We may never be ready for economic turbulence, but are you prepared?
If you’ve ever brought home a new pet, child, or other addition to your family, you know it’s nearly impossible to be ready for the chaos that may ensue. However, you can be prepared with the knowledge, the right supplies, and helpful resources. Maybe tough economic times aren’t so different.
(Side note: The blog you’re about to read is a trilogy finale. In part one of this series, we dove into resources that have your back in a liquidity crisis. Part two covers the top traits every financial institution needs to embrace to keep account holders happy.)
Now that we’ve looked at the lending and deposit pillars of preparedness, let’s talk about another crucial pillar: payments.
What do lending, deposits, and payments all have in common? They’re all about the availability and movement of money.
Every day our world operates less in cash and more in digital currency. Payment rails, specifically, fuel the movement of digital currency. Payment rails now include:
- ACH
- RTP (real-time payments)
- Card payments
- Person-to-person apps (Venmo, CashApp etc.)
- Digital wallets
- Blockchain
On the surface, payment rails may not seem valuable to account holders. While accountholders might not understand the behind-the-scenes of how their money moves, financial institutions must be aware of payment trends and adapt to how consumers want to move their money.
Here are four payment trends that can’t be ignored:
- Payments are a big deal
Maybe that’s a no-brainer but really, payments are a big deal. Money is only good if it can be used. The global payments market is valued at $240 trillion, and fintechs hold most of the market. Financial institutions that offer in-branch and digital banking are fighting for their seat at the proverbial payments table. Payments offer a significant source of deposits for financial institutions and are worth the effort to stay on trend. The main goal is to stay relevant to all the demographics you serve. - It’s time to give up the passwords
The bad guys know that funds are always being exchanged and they want to get in on the action. They will try to fraudulently intercept the funds or scam an individual. Your accountholders might not care about payment rails - but they do care about the security of their money. Fraud is everywhere. Strong layers of authentication must be in place to prevent fraud whenever possible. Encourage accountholders to swap passwords for biometric authentication, like voice identification, fingerprints, and facial recognition. - Who is shaping the future of payments?
Move over Millennials, Generation Z is on the economic scene. Millennials are still a large and important demographic, but Gen Z is not far behind them in strength and numbers. Gen Z is putting demands like convenience, lesser fees, and seamless integrations on the banking industry.
Financial institutions must start (or continue) to cater to Gen Z, not for the sake of catering to them, but for growth. Gen Z’s economic power is growing, and they aren’t loyalists like their Baby Boomer and Gen X predecessors. They have no qualms about taking their banking elsewhere if their payment needs aren’t being met. Gen Z’s digital forward style is shaping the future of payment channels and speed. - Don’t derail the payments strategy
The future of payments is multi-rail. Multi-rail payments encompass ACH, checks, person-to-person payment apps, card, and real-time payment and transfers.
A multi-rail strategy allows for omnichannel, real-time digital cash movement, between friends and family, and vendors – both domestically and internationally. Financial institutions, especially credit unions, must be prepared to adapt to how account holders want to move their funds.
Strategic payments infrastructure enables a seamless experience. Integrating an easily navigable digital payments platform with a 24/7 transaction monitoring system into your core processor will lay the groundwork for secure, multi-rail payments.
The market demands fast, secure, multi-rail payments. Are you prepared?