In late 2019, we saw Apple partner with Goldman Sachs to create the Apple Card, Uber launched Uber Money backed by Green Dot Bank, and Google announced plans to introduce checking accounts along with Citibank. Amazon has long had a joint Credit Card offering with Chase Bank and recently launched additional options with Synchrony Bank. Facebook, not wanting to be left behind, is working to develop their own cryptocurrency, recently renamed Diem. These are just a few of the latest examples of Big Tech shifting to the Financial Industry and the small number of institutions that already dominate the landscape, continuing to be in a position to leverage that shift. The COVID-19 pandemic has helped to accelerate this shift as consumers are moving further away from cash and traditional point-of-sale (POS) transactions in favor of contactless and digital payment options. This has also highlighted the fragmented checkout experience as consumers have 3 or 4 ways to pay at the register, typically compounded by loyalty programs and mobile app experiences. The biggest difference is that these payment methods often favor speed and convenience, something that is central to Big Tech’s infrastructure and user experience.
Fast forward to 2020 and we have seen a boom in peer-to-peer (P2P) payments as well, with PayPal and Venmo experiencing record earnings and Square’s Cash App experiencing rapid user growth. P2P transaction volume overall is growing month over month as consumers have adjusted to sending and receiving money in a completely digital, contactless way. For smaller, regionally-based Financial Institutions (FIs), these trends initially lead to a loss of transactions, which is obviously a concern, but the impact often does not stop there. Today’s consumers have an a la carte mentality when it comes to both technology and banking and the more comfortable a consumer becomes with these Big Tech solutions for transactions, the more they will look to them for investment relationships or credit solutions. Common behavior is to shop multiple services for the best fit based on price, convenience, and personal preference, but this behavior causes a break in loyalty to an FI.
Here at Neural Payments, we feel that the more that FIs can broaden their relationship with these consumers, even if it means leveraging the capabilities of a third-party FinTech, the more sticky they become to their cardholders. Taking a minimalist approach and just “checking the box” that you have a solution does not actually address the long-term disconnect that Big Tech and third party FinTechs are creating. Instead, the focus should be on enabling solutions that have both the FI and the customer at the forefront. The average consumer is already managing a larger portion of their lives on a mobile device. Financial Institutions can and should participate in these interactions and consumers would welcome it if the service is convenient and adds value from a trusted institution.
We are actively pursuing several integrations to allow our clients to do just that. It is exciting to build a company focused on solving these challenges for our customers. We have already partnered with Processors, Global Brands, and Big Tech in ways that we have not seen in the industry to date. These partnerships are allowing us to launch products that are changing the way we think about our FIs. Solving P2P is just the start – looking forward to 2021!
In late 2019, we saw Apple partner with Goldman Sachs to create the Apple Card, Uber launched Uber Money backed by Green Dot Bank, and Google announced plans to introduce checking accounts along with Citibank. Amazon has long had a joint Credit Card offering with Chase Bank and recently launched additional options with Synchrony Bank. Facebook, not wanting to be left behind, is working to develop their own cryptocurrency, recently renamed Diem. These are just a few of the latest examples of Big Tech shifting to the Financial Industry and the small number of institutions that already dominate the landscape, continuing to be in a position to leverage that shift. The COVID-19 pandemic has helped to accelerate this shift as consumers are moving further away from cash and traditional point-of-sale (POS) transactions in favor of contactless and digital payment options. This has also highlighted the fragmented checkout experience as consumers have 3 or 4 ways to pay at the register, typically compounded by loyalty programs and mobile app experiences. The biggest difference is that these payment methods often favor speed and convenience, something that is central to Big Tech’s infrastructure and user experience.
Fast forward to 2020 and we have seen a boom in peer-to-peer (P2P) payments as well, with PayPal and Venmo experiencing record earnings and Square’s Cash App experiencing rapid user growth. P2P transaction volume overall is growing month over month as consumers have adjusted to sending and receiving money in a completely digital, contactless way. For smaller, regionally-based Financial Institutions (FIs), these trends initially lead to a loss of transactions, which is obviously a concern, but the impact often does not stop there. Today’s consumers have an a la carte mentality when it comes to both technology and banking and the more comfortable a consumer becomes with these Big Tech solutions for transactions, the more they will look to them for investment relationships or credit solutions. Common behavior is to shop multiple services for the best fit based on price, convenience, and personal preference, but this behavior causes a break in loyalty to an FI.
Here at Neural Payments, we feel that the more that FIs can broaden their relationship with these consumers, even if it means leveraging the capabilities of a third-party FinTech, the more sticky they become to their cardholders. Taking a minimalist approach and just “checking the box” that you have a solution does not actually address the long-term disconnect that Big Tech and third party FinTechs are creating. Instead, the focus should be on enabling solutions that have both the FI and the customer at the forefront. The average consumer is already managing a larger portion of their lives on a mobile device. Financial Institutions can and should participate in these interactions and consumers would welcome it if the service is convenient and adds value from a trusted institution.
We are actively pursuing several integrations to allow our clients to do just that. It is exciting to build a company focused on solving these challenges for our customers. We have already partnered with Processors, Global Brands, and Big Tech in ways that we have not seen in the industry to date. These partnerships are allowing us to launch products that are changing the way we think about our FIs. Solving P2P is just the start – looking forward to 2021!
Best regards,
Mick
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