alford. 

Safety is another primary concern of consumers. Part of the concern is over physical safety. Many consumers want to avoid cash or key pads because these physical entities could contain pathogens. QR Code-enabled payments and other contactless payment options are therefore a safer alternative.

Consumer concern for safety also extends to their personal information and money. People want to transact with companies they trust. When consumers trust a company, they are more willing to shop there. PayPal’s market research indicates that “there’s a 50% lift in consumer willingness to buy when PayPal is present at checkout, whether or not they ultimately use PayPal,” explained Alford.

Merchants can meet consumer expectations

In order to meet the consumer expectations discussed above, merchants need to shift their focus from physical processes to digital ones. “Businesses and merchants used to think of physical first and digital second,” noted Alford. “That mindset has had to shift in order for businesses to survive.” As PayPal’s volume data shows, that shift is well underway.

Merchants have had to change their strategies to reach consumers. For example, restaurants have embraced carry-out and delivery options, while retailers have turned towards e-commerce and in-store pick-up options.

Alford pointed out that simply offering digital shopping and payment methods is not enough. Companies need to also make these digital methods simple and intuitive; consumers want excellent user interfaces that are easy to use.

The challenges retailers face in shifting digital

Since a lot of merchants have been primarily focused on the physical side of retail, they may be under-invested in digital. For many companies, they may not currently have infrastructure in place to accommodate e-commerce.

“In fact, in a study that PayPal conducted late last year, we found that across all age groups, nearly 80% of the consumers surveyed have shopped via smartphone, yet only 63% of businesses are optimized to accept mobile payment,” said Alford. The nearly 15% gap underscores the work some merchants need to do to keep up.

How PayPal is helping retailers pivot to digital

“A full suite of simple solutions, many of which businesses can start using in minutes, can be found on the PayPal homepage by clicking get support for your small business, including how to create QR Codes for contactless payments, selling on social or creating an online store,” said Alford.

In addition to this resource page, PayPal has multiple products that can help merchants.

“We recently announced the rollout of an in-app QR Code feature that allows customers and businesses to conduct in-person transactions at a safe distance and touch-free using their PayPal wallet,” added Alford. Another example is PayPal’s Honey, an application that helps consumers find the best price for an item. Companies that offer consumers this functionality will benefit as a result. PayPal also supports a wide range of payment options, including Google Pay, Apple Pay, Venmo, and the traditional payment methods. Therefore, a company that partners with PayPal can support the many payment choices consumers want in the shifting commercial landscape.

The post How Merchants Are Rethinking Commerce and Their Digital Footprint appeared first on PaymentsJournal.

Fees are an essential part of the payments industry. In order to exchange money between different networks or people, a fee is typically required to facilitate the transaction. This makes understanding fees important to any company in the payments industry. However, payment-related fees can be strikingly complex.

A large part of this complexity comes from the fact consumers can choose from a variety of payment types. These include card payments, mobile payments, P2P transactions, and e-commerce payments. Since there are numerous companies offering each of these payment types, competition can be fierce.

Further complicating the landscape is that all of these transaction types involve a growing number of participants. For example, a typical card transaction involves the consumer, merchant, payment gateway, merchant acquirer, payment network, and issuing bank. Each participant will either be an originator or a recipient of fees – some participants might even be originators as well as recipients of fees depending on contractual relationships.

A brief look at different fees

Since all participants involved in the entering, routing, authorizing, and settling of payment transactions either pay fees or receive fees, there are many different types of fees.

Although there are some variations, the following are the general types of fees that occur during the payments cycle:

• Interchange Fees: Interchange fees are paid by the payment service provider (PSP) to an issuing bank or the issuing bank processor through a payment network. The fee rates are set by the payment card networks and depend on a variety of variables, including the transaction amount, payment card type, and acceptance method, among other factors.
• Assessment Fees: This type of fee is paid by either the PSP or the merchant to the payment card network handling the purchase.
• Payment Gateway Fees: Merchants connected to a PSP via a payment gateway provided by a third party are subject to a separate set of fees charged by that payment gateway provider.
• Issuing Bank Processor Fees: When outsourcing processing entirely, the issuing bank will pay its processor an operations fee, which can vary depending on the fee structure.
• Payment Service Provider Fees: PSPs also include a variety of fees to cover their cost of doing business, consisting of flat fees on a per-transaction basis, a percentage of the total transaction amount, or a combination of both.

BHMI is helping companies understand fees

It is important that companies involved in payments understand what types of fees are out there and how fees can be utilized to increase revenue. To that end, BHMI—an industry leading company that has created primary business applications since 1986—is hosting a webinar from 11:00 AM to 12:00 PM (EDT) on July 16, 2020.

The webinar will feature Casey Scheer, Director of Marking at BHMI, and Cheryl Fitzgarrald, Senior Project Manager at BHMI. During the hour-long discussion, Scheer and Fitzgarrald will describe the different fees and commissions in the payments industry, and then offer some best practices for developing solid, effective fee structures.

The webinar will also outline how BHMI’s Concourse — Fees & Commissions™ solution allows for the creation of an almost unlimited range of fee configurations through its real-time, rules-based software. By simplifying the task of creating and managing complex feeing configurations, BHMI empowers processors to increase revenue and stay competitive.

Those interested in BHMI’s “Maximizing Pricing & Fee Structures” webinar can register here.

The post Don’t Leave Money on the Table: Maximizing Pricing & Fee Structures appeared first on PaymentsJournal.

Today, FinTech makes a substantial contribution to the process of handling financial flows. With the right selection of technologies, it is possible to improve financial services and optimize expense planning. Before you invest, it is quite crucial to identify current trends, understand patterns better, and then select the well-suited programming language for your project.

Mobile app developers can use several programming languages for financial app development. The goal of this article is to make you aware of the right technology stack for your app. Before we take a quick rundown of the programming languages let’s understand why we should invest in financial app development services.

Reasons why financial apps are attracting investors’ attention

The banking industry is gaining momentum because of young and tech-savvy customers. Witnessing the current scenario, more and more people are looking for cashless payments. Reasons that make banking or financial app development a good investment avenue are:

• Currency Becoming Digital

If you look back, you will notice the majority of your transactions have become cashless. Whether it is online money transfer or scanning QR codes for enabling payments, the mobile app is becoming a go-to tool for users. Developing an app for your financial institution helps you deliver conveniences and smart experiences to your customers.

• Mobile is the New Wallet

Carrying a physical wallet is long gone. Now, you can save all your card details in your app and make instant payments in almost every eCommerce store and service-based agency. With the right technology stack, you can make the payment process more efficient and smooth, encouraging users to use apps while making transactions. An intelligent financial app development solution helps your customer to track their expenses and makes them financially smart. Also, it helps you retain your users by offering loyalty points for using their money to make successful transactions. It becomes an ideal way to analyze your customers’ data to develop the best strategies for attracting more customers.

Top programming languages used for financial app development

Java – next-gen banking app with Java Development

Java is a multi-purpose object-oriented programing language that is used to create high-tech desktop applications and websites. With passing years, Java is now also introduced as a go-to-software development solution in the finance sector. The programming language offers continuous updates according to the needs of financial solutions.

For banks and other financial institutions, security and scalability are the most critical factors as these organizations process big and sensitive data regularly. 

1. Fraud-Proof Security Features – When building financial apps, you need to stay a step ahead of the hackers who can breach your security system or can make fraud transactions. Java is famous for both big data and security applications. It includes a wide range of in-built security features and comes with an advanced security manager, thus, helps you develop risk-free applications.
2. Multithreading – Java-based apps can manage multiple users at the same time. Leveraging the capabilities of Java, you can expect better performance due to the optimal usage of cache storage and CPU resources. It offers faster response even when multiple users are using the app simultaneously. Multithread servers will remain responsive to offer glitch-free user experience.

Python and finance – a perfect combination 

Innovative digital technologies play a crucial in the financial landscape. They come with splendid opportunities to eliminate manual processes and improve customer services. According to the recent stats, Python has established itself as the most considerable choice for developing a financial app. It is transcendent to solve challenges like compliance, regulation, and volume of data. As time passes by, the language is gaining momentum in the marketplace. Let’s find out why it is becoming the #1 choice when it comes to financial app development.

1. Concise Coding – Python uses laconic syntax that eliminates the need for writing long codes.
2. Robust Framework – Python uses one of the dominant frameworks for banking apps, Django. It provides off-the-shelf functionality that is not common in other frameworks.
3. User-Friendly Layout – With python software development, you have in-built dictionary data structures that offer dynamic high-level data typing, reducing the length of code.
4. Huge Community – An active community of software engineers provides enormous support while python-based app development.
5. Simplicity – Developing a full-service financial platform is itself a complicated task. Why complicate it more. Python is known for its lighter syntax and faster as compared to traditional programming languages.
6. High-Performance – It provides a clean object-orient design that maintains robust text processing functionalities that accelerate time-to-market and improve productivity.

Ruby on Rails (RoR) – solving biggest financial app challenges

RoR is built on Ruby, a general-purpose programming language. It has several advantages like quick prototyping, vibrant community, etc. which makes it one of the most recommended choices of app developers. There are around 2 million apps that use Ruby on Rails as their programming language. Reasons to choose Ruby on Rails for your financial app are:

1. Higher Productivity – RoR has a plethora of modules, generator scripts, and open-source libraries that make the development process smooth and rapid. The programming language helps you build a complex financial app in a shorter period. Rapid prototyping and well-developed test coverage are a few of its features that accelerate the development process. 
2. Improved Security – Fortunately, RoR has many in-built security mechanisms. However, it is not a plug-and-play solution; developers need to run on Rails guidelines to avoid any issues in the later phases. 
3. High Storage Database – It is hard to think, a financial app without a database. RoR’s MVC architecture simplifies the work with databases and also saves writing complex SQL queries manually. It is a flexible way to make any changes with databases and achieve results in a structured manner.

How much does financial app development cost?

Without any doubt, the future of banking app development is bright. It is estimated that the market value will reach up to $309 billion by 2022. Before investing, you must be wondering about its cost. Developing a customized app is an expensive approach. However, it offers positive outcomes and excellent ROI in the future. Typically, the cost of a financial app is around $20K to $100K. To find the exact price of the app is challenging as it depends on several factors. For instance:

• Mobile app platforms you choose
• Number of integrations you want to cover
• Features and high-tech functionalities you want to integrate
• Hourly rates of app developers
• Location of the outsourcing company
• The complexity of the app
• Chatbot integration
• AI for personalization
• Big data for personalized insights

Before you consult mobile app development companies, you can also check the approximate cost calculators. You need to answer a few questions based on your app requirement and get estimates within minutes.

Summary 

Choosing the right technology is imperative for any business. Your technology stack should fill all criteria and requirements to meet your demands. Each language plays a vital role for specific purposes. You can hire a reliable mobile app development company that can guide you in choosing the best technologies out of the rest. Moreover, they can give you a better understanding of your project.

The post 3 In-Demand Programming Languages to Create a First-Rate Financial App appeared first on PaymentsJournal.

Approximately 94% of the U.S. population has a tradition bank account and many additional consumers are served by a fintech solution and general purpose reloadable prepaid cards. The problems encountered by the IRS Fiscal Services to distribute the Economic Impact Payments (EIP) to individuals whose account details are not on file with the IRS has led legislators to consider using the U.S. Postal Service as a national bank. 

An article in Roll Call provided background on the new bill, introduced in March, that proposes to have the Federal Reserve get into the business of offering free checking accounts with bill pay services, online banking, free ATM services and presumably build effective mobile apps and handle 24X7 customer service:

[Sen. Sherrod] Brown introduced a bill in March that would allow individuals to open free bank accounts with the Federal Reserve, avoiding the fees and minimum-balance requirements that often block the poorest from traditional banking.  Brown’s proposal, and similar legislation introduced by House Financial Services Chairwoman Maxine Waters, D-Calif., would allow individuals to bank through Fed Accounts, which would replicate the amenities provided by normal banks — including debit cards, online banking, automatic bill pay and ATMs — without the costs.“This would give people more power over their paychecks and ensure that during and after the pandemic workers won’t have to rely on expensive check cashers to get their hard-earned money,” Brown said.

Many traditional banks, prepaid card providers, and challenger or neo banks already offer free or low cost bank accounts, so this is really just adding yet another solution to an existing market. Just because an affordable account is offered, it doesn’t mean a) consumers will open an account b) they will share their account information with the IRS or another Federal or State agency that is attempting to distribute money electronically. One reason that citizens operate outside the formal, traditional banking system is that they have a distrust of banks. Will these same individuals feel more comfortable having a banking account with the Federal Government?

The solution to the problem already exists. The issue of getting EIP payments to several million individuals had everything to do with the speed at which the payments should have gone out and the lack of time to get an electronic solution in place. Now is the time to be focused on government-to-consumer distributions before this issue arises again. 

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Recent Bill Proposes the Federal Reserve Launch a Retail Bank appeared first on PaymentsJournal.

If anything good has come out this pandemic, it might be the resiliency and flexibility that many businesses have shown as traditional methods of selling and servicing became more difficult, or even impossible. Practically overnight, the old ways of doing business with simple face-to-face interactions were gone. Many businesses were forced to implement new ways to interact with their clients, while others saw significant increases in the use of some of these “less personal” ways to conduct business (think call centers, online, and app).

A tip of the hat to these companies that were able to (forced to) change so quickly. I’m sure it was not without its challenges.

The net effect of all this is that many consumers have now been exposed to service delivery channels they would have avoided in the past. As a result this exposure, these consumers are starting to realize that there are more service channels available to them. For example, the individual that used to deposit checks at a teller may have been forced to use an ATM or remote capture via a banking mobile app. Now, they have more options available that they have previously not had experience with. Gone are some of the excuses and rationale people have used in the past – “I can’t be bothered,” “it’s too difficult,” it’s not secure,” “those things don’t work,” etc.

Forbes published an article this morning, How The Health Crisis Has Changed The Digital World Permanently which speaks very well to this shift. While the title leads the reader to believe it is only about healthcare, it really speaks to the entire customer interaction/customer experience ecosystem. While they use healthcare as an example, the idea of “Opti-channel” transcends just healthcare.

An opti-channel approach derives from the idea that not all channels are created equal, and not all channels are necessarily suitable for every interaction. An opti-channel strategy requires businesses to not only find the best channel to reach each type of customer, but to use that channel to its fullest potential in order to maximize engagement at each and every point along that customer’s journey while ensuring continuity of experience and personalization.

The old adage comes to mind – “water seeks its own level.” Customers have now been exposed to new ways of interacting with business across many merchant verticals. Like some of their more tech savvy brethren, a new wave of customers will be choosing the interaction channel that best meets their needs. Sometimes it will be in person, sometimes they will use a call center, sometimes they will go to a physical location, and sometimes they will use an app. They will choose the perceived “path of least resistance.” Businesses have less control of the interaction channel than ever before.

To complicate matters even more. The consumer desire for more channels will not be limited to single merchant vertical. If Walmart offers these servicing option, why can’t my credit card issuer or my other financial institutions?

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Are Your Servicing Channels Ready to Compete with Walmart? appeared first on PaymentsJournal.

Minneapolis, MN  – Branch, the challenger bank that works with employers, today announced that it has partnered with Mastercard to offer cardholders instant access to their funds with Branch’s Mastercard debit card by directly adding it to mobile wallets including Apple Pay and Google Pay from the Branch mobile app. Expediting the launch of this feature in light of COVID-19, Branch not only delivers users a contactless payments solution for transactions, but also provides users immediate access to their debit card upon sign-up.

This addition allows new consumers to sign up for Branch’s fee-free checking account and add the new Branch Card directly into their mobile wallets, without having to wait for the physical card to arrive. According to a recent study by Mastercard, consumers are showing increased adoption of and preference for contactless payments, with approximately eight in 10 stating that they are now using contactless cards, citing safety and cleanliness as key drivers.^[1]  With merchants rapidly adopting contactless payments to increase the safety of their employees and consumers, Branch users now also have a safer, more convenient way of conducting in-person transactions. Once a user completes the sign-up process, they can quickly access their new Branch Card via their mobile wallet.

“Consumers deserve fast and flexible mobile banking services that adapt to their needs,” said Branch CEO Atif Siddiqi. “As contactless payments become a critical part of everyday transactions, these new capabilities allow users to seamlessly transition between their physical and digital wallets.”

Users who have already received a Branch Card can update their app settings to add their debit cards onto their mobile wallets. Along with Branch’s identity verification process, mobile wallets like Apple Pay offer additional safety features including biometrics. With a shared commitment to financial inclusion, Branch partners with Mastercard and Evolve Bank & Trust, which is FDIC insured, to provide the fee-free checking account and debit card.

“Contactless payments offer safety, security, and efficiency to consumers at the point of sale,” said Sherri Haymond, executive vice president, Digital Partnerships at Mastercard. “The capability of offering an instant Branch Mastercard debit card is part of our commitment to making the digital economy work for everyone, everywhere.”

Branch primarily works with employers to provide financial wellness and tools for their hourly workforce, including auto-budgeting, free earned wage access, opportunities to earn more income, and zero-fee banking. Gig, salaried, and unemployed workers have also turned to Branch for more transparent, flexible financial services.

The post Branch Launches Mobile Wallet Capabilities to Provide Immediate Debit Card Access appeared first on PaymentsJournal.

This article presents statements from the FBI reporting an increase in attacks on mobile banking, all of them requiring the consumer to be tricked into loading a fake banking app or a Trojan that will intercept banking credentials. These attack vectors are infuriating because banks have little control over what their customers download:

“ ‘The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps.’

The FBI specifically pointed to threat of banking trojans, which involve a malicious virus hiding on a user’s mobile device until a legitimate banking app is downloaded. Once the real app is on the device, the banking trojan then overlays the app, tricking the user into clicking on it and inputting their banking login credentials.

Fake banking apps were also cited as a threat, with users in danger of being tricked into downloading malicious apps that also steal sensitive banking information.

In order to combat these threats, the FBI recommended that Americans only download banking apps from official app stores or from banking websites and that banking app users enable two-factor authentication on their accounts and use strong passwords.”

Overview provided by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group.

The post FBI Says Mobile Banking Hacks on the Rise, but Traditional Fishing Remains More Common appeared first on PaymentsJournal.

Trustonic platform can now be used by developers to secure apps with both multiple hardware-backed TEEs and advanced software protection to enable the next generation of secure mobile user experiences.

9 June 2020 – Trustonic and Huawei today announce the next step in their partnership to bring simplicity and greater security to mobile applications. Trustonic Application Protection (TAP) now supports Huawei’s hardware-backed Trusted Execution Environments (TEE) “iTrustee”, and the HUAWEI P40 Series smartphone supports the TAP SDK at launch. Application developers can use the TAP development platform to leverage Huawei’s hardware-backed security for features such as Trusted User Interface (TUI), which is vital for the next generation of mobile banking, payments and mPOS, automotive and mobile identity-based apps.

The TAP platform makes it easy for application developers to build advanced security and shielding into critical mobile apps. This will help Huawei to create a secure ecosystem for its Huawei devices, starting with the  HUAWEI P40 Series, while adding support for the other devices that are upgraded to EMUI 10.1. iTrustee’s integration with TAP will simplify the process of secure application development for Huawei devices and their acceptance into the broader application ecosystem.  

“The TAP development platform gives application developers access to the advanced security features that they need to bring trust and richer user experiences to app users across billions of smartphones worldwide,” adds Dion Price, Trustonic CEO. “This announcement is a significant achievement in just one year of working with Huawei and will bring hardware-backed security to an even wider range of applications and services.”

This news builds on the 2019 launch of the first development platform to enable developers to protect their apps and assets with TEE across different devices.

About TAP: Strong in-app protection enabling richer user experiences

TAP is the only application development platform that combines hardware-backed and software based in-app protection, enabling any developer to build and deploy applications with advanced security, and make use of TUI to shield sensitive user-interactions from potentially-compromised main device operating systems. TAP is already protecting a wide range of sensitive mobile application use-cases globally. This includes the digital car key sharing apps for Volkswagen Group and Hyundai, and off-the-shelf smartphone secure payment acceptance with Rubean.

You can learn more about Trustonic Application Protection here.

The post Huawei and Trustonic App Protection Partnership Grows with HUAWEI P40 Series Launch appeared first on PaymentsJournal.

Mark Twain was famously quoted (or misquoted) for saying “Just say the report of my death has been grossly exaggerated.”

While I have written several times in this forum that I think the bank branch, as we know it today, is going to change and the number of bank branches will likely decrease. The great prognosticators (whoever they are) have been predicting the death of the retail branch since the first ATM was introduced at a Chemical Bank in 1969.

Having said that, now, more than ever there are options for consumers to conduct many of the transactions that were once only available by going to a physical branch. Now, with online and mobile banking, consumers can do so much more without visiting a branch. The outbreak of COVID-19 and the subsequent temporary closure of branches has forced many bank customers to use these features out of necessity.

A recent post in American Banker, BankThink Don’t underestimate the power of branches post-pandemic (paywall?) talks about the resiliency of the branch and the important role it plays in retail banking. The author takes a very even handed assessment of the current situation while defending the branch.

If so many banks have been able to function and serve their customers with such restricted branch access, many wonder if this truly is the new normal.

Maybe this time will finally be the tipping point.

However, I would not consider the customer patterns or behavior these past three months as a signal that they are abandoning branches.

There is a difference between what someone is forced to do when options are taken away, and what a person chooses to do while other options remain.

As the author points out, some people will be very happy to return to bank branch and conduct their transactions the same old way as before, but others will not. Some will continue on with their newly adopted methods for banking and thus reduce their need for a branch.

The great unknown is, however, what proportion will go back to regular visits to the branch and what proportion will not? Quite frankly, this is a question that any business with a retail footprint is asking itself.

The death of the branch, at this point, is just hyperbole. It makes for a catchy headline, though.

Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.

The post No One Really Know the Fate of the Retail Branch appeared first on PaymentsJournal.

Walmart (NYSE:WMT), together with Green Dot (NYSE:GDOT), today announced updated features and benefits for the Walmart MoneyCard Reloadable Debit Card program.

The Walmart MoneyCard, issued by Green Dot Bank, member FDIC, will now provide accountholders with a 2% annual percentage yield on money saved in the integrated savings account, up to four additional MoneyCards for family members 13 years of age and older, free cash deposits and the ability to add money to your card from an existing bank account.

The Walmart MoneyCard, already the number one retailer-branded debit card available in the U.S., has made banking from your mobile phone even more attractive and easier than ever. With its easy-to-use online and in-app money management tools, it allows users to make the most of their money.

Now, in addition to gaining Prize Savings sweepstakes entries for dollars saved in the savings account, MoneyCard cardholders will earn 2% interest (APY) on savings1. The new High Yield Savings Account is just another example of how Walmart and Green Dot are supporting the financial wellness of our customers through financial services innovation.

“Now more than ever, consumers are looking for ways to manage their money for less, while saving as much as they can. The new Walmart MoneyCard allows customers to do both,” said Mike Keeslar, General Manager of Consumer Products, Green Dot. “Whether you have a specific savings goal in mind, or just want to set aside cash for an unexpected emergency, we have a free and easy savings solution, combined with other features Walmart customers depend on to more effectively manage their money.”

Walmart’s savings sweepstakes already encouraged saving, getting a rate that is higher than most financial institutions makes it even better. Every method consumers can take advantage of, to increase their earning is a move in the right direction.

Available at Walmart stores or online at WalmartMoneyCard.com, features and benefits of the updated Walmart MoneyCard include:

ASAP Direct Deposit: Get your pay up to 2 days before payday or your government benefits up to 4 days early with ASAP Direct Deposit.

High Yield Savings: 2% Interest on Savings within the Walmart savings account included within the MoneyCard App. You can easily move money into and out of your savings account at any time by simply tapping the Save or UnSave button.

Free Cash Deposits: Cash deposits to your MoneyCard are now free at any Walmart Money Center or Customer Service area when using the MoneyCard mobile app. The mobile app generates a unique barcode for the cashier to scan and funds are available within 10 minutes.

This feature is a variance from the normal trend of charging to add funds to a prepaid debit card. It is a unique way to encourage Walmart MoneyCard customers to download and engage with their mobile app and save money at the same time.

Free Family Accounts: The primary cardholder can assign up to four additional MoneyCards to family members 13 years and older for free, giving busy families a digital alternative to cash to manage and share their money.

Cash Back Rewards: The 3-2-1 Save cash back program provides all qualifying cardholders in the U.S. and Puerto Rico with 3% Cash Back at Walmart.com, 2% Cash Back at Walmart fuel stations, and 1% Cash Back at Walmart stores, up to $75 each year.

Monthly Fee Waiver: Waive your monthly fee when you deposit $1,000 or more to your account each month.

Bank Transfers: Use the app to add money to your Walmart MoneyCard from your existing bank account.

Prize Savings: In addition to earning 2% interest on savings and cash back rewards on spending, customers also earn entries into the monthly Prize Savings sweepstakes. Once in the savings account, each dollar earns an entry for one of 1,000 cash prizes every month (one grand prize of $1,000 and 999 $25 prizes).

Free Cash Withdrawal: Get cash withdrawals from your card for free at Walmart Money Centers and Customer Service desks.

EMV Chip Security: Personalized Walmart MoneyCards now include EMV chips, providing additional security to your account.

This is one of the first prepaid cards offered by a non-bank that is EMV chip enabled, security and safety of funds is very important. It also improves chargebacks to Walmart if the card is used at a non EMV enabled point of sale terminal.

Account Lock Security: Ability to Lock and Unlock your account through your mobile phone. When locked, your Walmart MoneyCard cannot be used to spend or access cash at ATMs.

Consumers can learn more about the Walmart MoneyCard by visiting WalmartMoneyCard.com. In addition to product information, customers have the option to watch videos about key product features, as well as how to set up programs such as Direct Deposit and Family Accounts.

Consumers can open an account online at WalmartMoneyCard.com or get a starter debit card by visiting the Money Center in their neighborhood Walmart store. 

Overview provided by C. Sue Brown, Director, Prepaid Advisory Service at Mercator Advisory Group.

The post Walmart MoneyCard Offers Free Cash Deposits via Their Mobile App appeared first on PaymentsJournal.

As consumers increasingly turn to online banking in the wake of the COVID-19 pandemic, certain services on financial platforms are starting to see increased traffic. This has led to higher rates of fraud, as bad actors strive to exploit the crisis.

What kind of fraud? According to recent DataVisor research, account takeover attempts have increased by 20% and new account fraud increased by 40% — all since the beginning of March. And as government bodies issue stimulus packages, there’s been an increase in malicious domain registrations, which can be used to perpetrate email phishing campaigns such as emails pretending to deliver payouts. According to Google, nearly one-fifth of all phishing emails in Gmail are coronavirus-related.

The increase in fraudulent activity in the banking sector isn’t likely to ease up, as shelter-in-place orders remain active throughout May and possibly into the summer months. Consumers will continue to leverage online banking apps, opening the door for fraudsters to login and cash out.

Financial Fraudsters Have Many Vectors

Stopping modern fraudsters from attacking financial institutions isn’t easy — and it requires increasingly advanced techniques. That’s because fraudsters are adept at evading detection by blending in with the normal activities of legitimate users. For example, they may randomize the timing of their attempts in order to avoid velocity-based bot detectors. They may use fake contact information and scripts to generate realistic looking email addresses or use emulators and jailbroken mobile devices to create the appearance of multiple independent customer accounts.

To make matters worse, increased reliance on mobile banking apps broadens the threat landscape and provides a vastly expanded attack surface for bad actors to initiate these malicious activities. Data must be collected and analyzed holistically at the source to stop fraud before it infiltrates the data network.

Today’s fraudsters are quick to evolve their tactics, rendering traditional fraud detection methods — many of which use statistical analysis based on existing datasets — ineffective. What’s needed is an approach that can provide early detection of both known and unknown threats and enable fraud and risk teams in financial institutions to stop fraud at the gate.

Advanced Machine Learning: The Key to Secure Online Banking

Over the past several years, fraud detection has employed supervised machine learning (ML). In this type of ML model, data from past transactions is labeled as fraud or not fraud, then the model learns the patterns and analyzes new data based on what it knows to identify anomalies. The problem is that new types of fraud attacks emerge all the time, and models trained on past data may not be able to spot them. Additionally, they can result in a high number of false positives — in the form of a declined ATM or credit card, or blocked access on a mobile app. Although the organization is protected from potential threat, the customer experience suffers.

Advanced models that leverage unsupervised machine learning (UML) techniques are able to identify potentially fraudulent behavior by spotting unusual patterns in the data, even in the absence of labeled transaction data. In addition to anomaly detection, UML uses clustering and graph analysis techniques to uncover relationships between input data. In this way, they can detect potential threats in real time and help stop an attack before it wreaks havoc on customer accounts. UML is especially effective for discovering new and unknown patterns, which is useful for thwarting today’s sophisticated fraudsters.

Additionally, UML models dramatically reduce false positives because they are more precise and accurate than traditional ML models. This helps remove friction from the customer experience.

Safe, Frictionless Banking During the Pandemic and Beyond

The trend toward online banking via browser and mobile apps will continue to gain momentum, as Americans continue to become accustomed to interacting with brands across many industries — banking, retail, healthcare and more — from home. Financial institutions that implement proactive, early detection strategies and techniques for stopping financial fraud can ensure safe banking and deliver a seamless, friction-free customer experience that gives them a competitive edge.

The post Another Coronavirus Challenge: How to Keep Your Online Banking Info Secure appeared first on PaymentsJournal.

How Financial Marketers Can Leverage Mobile During Times of Uncertainty

With locations closed and limited human interactions, financial institutions need to adapt quickly to connect digitally with consumers who are leveraging mobile-first banking now more than ever. While the number of omni-digital consumers has declined over the past few years, PwC research shows mobile-dominant banking customers have increased 50% since 2017 and they’re making their preferences known. With people utilizing mobile devices for tasks previously done in person, mobile-banking should be top of mind for marketers and financial institutions, beyond the world’s current situation.

The number of financial institutions the average consumer uses has increased by 10% since 2017. Even more worrisome is that 50% of customers who plan to open a new account in 2020 likely won’t do so at the bank they currently use. Agile institutions are moving to primarily digital offerings to enter new lending markets—think real-time account open and loan approval.

With social distancing in place and the rapidly evolving digital landscape, financial marketers need to shift away from branch versus digital mindset and focus on providing the right lending solutions at the right time, leveraging mobile devices.

The lending path to purchase

Lending is a high-intention product. Potential borrowers are motivated and ready to convert, yet McKinsey & Co discovered a leakage rate of 90% for new financial services customers who enter the funnel through digital channels.

During the awareness and consideration phases, lending customers are highly receptive to personalized mobile offers and messaging. A Google study showed a 48% increase year-over-year in mobile search traffic for lending-related terms such as mortgage, credit, and loans. Financial institutions have a clear opportunity to acquire new customers by aligning their messaging with a mobile-first audience, yet they have been slow to meet the challenge.

It’s not that they don’t recognize the imperative: An Econsultancy survey of financial industry leaders showed 81% of them believe personalizing the customer experience is important. Yet Forrester research revealed that 68% of financial services companies struggle to message the correct person across different devices and touchpoints.

The lending path to purchase is digitally dominant until consumers are ready to close a loan. At this stage, even mobile-first customers often seek personalized information from a representative. KPMG found that as many as 25% of these high-intent consumers drop out due to media friction—in many cases, the bank offered no easy way to request personalized information or connect with a representative. The need to optimize this experience and seal the deal digitally has become even more of a reality..

Sources of media friction

Friction points occur at every stage and across every channel, but they are particularly noticeable in the digital lending path to purchase:

• Messages aren’t served to the decision-maker
• Messages are irrelevant to the consumer’s situation
• The offer is unclear or irrelevant
• The medium is ineffective at targeting the consumer
• The message doesn’t include convenient options to check eligibility or get additional information
• The message doesn’t make it easy for the consumer to complete the application or speak to an agent

Financial institutions need to harness the capabilities of the entire mobile ecosystem—surfacing ads and marketing content, the in-app experience, text messaging and notifications, and mobile-optimized email—to eliminate media friction for lending customers.

Identity reduces media friction

Connecting touchpoints for a seamless, personalized mobile experience isn’t easy. Financial firms recognize that identity is at the heart of successful marketing strategies; Forrester research shows a majority have had an identity solution in place for a year or more. Even so, most still struggle to accurately recognize a consumer across different devices and maintain that identity over time.

Big Tech continues to hamstring personalized marketing efforts. Facebook’s recent privacy update makes it difficult for financial brands to reach potential lending customers. Google just announced it’s deprecating third-party cookies within the next two years, further complicating the process. How can financial marketers solve for this?

The answer is an identity resolution solution based on real persons, not their cookies or devices. Comprehensive identity resolution that recognizes individuals across multiple mobile devices and browsers ensures that targeted messages are served to decision-makers.

Messaging powered by accurate identity enables a personalized and consistent experience across all mobile touchpoints—ads, in-app messaging, SMS/text, and email—and eliminates media friction points to provide a connected experience. Consumers won’t fall out of the funnel due to irrelevant messaging.

Leveraging mobile’s unique functionality also solves friction points at the point of conversion. On-demand access via click-to-call, click-to-text, and chatbots connect consumers with the information they need to close the deal.

The bottom line

As the world rapidly changes, financial services need to change the way they manage and maintain relationships. To form deeper relationships necessary for acquisition, retention, and growth, financial institutions need to deliver the type of relevant interactions consumers expect.

That imperative doesn’t change for mobile-dominant consumers; the strategies needed to achieve personal relationships are evolving. It means knowing more about consumers beyond your brand interactions and creating frictionless mobile journeys by accurately and persistently recognizing each customer across various devices and channels along the path to purchase. Especially during times like these, it’s more critical than ever to connect with people digitally and offer the right solution to match their current needs.

The post How Financial Marketers Can Leverage Mobile During Times of Uncertainty appeared first on PaymentsJournal.

More than a third of the entire world’s population is under various forms of lockdown. For instance, South Africa went into lockdown for 21 days. New Zealand ordered 14-day quarantine for all individuals in this country. The UK went into full lockdown on 23^rd March 2020. In such a surreal situation, it is important for banks to provide hassle-free banking experience to individuals and businesses. And embracing the recent mobile app development trends is the best way to make that possible.

From national quarantines to school closures, countries around the world are trying everything they could to slow down the spread of the coronavirus. Though people can’t move out of their homes, that shouldn’t stop them from enjoying banking services whenever they need one. Let’s take a look at the latest mobile app development trends that will make it easier for people to access banking services in such critical situations.

1. Augmented Reality and Virtual Reality

The AR and VR technologies aren’t just about enhancing gaming applications on mobile devices. Now you can use these technologies in other sectors as well. Google Maps, for instance, uses AR to provide real-time directions to mobile phone users. Snapchat and Instagram also use AR filters that can transform a human face into several digital funny characters.

What is its impact on the banking sector?

According to Heather Bellini, a managing director of the global investment bank, virtual and augmented reality can generate a revenue of $80 billion by 2025 in banking. Here are the three ways AR and VR can take mobile banking apps to a whole new level.

• New research suggests that AR and VR technologies help deliver better efficiency, improve security and drive more productivity in mobile banking apps.
• According to a study conducted by Citi, integration of AR/VR can enhance the convenience, speed and financial insights of banking apps.
• Immerse UK brought forth a report that concludes that the combination of mobile banking and AR/VR technologies can help drive the UK economy, especially when the chips are down.

My verdict

In such critical situations, a mobile banking app should be treated like a branch that easily fits in one’s pockets. AR/VR promises to make the apps convenient to the extent that people don’t have to rush to a branch for transactions.

2. IoT (The Internet of Things)

IoT is nothing but a network of physical objects embedded with interconnected electronics, sensors and software. Big brands such as Samsung, Bosch and Xiaomi are already holding a big market share for this technology. The global IoT market is supposed to generate nearly $1.335 trillion US dollars in the year 2020 alone. Some of the most popular IoT app development trends include Kisi Smart Lock, Google Home, etc.

What is its impact on the banking sector?

The banking sector is usually known to be conservative, slow and prone to bureaucracy. And these are exactly what we DON’T need right now. IoT doesn’t only improve the speed of mobile banking but also influences this sector in a number of ways. Check them out.

• Smart ATMs have been of the most popular IoT devices that eliminates the wait for standing in long queues at a brick and mortar bank. Now this solves two major problems.

[One, you can avoid the risk of being a part of social gatherings such as in banks. Two, it reduces the number of employees needed inside the traditional branches, thereby driving down the costs of banks]

• IoT has the potential to simplify operating models on banking apps. JPMorgan Chase consists of nearly 51.8 million active digital customers and 36.5 of them use mobile banking. The latter marks a spike of up to 7% year-over-year. IoT lets you open a digital account within a maximum of five minutes on an average.
• 24*7 working chatbots are other wonders of IoT. Some chatbots even use machine learning and natural language processing to offer a personalised experience to clients with time.
• IoT uses data processing algorithms to generate wealth management insights for specific individuals. It increases the speed and accuracy of the financial information gathered. That means IoT enabled banking services can alert its users the moment their financial stability is under threat.

My verdict

Governments from all over the world have shut down several services due to the current COVID-19 situation. Bank employees are also reluctant to leave their homes. So what if you need an update about your transactions? What if you need to open or close your savings account immediately? That is when IoT will come into play.

3. Blockchain technology

Blockchain development has opened up a slew of exciting opportunities in the IT and banking sector. Developers can use this technology to create decentralised mobile applications which can be owned by everyone. The decentralised mobile applications are impossible to shut down and they do not have any downtime either. The image given below shows how worldwide blockchain revenue tends to increase from 2020 to 2030.

What is its impact on the banking sector?

According to a post shared by eLearning industry “As mobile transactions are gaining momentum for various businesses, blockchain-based mobile apps are gradually getting popular.” Some of the major banks have already started out this technology in their apps for money transfers, back-end functions and record storage purposes. Now let’s see how blockchain technology reshapes the future of mobile banking apps.

• Making in-app purchases is not as easy as using a grammar checker. Most of the users are unable to make an in-app purchase because they may not have the necessary payment method such as credit cards. The whole payment process is troublesome even for people who have a credit card. But, blockchain technology lets you make in-app purchases with app coins, thereby eliminating complex credit card processes.
• Blockchain technology is about creating an easy to use process with a localised user interface on mobile banking apps. It makes the banking experience on the go for customers without any hassle.
• There are various under-developed areas in the world where people have smartphones but do not have access to bank accounts or personal credit system. Blockchain technology will have the ability to establish an online mobile wallet to store coins and tokens for anyone who has a smartphone and an internet connection.

My verdict

The spread of coronavirus has left businesses all over the world, counting costs. The Bank of England and the US Federal Reserve have cut down interest rates in an attempt to strengthen their economies. However, the integration of blockchain technology with mobile banking apps can help in improving the economy, protect against cyber attacks and facilitate easier payment methods.

Final Thoughts

Governments are asking people to stay inside their homes and prevent the coronavirus from spreading further. It can be difficult for common people to opt for traditional banking services in such situations. Also, the global economy is expected to notice a slowdown by at least two per cent this year due to the impact of COVID-19. UNCTAD is even calling on governments to take urgent measures to curb this economic impact.

However, the mobile app development trends discussed above can make it way easier for us to enjoy a wide plethora of banking facilities online. Technologies such as Blockchain not only create more secure payment methods but also have the capability to improve the global economy.

The post Top 3 Mobile App Development Technologies That Will Reshape Mobile Banking In The Covid-19 Crisis appeared first on PaymentsJournal.

Recently, I looked at the question of whether using cash presented more of a COVID-19 health risk than using contactless. There was no convincing evidence either way, but it’s clear that there’s a sentiment against handling cash and that both consumers and merchants favour a move to contactless and online.

The move away from cash is nothing new of course, and the writing has been on the wall for many years. But the news of its demise has been premature, as cash had been clinging on to its role in commercial life. The question of the day, though, is whether the temporary antipathy inspired by COVID-19 will translate into a longer-term effect, and what that might look like.

Of course, if there’s an accelerated desire to move away from cash, then it will likely impact other changes that are already underway within the payments industry. I am thinking particularly of the EU’s Strong Customer Authentication (SCA) requirements. SCA is already being implemented for online banking and is due to be implemented for purchases in 2020. Some consumers will see the attraction of enhanced security and so be more inclined to use their cards. But getting people to accept the need for security is a bit like getting kids to eat their vegetables – you know it’s good for them, but they don’t necessarily like it.

So, the key factor moving forward will depend on how frictionless the implementation of SCA is – implementers must meet certain requirements, but they can choose how they do that. The latest version of 3-D Secure (now called EMV 3DS 2.2) is designed to enable payment institutions to meet the requirements of SCA and has put a lot of thought into keeping the process frictionless and avoiding customer-terminated transactions. By providing a lot more information about the transaction and the cardholder to the issuer it allows distinctions to be made between low-risk transactions (such as buying a loaf of bread from the shop across the road) and high-risk transactions (purchasing a hi-tech TV in a country you’ve never been active in before). The low-risk transactions should go through transparently, while the high-risk transaction will require some kind of multi-factor authentication, most likely involving a mobile device.

If SCA for online banking is anything to go by, this will probably accelerate the use of mobile devices for payments – 3DS implementations will probably result in the mobile device being a lot more convenient to use than plastic. Here’s how my online banking works if I am using a PC:

• Go to the online banking website
• Enter my 10-digit user ID
• Enter digits of my PIN
• Enter characters of my password
• Wait for an authorisation code to be sent to my mobile device
• Enter the 6-digit authorisation code into the PC

Whereas, if I am using my mobile phone:

• Start the app
• Enter a 6-digit password

That’s it. Even if I’m already working at my PC, it’s easier to pick up the mobile to do online banking.

This brings me to another question that interests me – if there is a switch from cash to card or mobile, will the switch be to credit or debit accounts? The statistics and predictions are quite conclusive – the crown goes to debit. For example, UK Finance’s UK Card Payments 2018 report predicts that by 2027 each UK adult will make 5 transactions a month by credit card, but 28 by debit card (as opposed to 5 and 20 in 2017).

Personally, I’m a bit bemused by this preference for debit cards. I’m from the generation that grew up with credit cards. So, although I never used the (horribly expensive) credit capability, I got used to enjoying interest-free deferred payment, being able to check my statement before making payments, making a single consolidated payment, cardholder rewards, and protection against fraudulent, disputed, or failed transactions. The only time I use a debit card is to make ATM withdrawals.

But a younger colleague had a diametrically opposite view – she always used her debit card. For her it was far more important to always know the state of her finances without the possible surprise of a big bill at the end of the month.

So, the preference for debit probably has a generational effect, but I guess the biggest factor is the lower barrier to getting a debit card compared to getting a credit card.

What do I conclude from all this? There will probably be a move away from cash accelerated by COVID-19, which will typically be manifested as debit transactions using mobile devices.

The post Use of Cash After COVID-19 appeared first on PaymentsJournal.

Microsoft Customers Enjoy Easy Access to Digital Receipts Through Ethoca’s Expanding Network of Banks, Providing Better Transaction Clarity Throughout the Payment Journey & Reduced Dispute Resolution Costs

Toronto, Canada  – April 15, 2020 – Ethoca, a Mastercard company, today announced an expansion of its collaboration with Microsoft that will bring Microsoft customers simple access to their digital purchase receipts through their banks’ mobile applications, enabled with Ethoca’s Digital Receipts service.

Today’s digital consumer is demanding more transparency about their online purchases to eliminate transaction confusion and simplify the overall payment journey. It’s not uncommon for digital goods providers to experience false claim rates of 80% or higher from consumers who often fail to recognize their own purchases, or those of family members who have access to payment credentials. This results in a growing number of consumers using the dispute cycle unnecessarily.

According to Mastercard, this growing phenomenon accounts for an increasingly large share of global chargeback volumes estimated to reach more than 615 million by 2021[1]. It also adds friction for consumers who unknowingly contest legitimate transactions that result in unintended fraud claims, as well as future false declines from their bank. Mastercard estimates that card issuers and merchants alike incur $15-$70 in operational costs for every dispute.

According to a recent Ethoca-commissioned study by research firm Aite Group, 93% of surveyed consumers said more information, including a picture of the printed receipt, would have been helpful for transactions they ended up reporting to their financial institution as unrecognized or unauthorized. Ethoca’s Digital Receipts service enables businesses including Microsoft to make this information available to their customers through card issuing banks currently enrolled in Ethoca’s service. Typically, consumers access this enhanced digital receipt through their bank’s mobile app. The solution is currently live with a Top 5 US bank, with plans for further global expansion throughout the year. Ethoca’s service has been shown to reduce inbound transaction inquiries from consumers to their bank by 15-30%.

“Ethoca is thrilled to be working with Microsoft to solve this challenge upstream – in the bank’s mobile app where consumers have the instant purchase clarity they need to avoid making a false claim,” said Keith Briscoe, Chief Marketing and Product Officer at Ethoca. “The only way the industry can solve this growing and costly problem is through industry-wide collaboration between card issuers, merchants and card brands sharing purchase insight in real time through the channels consumers know and trust.”

“This initiative aligns with Microsoft’s commitment to providing the best customer experience at every occasion, including access to Microsoft’s own Azure- based digital receipt and purchase information,” said Stuart Dwyer, Payments Director at Microsoft.“ Better information about the transaction at the moment when any doubt arises – typically when the customer is checking the card statement – can be effective for online purchases. It also ties in with Microsoft’s commitment to provide customers with insights on how to prevent fraud by using tools such as spending notifications or spending limits, available for example via Xbox family settings. Microsoft is also actively collaborating with the industry to address the broader problem presented by first-party misuse and fraud to enhance the purchase experience for all customers.”

[1] Aite Group

The post Ethoca to Bring Digital Receipts to Consumers through Collaboration with Microsoft appeared first on PaymentsJournal.

In support of its commitment to delivering best-in-class products and services to its Owner credit unions, PSCU continues to extend its leadership position in digital offerings to bolster credit union members’ online, mobile and digital experiences. The nation’s premier payments credits union service organization (CUSO), PSCU is elevating and expanding its mobile card management platform, as well as offering an online card management tool and digital issuance beginning in late 2020, among other initiatives.

“Consumer preferences, expectations and demands are constantly changing and shifting. These shifts are even more apparent in the digital space, as consumers of all ages are adopting online banking, downloading payment apps on their mobile phones and altering the way in which they interact with their credit unions on a daily basis,” said Denise Stevens, chief product officer at PSCU. “It is critical for credit unions to offer members access to a range of banking experiences, including mobile, online and other digital solutions, with contactless and digital becoming increasingly important as COVID-19 dictates how we conduct our everyday financial interactions. At PSCU, we understand the importance digital offerings hold in a credit union’s portfolio and are dedicated to helping our Owners deliver these crucial solutions and services to their members.”

Serving more than one million members, PSCU’s Digital Xperience (DX) platform enables Owner credit unions to effectively compete with big banks, while maintaining the personal touch that sets credit unions apart from other financial institutions. The digital suite is also connected to PSCU’s best-in-class fraud detection systems, which utilize aggregated data from nearly 33 million members to better identify and stop fraudulent activity while enabling members to transact seamlessly.

Launched in 2018 as part of the market-leading DX suite, DX Mobile is a user-friendly app that offers comprehensive card management while providing control, flexibility and personalization. Recent enhancements to the DX Mobile platform, all of which focus on improving a user’s digital experience, include the support of Apple Pay push provisioning, additions to the lost/stolen debit process, improved travel notifications capabilities and more.

Bank-Fund Staff Federal Credit Union (BFSFCU) was one of PSCU’s first Owner credit unions to integrate DX Mobile into its suite of services. From card alerts and controls to improved travel notifications and further enhancements, BFSFCU – based in Washington, D.C. – has already seen success among its members and staff with the mobile platform.

“Early adoption of PSCU’s DX Mobile was paramount to our transient and largely international membership, providing a number of critical app features that appeal to our cardholders on the go,” said Robert Arold, manager, Payment Products and Experience at BFSFCU. “DX Mobile benefits credit union staff by saving time and it empowers members with a vast array of self-service functions. Most importantly, it encourages greater engagement with our debit and credit card products.”

Another addition to the DX suite, PSCU’s online card management platform, DX Online, is currently in pilot. DX Online will deliver member-centric, intuitive online experiences to enable cardholders to manage all aspects of their debit and credit cards while on the go and after branch hours. For credit unions, DX Online will also provide a robust back-end administrative tool to customize aspects of the interface and marketing content through a self-serve environment. 

“At Scenic Community Credit Union, we were seeking a mobile-responsive site. DX Online delivers just that, and we are happy to be able to offer our members all of its new features,” said Brenda Edwards, chief operating officer at Scenic Community Credit Union (Chattanooga, Tenn.), one of the credit unions in pilot with DX Online. “Our staff has enjoyed access to the numerous additional features, like card lock/unlock, and our members love it for its ease of use and the reassurance it provides that their information is safe and easily accessible.”

PSCU is also poised to incorporate digital issuance into its digital suite of offerings in 2020. The CUSO’s digital issuance will create seamless, uninterrupted payment experiences and enable cardholders to continue transacting digitally, even in the absence of their physical card.

“All of PSCU’s DX products – including DX Mobile, DX Online and digital issuance, among other tools – target digitally-enabled credit unions who need uninterrupted payments and reliable digital experiences for their members,” said Jeremiah Lotz, managing vice president, Digital Experience & Payment Products at PSCU. “Developed and curated over years of research and investment, our suite of digital solutions gives Owners access to the technology they need to serve and grow for the future, all while providing the experiences their members expect.”

All of the features delivered through the DX platform are available via PSCU’s extensive API offering, which powers nearly two billion transactions annually and gives credit unions the choice to create and manage their own digital experiences or leverage a hybrid model of experience design and hosting.

To learn more about PSCU’s digital offerings, visit pscu.com/digital-experience-products.

The post PSCU Furthers Commitment to Digital Experience through Advancements in Mobile and Online Card Management Tools appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Technology and Fraud: Consumer Concern Is Real.

Mobile apps & e-wallets use is largely dictated by income:

• There is a strong correlation between household income and installed banking apps & e-wallets
• 48% of households >$100K have a banking mobile app installed, vs. 33% <$100K
• PayPal & Venmo are the most ubiquitous: 41% of >$100K households vs. 35% of <$100K households
• Apple Pay has the greatest disparity among e-wallets: 27% of >$100K households vs. 15% of <$100K households
• 21% of households >$100K use an online only or digital bank’s app (12% <$100K).
• 40% of households <$100K use no mobile app for financial services
• 29% of households earning >$100K use no mobile app for financial services

About Report

Mercator Advisory Group’s most recent consumer survey report, Technology and Fraud: Consumer Concern Is Real, from the bi-annual North American PaymentsInsights series, takes an in-depth look at U.S. consumers’ current perspectives on technology and fraud.

This report explores how technology and fraud impact consumers lives and, in particular, the way they shop and pay for things. This includes detail on not only what they do but also how they feel about these two important consumer issues.

The post Mobile Apps & E-Wallets Use Is Largely Dictated by Income: appeared first on PaymentsJournal.

MX, the leading digital transformation platform for banks, credit unions, and fintechs, today announced new research findings on consumer spending trends and mobile banking adoption, amid increased economic uncertainty and anxiety over Covid-19. MX data shows that mobile banking engagement increased by more than 50 percent since December and the amount that consumers are putting toward paying off their credit cards decreased by more than 25 percent in the last two weeks, as consumers look to safeguard finances and increase emergency funds. 

“Americans are turning to mobile banking as a way to take control of their finances and plan for their economic future,” said Ryan Caldwell, founder and CEO of MX. “With increased consumer engagement across mobile banking applications, financial institutions have the responsibility to not only deliver a great user experience, but to also provide meaningful advice and guidance that’s critical to the financial well-being of customers, especially during times of economic uncertainty. It all starts with clean financial data.”

According to the American Payroll Association, more than 70 percent of Americans live paycheck to paycheck, and Bankrate’s Financial Security Index found that three in 10 Americans have no emergency savings. A MX survey of more than 1,000 U.S. consumers took a deeper look at consumer sentiment on savings and the key drivers behind why Americans exceed their monthly budgets. Survey results include:

• More than 70 percent of people say that it’s important to put money away for a rainy day or for unexpected expenses; however, fewer than half put away more than 10 percent of their monthly income
• More than 50 percent of Americans attribute going over their budget to monthly living expenses (e.g. mortgage, rent, utilities or auto loans), with 1 in 4 Amerians exceeding  their budget primarily on entertainment and luxury items.

Additionally, nearly 60 percent of people say that their primary financial institution doesn’t help them become financially stronger; however, this could change as financial institutions prioritize digital initiatives and serve up insights to customers. 

To view an infographic with this data along with steps consumers can take to improve their financial wellness, visit: [insert link].

About MX

MX is the leading digital transformation platform for banks, credit unions, fintechs and partners, built on the belief that transformational growth starts with making data easily accessible and actionable for financial institutions. Founded in 2010, MX is one of the fastest growing fintech innovators, powering more than 2,000 financial institutions and 43 of the top 50 digital banking providers to improve the financial lives of more than 30 million people. To learn more, visit www.mx.com. 

The post Economic Uncertainty Drives 50 Percent Increase in Mobile Banking, According to MX Findings appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Technology and Fraud: Consumer Concern Is Real.

What age groups own what type of smartphone?

• Predictably, Apple iPhones have a commanding lead among 18-34 yr olds: 58% use iPhone vs. 42% Android
• Generation X flips this dynamic: 38% of 35-54 year olds use iPhone vs. 56% use Android
• Android also takes the lead in 55+ yr olds: 28% use iPhone vs. 47% Android
• Ownership of smartphones is virtually universal, with the exception of those over 55 yrs old
• Only 75% of U.S. consumers 55+ years old own a smartphone
• Total smartphone ownership is over 87% of U.S. consumers
• 95% of U.S. consumers aged 18-34 own a smartphone

About Report

Mercator Advisory Group’s most recent consumer survey report, Technology and Fraud: Consumer Concern Is Real, from the bi-annual North American PaymentsInsights series, takes an in-depth look at U.S. consumers’ current perspectives on technology and fraud.

This report explores how technology and fraud impact consumers lives and, in particular, the way they shop and pay for things. This includes detail on not only what they do but also how they feel about these two important consumer issues.

The post What Age Groups Own What Type of Smartphone? appeared first on PaymentsJournal.

Mobile cybersecurity leader, Trustonic, today announces the successful implementation by KB Kookmin Bank (KB Bank) of Trustonic Application Protection (TAP™) to enable a simpler authentication experience for users of its KB Star Banking app. By combining TAP with its new digital authentication certificates, the bank is dramatically simplifying customers’ access to banking services and enabling them to authenticate higher value transfers in-app, without the need for cumbersome user authentication practices like security tokens.

The largest Korean bank by number of mobile users, KB Bank provides online and mobile banking services to over 10 million customers. Trustonic’s mobile application protection is enabling the bank to provide faster, simpler and more secure digital banking services by isolating authentication certificates in the hardware security of today’s smartphones. Since launching in summer 2019, the app has acquired 3 million active users, and adoption among KB Bank customers continues to grow rapidly.

Mr. Han, Senior Executive Vice President, Kookmin Bank commented: “In Korea, users need to install authentication certificates to use mobile banking services. This can be a complex and time-consuming process that often requires revalidation and multiple passwords. With our long-standing partner Trustonic, we are able to vastly improve the in-app user experience and allow our users to authorize much higher value transactions. Some security solutions make you choose between security, user experience and performance but with TAP there’s no compromise.”

Enhancing user experience & enabling high-value transactions with advanced security

Historically, public certificates need to be regularly renewed by the app user, which can be frustrating and time consuming. Now, because the new KB Mobile Certificates have the advanced in-app protection provided by TAP, they do not need to be renewed unless revoked by the customer or unused for one year. This significantly simplifies and enhances the user experience.

High-value in-app payments are now possible because of this advanced protection. KB Bank customers can transfer up to 2 million won (approx. $1,700 US) using their account password, and up to 50 million won (approx. $41,000 US) with a password and six-digit PIN. Amounts between 50 million won and 500 million won (approx. $413,000 US) can be verified by entering their password and PIN before receiving an additional authentication code via an automated phone call.

Improving in-app functionality through trust

The TAP in-app protection platform protects mobile applications by securing sensitive code, data and processes in a highly protected environment. The environment dynamically upgrades over the course of an app’s lifecycle to take advantage of the most advanced hardware and software security technologies available on smartphones. Banking, payment, acceptance and fintech app developers benefit as they can use the TAP SDK to build secure next-generation experiences.

Dion Price, CEO of Trustonic, says: “Korea’s certificate-based authentication infrastructure has historically limited the user experience for mobile banking apps. By making its banking app more seamless and secure with Trustonic’s unique combination of hardware and software in-app protection, KB Bank has vastly improved the user experience. This is a perfect example of how advanced security can enrich apps for end users, which is why TAP is being adopted to protect financial services across payments, banking, fintech and mPOS.” For more information about how TAP is enhancing both security and user experiences, visit the Trustonic website.          

The post Korea’s KB Bank Uses Trustonic In-App Protection to Enhance Mobile Banking Experience appeared first on PaymentsJournal.

“India’s Icici Bank has launched banking services on the popular messaging app WhatsApp, enabling customers to undertake a slew of financial transactions during the national lockdown.“

Retail customers can check their savings account balance, last three transactions, credit card limit, get details of pre-approved instant loan offers and block/unblock credit and debit cards. Additionally, they can also get details of the nearest three Icici Bank ATMs and branches in their vicinity.

“Anup Bagchi, executive director, Icici, states: ‘Our retail customers can execute a host of their banking requirements on their own, without visiting a branch. The services are instantaneous and secure. With the growing prominence of social media in every-day life, we believe that this would add immense convenience to our customers, as it allows them to bank while they are on social media.’”

Icici Bank pushed banking services to “Whatsapp” as an additional convenience to its customers with two strategies in mind. First, for consumers to obtain basic account information from the popular social media app “Whatsapp”, which has over 400 million users in India alone.

Second, to provide information to those who are dealing with the lockdowns due to the coronavirus and are not currently using its mobile app.  Icici Bank has a robust mobile app known as “iMobile” which is feature rich.

“The move follows the recent launch of IciciStack, a digital banking platform offering nearly 500 services covering the full gamut of banking requirement for personal and business customers. The platform incorporates digital onboarding and features a full suite of APIs and digital banking services covering accounts, payments, loans, investments and insurance”.

Icici Bank has 18.5 million customers, making it the second largest bank in India.

Overview by Sue Brown, Director, Prepaid Advisory service at Mercator Advisory Group

The post Facebook’s “WhatsApp” Offers Banking Services for Icici Bank in India appeared first on PaymentsJournal.

The impact of the COVID-19 pandemic has led many financial institutions to close branches, cut back on branch hours, and cut back on their customer servicing capabilities in general. While protecting employees and customers alike is a very valid reason for cutting back on services, it will have its ramifications.

Let’s start with the fundamental fact that there is an unprecedented amount of fear and uncertainty among consumers right now. Many customers across the nation are being told to stay at home, have lost their jobs, and are now being told that the way they have interacted with their financial institutions is no longer available.

Our research has shown that consumer trust in their primary financial institutions is very high. This trust, which for many has been cultivated over several years, is in jeopardy if consumers feel abandoned at this critical point in time. It is very naïve to think that someone with limited technical ability is going to easily make the transition to mobile banking, remote check deposit, and online bill pay. 

This is where the customer service group becomes critical.  Customer service representatives need to help the consumers who are willing to go digital get set up and walk them through the process.  These people will likely need much more hand-holding than the average customer. 

What about those that cannot or will not go digital? What are financial institutions going to do for these folks? Again, customer support teams will play a critical role in helping these individuals navigate the “system” in a way that enables them to conduct their business.

There is a bottom line impact to this for financial service companies.

We will come out of this crisis. When we do, financial services companies that helped their customers through this will win with a more loyal customer base.  Those who did not will lose customers. I can’t make it any simpler. It’s also important to consider the impact on the brand.  Lastly, it is just the right thing to do in these times.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Don’t Lose That Customer Focus appeared first on PaymentsJournal.

FinTech Breakthrough, an independent market intelligence organization that recognizes the top companies, technologies and products in the global FinTech market, today announced that Ondot Systems, the digital card services platform for credit and debit issuers, has been selected as winner of the “Best Overall FinTech Mobile App” award for their Ondot Card App.

Ondot’s Card App™ allows any issuer to provide a digital-first experience for its credit and debit cardholders in just a matter of weeks. Ondot already works with more than 4,500 issuers to provide mobile card controls and interactive alerts. With Card App, Ondot leverages its real-time payments infrastructure to deliver a complete card experience, including instant card signup, wallet provisioning, spending insights and easy self-service.

Card App’s features reflect what consumers say they most want, and include the following:

• Immediate card issuance: Apply for a card within the app and receive a digital card immediately.
• Mobile wallet integration: Add cards to a mobile wallet like Apple Pay and Google Pay with ease.
• Transaction clarity: See enriched transaction and merchant information – clean name, address, map, logo, contact, hours – no more cryptic descriptions.
• Self-Service at fingertips: Get to critical card operations instantly – report lost, set travel, initiate dispute, etc.
• Safety controls: Be safe, feel safe – turn a card on or off, limit the geographic area where a card will work, control ATM and online transactions, set limits, get instant notifications of purchases, etc.
• Spend insights: Help customers spend smarter by showing spend trends, manage card-on-file and recurring merchants, and monitor credit wellness and spending health.

At the same time as tech companies are entering payments, focused on ease of use, Ondot is the first company to create a purpose-built app designed around the most common interaction customers have with their bank – payments. Rather than merely adding features to existing banking apps, Ondot’s Card App creates better user experiences in both everyday interactions and critical moments, such as when a card is lost.

“Payments are at the center of the disruption happening in the financial services and banking world, and we are seeing a tremendous uptick in consumer interest looking for a better experience with their credit and debit card usage,” said James Johnson, Managing Director, FinTech Breakthrough. “Ondot’s recently launched Card App is the first purpose-built app designed around how people actually use their credit and debit cards, giving them unparalleled control over when, where, and how their cards are used. This transformation of the card experience makes Card App a compelling choice for our ‘Best Overall FinTech Mobile App’ award in the 2020 FinTech Breakthrough Awards program.”

The FinTech Breakthrough Awards is the premier awards program founded to recognize the FinTech innovators, leaders and visionaries from around the world in a range of categories, including Banking, Personal Finance, Lending, Payments, Investments, RegTech, InsurTech and many more. The 2020 FinTech Breakthrough Award program attracted more than 3,750 nominations from across the globe.

“We created Card App to deliver the control that customers need and the convenience they want,” said Vaduvur Bharghavan, CEO, Ondot. “With tech giants moving into payments and large banks investing billions in digital capabilities, this is a critical time where customer expectations are changing rapidly. Card App provides a rapid and powerful way for issuers of all sizes to respond. We are extremely proud to receive this 2020 FinTech Breakthrough Award for our hard work and dedication in reinventing the credit card experience.”

The post Ondot Systems Wins 2020 FinTech Breakthrough Award appeared first on PaymentsJournal.

Payments are humming across a variety of rails to countless businesses and consumers at any given moment in the U.S. With so many available payment methods, end users, and use cases, the payments landscape can be a tangled web of rules and regulations.

It also can be a challenge for industry stakeholders to navigate the often complicated payments world, prompting calls for a simplified and automated process for exchanging payment-related information. Financial institutions of all sizes and specialties, as well as payment processors, emerging fintechs, and many others would benefit from such a process.

With a large cross-section of the payments world in need of a solution, Nacha has responded with Phixius, an online platform that brings together technology, rules, and participants to streamline and modernize how payment information is exchanged. Nacha plans to make Phixius available to early adopter organizations in May 2020.

To learn more about Phixius, PaymentsJournal sat down with George Throckmorton, Nacha’s managing director of Strategic Initiatives & Network Development.

During the conversation, Throckmorton spoke about the current issues with exchanging payment information, how Phixius addresses these pain points, and why Nacha is well positioned to lead these modernization efforts.

A solution to a problem 10 years in the making

The payments industry has contended with an inefficient means of exchanging payment-related information for at least a decade. Yet, the problems do not lie in “making” the payments.

“It’s not just about the routing of payments. I think that’s a misconception,” said Throckmorton. “When we talk about payment-related information, it’s about the authenticity and richness of that information.” Bundled into the authenticity of the data is a range of important aspects of making a payment, including invoicing, compliance data, and payment remittance.

One central issue connecting all of these aspects is a lack of automation. “When payment information is exchanged today, it’s very manually intensive,” said Throckmorton. Companies often rely on phone calls, emails, and even the U.S. Postal Service to exchange the relevant information. These methods are slow, prone to human error, and costly.

The lack of standardization is another problem that organizations encounter while attempting to exchange payment information. “How I get that information, the formatting, and which channel it comes in also add complexity to the process,” explained Throckmorton.

A related issue is also the lack of interoperability. Over the past decade, different players in the industry have set up proprietary directories that are very effective in supporting the exchange of payment-related data. However, these directories often do not connect with each other.

“So if I want to exchange information with others that are not in my particular network or solution, that’s where it becomes more difficult,” said Throckmorton. Small to medium-sized organizations are particularly affected by interoperability issues because they often can’t participate in multiple networks or solutions.

The last issue identified by Throckmorton was fraud protection. Ensuring that the information is reliable and accurate is of crucial importance for all of the parties to a transaction. One common fraud vector is to send a business a request to change information to later defraud the business. To validate that the request is indeed authentic, companies often rely on manual checks, such as a phone call or email, to verify the user’s identity.

Phixius solves pain points by utilizing emerging technologies, rules, and industry participants

After surveying all of these problems, Nacha began developing a solution. The company hired technology partner Ernst & Young LLP (EY) to help develop a product that could be brought to market. In 2019, Nacha developed and demonstrated a proof of concept to the industry, and after reviewing and incorporating industry feedback, Nacha developed Phixius.

“It’s a platform for the secure exchange of payment-related information,” said Throckmorton.

He stressed that Phixius is not a directory. Instead it is platform to enable interoperability that utilizes emerging technologies – including distributed ledger, RESTful APIs, and cloud-based environments – to allow its users to more easily and securely exchange information without centralizing data.

Phixius also supports real-time alerts and messaging, allowing payment information to be securely changed.  For example, a business can change payment instructions and every organization that has previously received information will immediately be notified of the change, said Throckmorton, noting this reduces fraud such as business email compromise. 

“There is no directory or database in the sky that everyone is going to, and creating risk,” said Throckmorton.

Phixius also supports real-time alerts and messaging, allowing payment information to be securely changed when needed. For example, “people can change bank accounts and they can change their preferences on what they want for remittance,” said Throckmorton, noting that these changes can occur in real time.

Underlying Phixius’ effectiveness is a set of participant rules. “We all have to agree that we’re going to act the same way, we understand the transactions we’re going to exchange, and what those mean,” explained Throckmorton. To this end, Nacha developed and now oversees a set of operating rules that govern the platform, covering issues ranging from liabilities to warranties. These rules provide confidence and certainty to everyone connected to the platform.

The last aspect of Phixius worth noting is its network of participants. Social media platforms become more effective when more people are a part of the network, and Phixius is no exception.

However, the platform is designed such that only financial institutions and service providers are directly connected. In turn, these businesses provide products and services to their clients, meaning that Phixius “requires a smaller number of endpoints to create value for all the businesses,” noted Throckmorton.

Why Nacha?

After determining the viability of Phixius as a solution to problems surrounding the exchange of payment-related information, Nacha did consider whether it was best suited to develop and govern such a platform.

The feedback Nacha received from the industry was a resounding yes. Besides serving as the steward of the ACH Network and being responsible for writing its rules, Nacha also has decades of experience successfully navigating broader payments issues.

Nacha regularly convenes diverse organizations to enhance and enable electronic payments and financial data exchange within the U.S. and around the globe. Through the development of rules, standards, governance, education, advocacy and thought leadership, Nacha works with industry stakeholders to advance the modern ACH Network and drive innovation by pursuing new ways to connect people, businesses and payments.

“Nacha also has been heavily involved in industry-wide API standardization efforts with organizations around the globe, including those in Europe and in Asia Pacific and with support from the industry launched Afinis, a membership organization whose goal is to further API standardization in the U.S. and participate in global collaboration.” explained Throckmorton.

Afinis is a membership organization with the singular goal of creating API standard products. For the past two years, Afinis has been successfully working with the industry to develop and test APIs and understand what steps are needed for their widespread adoption.

Throckmorton put it simply: “We have brought the industry together many, many times.” With Phixius, Nacha is planning on bringing the industry together yet again to modernize and provide much needed interoperability for payment information exchange.”

The post With Phixius, Nacha Sets Its Sights on Modernizing and Streamlining the Payments Process appeared first on PaymentsJournal.

Mobile apps are gaining significant traction, and banks tap into this ever-more common trend to drive tangible business benefits.

Yet, connecting clients with mobile technology is not enough. If you want to convert your app into the go-to mobile banking solution, enhance it with cutting-edge functionality that would correspond to the most burning needs of your clients.

Product marketing

Mobile banking coupled with beacon technology can be instrumental in reimagining how to innovate, operate, and engage with clients. Intelligent customer location tracking empowers you to deliver relevant product promotions and coupons when clients are near a branch or an ATM.

Besides, a thorough customer activity analysis both online and offline will allow you to not only personalize your digital location-based offers but also tailor in-person communication in branches.

Another way you can leverage beacon technology to drive customer engagement and increase sales is to deliver welcome messages with a summary of your banking services and short educational videos. For effective post retargeting, send location-based alerts asking clients to rate your services and leave reviews right after visiting the branch or ATM.

Don’t underestimate the power of cross-selling. Analyze client purchases and collaborate with relevant retail and online brands to provide personalized product recommendations right on their mobile screens.

Digitized maps

One more way to deliver an outstanding client experience at a fraction of the cost is to enhance your mobile banking app with a GPS-enabled list of all branches and ATMs available in the region the client stays at the moment, whether it’s a neighboring city or an overseas country.

To raise the ante, introduce in-app AR navigation toward a particular branch as well as present information about the needed facility in the form of smart 3D displays. Easily guide your clients by showing the names of the streets and buildings, pedestrian pace, distance covered, and other related information. Offer voice instructions to give your app users an extra layer of comfort.

If you already have cross-selling partnerships, capitalize on AR to guide customers toward the nearest shop and show how it looks like from inside and outside.

Advanced personal finance management

A big leap toward a truly cashless society, cutting-edge personal finance management can significantly increase user engagement.

For your mobile banking app to succeed in this niche, it should boast sophisticated functionality like recurring payment and purchase automation, intelligent receipt categorization, and bill scanning. Help your clients understand where their money is going through financial calculators with smart alerts on exceeding spending limits.

Take it up a notch with AI-powered features to foster sound financial habits. Introduce intelligent robo-advisors able to forecast card spending, smartly plan budget, devise sophisticated strategies on debt pay-offs, and more.

Also, accommodate users with seamless peer-to-peer transactions, single-touch donations, and easy-to-use loans, saving them the need to visit physical banks.

Any challenges so far?

Mobile apps can be a real breakthrough for your bank. But besides providing user-engaging functionality, pay particular attention to issues like ease of use, security, performance, scalability, and smooth third-party integrations.

Also, regularly collect and analyze user feedback to find all possible client service gaps and close them by continuously improving your app.

The post How to Leverage Mobile Banking to Boost Client Satisfaction appeared first on PaymentsJournal.

This article from TechRadar understates how rapidly payments are moving to the cloud and the role of data in driving that transition. It also incorrectly positions Google, Apple, Facebook and Amazon as key payment suppliers driving the transition.

Each one of these tech companies has a key role to play in payments but primarily around infrastructure. When it comes to making payments broadly available and invisible, the key players are cloud based payment platforms, like i2c, Galileo, Marqeta and others who can only function because of almost invisible, innovative banks that are the regulated entities. 

So these cloud-based payment providers help merchant service providers figure out how to utilize data to automate service delivery in a fashion that increasingly makes payments invisible. As more data becomes available from more devices through IoT, more and more payment transactions will become totally automated because people can’t deal with that much data; our machines will increasingly make decisions on our behalf.

Here’s more from the TechRadar article:

“A typical city dweller might now travel to work in an Uber, buy a coffee using the Starbucks app, use Apple Pay to buy lunch and after-work drinks and then prepare a meal with ingredients delivered through a subscription service. Their payment card never needs to leave their pocket for credit card processing.

These ‘frictionless’ experiences are what consumers of most ages and economic groups have come expect, and they’re becoming a key differentiator for those brands that have been able to move with the times and offer seamless digital payment.

Clouds on the horizon

The ongoing evolution in payment technology is big business, and the major tech players – Google, Apple, Facebook and Amazon – are starting to push the traditional banks out of the process. For any consumer-facing business wishing to offer customers a more seamless purchase experience, there’s a good chance one or more of these entities will actually be the ones delivering it.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Payments Are Quickly Moving to the Cloud appeared first on PaymentsJournal.

As we move into 2020, a date which replaced the year 2000 in many science-fiction writers’ quivers, it is worth looking at what kind of change we can expect as their ‘future’ becomes our ‘present’. While it is difficult trying to predict the future, it is also worth remembering that new things are seldom dreamed up and invented on the fly – there is usually a long development road first. Therefore, while this road is certainly becoming shorter, if we consider where we have come from and where we are now, we can begin to infer certain key trends for the near future.

In the e-commerce sector, from both a shopping and a payment point of view, the use of mobile phones for these purposes is only going to go from strength to strength. After all, mobile shopping is already being widely embraced, as it essentially means users have a virtual shopping mall in their pocket.

Mobile devices are unique in that they operate well within the e-commerce model yet work equally well in a brick and mortar retail environment. The use of a phone as a means of making a payment at the till is mostly fuelled by the convenience factor it offers. After all, people often lose wallets, but they take much greater care of their mobiles, as their lives revolve around these devices.

Naturally, as we head further outside the metros, we see less use of this technology, but thanks to the use of QR codes and Near Field Communications (NFC) – what is called ‘tap and go’ technology – consumers in these areas are now becoming more comfortable with this technology. This is partly influenced by the fact that holiday makers have headed into these areas, the demand for it has grown, along with its acceptance.

In fact, the financial services sector and the payments industry need to continue working together to drive this forward. Remember that the retail experience today is driven by the consumer, and these organisations must be prepared to accept whatever payment method the customer wants to use, while at the same time assuring the retailer that they will be paid.

Another trend that will become more visible this year is what we refer to as hyper-personalisation. This is when fintechs are able to leverage the huge amounts of available data related to a consumer, in order to drive insights to help businesses to gain a better understanding of their customers. As more and more data becomes available – from areas like social media, financial transactions and even browser history – this will be coupled to artificial intelligence (AI) and analytics to enable a personalised customer engagement that delivers them real time information.

A classic example is a consumer who fills up at a petrol station. The AI can determine from previous purchases that the consumer loves coffee and can inform them of the specials available at the garage’s own coffee shop. Previously associated mostly with online shopping, 2020 should see this trend entering the omni-channel space.

The Internet of Things (IoT), of course, goes together with the collaboration between fintechs, the banks and the payment facilitators. Together this creates a more powerful entity, as it significantly increases the amount of data that can be leveraged to improve the consumer experience.

Of course, no insight into future trends would be complete without mentioning Blockchain which, although it’s been around for some time, should grow significantly in 2020. We will witness an increasing number of organisations playing around with the technology and learning about it, as from a regulatory viewpoint, there is much interest in what it can offer.

Blockchain is ideal for the delivery of smart contracts, digital payments and even identity management, making it immensely powerful in combating fraud and the efficient use of Blockchain will be at the forefront of creating a far more secure transaction process. Thus, we will see increasing implementations, of this and as it gains momentum, it will move away from being something spoken of in hushed tones – as if it is something only a Bond villain would use – and into the mainstream.

In 2020 retailers will continue to expand the convenient payment services in-store, as an increasing number of common layers are forged between retailers and the financial sector in respect of consumers. Something like airtime, after all, can today be purchased at a retailer, but also via a banking application. This is a service common to both, that is simply offered through different channels.

It is this commonality that is driving the growing collaboration between these entities; a way to ensure the rich layer of experience continues to exist for customers, wherever they are. We are now at the point where there is a focus on making it easier for the consumer to transact, combined with an understanding that the customer is common to both sides. Of course, the leaders here will then be the businesses that are able to distinguish themselves via the richness of their approach and the delivery of an exceptional customer experience.

The post 2020: A Year of Change in the Payment and Financial Sectors appeared first on PaymentsJournal.

As technology evolves, the banking industry changes forever. Mobile transfers, e-bill payments, and online deposits are already the norm. The increased demand for digital banking services has caused a wide adoption of many revolutionary technologies, such as artificial intelligence and machine learning. As the industry changes, it becomes especially important to keep up with the latest trends so that you won’t lag behind your competitors.

Digital Banking: What It Is?

Digital banking is a term that refers to high levels of digitalization of different banking processes, from front-end to back-end. Artificial intelligence enables digital banks to automate numerous tasks associated with processing data, as well as administrative tasks. As a result, employees face less pressure in dealing with repetitive and time-consuming tasks.

The main advantage of digital banks is that they allow users to make deposits remotely. Besides, digital banking allows for personalization of money management services and enables users to easily apply for loans. There are many tech-oriented startups that offer online banking. However, traditional banking institutions also don’t lag behind and offer various online services, such as account transfers and bill payment.

Online banking preceded the next step in the evolution of banks — mobile banking. Mobile banking is even more convenient, as users can do all the necessary operations on their smartphones. Today, legacy banks realize that online services are a necessity, while digital-only banks don’t need any physical location to provide customer support. Millennials and Generation Z want to be able to make transfers and manage their accounts from anywhere, at any time. Therefore, digital banking will continue to evolve.

Main Trends in Digital Banking

1. Data utilization
   Data insights enable banks to better understand the needs and preferences of their customers. Now banks don’t need to limit themselves to simple risk-based, demographic, and product ownership profiles. They can access psychographic and lifestyle data, purchase data, geo-location data, and insights on channel preferences and social media use. Advanced analytics allows banks to use data insights to determine not only purchase preferences but also the expected timing of need.
   
   Data insights also allow companies to personalize communication with their audience. Obviously, the personalized approach can increase the effectiveness of marketing efforts significantly. However, personalization requires you to not only know your customers but also to speak their language. Therefore, international banking systems can also benefit from professional localization services like The Word Point.
   
2. Collaboration
   Effective strategic partnerships have never been so valuable. Given that the banking industry changes at a rapid pace, it becomes very difficult for any organization to work on improvement alone. Building partnerships, banks can extend their platforms and products into new markets, speak to new customer segments, and expand.
   
   The most important thing about partnerships is flexibility. To adjust to changes in the market, companies need to collaborate without renegotiating their relationships. Collaboration allows for seamless integration with the already existing products and systems. Partnering with each other, solution providers can ensure effective integration with credit unions and banks, minimizing the external and internal friction.
   
   For example, JP Morgan Chase partners with Roostify to provide digital mortgage services and collaborates with online lender OnDeck to provide small businesses with quick loans.
   
3. Platform economy
   A platform is a new business model that follows the plug-and-play principle. On a platform, multiple consumers and producers can connect, interact, and exchange value. The retail industry has the biggest number of platforms (50), and the financial services industry has 26 organizations with platforms.
   
   Platforms offer services and products from different companies, aiming to satisfy the needs of a wide range of consumers. Unfortunately, many financial institutions are still not ready to offer effective platform solutions, which can be a big problem in the future.
   
   The thing is that platforms can help organizations access huge volumes of data and take their personalization efforts to the next level. In addition, access to this data can improve the overall efficiency of financial companies. However, many organizations are not ready to adopt cloud solutions. Besides, data sharing introduces numerous challenges associated with security.
   
4. Financial health
   Financial health becomes the main priority for banks. During the last 70 years, the main competitive advantages in this industry had been the price, convenience, and location. Modern consumers prefer to make well-informed decisions, and their main goal is to improve their overall financial health. As a result, banks that help their clients improve their financial performance win the competition.

According to statistics, about 30% of American and European households note that they don’t have enough money for retirement or have no savings at all. Perhaps, one of the main reasons for such statistics is that people spend more time planning their holidays than their finances. Therefore, they want banks to help them. The popularity of automated wealth managers continues to grow. These apps use artificial intelligence to calculate the best interest rates, loan providers, and investment opportunities.

Final Thoughts

Digital banking is not a new thing anymore. The financial industry has once again changed because of the development of technologies and new standards of customer service. Modern people want flexibility so they are looking for a chance to manage their finances and to make transactions with no need to visit a bank.

Many traditional banks have already introduced their mobile applications or online banking services. At the same time, fully digital financial services appear here and there, making digital banking mainstream. We hope that our list of the latest trends in digital banking will help your organization set the right priorities, providing the best customer experience possible.

The post Latest Trends In Digital Banking: A Must Read For New-Age Customers appeared first on PaymentsJournal.

Is traditional retail banking facing a “death by a thousand knives?”  Today’s installment of this ever-present question looks at online-only or, as some say challenger banks. In this space names like Ally, BankMobile and Chime come to mind. 

A recent posting by research and polling firm YouGov takes a look at the online-only banking ecosystem from the consumers’ perspective. In the post, Can tech companies and mobile-only banks win over banking customers?, the authors cite a recent survey YouGov conducted that shows fairly high awareness of online-only banks among consumers. Actual usage of these services, however, still has room for improvement.

Looking at eight of the top mobile-only banks (according to Forbes), new YouGov data finds that about 62 percent of consumers are aware of at least one mobile-only bank and nearly one in five (22%) have used one before. An additional 13 percent say they are extremely likely to use a mobile-only bank in the next year.

When they asked consumers about the drawbacks to these types of banks, consumers were most often likely to cite security (27%) and privacy (25%) as the top two barriers to joining. A similar proportion said they see no barriers.

How can these banks make more inroads or, to flip it around, what may keep them from gaining more traction? If you think about it, for many people, their banking life wouldn’t be much different with an online bank than it is with their current banking institution. As our research shows, most consumers are already using their computer and/or mobile phone for banking.

This chart begs the question; if people are already banking digitally, wouldn’t a digital bank be a no brainer?

I’m not breaking any new ground here when I bring up some of the challenges (I couldn’t bring myself to use the word “headwinds) the challenger banks have in front of them. Here are a few:

• Trust – Trust is more than just security and privacy. It is a warm, fuzzy feeling of confidence that the place where you keep your money is reliable, safe, well intended, etc.  Even those people who don’t trust banks in general, trust their own bank.
• Inertia – We all know that inertia is a big deal in banking. It takes a lot to get a consumer to switch to another bank. 
• Comfort in the availability of branches – Our research shows than even Millennials and Gen-Z consumers still value having a branch to go to.
• Traditional Banks – Don’t think the traditional banks are going to sit on the sidelines and not get into this part of the retail banking world. Many have, and it is a safe bet that many more will follow.

Like so many of these fast approaching new ways for consumers to handle their money, there is no way to tell where challenger banks will fit into the larger financial services world. On paper they make a lot of sense. That said, consumers don’t always read the same papers we do.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post And in This Corner… The Challenger Bank appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Credit Cards: Still the Card of Choice.

Usage doubled for online lenders in 2019:

• In 2018, 10% of consumers used an online lending organization; In 2019, 18% of consumers did
• No single lender accounted for the increase and no single lender was used by more than 6% of consumers
• Consumers between the ages of 18-34 accounted for 67% of usage
• Men are more likely to use a non-bank lender, 23% of male consumers received a loan in 2019 & 13% of women
• 29% of consumers who received a non-bank loan earned over $100K a year
• 43% of men cite “lower interest rates” as a reason to use an online lender, only 27% of women do so
• Men found online lenders more appealing than women across every option in the study

About this report

Despite continued pressure from digital payment products, particularly person-to-person (P2P) applications like Zelle and Venmo that are used to pay back other individuals or to send a gift electronically, ATMs remain a fixture in the banking market. On the horizon is the growing threat of contactless cards, predicted to grow rapidly in the next two years, replacing small dollar purchases at the point-of-sale. A new research report from Mercator Advisory Group titled 2019 ATM Benchmark Market Report explores consumers’ trends in ATM use and other market developments.

“It may surprise some readers how strong the use of ATMs for cash withdrawals and other transactions activities continues to be in the face of digital payments. Consumer data supports the finding that individuals who have adopted newer payment technologies still rely on cash and ATMs for their day-to-day transactions. Despite the importance of ATMs, many financial institutions are handing over the operation of their ATM fleets to third parties to achieve reduced and more predictable maintenance expenses. As management and sometimes ownership of ATMs changes hands, the independent operators will be setting the tone and industry direction for ATMs,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.

This research report has 16 pages and 8 exhibits.

Companies mentioned in this report include: Avidia Bank, Bank of America, BMO Harris Bank, Cardtronics, Chase Bank, Fifth Third Bank, GasBuddy, McDonald’s, Payment Alliance International, PNC Bank, Salem Five Bank, and Wells Fargo Bank.

The post Usage Doubled for Online Lenders in 2019: appeared first on PaymentsJournal.

Today’s post is on a brief release in PaymentsSource about a Turkish bank Garanti BBVA, the second largest bank in Turkey with about $85 billion in assets (which is roughly the size of BBVA USA). The bank has extended the use of its mobile bank app to business customers (Garanti BBVA Corporate Mobile), with specific reference to the QR code-based payments capability. 

‘Garanti BBVA is turning to QR codes in an attempt to speed up and simplify business transactions…Money transfers through the code are designed to occur in seconds, and can be shared with any individual or company through the Garanti BBVA Corporate Mobile app. The money transfers can be made without entering an IBAN number.’

We have written a bit about QR code payments—including a recent Viewpoint in our Credit Advisory Service—which have gained generally wide adoption in various global markets (most notably in India and China). The U.S. market has not utilized the technology to any noticeable degree, although some adoption is occurring for tourist preferences.

The referenced announcement suggests that Garanti BBVA client companies can adopt the payment capabilities, which can then be used to pay for business expenses (or receive payments) where available and as necessary. We assume this is mostly a small business play, since larger corporate will typically utilize centrally billed commercial credit (or debit) cards to manage travel and office expenses. The news release also indicates that the transportation system in Istanbul accepts refills to their travel card from the mobile app as well, which certainly provides utility.

“At Garanti BBVA, we continue to implement innovations to make our customers’ lives easier,” Didem Dincer Baser, the bank’s executive vice president, said in a Thursday press release. “Consumer customers have been able to use QR codes for cash withdrawals, deposits and transfers, and we have now rolled this functionality out to corporate clients.”

There has been generally limited adoption (or demand) for commercial mobile payment capabilities, although certain markets have more robust use of ‘tap and go’ capabilities. We expect this to change during the next couple of years, and QR codes look like they will be part of that trend.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Second Largest Bank in Turkey Turns to QR Codes to Improve Business Transactions appeared first on PaymentsJournal.

A recently published report from a Brookings study found the number of workers in the U.S. who earn a median hourly wage of less than $11.00 and make only $18,000 annually encompasses approximately 53 million individuals.  And now during the holiday months, workers are looking not just at meeting current bills, but also funding gifts for friends and family.  Budgeting becomes critical at this point. Where do budgeting apps come in?

An article in BankRate takes a look at financial planning tools from banks and credit unions that will deny transactions when consumers reach the limit of their gift giving budget:

Banks and credit unions across the country are letting customers use their apps to set spending limits on their debit and credit cards. If their customers try to exceed the number they set, their transactions will get denied — before spending more than what’s in the account or hitting a credit card’s limit.

Some bank apps also let customers tailor their card preferences more granularly so that customers can, say, make a rule to not let them make transactions online or in certain geographies. While these features are designed to get in front of fraud, they have other uses — budgeting, included.

“Use [the app] not just to monitor fraud or to control fraud but also use it to control spending on yourself,” says Carrie Sumlin, executive director of online and mobile banking at Ally Bank, which offers a card control app that integrates with the main bank app. “We’ve kind of said it’s really to help you save you from yourself.”

Fintech companies, not just banks, are also in the business of helping consumers to keep their spending in check.  This is getting to be a bit of a crowded market. Fintechs are offering apps that collect data from primary financial accounts and provide spend tracking, budget setting, and forced savings.  Mercator Advisory Group recently published a report on that topic here.

This corner of the financial services industry became a bit controversial this week when it became known that banks, including PNC, are blocking access to third party fintechs to retrieve this kind of critical data in order to protect the information from being used fraudulently and also to suggest that consumers use the financial institutions’ solutions instead.  Several articles appeared on that topic, including this one in the Wall Street Journal.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Crazy Mixed-Up World of Bank Budgeting Apps appeared first on PaymentsJournal.

After disrupting industries ranging from ecommerce to advertising, big tech appears to be setting its sights on the financial industry. In August, Apple partnered with Goldman Sachs to roll out the Apple Card, a shiny titanium credit card designed to be used primarily with Apple Pay in a mobile ecosystem.

Then Google announced that it was teaming up with banks and credit unions to offer checking accounts to consumers beginning in 2020. With these moves, it is clear that big tech is increasingly focusing on the payments industry.

To learn more about Google’s announcement and what it means for traditional players in the payments space, PaymentsJournal sat down with Prasanna Narayan, Head of Product at Ondot Systems, a leading mobile payment service provider.

Joining us in the conversation was Sarah Grotta, director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.

During the conversation, Narayan and Grotta discussed the details of Google’s announcement, what big tech can bring to payments, and what this means for the traditional players in the payments space.

Google’s announcement: Hardly surprising, hardly any details

In November, the Wall Street Journal broke the news that Google, the global tech behemoth, was the latest tech giant to enter the finance space. Beginning in 2020, Google will be offering checking accounts in partnership with Citigroup and Stanford Federal Credit Union.

“I can’t say that bankers or those in the payments industry were particularly surprised [by the announcement],” said Grotta. In recent years, many tech companies have moved into payments.

Similar to Apple’s approach of offering the service through its branded mobile wallet, Google’s checking accounts will be available through the Google Pay wallet. Other than that, Grotta pointed out that Google’s announcement is lacking in specifics.

Due to the lack of details, analysts can only speculate about what this announcement means for the payments industry and Google’s long-term strategy for approaching the field.

It might be just an opportunity to provide an account to go along with its peer-to-peer G Pay services, said Grotta. This would allow Google to offer something that’s similar to the P2P solutions offered by Venmo or Square.

However, she said this could also signal Google’s long-term intention of becoming a challenger bank.

One interesting aspect of Google’s announcement is that it put the partnerships with Citigroup and Stanford Federal Credit Union front and center. “I think it might be signaling to regulators that the financial institutions are going to be really involved, most likely on the compliance side,” said Grotta.

Another point of interest is that Google doesn’t need to make money on these checking accounts. “Google can offer all sorts of free products and lose money on them if it wants to on a product basis,” explained Grotta. This is because offering the accounts would provide Google with a lot of customer data.

Big tech and the payments industry

As previously mentioned, Google’s announcement comes at a time when many tech companies are entering the payments space or are in the process of doing so. Facebook recently rolled out Facebook Pay, which provides a consistent payment experience across Facebook, Instagram, WhatsApp, and Messenger.

The tech company also made waves when it announced it was working on a Libra, a cryptocurrency project pulling together many of the world’s payment players (some of which have since dropped out).

Amazon was rumored to be in discussions with Chase to offer checking accounts and debit cards, but those apparently ended without a deal. Despite this, Narayan pointed out that Amazon has already partnered with Visa to release a co-branded credit card.

He also highlighted how Uber and Lyft have dabbled in offering financial services. Uber launched a debit card based checking account for drivers to be able to push money quickly.

What all these instances of big tech offering payment products show is that expedience and convenience are becoming more mainstream, alongside trust and security, said Narayan. “So existing players, the banks, have to balance that in how they appeal to today’s consumer and avoid being pushed to the sideline.”

The threat big tech poses to FIs

The fundamental threat posed to FIs by big tech is that brands such as Facebook, Apple, and Google are phenomenal at creating consumer facing technology that’s seamless and convenient. In contrast, the banking industry has faced much criticism for clunky mobile apps that often frustrate users.

“Tech companies have gone above and beyond to think about how consumers’ lifestyle is today and how consumers function,” said Narayan. Since many people now spend a considerable amount of time in mobile environments, these tech companies have focused on offering amazing mobile experiences.

As a result, tech companies have created products that enable consumers to save time, get things done, and gain access to needed information, all in an intuitive and seamless way.

“If you apply that to financial management, that’s what the financial institutions have to do to keep an eye on if they are reaching their consumers in the same way,” said Narayan.

Smaller institutions, in particular, need to focus on improving the services they offer customers. Narayan recommended that FIs offer digital products designed to easily empower consumers to complete a variety of financial activities. Whether it be opening an account, signing up for a card, or creating a digital wallet, these experiences should be quick and easy.

Financial institutions don’t need to create these mobile apps from scratch. Companies such as Ondot offer white label solutions, allowing FIs to offer the best tech solutions under their own branding.

The post Unpacking Big Tech’s Foray into Financial Services appeared first on PaymentsJournal.

Mobile banking is one of the most convenient ways to bank today. You can deposit checks, transfer funds, and even pay bills all from your mobile device. And now, with digital-only banks, you can do all of your banking without ever having to step foot inside a brick-and-mortar bank. How can debit rewards add value?

Digital-only banks are financial institutions that operate entirely online. That means there are no physical branches or ATMs. Instead, all of your banking is done through a mobile app or website.

One of the biggest advantages of a digital-only bank is that it’s available 24/7. Whether you need to check your balance at 3 am or transfer funds on a Sunday afternoon, you can do it all from your mobile device. Plus, since there are no physical locations, digital-only banks often have lower fees than traditional banks.

Challenger Bank N26 offers Debit Rewards

N26 is a successful digital-only bank with a simple, elegant, and free banking app that has amassed 3.5 million customers in Europe.  It launched a similar solution this year in the U.S. through their banking partner, Axos Bank.    

N26 is starting small, with a fee-free checking account and debit card.  It recently announced the addition of debit rewards to entice customers to spend more with their N26 card:

Some of the newly announced perks will be available for a limited time only, as told by the company via a statement.

“These new Perks enable our customers to receive benefits and discounts when booking travel, trying new experiences and products, or simply using the products they love every day. This is just one way we aim to help make our customers’ money work for them,” Nicolas Kopp, CEO of N26 Inc commented.

N26 offers various services to empower its customers such as receiving a salary up to two days in advance, offering Spaces i.e. sub-accounts that allow users to organize and achieve their financial goals. Users can also make free cash withdrawals and get two free out-of-network ATM withdrawals per month nationwide.

N26 GmbH is a mobile banking platform that was founded in 2013. It is focused on reinventing the banking experience for a digital lifestyle. Since the initial product launch in 2015, it has reached more than 3.5 million customers in 25 markets in Europe. It has raised more than $670 million from various investors across the globe

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post A Different Kind of Debit Reward from Challenger Bank N26 appeared first on PaymentsJournal.

First Apple revolutionized the personal computer industry with the iMac. Then Apple redefined the cellphone industry with the release of the iPhone. Now, Apple has set its sight on the payments industry.

The tech giant released its first credit card—the Apple Card—on August 20, with Goldman Sachs as the issuing bank. The card was designed to be primarily used with Apple Pay on Apple devices, but the tech giant did release a flashy titanium physical card.

While many companies have released their own credit cards, Apple’s approach has drawn much buzz due to the card’s lack of fees, quick onboarding process, and sleek mobile app experience. For its part, Apple marketed the card with the line “Created by Apple—not a bank,” signifying how it’s seeking to disrupt the banking landscape.

To better understand what the Apple Card brings to the payments space, and how issuers should respond, PaymentsJournal sat down with Bharghavan Vaduvur, CEO of OnDot, and Aaron McPherson, VP of Research Operations at Mercator Advisory Group.

Vaduvur and McPherson discuss the importance of the Apple Card’s emphasis on a mobile app, the potential impact on small banks, and how issuers can stay competitive against the global tech giant.

It’s not just a store card for Apple Music or the App Store

One of Apple’s defining characteristics is its focus on the customer experience. Now the company is applying this to the payments industry.

“This is really the first time a tech giant that anchors its entire existence on understanding the consumer experience is getting into a payment card issuer space,” said Vaduvur. Because of this, Vaduvur believes that Apple’s foray into payments is a big deal.

It has the potential to redefine how customers interact with their payment cards, he said, regardless of how much of a market share Apple eventually commands.

McPherson identified specific ways in which the card is changing the relationship between cardholder and card. First, the application process for getting the card is seamless and quick. Second, the card is issued instantaneously and goes straight into the digital wallet. This means that within minutes, a customer can get approved for the card and start using it right away.

The other notable aspect of the Apple Card is the mobile-first orientation. McPherson pointed out that users only get 1% rewards when they use the physical titanium card, whereas the rewards are 2% or higher if they use it as a tap and go transaction or the “Buy with Apple Pay” button on e-commerce sites.

However, McPherson did point out some weaknesses of the card. When customers make a purchase, they get a percentage of the purchase back in what’s called Daily Cash. However, McPherson noted that this Daily Cash largely stays within Apple’s ecosystem because transferring it to a bank is a cumbersome process.

You can really only use Daily Cash seamlessly within the App Store, in in-app purchases, or for iTunes transactions, he said. Moreover, the best rewards come when you buy Apple products, or use the card with one of the company’s merchant partners, such as Uber. Therefore, in some ways, the Apple Card functions as a store card of sorts for Apple.

He also noted that while the Apple Card app does have nice spend analysis tools, it currently doesn’t allow users to export the data, making it hard for users to use the analytic tools of their choosing.

Vaduvur said that while this may be the case, it’s largely irrelevant since most people are perfectly content with Apple’s default spend analysis tools. What’s more important is the overall user experience, and in this regard, Apple is nailing it. The Apple Card is more than just a store card, it’s changing mobile wallets in general.

The Apple Card is putting pressure on the banking industry to respond

From Vaduvur’s perspective, the Apple Card has established the new normal.

For too long, the banking industry has struggled to understand typical consumer behavior and cater towards it, said Vaduvur. But Apple’s approach puts the consumer experience front and center.

It begins right away as Apple has made acquisition spectacularly simple. It’s never been easier for a user to get approved for a card and start using it right away. And once approved, the mobile experience is sleek and intuitive, reflecting Apple’s consumer-focused approach to product design.

In contrast, many financial institutions have clunky mobile apps that are so packed with features that consumers often struggle to use them.

As an example, said Vaduvur, if you lose your card, and you want to turn it off, you might have navigate through a web of features and screens before you can do so. This is because banks simply haven’t thought enough about convenience and clarity when designing feature functionality.

“Issuers have to respond,” said Vaduvur. He said banks both large and small are threatened, but smaller banks may feel more pressure. For example, nobody is going to stop using their Bank of America card tomorrow, he said, but smaller banks may be displaced by Apple unless they’re proactive.         

McPherson agreed, saying that “smaller financial institutions are pressured to match the mobile experiences and online experiences provided by the large issuers.” However, smaller institutions have an advantage in that their development and decision making times are typically much shorter, enabling them to innovate faster than larger banks.

How to compete with the Apple Card

Both McPherson and Vaduvur were optimistic about traditional issuer’s chances.

One immediate point that’s worth considering is that Apple has a minority market share in the United States, and even less traction across the world. “All of this stuff doesn’t work on Android,” said McPherson. He explained that if you’re an issuer, you want a solution that works on both Android and iOS operating systems.

In addition, Apple’s approach to its user-friendly card app can be easily replicated. “Apple’s marketing message is great, but I think issuers who’ve traditionally not thought of themselves as being designer gurus can now actually innovate and create,” said Vaduvur.

This is because it’s much easier for “fin to add tech than for tech to add fin,” he explained. People already trust banks with their money and banks now just have to design better banking applications.

Financial institutions need to focus on improving their mobile apps, making them straight-forward and easy to use. They also need to put the consumer front in center.

For example, one feature that banks should offer is that when a consumer’s card is declined, the bank can, if the consumer is eligible, push them an offer for overdraft protections in real-time via the card app. Functionality like this turns a negative consumer experience into a positive one, and builds customer loyalty to the issuer.

Another area to improve is in cleaning up transaction data. Too often, consumers will get confused by the transaction information they’re presented with. For instance, if you make a purchase at a vending machine, it may appear on the bill as a purchase made at a random company, in a random state.

One of the appeals of the Apple Card is that they present the user with cleaned up data that avoids issues like this. Not only will the consumer be happier, the issuer will save money as the number of chargebacks and customer service calls decrease. 

Many fintechs, including OnDot, can partner with FIs to aid in offering functionality like this in FIs’ card apps.  

“We’ve launched Card App, which is a product that provides Apple Card-like capabilities to financial institutions, on top of existing payment,” said Vaduvur.

By using products such as Card App, Vaduvur believes that FIs can not only emulate Apple but actually leap-frog the tech giant.

The post Hey Issuers, Big Tech Is Coming. Here’s How to Compete appeared first on PaymentsJournal.

The realization of the “Internet of Things” is part of a natural progression of technological advancement, affecting all industries, increasing visibility, improving process flows, and, most importantly, automating actions. According to an article published in Forbes India, one of the ways in which IoT is disrupting banking is:

“Today, in the IoT-driven digital banking space, customer onboarding and KYC processes have become faster. As more and more devices acquire digital interfaces, customers can now access their bank accounts from any ‘thing’ and ‘anywhere’ through a device with a digital-enabled interface.”

While accessing a bank account from any ‘thing’ or internet connected device has its advantages, the key defining factor behind IoT is the ability to automate actions, especially when it comes to payments:

We have already started to see the use of connected devices and wearables in the banking space—for example, payments through smartwatches”

Payment through a smartwatch or contactless card loaded into a mobile device has its benefits, but it is not leveraging the full potential of an IoT device. The difference between scanning a card in your wallet and scanning the same card with your smartwatch is marginal.

However, once that IoT device loaded with a payment method is making an automated transaction based on the analysis of gathered data, the difference is significant. Today, the simplest example of an IoT Payment is a smart-printer ink transaction. A connected printer monitors the level of ink inside, and once a low-ink level is detected, the device places an order for new ink. Just like automated driving systems or automated manufacturing robots are changing their respective industries, in the same way IoT Payments will grow to change the payments industry.

Overview by David Nelyubin, Research Analysts at Mercator Advisory Group

The post Can IoT Payments Disrupt the Payments Process? appeared first on PaymentsJournal.

Today’s post covers a CNBC article detailing Uber’s recent announcement regarding payments:

Ride-hailing giant Uber is making a deeper push into financial services.

The company announced on Monday the formation of a new division called Uber Money to house its efforts, which include a digital wallet and upgraded debit and credit cards. The emphasis, at first, will be expanding Uber’s efforts to give its 4 million-plus drivers and couriers around the world access to a mobile bank account so they can get paid after each ride, according to Peter Hazlehurst, who will head the new division.

“We wanted to help everybody understand that there’s a new part of Uber that’s focused on financial services and that has a mission of giving people access to the type of financial services they were excluded from,” Hazlehurst said in a phone interview.

Uber’s foray in to the financial services market is very interesting as the company has several elements going for it. Uber has already dealt with some of the key consideration for financial service adoption, having established name recognition and trust with its drivers and riders.

Under pressure to turn a profit amid competition from new ride-sharing entrants around the world, Uber is betting that by building out its financial ecosystem, it can keep drivers and riders loyal to its platform. The company topped 100 million monthly active users this year. Many of them use credit cards to pay for rides and food orders. Future products could remove costs related to financial middlemen or generate new revenue streams.

In June, CNBC was first to report that Uber was ramping up the creation of financial products by hiring engineers for a fintech outpost in New York.

Uber is rolling out globally a debit card with an enhanced “instant pay” service it has been testing in the U.S. and a few other markets. The feature has taken off in the U.S, with more than 70% of driver payments made using instant pay, according to Hazlehurst. It is essentially a no-fee banking account, with the debit card in the U.S. linked to an account provided by Green Dot.

“Not only do you get access to your earnings in real time, it doesn’t cost you anything to keep the money there and you can spend it whenever you want to,” Hazlehurst said.

Instant pay is a perfect complement to the card offering if you are an Uber driver. Often “gig workers,” like those who drive for Uber, need access to their earnings as quickly as possible in order to pay their bills and maintain their desired standard of living.

With this feature being offered at no charge, there should be no concerns that the offering is usurious and that Uber is taking advantage of their unique position. This is because some “gig workers” are considered to be financially underserved.

These payment innovations highlight the reality that many in the gig economy are struggling to make ends meet. Another popular feature, no-cost $100 overdrafts, helps cash-strapped drivers pay for gas to kick off a working day. It is, however, a better alternative than high-interest payday loans.

Uber’s ambitions could bring drivers into the realm of digital finance in parts of the world where cash is still king, like Pakistan and Bangladesh. About 40% of all Uber trips globally are paid using paper currency, Hazlehurst said, and Uber is eager to bring that figure down.

After equipping drivers with electronic bank accounts — echoing the model of so-called challenger banks like Chime and Varo — would Uber one day look to provide its many millions of riders with an account, too?

…

Uber’s move is the latest sign that tech giants are looking to make inroads into finance. Apple recently launched a credit card with Goldman Sachs, and Amazon has been offering small business loans to its merchants for years. Facebook unveiled an ambitious plan this year to help remake global finance with its libra cryptocurrency, although that effort lost momentum after some corporate partners abandoned the project.

Among new products Uber was set to unveil at a payments conference in Las Vegas was a digital wallet called Uber Wallet that riders and drivers can use to store dollars, track their transaction history and make electronic payments. Apple Pay and Google Pay will be integrated with the service early next year so drivers can immediately spend their earnings, even without a physical debit card, Hazlehurst said.

The ability to manage funds is also a strong attractor. After all, Uber drivers have to have a smartphone. It’s only natural to launch this enhancement which also makes it easier for drivers by providing an alternative form factor.

Uber recently surveyed U.S. drivers about whether they’d be interested in taking small loans from the company, Hazlehurst said, confirming a report from Recode. It’s too early to say if they’ll do that in the U.S., but in several countries including Brazil, India and Peru, Uber already offers micro loans to drivers, he said.

For riders, Uber’s credit card, a joint product with Barclays, will be reintroduced with richer rewards for payments within Uber’s transportation and food delivery services.

As for offering credit cards … I understand the need for both the drivers and for Uber’s long term financial success. For me this is a bit of a wait and see. Bad decisions on credit card offerings or offering credit with easy terms to persons who are somewhat financially challenged can be a bad recipe.

Overview by Sue Brown, Director, Prepaid Advisory service at Mercator Advisory Group

The post Uber Is in a Unique Position, as a Challenger Bank appeared first on PaymentsJournal.

Mobile banking technology is the use of digitalization to provide customers with banking services via mobile platforms.

Some benefits of mobile banking include its accessibility, specifically allowing consumers to conduct banking activities on their own time through the convenience of their mobile phone or device. This also allows consumers to obtain access to information about their banking account when they need it. The use of automated processes provides customers with more resources available to answer questions they have about banking in an efficient and easy manner that meets varying preferences due to its flexibility.

Studies show that digital banking is projected to be used by an increasing amount of the U.S. and world population over the coming years. This is up from its already high usage amount from millennials in the U.S. due to the security, personalization, and accessibility it offers. Many banks are adopting solutions to meet this demand.

As digital banking technology continues to develop in popularity and expand with the latest digital banking technology trends, here are some mobile banking future trends to look out for in 2020.

Top Mobile Banking Trends Coming in 2020

1. Voice Activated Commands for Banking Services

Voice recognition and voice-activated commands are already prevalent in society with the use of smart technology. This has transitioned over to the banking sector. For example, customers can use voice recognition as another means for two-factor authentication, thus offering another means of securely accessing their accounts.

Additionally, with the use of voice commands already used by customers, it is natural for many consumers to feel comfortable and easily understand how this can be used with their banking services.

Some banks have begun to apply this a bit further and allow customers to quickly use only their voice to conduct banking activities such as report a lost card or fraudulent transaction or to make a transfer of money.

2. Automated Assistance and Smart Bots for Better Customer Service

Automated assistance provides customers with access to answers for many banking questions. It also is done at a speed that representatives could not feasibly provide to all the bank’s customers. This allows some customers to get the answers they need quickly while saving resources provided by live representatives for the customers that need further information or have more complicated banking questions that automated assistance may not be yet equipped to answer.

This trend has developed and continues to do so with many websites and mobile platforms, including banking. It is not uncommon to first have an automated assistance attempt to provide customers with the answer or information they need. If unable to do so, then the customer can be transferred to a live agent.

As automated intelligence develops in sophistication, this trend will likely become more prevalent in how customers do banking. Smart bots are being adopted by more banks and taught to give customers the personalization they desire in an efficient manner.

3. Accessibility Regardless of Location to Banking

Through mobile banking softwares, geographical barriers are no longer as limiting for customers to conduct banking for themselves, as well as reach other areas of the world. This helps customers with activities such as selling products online, transferring money to family or friends overseas, and accessing their banking account while traveling. Another example that is emerging is the use of ATMs that do not require the customer to use a card. This allows customers to truly access their banking account when they want or need to do so.

4. Innovative Banking Apps

Through the increasing use of innovative banking apps by both traditional banks and more digitalized focused banks, there are more options for customers to conduct banking on their own time through the convenience of mobile devices. This gives customers greater flexibility and makes it easier for your customers to conduct banking transactions when they need to, instead of waiting for standard banking hours.

This provides customers with the freedom to do banking activities on their own time. Mobile banking apps also allows customers to save time by eliminating the need to travel to a physical banking branch or wait on the phone for a live representative.

Another benefit featured among some banking apps are methods to pay down debts. Given the ease of utilizing an app to help pay off outstanding amounts due, this will make it easier for customers to quickly pay off bills and loans. Also, some apps offer customers a way to easily save up small amounts at a time. Both features allow customers to better secure a brighter financial future and handle their current financial situation to meet their immediate needs.

More mobile banking apps will continue to develop in 2020 and banks will add additional features to keep up with the competition in the new way that many customers do their banking.

5. Mobile Fintech in Banking

Mobile Fintech allows customers to utilize technology and software to perform financial transactions. As such, mobile Fintech has become a key feature of the mobile banking trends that continue to develop and will be as mobile banking continues to grow in popularity.

Incorporating the use of technology with financial transactions allows customers to make transactions on the go, such as paying bills or sending money to a friend, and also provides a means for stopping transactions. The latter can help customers quickly stop potential fraud or rectify a mistaken transaction. These transactions are also easy to view on mobile applications since customers can have real-time access to their bank account and recent transactions made on it.

6. Easy Access to Information and Bank Account Status

With both automated intelligence and the use of chatbots as well as the ability to view banking information in real-time to pay bills or make investments, the convenience of mobile banking allows customers to handle their finances in a way to best suits them. As customers gravitate towards convenient solutions to handle everyday tasks and want to keep the personalization that many services offer today, this trend is sure to continue in the banking industry.

This also allows customers to easily view their current bank account status to better manage financial position.

7. Accessible Bill Payments

Through mobile banking, customers now have more options to streamline how they pay bills. They can do so through autopay or easily send money regardless of the time it is. Banks also can offer automated breakdowns that help the customers understand the types of expenses in which they are spending their money.

8. Easier Investing Tools

With mobile banking technology expanding, so too has the accessibility of many customers to engage in investment transactions. More platforms have developed over the recent years that seek to provide more people with the information and resources they need to begin learning how to invest and save for the future. Also, these platforms offer benefits to customers experienced in investing.

Banks will need to facilitate this to keep up with this growing trend and provide their customers with a financial feature that continues to grow in popularity.

9. Card-Free Transactions

Mobile banking solutions offer card-less transactions through peer-to-peer payment exchanges such as PayPal and Venmo to card-free ATM transactions. This provides the convenience and accessibility to access and transfer money when customers need to with only a mobile device. This convenience makes banking simple and easy, without much planning.

10. Transfer Money Overseas and Engage in Global Transactions

The latest digital banking trends can also facilitate the ease of converting different currencies. This provides customers more assurance when transacting in different currencies, and as such, greater confidence to engage in a wider array of banking transactions across the globe.

Final Thoughts

banking software development has already changed how consumers do banking. This will continue to grow in prevalence in the future as more technology is introduced and the benefits are accessible to more people and for more types of banking activities. As such, it is important for banks to keep up with the developing digital banking technology trends.

Author Bio

Jaideep Sharma joined Chetu Inc. in 2011 as Technical Project Manager. He moved up to become the Director of Operations in 2015. His primary responsibilities are to lead and manage technical teams that create custom banking software solutions. Jaideep comes with a high level of experience in banking technologies including Fintech , Blockchain & many others. He currently works for Chetu’s headquarters in Plantation, Florida.

The post The Top Mobile Banking Trends For 2020 appeared first on PaymentsJournal.

Valorus, the technology company that helps enterprise-level organizations expand their brand into financial services, launched today to deliver a white label fintech solution designed to drive new recurring revenues, reduce customer churn, decrease merchant processing fees and streamline money management processes such as employee payments and more. Valorus helps companies better monetize their customer base by offering a strong, safe, and secure fintech solution that can be implemented quickly and without the requirement for internal R&D resources.

The Valorus announcement was made today at the Money 20/20 conference in Las Vegas, the world’s biggest event covering payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology.

Designed for large retailers, hospitality companies, service providers such as wireless MVNOs, HR/payroll, labor platforms and more, the Valorus white label fintech solution enables employers to more cost efficiently make payments and other transactions and even offer microloans to their customers in real time and around the world.  Valorus’ feature-rich mobile wallet and debit card can be private labeled by any brand with modules available to reduce merchant processing fees and even manage alternative currencies.  The solution also significantly reduces the costs for end users moving money to family and friends worldwide as well as for companies sending and receiving payments from customers and suppliers.  With Valorus, companies can generate new recurring revenue streams, averaging $3-$5 per user per month, provide a better deal on financial services their customers already use, drive greater brand loyalty and create additional in-person and online traffic.

“Valorus has been designed to give companies a strong competitive edge by removing the complexities and hurdles of offering extremely secure financial services to their customer base,” said Paris Holt, CEO of Valorus Technologies.  “Brands can now round out their portfolio offering with financial services that are tested and proven, as well as offer a complementary set of functionality and value-adds that no other product offers today.”

Additional Valorus features include:

• Merchant Payment Processing: Enable secure purchases and receive payments in real-time with no bad debt exposure. Reduce credit card processing costs and increase the speed and security of transactions.
• Multi-currency support: Convert to any currency, including alternative currencies, via a simple interface.
• Free money transfers: Customers can move money from their mobile wallet to other users’ accounts around the world in real-time and at no cost.
• Free bulk transactions: Move money to and from any mobile wallet or debit card, including for corporate payroll.
• Unprecedented security: Enjoy peace of mind with block-chain, third-party authentication and Valorus’ artificial intelligence-based security platform.
• Micro-loans: Provide customers or employees with short-term financial assistance and issue micro loans directly to the customer’s mobile wallet.
• Micropayments & commissioning: Make it easy to process and distribute payments to customers, agents and consultants fast and with no transaction costs.
• Nextgen payroll processing: Streamline systems and reduce transaction costs while enabling employees to receive funds instantaneously.
• Cross-platform access: Available on iOS and Android phones, watches and tablets.
• Customizable: The entire platform integrates with a customizable suite of applications for mobile, wearables, points of sale, member services and customer communications.
• Additional value-added services.  Offer customers embedded value-added services, such as wireless services, music streaming, wellness services and more.

Valorus can be seen at Money 20/20 Conference at booth #3835.  To schedule a demo or get more information, go to www.valorus.com.

About Valorus

Valorus is a joint venture between Carnegie Technologies, an umbrella company incubating and delivering innovative products and services and creating new markets in the technology landscape, including Fintech, IoT, Satellite, Communications, Mobile Entertainment, Music Streaming and more; and Unified Signal, which first developed a powerful mobile wallet and virtual bank for the United States Department of Defense to military specifications for data and has since served more than 2 million other customers and has enabled more than 150 brands to launch a variety of offerings over the past 20 years.   The Valorus white-label fintech solution provides companies with an enterprise-grade fintech platform that is secure, cost-efficient and easy to use. The suite is interoperable with virtually all global payment platforms via the Valorus MCN (Mobile Clearinghouse Network), making it a highly cost effective option for consumers looking to manage their money online.

The post White Label Fintech Arrives as Valorus Debuts to Deliver the Most Robust Branded Enterprise-Grade Fintech to MVNOs, Retailers and Labor Platforms appeared first on PaymentsJournal.

You’ve probably heard that consumers love having choices. However, what’s lesser known is that too many choices can be overwhelming. This is especially true when it comes to mobile banking applications.

For years, financial institutions have been cramming more and more features into their mobile bank offerings. Instead of this translating into higher consumer satisfaction, the reverse has happened.

In the past year, consumer satisfaction in their mobile banking apps has declined by 15% because “consumers were challenged in completely understanding all features,” according to a survey from J.D. Power.

To understand the issues plaguing banking apps, and what the solution is, PaymentsJournal sat down with Rachna Ahlawat, co-founder and executive vice president of Ondot systems, a leading mobile payment service provider. Joining us in the conversation was Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

App bloat: how we got here

To help explain the problems with mobile banking apps today, Ahlawat began the conversation by going back to the beginning.

About 10 to 12 years ago, when mobile banking apps were first coming to market, financial institutions designed them as a continuation of the services offered online. And since the services offered online were akin to those offered in the physical bank, mobile apps became jam packed with features.

Ondot’s research indicates that there are about 52 features on a mobile banking app.

“That’s just too much,” said Ahlawat. “The problem here is mobile banking is a consumer app, but it’s designed like a branch in a bank.”

This is what gave rise to app bloat—an app so packed with features that users struggle to use it.

She contrasted the bloat in banking apps with more consumer-friendly apps such as Uber. With Uber, hailing a ride is easy and intuitive. Within a few clicks, the user can get the service they want.

But with banking apps, this is often not the case. The user will try to use a feature, grow frustrated when it proves challenging to understand, and call the bank for assistance. Because of this, mobile banking apps have failed to accomplish what the original goal was: reducing the amount of calls coming into call centers.

So banks end up having the extra expense of creating and supporting mobile applications, while not reducing their call center costs, “which is what they had initially hoped to achieve,” said Ahlawat.

Sloane agreed, noting that each consumer uses the app to accomplish a specific goal. Whether it’s making a deposit, doing a money transfer between accounts, or any other banking activity, “getting them to that solution quickly is obviously critical,” he said.

Since mobile bank apps have largely failed to fully satisfy customer needs, an opportunity arose for big technology companies to move in. Google and Apple rolled out card apps, which are user-friendly applications that enable users to better control their card through the app.

Instead of trying to create one app that does everything, the tech giants had realized it’s better to create multiple apps that do one thing exceptionally well.

With a card app, users can track the purchases made with their card, use the app to make purchases, receive alerts about any suspicious purchases, and utilize a variety of other features tied to the card.

Ahlawat explained that in order to compete with the big tech companies entering the space, banks should break banking features out into separate apps, rather than keep them all crammed together in one place.

App factories enable smaller banks to stay competitive

Armed with vast funds, major banks and large tech companies can funnel millions of dollars into designing mobile apps. For mid-tier to small-tier institutions, keeping up with this digital arms race can be challenging.

With this in mind, Ondot created a white label solution to ensure “issuers of all sizes could be able to go through this digital transformation,” said Ahlawat.

Banks don’t need to hire hundreds of engineers to design the app, or convince their mobile banking provider to adopt features and then wait for them to be implemented.

“We have done the heavy lifting of ensuring that card is front and center in this app,” said Ahlawat. Ondot provides the institution with the mold of an app—a factory app, so to speak—that the company can then add their branding to and take to the app store for certification.

Within a few weeks, the institution will have their own branded card app brimming with easy-to-use features related to card use.

Crucially, the factory app is designed with a solid user experience in mind. For example, turning on and off your card is only two clicks away, Ahlawat explained. And users can get real-time notifications about their card usage. If the card is declined for insufficient funds, for instance, the user will be alerted, and if eligible, they can receive an offer for overdraft protections.

The emphasis on an intuitive user interface and practical features is central to what makes this approach so successful. The major tech companies weren’t successful simply because of their massive budgets. Rather, companies such as Apple realized that ease of use should be the main focus of creating a banking app.

“We are a company that believes in creating consumer products that, of course, ultimately make our lives easier,” said Ahlawat.

An app for everybody

In its approach to designing the app, Ondot strove to meet the needs of everybody. Surveys show that all generations prefer to use digital tools for banking, said Ahlawat.

This being said, she noted that millennials in particular desire an easy mobile experience. “They prefer something that gives them the immediate sort of confirmation, and they like to use of technology to improve their lifestyle,” she said.

Sloane agreed, adding that the more active the app can be in helping the consumer complete their goals easily, the more likely it is that the consumer will keep doing business with that financial institution.

The post How to Stop App Bloat: Ondot’s Approach to Mobile Banking appeared first on PaymentsJournal.

Mexico’s Cobro Digital (CoDi) launches on October 1, affecting credit cards, debit cards, and non-cash payments, in a overhaul of non-cash payments intended to expand financial inclusion to this country’s 129 million people. The effort centers on financial inclusion for the country. Just 38% of adults in Mexico have a bank account, according to a 2017 World Bank survey, half the rate of other countries with similar per capita income.

As BNAmericas reports, CoDi is a state-owned version of WeChat Pay, for everything from hospital bills to metro rides.

• Speaking in March ahead of the CoDi pilot programs, Mexican President Andrés Manuel López Obrador (AMLO) hailed the platform as a critical cooperative effort between the private and public sectors to boost lagging growth in financial inclusion and reduce fees associated with traditional POS terminals and credit/debit cards.
• But nagging concerns exist both with security issues that continue to dog the nation’s interbank electronic payment system (SPEI) and a lack of visible promotion with only days to go before the launch.

The security issue is a tough one. In a recent report on the LatAm market, titled Credit Cards in Latin America and the Caribbean: Financial Inclusion with Risks and Opportunities, Mercator cited data from Visa which indicated that 14.3% of online orders were rejected due to fraud suspicion. Even with the high reject rate, Mexico experiences a 2% chargeback rate, more than double the U.S. and the highest in Latin America.

We think there should be a flag on the field and that implementation should be delayed until many of the quirks are worked out. In fact, many banks are not ready for liftoff.

The article continues:

• In a pre-launch report, the central bank indicates that 33 of Mexico’s 51 regulated private sector banks are already CoDi ready, with many of the largest banks already months into pilot programs and in-house tests.
• Among those banks that still face significant shortfalls are development banks Banjército and Bienestar (formally social development bank Bansefi).
• The latter in particular plays a central role in the social benefits programs introduced by AMLO. For example, debit cards distributed by Bienestar – designed to cut out the “middle man” and potentially corrupt third parties – are the only means for many to receive certain new federal benefits, including public pension stipends for the elderly.
• However, Eduardo Zamora, director of cybersecurity consulting firm Fortinet, sees CoDi as opening a window of vulnerability, despite banks’ best efforts to protect users.
• Mexico, he added, is seeing more cyberattacks than any country in Latin America with annual growth in attacks in double digits.
• “[CoDi represents] a critical point where banks have to protect themselves much more with evolutionary technologies,” he added.

The reporter in the BNA article indicates that he is not seeing local ad campaigns to engage new consumers.

• This reporter, who lives within the boundaries of the test program, spent hours on September 14 moving through fresh markets and downtown thoroughfares dedicated to commerce without seeing any sign suggesting CoDi was in use.

Just two months ago, Credit card acceptance in Mexico came to a halt in August 2019 as Reuters reported:

• Several of Mexico’s largest banks reported on Saturday that they were experiencing problems processing debit and credit card payments while some shops in the capital informed customers that they would only accept cash payments.
• Banorte, HSBC, and Santander all said on their Twitter accounts that the problem was with the company that was processing card payments and that they were working on finding a solution.

And, as Reuters reported, the Mexican Finance Ministry was nowhere to respond. Mexico News ferreted an answer and found:

• A data center malfunction left bank customers across Mexico unable to make purchases and withdraw cash with their credit and debit cards for several hours on Saturday.
• Prosa, an electronic transaction services firm that processes card payments for several banks, said an electrical fault at its data center in Santa Fe, Mexico City, caused the widespread failure of payment terminals and ATMs.
• Bank customers were also unable to make online purchases using credit and debit cards.

I’d say hold off the launch. Pull together the many banks that are not ready to function. Publicize CoDi with the same vigor markets talked about PIN Day and EMV. And as to security, batten down the hatches so the startup is smooth.

Payment systems rely on irrefutability, integrity, and confidence. A false start can set this financial inclusion project back a decade. We root for Mexico, but this financial inclusion product needs to come up right, the first time.

…We will be back next week with an update.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Cobro Digital in Mexico: (Not) Everyone is Ready, but Here It Comes appeared first on PaymentsJournal.

QR codes brought credit card and debit card payments to large, promising markets such as China, India, and Mexico through retailers such as Alipay, WeChat Pay, Paytm, and Mercado Libre. The acceptance model is now being offered to markets previously considered too weak or too unbanked.

The Daily Star (Bangladesh) reports on Visa’s move to include the country of Bangladesh in QR acceptance.

The World Bank indicates 0% penetration of credit cards and only 6% debit card usage in this country. In progressive, emerging markets, debit card usage is closer to 30%, and credit card usage is at least in single digits, indicating at least some progress in financial inclusion.

The country has a labor force of 67 million, drawn from a population of 160 million with a 4.4% unemployment rate. With 25% of the population below the poverty line, and a per capita income of only $4,200, the CIA Factbook indicates that the country experiences high levels of poverty. But, with 92% of the country using mobile devices, there is the promise for long term development.

Enter Visa.

The Daily Star reports:

• Visa yesterday announced that it would launch an interoperable quick response (QR) payment system in Bangladesh within the next one and a half months as part of efforts to expand its business.
• Paying for goods will no longer need point of sale (POS) terminals at shops or other places, TR Ramachandran, country manager for Visa India and South Asia, said at a press conference at InterContinental Dhaka.
• Clients will have to just use mobile banking apps linked to their debit, credit and prepaid cards to scan QR codes displayed by merchants, he said.
• Visa, one of the global leaders in digital payments technology, is working with various banks and partners across the country to enhance the acceptance of digital payments, Ramachandran said.
• Ramachandran also thanked Bangladesh Bank for recently drawing up relevant guidelines for the payment system, which the central bank is terming Bangla QR.

Mercator Advisory Group’s research in QR codes finds that there are three triggering points for this payment form to take effect: The involvement of the Central Bank; the presence of retailers driving towards digital engagement; the interest of a payment network to help accelerate the movement.  Visa’s investment in this relatively developing country, albeit the eighth-largest country in the world, is another indication that QR codes are bringing payments to the world.

This is a far departure from George Harrison’s 1971 Outcry, and now the first step towards financial inclusion.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post With Bangladesh on Visa’s Target List, Credit Card QR Codes Are Here, There, and Everywhere appeared first on PaymentsJournal.

Financial institutions today are challenged with meeting consumers’ high expectations for fast and convenient digital banking processes, while also needing to mitigate fraud and comply with increasingly stringent regulatory requirements. Consumers want to do more of their banking through digital channels. A 2018 survey of more than 5,000 consumers showed that 69 percent want to be able to conduct their entire financial lifecycle – from account opening to taking out personal loans – entirely  through online and mobile channels. Yet, too often today, new customers are still sent out of the digital channel and forced to visit a branch location in order to complete the account opening process.  A move that injects additional friction into the process and increases customer frustration.

That’s because even in today’s increasingly digital era, banks are struggling to fully digitize the account opening and onboarding process. In order to prevent application fraud and comply with strict know your customer (KYC) and anti-money laundering (AML) regulations, financial institutions must positively verify their customers’ identities, which has traditionally been difficult to do in digital channels. Last year, it was estimated that banks alone were to exceed $31 billion in global fraud loss.

In a climate where fraud, identity theft and data breaches dominate headlines, consumers need to be on high alert. Digital identity verification is a key technology to not only enable the end-to-end digital banking services that consumers desire, but also to maintain trust between financial institutions and their customers. A process that onboards new customers faster, lowers operational costs, and ultimately improves the consumer’s digital banking experience.

The Need for New Identity Verification Methods

Traditionally, financial institutions have relied on a combination of knowledge-based authentication (KBA) questions and static personally identifiable information (PII) in order to verify consumers’ identities in digital channels. However, in the wake of large-scale data breaches in recent years that exposed the PII of millions of consumers, these methods are no longer effective. Fraudsters and cybercriminals use the vast troves of exposed consumer data available on underground markets – including birth dates, addresses, social security numbers and more – to create synthetic identities or open fraudulent new accounts under legitimate consumers’ names.

As a result, financial institutions must look to new approaches for verifying consumer identities in digital channels. A number of new technologies and trends, from the proliferation of smartphones to the emergence of advanced analytics and machine learning, now make it possible for financial institutions to automate and secure consumers during the digital account opening process.

Identity Document Verification

Thanks to the prevalence of smartphones today, financial institutions can now leverage consumers’ mobile devices for verifying the authenticity of their identity documents. Using their smartphone camera, new applicants can snap a picture of their driver’s license, passport or other identity document and upload it directly to the financial institution. Advanced artificial intelligence (AI) and machine learning algorithms look for embedded security markings that are invisible to the naked eye, to verify that the documents are authentic and unaltered.

E-signatures: Enhancing Customer Experience and Compliance

Signatures are a traditional form of verifying identity, but manually “wet” signing documents can be a time-consuming process, that can involve visiting a branch, or printing, scanning and posting documents, all of which carry a higher chance of human error. The pain-points associated with manual signatures become even greater if an agreement spans geographical regions. Given this, banks are increasingly adopting e-signature solutions as a more seamless and secure, e-signing experience that allows the bank to acquire new customers quicker and offer a higher quality service, no matter their location.

E-signatures also help banks remain compliant with GDPR and other regulations by capturing a customer’s digitally signed document supported by a comprehensive visual audit trail detailing what the customer has agreed to, when and how they signed.

While many banks have already adopted basic e-signature abilities, the technology alone is not enough to completely automate the new accounting opening process while reducing fraudulent enrollments. For example, manual identity document verification checks or introducing paper agreements, are both ways in which banks end up with a semi-automated or siloed process, which increases application abandonment rates and application fraud while negatively impacting the overall customer experience.

Biometrics

Financial institutions can also leverage consumers’ smartphones for biometric authentication methods including fingerprints, facial recognition with liveness detection and even iris scanning. For example, banks can request that the consumer snap a selfie to submit at the same time they submit the digital copy of their ID. Automated facial comparison technology with liveness detection can verify that the person in the selfie is real and is the same person pictured on the identity document. When combined with biometric identifiers such as fingerprints and iris recognition, financial institutions have a powerful tool for quickly verifying new customers’ identities to a high degree of certainty.

Risk-Based Analytics, Real-Time Account Checks and Transaction Monitoring

Banks can combine the identity verification methods described above with advanced risk analytics, real-time account checks and transaction monitoring to achieve context-aware identity verification. This combination of technologies allows financial institutions to aggregate an array of real-time information from several different data sources and digital channels to make immediate decisions that assess the total risk associated with the new customer. These data sources can include third-party partner risk data, recent transactions and real-time account checks at other institutions, as well as risk analysis based on the user behavior, biometrics, location, device integrity and more. Real-time analysis of this data helps provide a comprehensive and contextual picture of the applicant that can complement other identity verification checks in order to help the financial institution reduce the risk of fraud in the new account opening process.

 Multi-factor Authentication

With the technologies described above, financial institutions can establish strong identity assurance in digital channels through multi-factor authentication. Rather than simply relying on something the applicant knows (such as KBA or PII) to prove their identity, banks can leverage mobile device data along with biometric or behavioral risk indicators for a multi-layered security approach that takes into account something the applicant has and something they are, in order to apply the precise level of security, at the right time, thereby helping to mitigate the financial institution’s exposure to fraud.

Ultimately, digital banking is predicated on trust. Consumers must be able to trust that financial institutions will protect their sensitive data and PII through strong security measures. Combined with a positive digital account opening experience, banks must be able to trust that new applicants are who they say they are. With new digital identity verification technologies, financial institutions can finally effectively verify new customers’ identities in mobile and online channels, without compromising security or impeding the digital customer journey. By enabling a convenient and secure digital account opening processes, banks can meet the expectations of today’s digital consumer and re-establish trust, while fighting fraud, reducing abandonment rates and meeting regulatory compliance.

The post Digital Account Opening: Enabling Greater Trust Between Financial Institutions and Customers appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s viewpoint – Payments for Work in the U.S. Gig Economy.

When a gig worker asks for early pay, how much $ do they need?

• “Early pay” is known alternatively as “pay on demand” and “daily pay”
• The fee to process this payment is either carried by the digital platform provider or the worker
• The best case scenario for employer and employee is if the platform provider funds the program and employer pays transaction fees
• However, multiple alternative schemes exist including employer funded and workers carrying fees
• Traditional financial institutions have overlooked wages earned in the gig economy
• Challenger banks have emerged focused on the gig economy for financing loans, credit cards, and merchant services

About the Viewpoint

The gig economy encompasses a growing percentage of the U.S. population and shows no sign of retreating.

From the casual “side hustle” to freelance work that represents a worker’s sole source of income, the gig economy is presenting some interesting challenges and opportunities for banking and payment providers.

The post When a Gig Worker Asks for Early Pay, How Much $ Do They Need? appeared first on PaymentsJournal.

This article identifies the next move by Apple to lock banks out of its market by restricting access to core features on Apple devices. This “walled garden” approach to market penetration has helped Apple lock out competitors and generate greater profit.

While the article focuses on the banking features that Apple will make available through its relationship with Goldman Sachs, the real news is that Apple has added identity to its walled garden. Apple has enabled the Goldman Sachs onboarding process by utilizing Apple’s control of the user’s identity:

“This quick strike comes through Apple Card’s unusual application and activation process. Consumers can apply for the card at any time by opening an app that comes pre-installed on their phone. If they request the physical card, they never have to call an 800 number to activate it; instead, they simply tap the card’s packaging on the phone. It’s a decidedly different process — but also very familiar to any consumers who ever paired Apple’s Airpods to an iPhone.”

The payment networks have identified identity as a critical component of not only payment fraud but also the larger issue of identity. Mastercard has released its consumer-centric model for digital identity, and Microsoft and IBM are supporting development of a self-sovereign identity in the Linux Hyperledger Indy project. But how will IBM, Mastercard, Microsoft, or anyone else initiate its own consumer-centric digital identity model if the consumer’s identity is already locked up tight inside the Apple ecosystem?

Because Apple controls all aspects of its ecosystem, a fanatical control issue that has served the company well since its creation, it will be able to implement control over its customer’s identities very quickly and then monetize that control. This is evident in the solution it deployed with Goldman Sachs.

Anyone expecting Apple to open up its infrastructure so that other financial institutions can deploy a similar provisioning process are deluding themselves. Apple will keep NFC locked up and will increasingly monetize the identity of Apple consumers all in the name of protecting them. As always, Apple has developed a brilliant and profitable strategy that borders on impropriety but without obviously crossing that red line.

So how will IBM, Microsoft, Mastercard, financial institutions, and everyone else respond? If that response is to have any impact, it better happen quickly.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Uh-Oh! Is Apple Expanding the Restriction on NFC to Include Mobile Identity? appeared first on PaymentsJournal.

In 2011, Google introduced Google Wallet, which made it the first tech giant to bring one to the market. This was a revolution that fed on a technology called Near Field Communications (NFC). It allowed people to use the wallet to make payments, redeem coupons, and earn loyalty points from the comfort of their phones.

Unfortunately, the mobile penetration of the e-wallet was not as deep as it should have been. To make matters worse, there were only a few merchants out there who welcomed it.

Building on the same idea, Apple introduced Apple Passbook (now Apple Wallet) in 2012. However, the app targeted coupons, store cards boarding passes, movie tickets, event tickets, transportation tickets, and student ID cards in place of mobile payments.

A couple of years later, it unveiled Apple Pay that focused on secure monetary transactions, much like Google Wallet.

Other companies such as Samsung followed suit and sparked a war of innovation in an attempt to bring about newer technological advancements that could stand out and gain the upper hand.

Ever since, mobile wallet has grown into a billion dollar industry underpinned by the convenience it delivers.

According to market experts, mobile payment apps are likely to reach a transaction value of a whopping $14 trillion by 2022! You can only image the ninja speed at which this industry is pacing.

Modern-Day Sophistication

The mobile wallet field has come of age and witnessed massive changes en route to modernization. For instance, NFC is now commonplace in most high end smartphones and locations that accept digital payment.

To top that, there has been a colossal smartphone penetration of 67% worldwide with 5.112 billion unique mobile users showing up in 2019.

Source

Also, of the total global population of active Internet users (4.388 billion), 52% (3.986 billion) chooses mobile Internet! This is huge.

Source

Needless to say, there has been a significant change in the way people lead their daily lives, commute, work, watch movies, read books, cook, choose eateries, indulge in fashion, make purchases, and pay utility bills.

This is the era of doing things ‘on the go.’ To that end, ‘hard cash’ is fast fading away from the lives of consumers and digital payment solutions such as mobile wallets are reigning all over.

Reason? – Because convenience is the new loyalty! After all, a mobile wallet enables…

• Quick monetary transactions
• Easy accessibility
• Extensive use cases
• Splitting of bills
• Timely payments
• Reward points and bonuses
• Convenience of paying on the go

Owing to the benefits, not only the tech savvy population, but also laymen are jumping onto the bandwagon and choosing mobile wallets as a preferred method of payment. The country-wise mobile wallet usage is highest in China, followed by Norway, UK, and the rest.

Source

According to Juniper Research, the mobile wallet user base could touch 4 billion users by 2024 from the present 2.3 billion.

In modern times, enhanced consumerism has leveraged the benefits of this financial instrument to the fullest. Take the likes of Alipay, PhonePe, PayPal, Skrill, Amazon Pay, Apple Pay, and Google Pay.

People no longer brood over aspects such as functionality, security and cost of digital wallets. Rather, they are willing to know what the future has in store and what better features can be expected.

As such, mobile wallet integration is a field brimming with opportunities. However, bringing digital data and high value customers together inside mobile payment apps and then offering a glitch-free experience is a mighty task.

It is a catch-22 situation where consumers depend on merchants to adopt the mode and vice versa; one falters, the other backs off, too. The usage of mobile wallets is thus, subject to the indirect network effect.

Mobile Wallet Integration: Opportunities and Challenges

Opportunities

1. Customer Engagement and Loyalty

Business is a numbers game! For any business to survive, it must have customers. Repeat customers, to be precise. Loyalty is a sign the business is credible and worth relying on. However, building customer loyalty is easier said than done.

While businesses focus on their customer retention goals, customers have their own reasons to flip anytime they find a better brand. Similar is the case with digital payments. Thus, having a critical customer base with a minimum number of early adopters who can provide timely feedback requires a lot of effort.

Customer loyalty and retention is heavily dependent on mobile apps. Brands that do not have it are sure to fail because most consumers prefer loyalty programs accompanied by a mobile app.

With such an application, it becomes easier to collect reviews and offer loyalty points as well. So, this is a huge opportunity to work on, when it comes to e-wallet app integration.

2. Rural Penetration

For businesses to be successful in the actual sense, it is of utmost importance that they reach the urban as well as rural population. In fact, rural areas carry the potential of making a huge impact on the economy of a country and the world at large. So, the market therein needs to be dug deeper.

However, most people in such remote areas are deprived of basic financial facilities such as a bank account. Nevertheless, smartphones and the Internet have successfully penetrated into the rural ecosystem. Here is a chance to strike when the iron is hot.

The rural population can conveniently use mobile wallets to set up bank accounts without ever visiting a bank in person! Because present-day digital payment is transparent, secured monetary transactions would not be a concern ever. It is evident that with money matters, the ‘urban first’ philosophy no longer works.

3. Expanding Smartphone User Base

It is amazing how a decade ago mobile phone makers were worried about boosting product ownership and working on strategies to grow the same. Does it need a push now? We don’t think so. Smartphones are bought by everyone these days.

In fact, people prefer to buy more than one model for convenience and fun. And this frenzy only seems to be increasing with each passing day. Today, four in ten people are sure to own a smartphone. The good news is the count is increasing.

In the coming years, this number is expected to grow massively. This indicates there could be a rise in the number of mobile wallet users, too. More people are inclined toward cashless payments because of the convenience and speed of money transfer.

Also, people are increasingly becoming comfortable using technology. Scanning QR codes and making use of NFC now seems to be everyone’s cup of tea!

4. Mobile Banking on the Rise

Banks these days are surfacing on the Internet and on our smartphones as well. In an attempt to reach customers, these financial organizations have moved a step ahead in the online space; they are now going mobile.

Because the global population is out-and-out tech savvy and so in love with the Internet culture, banks worldwide seem to have played their cards right.

In an attempt to simplify cashless payments, online balance checking, remote deposits, and other services, they are introducing digital software that are innovative, detailed and highly sophisticated.

This is a revolution led by consumers where three in ten people with smartphones are willing to opt for cashless payment as and when the need arises.

Challenges

1. Regulatory Compliance

Digital wallets and payment apps need to bespeak the highest standards of security. To that end, they also need to comply with all legal requirements under government jurisdictions – for consumers as well as financial organizations.

For rookies in the market, becoming compliant is a daunting task and needs a lot of effort. Unauthorized use could be a liability and put such companies in legal hot soup. As such, privacy and data policy need to be placed in the best interest of consumers.

2. Fraud Risks

This is a serious challenge and can make or break the reputation of a mobile app in the global market. Fraud risks count among those many reasons why consumers shy away from using e-wallets.

The fear of getting hacked or facing malware attack or suffering data leakage is no intense that people find it safer to not use these modes of payment and settle for hard cash.

Product makers need to ensure their e-wallets are not vulnerable and do not pose a threat to financial safety of consumers.

Enabling safe end-to-end transactions is an imperative, not a choice. After all, technology should be all about convenience and nothing about disconcertment.

3. Low Awareness, Less Trust

Some consumers and merchants are yet to catch up on technological advancements that are happening around the globe. Their lack of knowledge makes them believe e-wallets are not a convenient mode of payment and do no good. Their ignorance makes them think paying money in cash or via credit or debit card is always better than paying via a mobile app.

What if their phones get hacked? What if they lose their device? What if they get locked out and lose access? They associate the very idea of using an e-wallet with frauds.

For those who want to plunge into this market, breaking the stereotypes is necessary if they want their new e-wallets to survive in the market and make profit. They must run marketing campaigns to make people realize how wallet security is not compromised so easily. Positive word of mouth is necessary. Remember, technology is always feared until it starts making sense.

4. Zero Gratification

Unlike cash back programs, mobile wallets usually do not come with reward policies. This makes them a dull affair because there is no opportunity to avail discount or bonuses.

Zero gratification is both a challenge as well as an opportunity for financial marketers and mobile app developers to attract more consumers by introducing reward points so a positive payment journey can be enabled.

For instance, allowing reward points or cash back when an e-wallet is used for making an online purchase would ensure consumer stickiness and retention. Such gratification, however, needs to translate into real money as and when the consumer desires.

Future of Mobile Wallet Integration

• Monetary transactions will be largely driven by remote purchases.
• Tokenization and dynamic cryptograms will ensure better security.
• NFC based contactless wallets will be challenged by QR code based wallets.
• Consumers will have complete control over their wallet.
• AI powered automated payments will enter mainstream.

To Conclude…

Because the Internet welcomes everyone with open arms, we will see more netizens join the World Wide Web in the coming years. Did you know there could be around 650 million users on the Internet by 2020!

More the digital penetration more would be the savviness in people. Users will be willing to try out newer technologies and make use of digital currencies as well. As such, mobile wallets could become more than payment making instruments. They could become complete financial management tools altogether.

But, we must not forget technology is dynamic. In other words, mobile technology will advance for sure and with it, hardware configuration of those many devices that support e-wallets. The very motive of the cashless ecosystem is to enable open banking that would go beyond mobile-centricity.

And, because the idea of cashless transaction is proliferating, businesses will have to consider the utility and scope of requirements thoroughly.

The good news is the demand is high and the willingness to supply even higher. Overall, things look rosy in the space of mobile wallet integration. The real challenge is to study user behavior, use it to retain consumers, deliver personalized experiences, and create a stable cashless society in which sellers, merchants, and buyers can thrive peacefully. If this challenge can be overcome, there is every bit of chance to rake in the moolah.

About Author

Mehul Rajput is a CEO and co-founder of Mindinventory, a software development company that provide web and mobile app solutions from startup to enterprise level company. His role involves heading the operations related to business and delivery with strategic planning and defining road-map for the future.

The post Mobile Wallet Integration: A Wellspring of Opportunities and Challenges appeared first on PaymentsJournal.

When Bob Dylan wrote his famous song “The Times They Are a-Changin’,” he was not referring to the financial services industry – but the line certainly fits. Over the past decade, financial insitutions (FIs) have undergone tremendous change in how their customers manage their financial lives and interact with the FI. And while fundamental shifts among FIs and their technologies has typically been a slow process, the introduction of major new players in the digital space has signaled a new era of digital transformation.

Earlier this year, for example, Apple announced its partnership with Goldman Sachs to launch the company’s much anticipated Apple Card. Amazon is also reportedly in talks with several major banks, including JP Morgan Chase, about building a new checking-account-like product to appeal to younger and more digitally-focused consumers. Likewise, T-Mobile has joined the fray with its own online checking account service, T-Mobile Money. The financial industry has traditionally been dominated by a few of the oldest and most established banks, but the introduction of these powerful, digital brands will no doubt impact financial institutions around the world.

Not all consumers are ready to switch, but financial institutions need to pay attention

In a recent survey by the management consulting firm cg42, the majority of consumers reported they would not switch to either Apple or Amazon if banking services were offered. In fact, of all the respondents, only 14% said they would switch to Amazon to handle their banking business, and Apple did not fare any better with only 11% of respondents willing to switch to the Cupertino company. However, these numbers are large enough to be worrying to FIs – particularly when the millennial segment favored moving to these non-traditional brands by a much higher percentage than the overall numbers might initially indicate.

Millennials have embraced the shift to digital banking, as evidenced by their demonstrated enthusiasm to pay via mobile devices or to split bills via a mobile app. 80% report their willingness to change to a new financial institution offering better or more diverse digital services. In a digital world, switching providers is less daunting to consumers, meaning the threat of customer churn is greater than ever.

The new digitally designed bank

The next generation of digital-first banks – let’s call them “digitally designed banks” – will most likely be made up of the major financial institutions we know today, but will also include an entirely new set of financial organizations that don’t yet exist. We can expect these newcomers to range from well-known tech platforms to nimble, “digital only” banks that are started from scratch. To compete with these financial alternatives, traditional banks will likely turn to new partnerships with fintech businesses that can offer more consolidated, specialized services such as small business lending or industry financing to drive new growth in those areas.

While these changes will mean significant transformation for the financial industry, it’s also an opportunity for banks, specifically. Traditional retail banks have somewhat of a stodgy reputation when it comes to innovation, but many of the leading banking groups today already offer new digital services. Chief among these is the convenience offered to consumers of depositing checks – one of the leading branch transactions – by taking a photo of it with their mobile device. This transaction drives cost advantage for the FI and makes for a happier, more loyal customer Many financial services apps also offer person-to-person payments, personal financial management tools and virtual assistants. The process of opening a new account from a mobile device has been made both faster and more secure with the introduction of remote-enabled identity verification.

What the future holds 

From my time speaking with today’s leading financial institutions, they have shown a remarkable ability to adapt and innovate. And it is important to remember that many of the digital technologies that are used today in other industries were first introduced to the market by banks. Kiosks now used by airlines for passengers to check in to their flight might look new and impressive until you remember that ATMs have been dispensing money using the same format for more than five decades.

It’s true: technology is evolving faster than people’s ability to recognize it, and financial institutions around the world will need to adapt. The institutions that invest today in understanding these changes and develop digital services as a key component of their business, however, will be well prepared for the future.

The post Banking in an Amazon World appeared first on PaymentsJournal.

NCR Corporation (NYSE: NCR), a technology leader for the financial industry, today announced that the company has acquired D3 Technology, Inc., a leading provider of online and mobile banking for the Large Financial Institution (LFI) market. Adding D3 immediately expands NCR Digital Banking into new market segments, including U.S. large banks and over time, international banks.

“D3 has a well-earned reputation for innovation and product excellence and delivers one of the most advanced digital platforms for large banks,” said Michael D. Hayford, president and chief executive officer, NCR Corporation. “NCR’s Digital First Banking solutions help financial institutions connect with consumers whenever, wherever, and this acquisition helps NCR provide banks of all sizes with an exceptional digital experience.”

D3’s customer-focused solutions have become a leading digital platform for large banks. Mark Vipond, chief executive officer for D3 stated, “NCR is a great fit for D3 and the timing is right for us to combine forces to create a powerful digital transformation platform for large financial institutions. This transaction enables us to capitalize on new market opportunities and bring top-tier capabilities to our mutual and future clients.”

The expansion of NCR’s digital banking solution portfolio means that in addition to delivering one of the industry’s strongest solutions in the cloud for the Community Financial Institution (CFI) market, it can now provide a leading on-premise solution built for the needs of LFIs.

NCR is a leading provider of digital banking solutions for financial institutions. D3 accelerates NCR’s Digital First Banking strategy, which includes integration of the customer experience across all self-service channels such as online and mobile banking, ATMs, Interactive Teller Machines and other Banking software solutions, complemented by NCR’s consulting, advisory and support services.

Financial terms of the transaction were not disclosed. The transaction is expected to be slightly dilutive to EPS in the first year.

About NCR Corporation

NCR Corporation (NYSE: NCR) is a leading software- and services-led enterprise provider in the financial, retail, hospitality, telecom and technology industries. NCR is headquartered in Atlanta, Ga., with 34,000 employees and does business in 180 countries. NCR is a trademark of NCR Corporation in the United States and other countries.

The post NCR Acquires D3 Banking Technology appeared first on PaymentsJournal.

Here is an interesting news pickup from Forbes on Fintechs in Brazil, suggesting if Indonesia’s mobile economy is the new tiger of Southeast Asia, then Brazil is the jaguar of South America.

• This huge user base of urban, young, mobile-first consumers has given rise to homegrown start-ups in a variety of mobile verticals, from 99 (ride-hailing) to iFood (food delivery), lending (Creditas), and banking (Nubank).
• Similar to the story playing out Indonesia, many of these local heroes have already grown to unicorn status, fueled by huge infusions of cash from international VC firms and strategic investors from China.

The most interesting development is Nubank. What started as a simple solution to embrace the unbanked has turned into a top virtual online bank.

• And Nubank, the most valuable startup in Latin America, is currently in discussions with global investors on a $1 billion dollar round which would value the company at up to $10 billion, making it one of the largest fintech companies in the world.
• It’s an industry ripe for disruption, and more fintech start ups—370 to be precise—have launched in Brazil than in any other Latin American country.
• They are attacking opportunities in payments/remittances, business and consumer lending, wealth management, insurance, and trading. As these new entrants gain traction, we can imagine how the new financial ecosystem will evolve.

It is not the app, it is the super app.

• The on-demand “local super-app” model has originated in Asia. China’s Meituan Dianping is perhaps the best example.
• Likely the most valuable app you’ve never heard of, $44 billion Meituan began as a group buy platform for local/small merchants of goods and services, expanded to food delivery, and evolved into a platform where over 400 million users access services ranging from restaurant reviews and reservations to hotel and home rentals, to movie tickets and travel booking.
• Brazil’s iFood and primary competitor Rappi are following this script. Beginning with one value proposition – delivering restaurant meals or groceries – they are morphing into platforms that are integrating into both their merchant’s operations and consumers’ financial lives.
• Those who benefit most from this convergence are Brazil’s currently unbanked, who will be brought into the financial fold via these new super-apps and have their lives transformed for the better.

There are a few takeaways. Note the morphing of apps. The model starts out with a simple solution, such as China’s Meituan Dianping. It begins with cooperative buying, and as it gets traction, it expands to adjacent businesses. In this case, to food deliver, then restaurant reviews, then reservations, and onward.

The parallel in Brazil is Nubank. The original application was banking for the unbanked. After a short while, Nubank extended its reach into lending, wealth management, and insurance. This is not the first time you will hear about Nubank, and it surely will not be the last.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Fintechs in Brazil: More Than Just Credit Cards, It Is the Super-App appeared first on PaymentsJournal.

Digital only bank accounts are plentiful and new providers are entering the marketplace all the time. Just last week there were headlines announcing the UK’s Monzo bank and Germany’s N26 are getting closer to launching their banking solutions in the U.S.

Perhaps with that in mind, Discover announced that it is eliminating fees on savings and CD accounts plus their digital checking account. That includes eliminating the insufficient funds fees:

Discover says it will no longer charge fees for insufficient funds, excessive withdrawals, falling below minimum balances and stop-payment requests on any of its checking, savings, money market and CD accounts.

“Removing all deposit account fees was an easy decision for us based on our commitment to offer the most rewarding banking products in the industry,” Arijit Roy, vice president of deposits at Discover, said in a statement.

This latest announcement builds on Discover’s already low-fee offerings. For example, Discover already offered checking customers an account that does not charge a monthly maintenance fee and offers 1% cash-back rewards on up to $3,000 in debit card purchases. Plus, Discover customers have access to 60,000 no-fee ATMs in the U.S.

Prior to Monday’s announcement, Discover charged customers a $30 insufficient fund fee when they overdrew their checking or savings account. But Discover capped the number of fees assessed to just 1 per day, as opposed to other big banks who levy 3 to 4 of these per day.)

This may be a good move not just to stave off competitors, but also a good political move. Legislation to curb account fees pop up from time to time, particularly around overdraft an insufficient funds fees:

Roughly 1,200 customers have lodged complaints about overdraft policies to the Consumer Financial Protection Bureau’s database so far this year.

Rep. Carolyn Bosher Maloney (D-N.Y.) and other Democrats want to change that. In 2017, Maloney introduced the Overdraft Protection Act. The legislation would require overdraft fees to be “reasonable and proportional,” and would limit the number of overdrafts to once per month and a total of six on an annual basis.

The congresswoman said last month that she planned to reintroduce the bill. A press secretary for Maloney tells CNBC Make It that Maloney “hasn’t introduced this legislation yet but plans to do so soon.”

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post In the Competitive Digital Only Banking Market, Discover Eliminates Account Fees appeared first on PaymentsJournal.

The Wall Street Journal and many, many other news outlets have reported Chase Bank has begun the process of closing down Finn, its digital only, or mostly digital-only, version of its core bank. Finn has been in market for only about a year. The purpose of Finn was to see if the bank could attract new customers and deposits under a different name and marketing strategy and with a unique app. Here’s the background on the shut-down:

The nation’s largest bank began informing clients Thursday that it is shutting down Finn, the no-fee banking brand designed to meet the financial needs of younger consumers, and transferring their funds to new Chase checking and savings accounts.

It is a quick about-face for a product JPMorgan hoped would help it lure new customers to its online and mobile banking options, a hot spot of competition among the nation’s banks and financial-technology startups. 

We have to give Chase and the handful of other banks credit at least for attempting a new approach. Banks are often chastised for playing it safe and not making big bets. This surely was a “big bet” and closing it down was likely a tough decision.

There is a lot of after-the-fact commenting about why Finn wasn’t a run-away success. Here’s The Journal’s take:

Finn’s strategy differed from other digitally focused banks and startups. It didn’t offer savers rich interest rates to get them to open accounts, a tactic employed by Goldman Sachs Group Inc. and Ally Financial Inc. Because it was started from scratch, Finn didn’t get the boost of an already-active base of digital users, as did fintech startups such as Acorns Grow Inc. when they launched checking accounts.

Yet Finn, which was built on top of the same back-end infrastructure as Chase’s namesake mobile app, allowed its customers to visit Chase tellers, get checks and use its ATMs. As a result, a Finn account looked a lot like a typical Chase account. 

This announcement may give other financial institutions a much-needed pause and a reason to think about what they hope to achieve from their digital-only counterparts either launched or in planning stages:

• Is it to attract the same consumers that find value in other digital-only options like Ally, Discover Bank, Chime, etc., etc.  Can that be back that up with a great user experience, with high-interest rates on deposits and rich rewards programs to boot?
• Is it to experiment with new technology outside of the existing core processing infrastructure?   This is a legitimate endeavor, but the end-game should also be defined.  Will this ultimately become the bank’s future infrastructure?  Will assets developed in the digital bank be imported to the old system once they have been proven?  What defines success for the digital institution?

Mercator Advisory Group recently published a report on the state of digital-only institutions in the U.S. and that can be found here: Digital Consumer Banks in the U.S.: Your Money or Your Wallet.

Overview by Sarah Grotta, Director, Debit And Alternative Products Advisory Service at Mercator Advisory Group

The post What is the End Game for Bank’s Digital Only Businesses? appeared first on PaymentsJournal.

This research conducted by PaySafe indicates that 56 percent of consumers are worried about the security of biometrics. However, looking at consumers current concerns is shortsighted. When first introduced, the vast majority of consumers (80 percent) indicated they would not trust their mobile device for banking functions, yet in only five years mobile banking proved to be so convenient that almost 80 percent of consumers were actively using it.

In January 2017 Mercator published “Biometrics: A Market Forecast for Consumer Adoption” that utilized this conversion rate in conjunction with predictions for how broadly biometric support would be available to consumers and how many authenticators would utilize a biometric to grant access to apps and websites. So this reflects the current status:

Those consumers who didn’t feel comfortable using biometrics identified a lack of trust as their primary reason for avoiding them. The research also revealed further fears around the use of biometrics:

• Nearly half (45 percent) stated they did not want companies having access to their personal biometric details

• 35 percent did not know enough about biometrics to trust it

• Nearly a third (31 percent) were concerned that their fingerprints could easily be cloned and used to commit fraud

• 28 percent said biometrics did not seem “safe

Overview by: Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post Consumers Reluctant to Use Biometrics for Fear of Identity Fraud appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

This episode of Truth In Data provided by Mercator Advisory Group’s report – 2018 Digital Banking in the U.S.: From Bricks to Clicks

1. Understanding the balance between trust and benefit is crucial to increasing consumer’s adoption of new banking technology
2. The “trust bar” is far higher for financial services than for other consumer digital services
3. Concerns linger about the safety of digital banking among US consumers
4. Consumer’s trust will increase with familiarity over time and as financial services technology becomes ubiquitous
5. The PC continues to be an important vehicle to interact with financial institutions and must not be ignored
6. Conversational agents are a burgeoning avenue for consumer interaction with banks – with the same hurdles as other techs

About this report

Mercator Advisory Group’s most recent Insight Summary Report, 2018 Digital Banking in the U.S.: From Bricks to Clicks, reveals that U.S. customers are highly engaged when it comes to interacting with their financial institution digitally – via computer or mobile device. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey found that although consumers use a number of channels for their digital banking, PCs remain the most preferred. About 6 in 10 respondents report that their PC is their preferred device for interacting with their financial institution.

While only about 1 in 8 consumers (13%) use a conversational agent Apple’s Siri or Amazon’s Alexa to interact with their bank, those who do are very satisfied with it (78%). The report, Digital Banking: From Bricks to Clicks, shows that one-half of consumers are using their financial institution’s mobile app for some type of interaction with the FI, and those people are very satisfied with the app as shown below in an excerpt one of the charts summarizing the survey findings.

“Financial institutions can further deepen their relationships with their customers by providing a mobile interface that allows customers to do what they want, when they want. Mobile usage is already high and will only grow and thus become an even more important avenue for building relationships with customers,” states the author of the report, Pete Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post Six Strategic Implications for Today’s Mobile Banking Environment: appeared first on PaymentsJournal.

Whilst developments in fintech show no signs of slowing, there appears to be disparity between the level of consumer demand and the rate of adoption. Global bank ING’s latest consumer economic research finds that whilst a few are satisfied with traditional bank offering and don’t see value in the introduction of new means of engagement, the majority of respondents believe that banks should offer consumers the most up to date technology available. Further, they agree that banks should cooperate to ensure that the latest payments systems are accessible to everyone.

Our move towards becoming a cashless society reflects how trends in banking are changing our financial behaviour. ING’s 2018 research for example showed that in America 74% of instore payments are made using either a debit or credit card, rather than cash.

However, whilst demand charges ahead, it appears that adoption of new technologies lags behind the rate of innovation, with concerns around security, privacy and maintaining control acting as key barriers to change.

The majority (62%) of Americans have never used fingerprint or voice recognition to log into their bank’s app. This reflects the belief of just 37% and 54% of respondents respectively, that voice and face recognition are secure. It seems therefore that consumers are not yet ready to accept these changes and may prefer for early adopters to test the waters before making the leap themselves.

In fact, whilst using an app (59% of people do this) has now become just as popular as accessing a website (61%) when seeking information, 70% of Americans still sometimes opt to physically visit their bank branch to access financial services, and perhaps surprisingly, across our total survey sample, the results are consistent across ages.

Mobile banking has of course become a standard for many, and those that now use mobile devices to manage their money do cite the benefits. 68% agree that they view their account balance more frequently, almost half (47%) state their financial goals are now clearer, and 42% now think about money more often. Accessibility has become paramount, with most (between 86% and 90%) of those who are already using multiple different devices to manage their money, grabbing the device is more accessible at the time when they need to check their balance, make a payment, or transfer money.

History has shown that as new technologies have proven to be reliable and useful, and therefore socially acceptable, adoption rates soar. Like with mobile banking, as the banks race to meet the demands of consumers seeking innovation in fintech, we can anticipate that widespread uptake will follow slow initial acceptance. Additionally, with close to half of Americans (49%) using alternative providers to supplement their money management, alongside their main financial institution, market disrupters and the fast pace of innovation in fintech may mean new technologies will become the norm more quickly than in the past.

However, over half (55%) of Americans are not aware that in some parts of the world, financial providers can access information held by other companies, with the user’s consent. And the majority (59%) say they would not be happy using this technology. While still in its infancy, this suggests that factors such as awareness will challenge the technology’s currently slow acceptance.

Another limiting factor is consumers’ natural demand for maintaining control of their own financial decisions. In fact, 53% are unhappy with the idea of an automated investment program, despite any potential benefits of using such technology.

Ultimately, for banks to overcome the challenge of hesitant or sceptical consumers, addressing security concerns, as well as increasing the familiarity and awareness of the latest technological innovations will be essential. It is clear that whilst Americans are quick to demand the newest technology yet slow to adopt it, there is potential for this gap to close.

The post Consumers Demand and Embrace Banking Technology, but Adoption Lags as Security Concerns Remain appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

This episode of Truth In Data provided by Mercator Advisory Group’s report – 2018 Digital Banking in the U.S.: From Bricks to Clicks

• Trick Question! Exactly 25% of consumers use a camera on a smartphone via app to deposit checks
• 47% of consumers expect an increase in their mobile deposit habits
• 49% of consumers expect their mobile deposit habits to stay the same
• Only 4% of consumers expect to use mobile deposit less in the future
• Using a teller remains the top method for depositing checks: 48%
• 22% of consumers report using an ATM to deposit checks without an envelope
• 12% of consumers deposit checks at an ATM with an envelope

About this report

Mercator Advisory Group’s most recent Insight Summary Report, 2018 Digital Banking in the U.S.: From Bricks to Clicks, reveals that U.S. customers are highly engaged when it comes to interacting with their financial institution digitally – via computer or mobile device. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey found that although consumers use a number of channels for their digital banking, PCs remain the most preferred. About 6 in 10 respondents report that their PC is their preferred device for interacting with their financial institution.

While only about 1 in 8 consumers (13%) use a conversational agent Apple’s Siri or Amazon’s Alexa to interact with their bank, those who do are very satisfied with it (78%). The report, Digital Banking: From Bricks to Clicks, shows that one-half of consumers are using their financial institution’s mobile app for some type of interaction with the FI, and those people are very satisfied with the app as shown below in an excerpt one of the charts summarizing the survey findings.

“Financial institutions can further deepen their relationships with their customers by providing a mobile interface that allows customers to do what they want, when they want. Mobile usage is already high and will only grow and thus become an even more important avenue for building relationships with customers,” states the author of the report, Pete Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post True or False – over a Quarter of Consumers Use Mobile Apps to Deposit Checks? appeared first on PaymentsJournal.

More than four out of five financial institutions believe their business is at risk due to digital innovation, according to a PwC study.

They certainly have good cause to lose sleep. Fintech – the startups, tech companies, and even legacy providers leveraging new technology to deliver a better customer experience at lower costs – is starting to disrupt financial services as dramatically as Amazon has rattled retail and Netflix has transformed at-home entertainment.

Mobile banking trails only social media and weather as the most popular app on smart phones, a report by Citi shows. Almost half of consumers – including two thirds of millennials – have increased their mobile banking usage in the last year, according to the study. Thanks to these intuitive apps that enable real-time transactions, the global mobile wallet market is expected to surpass $250 billion by 2024, Global Market Insights projects.

As customers rely less on brick-and-mortar banks and more on digital channels, traditional financial institutions are confronted with a new reality: They are expected to deliver personalized, easy and super-convenient experiences on par with the likes of Amazon or Netflix.

Which leads to an interesting irony: While digitization has stripped away a great deal of the human-to-human interaction that financial services companies have had with customers for as long as banks have existed, knowing how customers experience the brand has never been more important.

To deliver the trendy, innovative, and exciting services that customers now expect, it is essential to truly learn about, understand, and empathize with them. Financial services companies that get this wrong are in jeopardy at a time when people can switch loyalties with a few clicks or taps.

In my work with fintech companies, I’m hearing three common themes in what has made them successful in grasping customers’ motivations, needs, desires, and behaviors.

1. In-demand products and services. A primary reason consumers are flocking to fintech companies is a product or service they can’t find elsewhere.

This highlights a key distinction between traditional and emerging financial services models. Fintech companies have the advantage of not being burdened by an organization’s legacy technology or traditions. Thus, they’re able to adapt to create products and services that may not fit into the frameworks or philosophies of more traditional organizations.

Fintechs are seizing the opportunity to serve new customers such as millennials in the margins that traditional financial institutions had mostly ignored and have created new personas and market opportunities as a result – simply because they seem to understand them better.

2. Trusted recommendation. Another common reason why consumers choose a specific fintech company is that they were referred by a friend, family member, or another trusted source, such as a respected publication or blog. This shows the viral effect that deeply empathizing with customers can have.

3. Ease of use. A seamless online experience — a simple design, an easier application process, and the ability to resolve issues through the app or website without calling customer services – is a huge differentiator. So are lower fees, higher annual percentage rates on savings, a good rewards program, and anything else that makes for a superior customer experience.

Furthermore, there’s a perception among many consumers that fintechs care more about them on an emotional level and understand them more than traditional banks.

When it comes to their finances, consumers have high expectations and ever-changing needs. Winning in this environment for a financial services company – traditional or otherwise – is all about displaying customer empathy and offering better products, and superior digital experiences.

Consumer loyalty for financial products can be fleeting, but companies that incorporate fast human insight into every stage of the development process are likely to earn their business for a long time.

Janelle Estes is Chief Insight Officer at UserTesting, a human insights platform.

The post Digital Disruption’s Secret Sauce: Human Empathy appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

This episode of Truth In Data provided by Mercator Advisory Group’s report – 2018 Digital Banking in the U.S.: From Bricks to Clicks

• False! But its razor thin: 49% of US consumers use their banks mobile app
• Satisfaction with mobile banking apps is very high – 89% – so those who use it, like it
• Still, 6 in 10 consumers (59%) don’t prefer mobile banking because their current method “works just fine”
• Predictably, confidence ratings in mobile banking:
  • 60% age 18-34
  • 46% age 35 to 64
  • 23% age 65+
• Confidence ratings for security are almost identical:
  
  • 55% age 18-34
  • 40% age 35-64
  • 20% age 65+
• 66% of consumers now use a “Strong” password w/ 8+ characters, capitals & numbers
• 23% of consumers use a finger print reader to access mobile banking

About this report

Mercator Advisory Group’s most recent Insight Summary Report, 2018 Digital Banking in the U.S.: From Bricks to Clicks, reveals that U.S. customers are highly engaged when it comes to interacting with their financial institution digitally – via computer or mobile device. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey found that although consumers use a number of channels for their digital banking, PCs remain the most preferred. About 6 in 10 respondents report that their PC is their preferred device for interacting with their financial institution.

While only about 1 in 8 consumers (13%) use a conversational agent Apple’s Siri or Amazon’s Alexa to interact with their bank, those who do are very satisfied with it (78%). The report, Digital Banking: From Bricks to Clicks, shows that one-half of consumers are using their financial institution’s mobile app for some type of interaction with the FI, and those people are very satisfied with the app as shown below in an excerpt one of the charts summarizing the survey findings.

“Financial institutions can further deepen their relationships with their customers by providing a mobile interface that allows customers to do what they want, when they want. Mobile usage is already high and will only grow and thus become an even more important avenue for building relationships with customers,” states the author of the report, Pete Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post True or False – over Half of Us Consumers Use Their Bank’s Mobile App? appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

This episode of Truth In Data provided by Mercator Advisory Group’s report – 2018 Digital Banking in the U.S.: From Bricks to Clicks

• More! 22% of mobile bankers claim their use of cash has increased over the last 12 months;
  vs. 8% of non-mobile bankers
• Mobile banking consumers are also using more checks! 13% of mobile bankers report increased check writing over 12 months; vs. 5% non mobile bankers
• Mercator analysts theorize that the increase is correlated with the demographics of mobile bankers
• Age is one of the leading indicators of mobile banking consumers – 40% of mobile bankers are 18-34
• 9 years ago (2010), only 24% of consumers owned a smartphone – today, 83% nearing saturation point
• Branch/teller remain consumer’s preferred method for contacting their bank (23%)
• Mobile app is the second most preferred method, 15% of consumers prefer mobile app

About this report

Mercator Advisory Group’s most recent Insight Summary Report, 2018 Digital Banking in the U.S.: From Bricks to Clicks, reveals that U.S. customers are highly engaged when it comes to interacting with their financial institution digitally – via computer or mobile device. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey found that although consumers use a number of channels for their digital banking, PCs remain the most preferred. About 6 in 10 respondents report that their PC is their preferred device for interacting with their financial institution.

While only about 1 in 8 consumers (13%) use a conversational agent Apple’s Siri or Amazon’s Alexa to interact with their bank, those who do are very satisfied with it (78%). The report, Digital Banking: From Bricks to Clicks, shows that one-half of consumers are using their financial institution’s mobile app for some type of interaction with the FI, and those people are very satisfied with the app as shown below in an excerpt one of the charts summarizing the survey findings.

“Financial institutions can further deepen their relationships with their customers by providing a mobile interface that allows customers to do what they want, when they want. Mobile usage is already high and will only grow and thus become an even more important avenue for building relationships with customers,” states the author of the report, Pete Reville, Director of Primary Data Services at Mercator Advisory Group including the CustomerMonitor Survey Series.

The post Are Mobile Banking Consumers Using More or Less Cash? How about Checks? appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

• They tend to be younger with 40% between 18 and 35 years old compared to 11% of those who are not mobile bankers
• They skew more wealthy with 31% reporting a household income of $100K or more compared to 21% of those who don’t use their smartphone for banking
• Further, mobile bankers are twice more likely to be employed full-time than non-mobile bankers (50% vs 25%)
• That said, there is little difference in marital status (46% vs 51%)

The data provided for this episode of Truth In Data is a preview of an upcoming report from Mercator Advisory Group – Mercator CustomerMonitor Survey Series Digital Banking Report to learn more, please contact Peter Reville, Director, Primary Research Services

The post Who Is the Mobile Banker? appeared first on PaymentsJournal.

Myanmar, once known as Burma, has a 50 million population wedged in between India, China, and Thailand.   Unlike its surrounding neighbors, the country is essentially unbanked, with 74% of citizens lacking an account at financial institutions, and only 5% holding debit cards. And, if you think those numbers are unusual, consider the fact that less than 1% of citizens hold a credit card. Though unemployment is only 4%, one out of four people live below the poverty line.

Almost everyone in the country owns a cell phone, with 87% penetration. The mobile device is what will be used to bring the country onboard to electronic payments, and they will do it with QR codes.

This is surely a case study for financial inclusion and increasing electronic payments

The Central Bank of Myanmar reports that the manual reconciliations required to clear debits and credits are burdensome, the long term vision is for an automated clearing system, which will be an add on to the 2011-updated EFT system.

Consumer payments are now a priority and the country plans to use what has become a common business strategy by linking high cell phone penetration with low banking availability with QR codes.

Singapore Business Review announced today that Nets Group, a Nordic tech firm will help the country integrate QR payment acceptance standards similar to those endorsed by the Monetary Authority of Singapore.

• The first project under the programme will see NETS sharing its technical and operational knowledge around the Singapore Quick Response (SGQR) Central Repository platform with MPU, to implement a similar platform in Myanmar.
• Launched in September 2018 by the Monetary Authority of Singapore and the Infocomm Media Development Authority, the SGQR is said to be the world’s first unified payment system for QR codes that combines multiple QR payment codes such as PayNow and NETS QR into a single QR code. With the consolidation of QR codes, merchants only need to display a single SGQR label instead of having multiple QR codes, cutting clutter on the storefront and enabling quicker payments processing.
• Myanmar’s digital payment has gradually developed with the explosive growth of mobile and internet penetration that had a major impact on its financial services sector, according to Zaw Lin Htut, CEO of MPU.

The beauty of QR codes is that they allow consumers to transact cellphone-to-cellphone, no payments terminal required. Instead of data or internet lines required for the standard payment card acceptance device, a consumer can simply engage their phone to the merchant’s device, and once linked, the typical payment card acceptance, authentication, and approval tools engage.

…Welcome to the world of credit and debit.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Myanmar Drives Towards QR Codes, With 74% Unbanked, This is a Large Step for Financial Inclusion appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Supplier Enablement: Get More Flexible and Technical

• Mobile banking has the momentum
  
• Satisfaction with teller banking remains very high at 91% where its been for the last 5 years
• But satisfaction with mobile app via smartphone is up to 92%, rising steadily from 86% over the last 5 years
• 3 online only segments:
  • full-service online banks
  • lenders gathering premium deposits online
  • brokerage/insurance online banks
    
• Mercator estimates the total online-only banking market to include over $1 trillion in deposits
• Three giant full-service online banks dominate the market, they are:
  • Ally Bank
  • Discover Bank
  • USAA

          each has $70 billion or more in domestic deposits

• Overall, Mercator estimates deposits growth in online-only banking at 10% from 2017-2018; though the range was extreme (-5% to +28%)

About this report

The revolution in electronic payments has been underway for quite some time but has been much more visible in consumer payments than in the more complicated use cases associated with business-to-business (B2B) payments. Recent advancements include faster speed of payment, increasing options for cross-border solutions, and greater choices for access to such solutions.

In a new research report, Supplier Enablement: Get More Flexible and Technical, Mercator Advisory Group reviews how banks enabling suppliers to accept card payments and other forms of e-payment need to change their thinking and technology and adapt to the suppliers’ point of view. Not doing so will result in missing a large potential opportunity to capture a portion of the trillions of shifting payments volumes moving away from paper.

“The annual growth in B2B noncash payments globally is estimated at about 6.5%, and Mercator Advisory Group believes that the e-payments portion of that growth is about two percentage points higher due to the decline of checks. This varies by region, in particular North America, where the U.S. has been lagging in the elimination of paper process and payments versus some other areas of the world”, commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “ When it comes to the cards business, the enablement challenges have been steeper, both because of the change involved for suppliers and the friction of perceived acceptance costs. The industry has pursued best practice attempts to gain wider acceptance with modest success and now needs to try something new.”

The post Satisfaction with Online-Only and Branch Banks Is Equal, Except: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Supplier Enablement: Get More Flexible and Technical

• Online-only bank customers trust their digital bank roughly the same amount as they trust national banks (both score 53%)
• But when rated vs. a slate of institution types, online banks garner the lowest number of top ratings (14% vs national banks 24%)
• 36% of US households use an online-only bank, almost as many as use a credit union, 41%
• Yet only 8% of online banking consumers consider online-only banks their primary bank (vs. 66% full-service bank, 18% credit union)
• Online only bank customers tend to use high-interaction products like Checking (75%) and Savings (65%) accounts – historically tied to branch banking
• The largest digital bank identified by Mercator has nearly a quarter trillion dollars in deposits and grew nominal deposits 37% in 2018.

About this report

The revolution in electronic payments has been underway for quite some time but has been much more visible in consumer payments than in the more complicated use cases associated with business-to-business (B2B) payments. Recent advancements include faster speed of payment, increasing options for cross-border solutions, and greater choices for access to such solutions.

In a new research report, Supplier Enablement: Get More Flexible and Technical, Mercator Advisory Group reviews how banks enabling suppliers to accept card payments and other forms of e-payment need to change their thinking and technology and adapt to the suppliers’ point of view. Not doing so will result in missing a large potential opportunity to capture a portion of the trillions of shifting payments volumes moving away from paper.

“The annual growth in B2B noncash payments globally is estimated at about 6.5%, and Mercator Advisory Group believes that the e-payments portion of that growth is about two percentage points higher due to the decline of checks. This varies by region, in particular North America, where the U.S. has been lagging in the elimination of paper process and payments versus some other areas of the world”, commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “ When it comes to the cards business, the enablement challenges have been steeper, both because of the change involved for suppliers and the friction of perceived acceptance costs. The industry has pursued best practice attempts to gain wider acceptance with modest success and now needs to try something new.”

The post Six Contrasting Stats about Consumers and Online-Only Banks: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Supplier Enablement: Get More Flexible and Technical

1. Full Service Online Banks
2. Lenders Gathering Premium Deposits Online
3. Brokerage and Insurance Owned Online Banks
4. Online Divisions of Diversified Banks
5. Fintechs and Bank Partners

Today’s digital banks in the US collectively generate over $1 trillion in deposits

About this report

The revolution in electronic payments has been underway for quite some time but has been much more visible in consumer payments than in the more complicated use cases associated with business-to-business (B2B) payments. Recent advancements include faster speed of payment, increasing options for cross-border solutions, and greater choices for access to such solutions.

In a new research report, Supplier Enablement: Get More Flexible and Technical, Mercator Advisory Group reviews how banks enabling suppliers to accept card payments and other forms of e-payment need to change their thinking and technology and adapt to the suppliers’ point of view. Not doing so will result in missing a large potential opportunity to capture a portion of the trillions of shifting payments volumes moving away from paper.

“The annual growth in B2B noncash payments globally is estimated at about 6.5%, and Mercator Advisory Group believes that the e-payments portion of that growth is about two percentage points higher due to the decline of checks. This varies by region, in particular North America, where the U.S. has been lagging in the elimination of paper process and payments versus some other areas of the world”, commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “ When it comes to the cards business, the enablement challenges have been steeper, both because of the change involved for suppliers and the friction of perceived acceptance costs. The industry has pursued best practice attempts to gain wider acceptance with modest success and now needs to try something new.”

The post 5 Distinct Institutional Segments to Online-Only Banks: appeared first on PaymentsJournal.

Last week, T-Mobile rolled out a new banking service called T-Mobile MONEY, I was thinking that this was going to be a mobile money account, operated by a mobile service provider. Remember Isis? The U.S. mobile wallet platform funded and created by AT&T, T-Mobile, and Verizon, not the terrorist group. That’s what they set out to do five years ago. But instead, T-Mobile is launching a low-cost, mostly digital checking account with the help of a partner bank and bashing financial institutions in the process. Like so many other branch-less banking options, T-Mobile is using a high-interest rate, (4% on the first $3,000) to attract attention, customers and “hot” money.  Mercator Advisory Group recently published a report on Digital Only Banks and looks at their impact in the U.S.

Market Watch published an article that looks to put into perspective why T-Mobile would introduce such a ho-hum product. It’s less about a desire to one-up traditional financial institutions and more about getting closer to their customers:

So why are so many types of companies offering banking services?

“It makes the relationship stickier,” said Greg McBride, chief financial analyst with personal-finance website Bankrate. “Banks figured out a long time ago that customers are a lot stickier if connect direct deposit, a debit card and online bill payment to a checking account.”

“Sticky” implies that it’s difficult for customers to switch to a rival company. A 2017 study from Bankrate and Money Magazine found that the average U.S. adult had the same primary checking account for 16 years, and more than a quarter of adults had the same account for over 20 years.

For a company like T-Mobile then, converting a wireless subscriber into a checking account holder would then reduce the likelihood that they would switch their cell phone plan to AT&T or Verizon.  

“We’ve proven that when we invest in our customers, they are happier and stay with us longer,” a T-Mobile spokesman told MarketWatch.

Bank accounts are rich with information about consumer habits. That one account provides a lens into how much money a customer makes, where they spend that money and whether they’re trying to save that money. “If you’re in any consumer-facing business, he who has the most data wins,” McBride said.

Analysts argued this same logic underpinned Apple’s decision to offer a credit card with Goldman Sachs.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Why T-Mobile Rolled out a Boring Financial Account appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment

• Use of mobile banking is somewhat low at about 3 in 10
• That said, satisfaction among those who do use mobile banking is quite high, however
• Inertia and security concerns prevent consumers from using mobile banking
• Method for banking can vary. Consumers choose the method for contacting the bank that suits them best. Smartphones, tablets, and computers all have unique use cases
• Consumers report being able to use their mobile app motivates them to do as much banking activity as possible by mobile phone
• Mobile app users report that they feel more loyal to their bank as a result of using the app

About this report 

Mercator Advisory Group’s most recent Insight Summary Report, Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment, reveals that U.S. customers are highly satisfied with their banking relationship and comfortable with their current primary bank or credit union. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey also found that only about 1 in 3 consumers want to be contacted by their financial institution (FI) about new products and services. This necessitates that FIs be very strategic in the way they cross-sell and up-sell to their customers

While the incidence of opening an account digitally is moderate (28%), satisfaction with the digital account opening process is very high (approx. 85%).

The report, Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment, shows that consumers are resolute in their determination not to pay ATM fees. More than 7 in 10 report that they actively try to avoid paying a fee when they withdraw money from an ATM. Further, about one-third only use an ATM for cash withdrawal.

Although only about one-third of consumers use mobile banking, those who do are quite satisfied with the experience. Inertia and security concerns are barriers to mobile banking adoption

“Banks need to show consumers value beyond dollars and convenience. And this needs to be balanced with security and safety,” states the author of the report, Pete Reville, Director of Primary Data Services including CustomerMonitor Survey Series at Mercator Advisory Group.

The post Surprising Stats about Consumers and Mobile Banking appeared first on PaymentsJournal.

A decade ago, the outlook for the banking industry wasn’t positive. There was a significant drop in business and consumer confidence, and that affected the global economy on a deep level. The most intense stage of the banking crisis started in September 2008, with the collapse of Lehman Brothers.

But the banking industry is not the one to stand and wait for devastating effects. Changes were made, and we’re way beyond that point. Currently, we look at banking and capital markets with great optimism. We expect more technology and more convenience than ever before.

Banking apps, in particular, change the way consumers approach the industry. That’s where we’ll see the greatest progress.

How about we take a look at some predictions that will define the banking industry in 2019?

7 Online Banking Apps Predictions for 2019

1. Virtual Assistance in Apps

The Bank of America mobile app was a huge hit as soon as it showed up. Erica is the factor that makes it special. It’s a virtual financial assistant that speaks. With voice search trends constantly on the rise, it’s only expected for the banking industry to follow up.

“How much money can I spend today?” Wouldn’t you love having a personal financial assistant, who would answer that question right away? You’d get a realistic answer, based on the app’s calculations of income and expenses. It’s much more convenient for you to ask the app than to call a personal advisor or to make the calculations yourself. We’re heading in that direction.

2. Updates in Privacy Policies

More people than ever will start using banking apps in 2019. This brings us to a serious issue: privacy.

According to the 2019 Deloitte Banking Industry Outlook, consumers have higher privacy protection expectations than ever before. Instead of just meeting compliance requirements, the banks will have to approach privacy issues in a more holistic way. That means they will have to be more transparent and accountable with the way they use the information of their users.

Privacy became a big issue for all industries that handle information online. As an example, students always go through a GradeMiners review before making the decision to purchase something on that website. They will also research the banking apps they try to use. If the privacy policies are not strong and transparent enough, they won’t do business with that bank.

3. Robotic Process Automation

The word bot is no longer an insult. It actually refers to something smart.

Robotic process automation technology aims at completing labor-intensive, repetitive tasks with ease. It’s being used for basic customer support, sending emails, and transferring data from one banking system to another. As an example, chat bots are common for services that offer assignment help online. They make the process of getting information much faster.

This changes the way that banks work. The consumers will handle most of the banking processes via apps. Front-line banking employees will focus on more advanced operations.

4. The Digital-First Approach

In March 2019, Apple and MasterCard announced the launch of their digital-first product. It’s a card designed as a digital-first product, with the physical card given as an option.

Digital wallets are soon to become the only type of wallet that people own.

Just think about it: you won’t have to go through bills and change to pay the right amount. You won’t have to pick the right card, take it out and risk damage. No one will be able to see the number at the back of the card. Digital wallets are way safer and more convenient.

5. The Focus Is on Consumers, Not Apps

Digital transformation is important for one thing and one thing only: the consumers demand it.

Vivian Richards, a freelance writer for Assignment Holic, explains: “As a freelancer, I work from home and I don’t like going out solely for bank visits. That’s why I rely on apps so much. But it’s not just about having an app. It’s about the convenience it provides. Currently, I struggle with crashes and lack of features. I need my bank to focus on consumer experience.”

6. Banks Aim Towards Consumer Services Ecosystems

Banks are about to get more serious about partnering with other industries, such as retail, healthcare, online gambling, and freelance platforms.

In June 2018, Amazon, JPMorgan Chase & Co. and Berkshire Hathaway Inc. announced collaboration with the intention to reduce wasteful spending. This is only one example of a holistic financial experience, enabled through an ecosystem of partners. It’s a trend with a lot of potential in future.

7. Personalized Approach

We already saw initiatives that target specific demographics. Apps aimed at Millennials, loan options for older people, and so on. But the approach is shifting towards greater personalization.

Roberta Smith, finance assignment writer at Brill Assignment, explains: “It’s about time for banks to start providing an individualized experience. They will start targeting consumers not only according to age, but by interests and values as well.”

The customer-centric approach is the foundation of many industries. It’s how Amazon targets its users, and it’s quite successful in that aspect. It’s also how writing services like PaperWritingPro.com approach their customers – they base the offer on the individual needs of the user. Banking apps are lagging behind, but they will catch up.

The world is going forward. We’re lucky to live in a time of such advanced technology progress. The above-listed trends are only a glimpse of what we expect to see in 2019. We can’t predict it all.

BIO:

Scott Mathews is a college paper writer, enthusiastic Reddit user, and a regular with Quora answers. He works as an academic writer from the economy niche for Ninja Essays. He is also part of the editing team at Pro Essay Writing. In the meantime, he is getting educated on how to live a more sustainable life, without hurting the environment.

The post 7 Shocking Online Banking Apps Predictions That Will Define 2019 appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode provided by Mercator Advisory Group’s Customer Monitor Survey Series.

• While the incidence of opening an account via mobile is moderate (28%)
• Satisfaction with the digital account opening process is very high (approx. 85%)
• In fact, overall satisfaction with the mobile account process is 90%
• Increased trust in this channel will ultimately lead to greater usage as long as the satisfaction results remain strong

About this report

The CustomerMonitor Survey Series delivers a method to monitor critical changes in customer attitudes and behaviors toward payment products and channel usage that shift with changing economic times, channel usage (mobile device use, Internet use, etc.) and with differing product and service offerings (for example: the use of loyalty programs, prepaid offerings, etc.).

Mercator Advisory Group draws upon our broad industry expertise, clients and extensive research capabilities to develop highly topical and relevant questions that impact payments and channel delivery business strategy. It is Mercator Advisory Group’s experience base to answer strategic issues, its consistency of tracking year-over-year trends, and the flexibility working with our members to have public and/or private questions addressed, that differentiate this offering from other survey-based products.

Further, this catalog of primary survey results is offered an exceptional value due to Mercator’s business model that permits access to the full catalog of previous years’ surveys for all users throughout the year of service. Mercator has designed this program to be a continuous series of surveys that are fielded to monitor the shifts in behavior.

The post Are Consumers Satisfied with a Digital Account Opening Experience? appeared first on PaymentsJournal.

This U.K.-centric discussion of plusses and minuses to consumers provides a useful review of the digital-only “challenger banks” that have caught the imagination of many consumers. In looking at their advantages it is noted that: 

Digital only banks have the capability to champion app-based services which aren’t offered by mainstream banks, whether that’s due to a lack of demand or a lack of commitment on the part of high street banks. 

Mobile banks respond to the needs of an increasingly digital country where information is expected to be available constantly at the click of a button. So, some mobile banks have included functions that help customers manage their finances such as: 

• Spending notifications in real-time
• Spending reports
• Spending projections
• Links with other financial assistance apps 

Along with this, mobile banks are also adapted to the way we live in the 21st century by, for instance, allowing bill splitting via the app in an age where fewer people carry cash. 

Traditional banking apps can feel clunky in comparison to mobile-only apps, with some services only available either on their online computer-based banking services or in branch

As Mercator notes in its soon to be released report, Digital Consumer Banks in the U.S.: Your Money or Your Wallet, a similar phenomenon is occurring in the U.S., with Fintech firms and their bank partners offering enhanced digital wallet services as a primary product, but in many cases not a lot more. As noted in the article, consumers could be both motivated and frustrated by these product offerings:

It’s worth remembering that not all digital banks offer the same functionality as customers might have come to expect from a traditional bank, so be sure to check carefully before signing up. 

Before signing up for a mobile-only bank, it’s worth checking not only which services and facilities they offer but also what the original target market was. While mobile banks will naturally evolve, this original aim could be just what you were looking for anyway.

In the U.S., Mercator’s forthcoming report illustrates a diverse and highly competitive digital bank marketplace, encompassing legacy banks as well as fintech startups across five institutional segments. From the standpoint of online deposit-gathering, the U.S. digital bank market is quickly evolving and is widely accepted by consumers.  But one constant on either side of the Atlantic is that consumers need to read before they commit. Challengers may own the “non-bank” image, but they don’t have a monopoly on competitive innovation.

Referenced article by – Choose

Overview by Ken Paterson, VP, Special Projects and Director, Customer Interaction at Mercator Advisory Group

The post Mobile Only Banks, How Do They Work? appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment

• Younger, better educated, higher income, experience, and comfort with similar products
• Consumers with one or more of those demographics are willing to evaluate new digital payment options
• Six criteria are evaluated: product availability, openness to technology, ease of use, perceived security, value received, comfort with process
• Consumer demographics (4) and evaluation criteria (6) feed a 5-stage adoption funnel, beginning with Awareness
• Awareness leads to: interest, evaluation, trial, & adoption

About this report

Mercator Advisory Group’s most recent Insight Summary Report, Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment, reveals that U.S. customers are highly satisfied with their banking relationship and comfortable with their current primary bank or credit union. The report is from the Banking and Channels Survey in the bi-annual CustomerMonitor Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s CustomerMonitor Survey Series online survey of 3,000 U.S. adult consumers in November 2018.

The survey also found that only about 1 in 3 consumers want to be contacted by their financial institution (FI) about new products and services. This necessitates that FIs be very strategic in the way they cross-sell and up-sell to their customers

While the incidence of opening an account digitally is moderate (28%), satisfaction with the digital account opening process is very high (approx. 85%).

The report, Omnichannel and Branch Banking: The Current U.S. Consumer Banking Environment, shows that consumers are resolute in their determination not to pay ATM fees. More than 7 in 10 report that they actively try to avoid paying a fee when they withdraw money from an ATM. Further, about one-third only use an ATM for cash withdrawal.

Although only about one-third of consumers use mobile banking, those who do are quite satisfied with the experience. Inertia and security concerns are barriers to mobile banking adoption

“Banks need to show consumers value beyond dollars and convenience. And this needs to be balanced with security and safety,” states the author of the report, Pete Reville, Director of Primary Data Services including CustomerMonitor Survey Series at Mercator Advisory Group.

The post Four Demographic Characteristics Dictate Whether Consumers Evaluate New Digital Payments: appeared first on PaymentsJournal.

Talk, text, tweet, DM, Snap, FaceTime – there are thousands of ways to reach people and even more on the horizon. With communication and mobile technology advancing like never before, consumer behaviors are changing at record rates. The lines between physical and digital are increasingly blurring, which will significantly impact all industries for years to come, including banking.

Our latest Trends in Consumer Mobility Report takes a deeper dive into the merging of the digital and physical, finding nearly half of respondents see no difference between communicating virtually or in-person. According to the survey of evolving mobile trends and behaviors, it’s gotten to the point where consumers actually prefer mobile communication over in-person when it comes to connecting with their friends and family.

Read on for more key trends from the report: 

Talk or Text?

There are several factors that Americans take into account to determine how they communicate with others, with top responses being the importance of the conversation, urgency and their relationship with the person. And for 41 percent of today’s Gen Zers, their current mood is the primary factor.

Just @ Me

The majority of consumers believe they can have a close friendship with someone they’ve never met in person, only online. Gen Zers are even as likely to ask for social media handles as they are for phone numbers when meeting new people.

Stay App-tive

Consumers are clearly turning to apps to manage their everyday lives, with many Gen Zers accessing apps more than 50 times per day. The types of apps Americans depend on the most are navigation, entertainment and retail; and they expect these apps to earn rewards, connect them with others, make payments and so much more.

Humanizing Apps

We also found that Americans prefer apps that they see as having personality traits like being trustworthy, easygoing and well-rounded. We have the same expectations for apps that we do for our friends!

Banking on the Go

Mobile banking is also rapidly rising, as nearly three-quarters of consumers say they use their bank’s mobile app. Perhaps this is because nearly all users feel the app saves them time, with 80 percent citing it saves them up to an hour each week. Gen Zers and millennials are the highest adopters and most frequent users of mobile banking.

No Cash, No Problem

Along with day-to-day banking needs, Americans are also using mobile apps to pay each other – 44 percent of consumers currently use person-to-person payments (P2P) technology, an 8 percent increase year over year. P2P payments are even starting to replace physical gifts as 81 percent are comfortable gifting money through P2P, with birthdays, graduations and holidays the top occasions for doing so.

Password Passé

Passwords are quickly becoming a thing of the past. Today, most Americans are comfortable using biometrics on their smartphones, with 69 percent using fingerprint or touch ID, 65 percent using voice recognition and half using facial recognition. Baby Boomers are the heaviest adopters, leading the charge of newer, more secure ways to access their information.

Next-Gen Tech on the Horizon

User expectations continue to evolve and with it, new technologies. When asked to describe the future of technology, consumers predict that emerging tech will play an even larger role in their lives over the next decade. In the next 10 years,

• 60 percent think it will be more difficult to disconnect from technology
• 39 percent believe all technology devices will be touchscreen
• 35 percent say all information will be accessed via biometrics

Consumer-facing businesses cannot ignore these evolving behaviors if they want to stay relevant and forge meaningful, long-lasting relationships with their customers. At Bank of America, our unique high-tech, high-touch approach enables us to meet all of our clients where and how they want to communicate. Whether it’s through digital or physical interactions, our job is to make it as easy as possible for our clients to bank how, when, and where they want to.

To learn more about the Trends in Consumer Mobility Report from Bank of America, visit bankofamerica.com. 

Nikki Katz is the Head of Digital Strategy and Emerging Experiences at Bank of America. She’s responsible for leading the ongoing enhancement of Bank of America’s digital services and channels, transforming the online and digital customer experience, and delivering a suite of leading-edge capabilities that will enable the bank to continue their leadership position in digital.

The post Tech and Banking: Evolving Mobile Trends From Bank of America appeared first on PaymentsJournal.

BAI recently published a list of top 10 mobile banking trends that experts see coming or growing in 2019. Mobile banking is certainly taking off, especially in light of recent branch closings. Yet, experts predict that consumers are looking for more value in their mobile banking apps, with more functionality such as cardless ATM access, easier authentication processes using biometrics, more personalization using machine learning and customer data to provide financial advice, with some human or human-like intervention, either by voice activation or with human connections when necessary to remote locations. Consumers rely more and more on their mobile devices to manage their lives, but are looking for enhanced security yet easier user interfaces that recognize our past behavior and relationships and provide more than just account management. Mobile banking providers need to more than just providers, but act as more of a financial partner, providing greater convenience, functionality and advice. Otherwise, consumers are willing to go to non-traditional providers for deposit accounts and payment tools who provide that value.

“Using technology to create more meaningful and deeper connections with customers will drive mobile banking strategies for years to come. Innovative digital solutions, data and analytics, and a customer-first approach will enable banks to build closer human connections and solve financial problems.”

Mercator’s CustomerMonitor Survey Series sees rapid growth of mobile banking, and our latest Channels survey conducted in November of 2018 finds that half of consumers with accounts at financial institutions have used a mobile banking app on their smartphone within the previous year, steadily growing over the past five years. Consumers are using mobile devices to manage their accounts, pay bills, transfer money and make other banking transactions. Voice-activated banking is also on the rise, but satisfaction with current methods is low, as integration needs improvement. Most consumers adhere to some type of a budget. Especially in a time of stock market volatility and turbulence, consumers seek advice and support for wealth management, savings and improving their financial health. They need a provider that fits in their lifestyle, knows them and can act as a partner to provide value in their terms.

Overview by Karen Augustine, Manager, Primary Data Services at Mercator Advisory Group

The post Mobile Banking Trends for 2019: Looking for Value appeared first on PaymentsJournal.

Traditionally, systems such as treasury management, procurement, enterprise resource planning (ERP), and card management have been delivered through installed programs on the desktop platform. Now, however, these systems are becoming available through other platforms and channels – namely, the cloud and mobile devices. Corporate users and financial professionals all along the cash cycle are now facilitating payments and other core activities using mobile platforms.

Steve Murphy, Director of Commercial and Enterprise Payments, outlines some of these activities and scenarios, while looking ahead along a seven-year growth trajectory to project the expected value of corporate and commercial spend initiated through mobile channels in 2025.

Today: The commercial mobile landscape at a high level

Currently, mobile is being used to facilitate various direct and indirect payment activities and a handful of other services for commercial customers.

One of the most common transactional scenarios is corporate proximity payments – that is, ones carried out in face-to-face environments. These are usually executed via a commercial card platform that allows employees to use the company card for purchases while traveling for business.

Commercial cards can also be used remotely when employees use them to book flights or accommodations through travel management systems, for direct procurement at the company via phone, and for web interactions.

There are also indirect payment scenarios where designated approvers such as CFOs and AP managers are using mobile to execute both bulk and single payment releases throughout the AP workflow as invoices are received and processed for payment.

Tomorrow: Potential uses and growth areas for mobile

Mobile has the potential to let these employees do more with less effort.

For instance, loading that commercial company card into a mobile wallet platform would enable traveling employees to use it directly at the point of sale as a contactless physical card – a tap-and-go scenario. Enabling employees to manage expenses on a mobile device as they go would save them the time and headache of filling out reimbursement forms while traveling – and free the rest of the organization from having to process them.

But Murphy says it’s safe to dream bigger. Making existing functions even more seamless is only the beginning of what’s possible.

Mobile could help coordinate interactions between departments to improve project management and CRM activities. It can provide clients with more capabilities in online banking, beyond the card management tool that has already become commonplace.

As business-to-business (B2B) marketplaces show an uptick, Murphy predicts that these will become a good market for virtual card usage and e-procurement systems because of the potential for more frequent integration up front for card-based selections in e-procurement – compared to today’s accepted “buy now, bill later” approach.

Consider an indirect payment scenario where approvals and releases are required as part of the accounts payable (AP) workflow as invoices are received and processed for payment.

Growth Projections

Looking ahead to 2025, Murphy expects the value of corporate and commercial spend initiated through mobile channels to grow exponentially. He predicts that remotely-initiated mobile payments will begin to accelerate in 2021, driven by further digitization of the care cycle.

Meanwhile, proximity payments will follow a similar slope but at a slower pace, which will hinge on merchant adoption and access, plus a greater number of issuing banks and payment service providers offering capabilities.

What does all of this mean? When it comes to mobile, the sky’s the limit in these early days. We simply don’t know what we don’t know, and can’t begin to imagine what we can’t imagine.

The post How Mobile Facilitates Payments and More in the Corporate User Space appeared first on PaymentsJournal.

There are plenty of reasons that a financial institution (FI) might put off the impending digital transformation. It’s no small project. On one side, consumers are demanding a laundry list of products and functions on the user end, but FIs must also respond to pressures on the other side from compliance enforcers and organizational filters.

However, Ken Paterson, VP Special Projects and Director of Customer Interaction, says this is a market where one can reasonably expect any John or Jane Doe to have a smartphone or tablet. Therefore, there’s much to be said for taking a mobile-first approach to creating a digital banking interface.

What Winning FIs Do Differently

The biggest, most successful FIs are already taking a mobile-first approach. For these FIs, mobile is driving major decisions across the organization.

First, it’s shaping platform design factors such as color, branding, and graphic standards. The look and feel of mobile apps are being used to overlay into other channels, including the physical branch channel.

Mobile is also shaping FI’s IT approach, whether they’re developing an API strategy, making decisions around platforms and applications, or weighing the importance of security concerns.

Finally, mobile is dictating shifts in organizational structures as FIs create digital transformation leadership roles and coordinate the implementation of products and services across organizational silos.

Many institutions also have innovation hubs, development labs, and in-house incubators that often serve as leadership training as they rotate executives through their doors.

Why Mobile-First Matters

Why are these FIs letting mobile take shotgun in their decision-making process?

According to Paterson, it’s simple: Mobile should be important to FIs because it’s important to the end customer. Mobile banking is starting to play a lead role in terms of service definition and delivery at FIs. It’s rapidly becoming customers’ favorite delivery channel for FI interactions.

Customer experience is where channel functionality converges in a single location. It’s where omnichannel support occurs, and that’s something that defines the customer experience. Therefore, it should come as no surprise that that’s where digital transformation is happening in successful FIs today.

What Mobile-First Really Looks Like

Of course, it’s no easy task delivering all the functions that customers want at the standards that the law and organizational culture demand. Here is just a partial list of consumer products and functional capabilities that most FIs will want to enable on mobile:

• Deposit, loan and card products
• Investment and insurance products
• Rewards
• P2P transfers and bill-pay
• Card controls
• Mobile wallet/cardless ATM
• KYC/authentication
• Natural language interfaces
• Receipt management
• Branch locator
• Account opening and onboarding

As if that list were not exhaustive enough, Paterson adds that the final output must pass through organizational filters including:

• Structure and controls: What is the organization’s overarching approach to digital transformation and its vision of mobile structure?
• Compliance: Every item in that extensive list must be compliant.
• Disclosure: How will documents and disclosures be presented?
• Segmentation: How will products be grouped and presented on the mobile platform (i.e., consumer, small business, and commercial)?
• Navigation and flow: How will the FI determine the organization of products by segment or user group within the app? Here, end-user navigation is a primary concern.
• Design standards: Common graphics, branding, and terminology must be leveraged across all channels.

Finally, Paterson notes, all of the above must be accomplished while accommodating the core or legacy system of record constraints, and while also providing user analytics to the leadership team.

Overwhelming? Perhaps – but worthwhile. Over the last five years, mobile banking has doubled its penetration of the retail customer base, putting it on the path to becoming a preferred channel.

The post No More Holding Back on Mobile appeared first on PaymentsJournal.

With traditional branch-based banking on the decline as consumers embrace mobile apps to quickly and simply manage their financial needs, financial institutions are scrambling to adjust to the new world order of digital-first banking.

This trend has been accelerated as digital-native millennials –far removed from the days of queuing at a brick-and-mortar bank, meeting with a teller, and cashing physical checks – have come to dominate the workforce. And while most banks are committed to providing digital solutions to meet their customers’ financial needs, there is considerable room for growth.

Fintech developments have spurred a sharp increase in mobile banking, with 51 percent of mobile phone users accessing financial services via their phones in 2016, compared to only 18 percent in 2009. Not only is there competition among banks to create the best app experience, but in an era of innovative fintech solutions, competition extends to emerging non-bank players who offer money management tools as well. MagnifyMoney’s annual survey reviewed the best mobile banking apps of 2017, and while few apps made major improvements, the study found that no banking apps were perceived to be particularly bad.

So how can banks rise above the competition, improve their app experience, and stand out in an ever-expanding sea of options? 

Fuss Over Features

Features come first and foremost. A Citibank survey found that 80 percent of people are likely to remain with a bank whose app that has five or more features. Consumers rely on their banking apps for a host of different purposes and needs, and banks need to design accordingly.

But which added features do customers want to see? App reviews on Apple App Store and Google Play Store provide some important takeaways: Consumers want quality customer service features, and given the nature of the services, users naturally prize security features, such as face-recognition and fingerprint-ID. Instant advice, personalized budget tools, and cash rewards programs are also popular with many customers, an Accenture survey found.

Hand Over Control

Naturally, customers want and expect to feel firmly in control of their banking experience. By giving users the right features to take ownership of their finances, banks can empower consumers and engender greater loyalty, forging mutually beneficial relationships. Money management tools such as budget notifications or insights derived from spending analytics will equip consumers with the kind of actionable information they need to make intelligent financial decisions. Similarly, apps that allow users to allocate their own funds or create customized spending schemes enable consumers to create financial plans that make sense for their own goals and aspirations.

A Knockout User Experience

Just as the users need to feel like they have a secure handle on the digital banking experience, so too they must feel like the app was designed for them. While mobile banking began as a cost-cutting strategy for big banks looking for ways to lessen traffic in their local branches, the focus has completely shifted. Over the last five years, banks have stopped emphasizing functionality for themselves and come to recognize the importance of user experience.

What good is having multiple great features if customers are struggling to navigate the app interface? When asked about their financial institution’s digital experience, 68 percent of users were seeking something easy to understand, and 62 percent voiced a need for minimal effort when using the app. Prioritizing UX means that app-users can perform any banking tasks with ease, from wherever they are.

Combining Forces

Coupling several high-demand features with an easy-to-use design will help facilitate a great mobile-banking experience. While this may not seem groundbreaking, tweaking the UX and adding features is the real difference between a good app and a great one. But the real takeaway is to remember who is using the banking app: When digital banking puts customers’ needs first, everyone wins.

The post A How-To Guide for Building the Best Banking App appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower left corner of your screen to receive notifications as soon as the episode publishes.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Mobile Payments: Still Waiting for Broader Adoption in the U.S.

About this report

This study, based on Mercator Advisory Group’s CustomerMonitor Survey Series payments survey conducted using an online panel of 3,002 U.S. adults in June 2018, examines the demographic shift and changing landscape of web-enabled mobile users, consumer use of mobile devices for making payments and shopping online and in stores, use of in-app payments, related payment features including e-couponing, e-receipting, and e-loyalty as well as alerts and emerging digital platforms such as voice-activated conversational interfaces and wearables for payments

The post How Many Consumers Use a Wearable Device for Banking and Payments? appeared first on PaymentsJournal.

The introduction of new payment types has created a greater need for a strong, flexible card infrastructure than ever before. That’s easy for issuers to lose sight of; mobile services are new, exciting and backed by demonstrable customer demand. Fundamentally, however, mobile services rely heavily on card payments.

All this innovation is pushing and pulling card infrastructures in ways no-one could have predicted a decade ago. Mobile banking, ecommerce integration, loyalty and rewards schemes and even IoT payments all link to cards. That’s a lot to ask of a back-end system.

So the question is: how can issuers balance a need to be perceived as innovative with providing a reliable, compliant and fit-for-purpose payment infrastructure?

Payment revenue is falling, so issuer’s profit margins are being squeezed. Technological change is advancing faster than internal systems can be updated, and the demand for developers with the skills to design and implement back-end solutions is growing faster than supply. As a result, the most forward-thinking banks are taking a critical look at their go-to-market strategies, and questioning if a business model where they design, implement and maintain their own systems is still feasible.

Take payment gateways as an example. Banks need a payment gateway to the card schemes as they are the backbone of broad e-commerce payment acceptance for their customers, thereby enabling banks to benefit from the international e-commerce market – set to grow to $4.5 trillion by 2021[1]. To avoid locking themselves in with a single scheme, these gateways must also be card scheme agnostic. Issuers now have the choice of whether to develop and maintain these gateways themselves, or to prioritise reliability and time to market by working in collaboration with a trusted partner.

The debate around outsourcing infrastructure has been simmering under the surface for the last few years, and was brought into focus by the Second Payment Services Directive (PSD2). Open banking is bringing huge opportunities to banks because the importance of national borders in the provision of financial services is diminishing. This opens up the market and benefits consumers, and enables banks to target whole new countries of potential customers. However, these opportunities come hand in hand with two significant challenges.

First, banks must ensure that their payments infrastructure is compliant not only with EU and their own national regulations, but the domestic regulations of any other international markets they intend to enter, as well as the complex and constantly evolving requirements of the card schemes. Card scheme compliance alone is a great responsibility, demanding increasingly more resources as the service portfolio diversifies and becomes more complex, predominantly driven by mobile payment enablement. This is an enormous undertaking – and one difficult to justify when there are dedicated providers of back-end systems offering full compliance for less than it would cost a bank to create and maintain it themselves.

Second, scalability is key. In the increasingly globalized world of financial services, exciting new products must be made available to all customers at the same time, without any of the downtime associated with launching new products and systems. Stability and security are fundamental to banks; innovation alone means nothing.

It’s clear that, in an era where banking and financial services are evolving faster than ever before, banks need to put their money where it counts. A flexible and reliable card infrastructure will be crucial to a successful transition as more and more financial services move to being predominantly mobile – and in the future, maybe even mobile-only.

Although most consumer-facing financial institutions now offer mobile applications, that doesn’t mean that they are ready for a world where smartphones are the primary point of contact with their customers. This is a new reality, and as the industry changes issuers must evolve too. Those that survive and thrive will be the banks that focus on their delivered customer journey and value-adding core business areas – and it’s time to ask if this really includes developing and maintaining back-end systems.

So, put your cards on the table. Is your infrastructure up to the challenge?

For more information on Nets’ payment services for banks, issuers and financial institutions, please visit www.nets.eu.

[1] https://www.shopify.com/enterprise/global-ecommerce-statistics

The post (Payment) Cards on the Table: is your Infrastructure up to the Challenge? appeared first on PaymentsJournal.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report Digital Banking: Improvements Needed to Compete with Fintech, by Karen Augustine

The post Mobile banking has never been more popular, but… appeared first on PaymentsJournal.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report: U.S. Market Forecast for P2P Solutions, 2017-2021 by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Mobile Banking’s History of Growth appeared first on PaymentsJournal.