How financial institutions can meet evolving consumer expectations
Financial institutions are witnessing a rapid evolution in bill pay fueled by nonbank competitors, COVID-19 and constantly rising consumer expectations. It's a complex challenge that calls for flexibility and a willingness to expand the definition of bill pay beyond the basic task of paying a bill.
The pandemic is driving rapid innovation and accelerating the use of digital tools. However, for years before COVID-19, large fintechs had emerged to focus exclusively on consumer payments, including bill pay.
By working from the outside, fintechs could focus on payments without consideration of existing banking infrastructure, integrations and other factors that financial institutions must keep in mind. Fintechs have used that advantage to innovate and connect with consumers, and that is a challenge to traditional financial services companies to up their game.
Financial institutions, though, have their own advantages. Zelle® is a prime example of recapturing person-to-person (P2P) payments and expanding to small-business payments with a real-time, convenient and secure service.
But every payment is under the microscope. Consumer expectations are going through the roof as people look for more convenience, ease of use and more advisory experiences. While that started in areas such as P2P, transfers and disbursements, heightened expectations are expanding to bill pay.
Financial institutions can continue to innovate and deliver on customer expectations when it comes to the next generation of payments. Here's how.
Become an Extension of the Biller
The question for financial institutions around bill pay is how to make it more modern and intuitive.
Let's say I go to my cellphone company's site to pay the bill and notice it's much higher than usual. The site will show me why. Maybe one phone in the plan exceeded the data cap.
That leads to prompts: Do I want to change my plan? Do I want to upgrade? Did I know I'm eligible for a new phone? Suddenly, my cellphone company is offering a complete advisory experience. And, like most people, I almost always go to the cellphone company's site – or any other biller's site – to make a real-time or last-minute bill payment using a credit or debit card.
Financial institutions recognize their bill pay experiences don't always measure up. There are gaps in the user experience and payment features. But they also recognize their legacy technology does the foundational things well.
The benefit of financial institution bill pay is it's a consolidated experience, a place where consumers can go to pay all their bills. They don't have to remember all the different passwords or put payment reminders in their calendars. The fact that a financial institution can do all of that in one place is a value proposition that resonates.
But then people experience it and say, "Oh, I can't pay with my card. I can't make last-minute payments. And I'm not getting the advisory experience I'm used to." So they don't make the switch to the channel.
Closing the gaps to offer the same benefits and services as biller sites requires financial institutions take advantage of their strong foundation while adding flexibility to deliver a modern, intuitive user experience.
Leverage Data to Offer Meaningful Insights
Financial institutions know who people are paying. So why not streamline the bill pay setup process by presenting those billers to consumers right from the start?
Financial institutions can also identify other relevant billers in a user's area to serve up as possibilities. Biller setup is the first step, and when financial institutions leverage data and analytics to be more advisory, they have a higher likelihood of engaging consumers.
The possibilities of how financial institutions can use data keep expanding. Eventually, leveraging data and analytics to close gaps in the experience will lead to predictive reminders.
With those reminders, financial institutions may see that a consumer paid a biller on the 15th for the past three months. But this month, the consumer hasn't scheduled the payment. So on the fifth of the month, for instance, the financial institution could ask the consumer if the payment should be scheduled.
The focus is on using data to be smarter and make people's lives easier, whether through automatic payments or notifications and alerts.
Embrace Real Time
When financial institutions are proactive, they're anticipating what's next in terms of meeting consumer expectations. Real-time bill pay is on the horizon.
It starts with a request to pay, which is an actionable alert indicating a payment is due. The user receives the request to pay from the biller through the financial institution and can pay the bill immediately. When the user responds with “pay now,” a real-time confirmation is delivered, creating a sense of comfort and trust for the consumer that the payment was made.
For processing the real-time payment, there are several methods available and others on the horizon, including direct settlement real-time networks, such as The Clearing House and the FedNowSM Service, and the card networks.
The goal is to give consumers the most real-time payment choices with the most billers. That's the next generation of experiences, and the industry is at the doorstep of a new world for bill pay.
Building on a Strong Foundation
At its heart, the bill pay challenge facing financial institutions filters down to one basic task: creating a comprehensive, enriched experience that meets consumer expectations.
The bill pay environment right now is complex, with emerging competitors and accelerated expectations, especially during a pandemic. But financial institutions are well-positioned to take the next step in bill pay.
They have the trust and loyalty of consumers and an established foundation of technology and data that competitors lack. Closing those user experience gaps and embracing the next generation of bill pay is how financial institutions can bring together the best of both worlds for consumers.