Being your members’ primary financial institution (PFI) is about serving them where they live their financial lives. As mobile and digital innovations continue to transform the consumer landscape, what members expect from payments is changing. We’ve identified four trends that you need to know to win the payments race:
1. Payments Are Increasingly Passive
That is because they are rapidly going digital. According to Capgemini and BNP Paribas, consumers will make more than 726 billion digital transactions by 2020. eMarketer projects that $156 billion in mobile P2P payments will be made in 2018 alone – with $244 billion estimated for 2021.
At the same time, U.S. in-store mobile payments are advancing at 40 percent annually, on track to hit $128 billion in 2021.
And while 98 percent of consumers proactively choose a payment method during a live POS transaction, according to the Deloitte Center for Financial Services, 74 percent of web transactions and 87 percent of mobile purchases are made passively, using a default card stored within the merchant site. To win the payments race, that default card must be yours.
2. FI Relationships Are Changing
A recent IDC survey queried consumers about their thoughts on banks. The results might surprise you. While 81 percent of consumers agree that “banks are a necessity and serve a vital role,” and 68 percent believe their bank is more secure than the retailers they shop, a full 24 percent of those surveyed also agree with the following statement:
“I would be fine using a third party for all my financial needs and close out my traditional banking relationships.”
As consumers continue to embrace third-party payments providers, financial institutions everywhere are scrambling to maintain industry dominance.
“In this environment, the only way to achieve rapid growth and stickiness with members is to increase your share of digital wallet, and that requires modernizing the payments experience,” said Gail Tofil, VP of strategic partnership retention for CO-OP.
And entities across the globe are doing just that. In fact, according to IDC, 19 of G20 economies are implementing “new rails,” alternative networks to enable faster, real-time settlement. Thirty-five countries worldwide are actively moving to real-time payments.
Consider also that the Internet of Things, blockchain technology, P2P networks and voice recognition bots are all redefining how transactions are conducted, ushering in a future in which payments are as fast and ubiquitous as the Internet itself.
3. PFI is About Gaining Top-of-Phone Status
So, what exactly do consumers expect from payments today?
“Members also want to be rewarded for their transactions – in ways that are meaningful to them,” said Tofil. “Consumers received $15 billion in rewards in the last year alone and will base primary card decisions on expected rewards.”
Yet, with so many member interactions passing through digital channels, credit unions are challenged today to get to know their members well – to build relationships, understand what they want and provide the kind of timely, personalized rewards and offers that resonate with them.
“The key to engaging members in the digital age is to leverage data,” said Tofil. “Several CO-OP initiatives are well underway to help you effectively mine your data and put it to work in service to members.”
4. Look Beyond Payments
While payments sit at the heart of the member experience you provide, achieving PFI status takes a multi-faceted approach, one that recognizes the full spectrum of member financial needs.
“For example, 67 percent of millennials want their banking tools and providers to help them create and monitor their budget,” said Tofil. “Ultimately, members want it all. They want easy, open access to the channel of their choice when interacting with you, whether that is the branch, call center, card payments or digital/mobile bill pay. They also want the option to control their own financial world without having to interact with you. Offering self-serve access is essential.”
She continued, “We need to show our members that we see them as people, with unique wants and needs, and that we are going to help them live better financial lives. That’s how we build loyalty.”
Understanding and navigating the always changing payments landscape is not easy, and that’s why having the right strategic partner in place is critical in today’s digital era. Contact us today to discuss how to meet these needs and gain PFI status.
And be sure to join us at an upcoming CO-OP Roadshow in a city near you. Learn the latest consumer trends and hands-on strategies you can begin implementing immediately at your credit union. See the full schedule: http://co-opthink.org/event-types/regional/