Consumers expect Amazon-like experiences in every facet of life. Payments are no exception. Unfortunately, U.S. banks and credit unions are mostly slow adopters. So some services that they offer, once considered advanced or at least standard, fall out of use because they no longer match what consumers want.
One example is bank-provided billpay. Consumers once saw it as a convenient way to manage, track and pay bills. However, the traditional billpay model, still utilized by many banks, is lengthy. It can take 2-3 days for electronic payments and in some instances, 7-10 days for the full payment lifecycle.
And when financial institutions do build ACH-connections to large, national billers, the process still does not provide the consumer with immediate credit for the payment. At best, generally, they can provide a next-day credit. In some cases, they can provide same-day payment to a small selection of billers.
Paying bills directly to merchants is much, much faster.
Traditional methods can also cause disruption in consumers’ financial lives. Consider two examples:
- Many military men and women rely on family to ensure bills are paid during overseas deployments. If a relative forgets, that can hurt the service member’s financial standing.
- Underbanked consumers and families living paycheck-to-paycheck often resort to paying hefty fees when bills are paid late. And all too often, bill due dates do not line up with the pay cycle.
In both cases reliance on traditional bank billpay method may cause late payments regularly, racking up late fees and making it more difficult for consumers to pay future bills.
Financial Institutions Can’t Hang Back Any Longer
Real-time bill pay is a strong example of upgrading a severely outdated service by providing customers with a faster, more secure way to manage their bills. For servicemembers and their families, it can help take the thinking out of financial management by providing an automated approach to bill payments that keeps data and payment tied together. And, for the underbanked who need to wait until payday to make their payments, it enables them to take control of payments at their convenience and ensure that payments post in real-time to avoid additional charges.
In the Amazon age, for banking institutions, providing real-time payments will be necessary sooner rather than later. The benefits are clear: stronger customer experiences, no friction between transactions and the ability to serve customer needs 24/7. Until more institutions adopt this, no banker or credit union executive should be surprised that most consumers rely on direct-to-merchant payment options.
But even with the benefits, retail banking executives have been cautious because rolling out new applications of real-time payments, such as comprehensive bill-pay platforms, can create unintended ripples in both the customer experience and internal operations. Financial institutions need to actively prepare both consumers and their employees and customers for the transition.
When implementing a new technology service, financial institutions can follow these simple steps to manage consumer expectations, anticipate potential misunderstandings and ensure smooth adoption.
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Identifying Benefits and Challenges — An Essential Beginning
An institution’s leaders and employees must understand both the benefits and potential complications of this shift, going in. This will help them more proactively identify potential disruptions in day-to-day operations. Consider these benefits and potential obstacles during implementation of real-time billpay:
Benefits
- Provides merchants with an immediate payment and consumers with peace of mind that their bills are paid once they click “submit.”
- Gives consumers more payment options and provides 24/7 ability to make payments — essential for any modern payment platform.
- Provides flexibility, as financial institutions can use a variety of payment rails to produce the best combination of speed and cost demanded by consumers.
- Enables consumers to consolidate their bill-pay experience into one secure, trusted avenue. Financial institutions are the only type of organization that can provide such consolidation.
Potential challenges
- A heightened sense of permanency attends each transaction, since processing occurs in real-time.
- Consumers must pay close attention when making real-time payments to ensure they are sending the correct amount to the right recipient.
- Due to the immediacy of the transaction, financial institutions must be able to evaluate fraud risk in real-time.
For successful adoption, they must educate both consumers and staff on the technology’s speed and permanence
Educating Customers and Staff to Streamline Adoption
One of the most crucial areas that financial institutions struggle with is educating their customers and employees on the impact of new technology. Despite marketers’ best efforts, there are often going to be overlooked considerations when developing these important materials. So, once the characteristics above are identified, institutions can use them to create educational materials and implementation processes.
Customers
Most consumers don’t care “how the sausage is made.” However, they do need to know when money will be deducted from their account and when their bill be paid. Financial institutions must provide some quick, easily understood and readily available information to address questions.
If rolling out a new billpay portal, consider developing a Q&A page that can be easily found on the billpay site. Include a call out to some of the most frequently asked questions on the main page. Additionally, in any marketing materials make sure the verbiage is clear — avoid “techspeak.”
For example, consumers should be able to quickly learn that real-time billpay can help better manage cash flow, reduce time spent paying bills and provides immediate payment. If one-time-use virtual cards are being used on the back-end of the process, it’s important to enable the consumer to opt-in.
Employees
Financial institutions need to ensure that all staff, especially frontline and call center employees, are up to speed and able to answer questions that may come in. Similar to consumer-facing messages, it helps to provide an FAQ that employees can easily leverage when answering questions about things, such as cancelling a transaction.
Importantly, having a confidently informed staff can help employees improve their cross-selling skills. Giving employees ample resources and information can empower the bank staff to have positive discussions about the new technology. In the case of real-time billpay, employees will better understand that a customer-centric approach to billpay is a unique offering that can help consumers better handle their finances.