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Love or Money?

Study finds neither is a key factor in determining customers’ loyalty to banks.

Banks can sideline disruption and achieve customer growth with better data utilization, according to results of a new study conducted by Forrester Consulting on behalf of Equifax. The analysis aimed to evaluated the fragmenting value chain in the banking industry and to provide guidance for banks on remaining competitive amid growing competition and quickly changing consumer expectations.

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Overcoming Barriers to Effective Real-Time Payments

By Elena Whisler

Real-time payments have come of age. As the new FIS report, Flavors of Fast, shows, the number of real-time payments programs has grown exponentially worldwide over the past few years: from 14 in 2014 to 40 today. An additional 16 are expected to go live immanently. It’s easy to understand why; we live in the age of instant gratification. Consumers (retail and corporate alike) increasingly demand that services are delivered with immediacy — and that includes payments.

As consumers see it, moving money around is now just a matter of ones and zeros; so, why shouldn’t payments be instantaneous? It’s more important than ever for financial intuitions and payments providers to cater to this demand. People have much more choice over whom to bank with and which payments services to use. If they’re to be competitive, financial institutions need to be able to offer this much-valued service.

Real-time payments and service innovation.

But real-time payments are about much more than simply protecting market-share: they also provide an opportunity to innovate and grow. Real-time payments infrastructure provides the framework over which financial institutions can launch new, value-add overlay services that will help them win in the digital age. Innovative services launched in 2018 included money management apps, intelligent account onboarding and credit scoring, retailer pay apps and new P2P payment methods. FIS believes that 2018 was the start of a pivotal shift in how real-time infrastructures around the world are used to provide contextually relevant, frictionless and immediate experiences.

The challenges of real-time operations.

The opportunities of the real-time revolution will only be realized if banks and payments providers evolve their processes and technologies. Key to this task will be creating a bridge between legacy technology and new systems and payments services. Completely replacing the IT systems of a large financial institution to enable API-based, real-time payments-enabled services is often costly and disruptive. Banks and payments providers should therefore look to enterprise payments software to integrate new technologies with legacy systems. This software-enabled approach will help financial institutions execute the latest real-time payments solutions seamlessly, and without disruption to core business systems.

There are two further barriers to success in real-time payments and associated services. The first is operational. Real-time payments require that operations are available 24 hours a day, 7 days a week, 365 days a year. As a result, financial institutions need to move to an always-on staffing model — and this will be a big change for many. This leads to the second barrier, which is technical: with a 24/7/365 model, there’s no scope for systems downtime, making it difficult to perform systems updates.

Realizing the opportunities of real-time.

These challenges are not insignificant, and many businesses may decide they simply don’t have the resources or technical capabilities required for real-time payments. However, the alternative of doing nothing is no alternative at all: these organizations will rapidly lose out to competitors that have embraced change.

That’s why I believe managed services will prove critical to the successful implementation of real-time payments-enabled services. By outsourcing the maintenance and management of payments infrastructure, financial institutions will be able to leverage economies of scale to reduce costs. More importantly, these institutions will also be able to outsource the compliance element of real-time payments as their service provider will implement the correct changes on their behalf. What’s more, the managed service approach means they can rest assured that their systems are always up to date without the need for disruptive downtime.

Change is coming.

We’re on the cusp of a new banking revolution, one where compelling new services leverage real-time payments capabilities to deliver next-level value to businesses. The FIS report shows that the building blocks for this new revolution are rapidly falling in place. The task now is for individual financial organizations to work out what this change means for them and how their strategy reflects that to ensure they will thrive in this new age. What seems likely is that organizations that move quickly stand to benefit the most, the only question being will the early bird get the worm, or will the second mouse get the cheese?

Elena Whisler is payments and data solutions director, FIS. For more information, visit www.fisglobal.com.

Personalized Marketing Could Enhance Customer Experience

Wellesley Hills, Mass. // www.redpointglobal.com

Financial institutions consistently place customer experience in their top strategic priorities, but many banks still face the challenges of siloed product lines, channels and business units. Yet, 90 percent of consumers value personalized experiences, and according to The Boston Consulting Group, 54 percent of customers who joined a new bank did so because the new institution could deliver such personalized communications.

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Digital Lending Now an Expectation, Not an Advantage

Providing mortgage borrowers with a digital experience is no longer a competitive advantage but the new reality for mortgage lenders, according to the findings of a new study by STRATMOR Group, a mortgage advisory firm.

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The 5 Risks Banks Face Today

By Don Halliwell

For years, the banking industry was stagnant. Decade old systems stitched together have created a fragility that makes innovation quite challenging. Operating within these constraints, banks have been hesitant to adopt new techniques and systems – until now. In a new era where every interaction relies on technology, it’s crucial for banks to reinvent how they connect with their clients during every interaction. With big tech leading the way and edging ever closer to the financial space, from the operations to the experience, digital has increased customer’s expectations.

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