The Future of Payments

36 BANKING PERSPECTIVES QUARTER 4 2018 RTP at 1: Northwest Financial Corp. E EVER SINCE THE FEDERAL RESERVE convened its Faster Payments Task Force in 2015, we’ve been hearing a louder and louder drumbeat about the need for faster or real-time payments. As I visit with community bankers about the issue, I get a variety of reactions. Many bankers aren’t engaged in the discussion at all. Others are still only thinking about the consumer side of real-time payments, and some community banks are ahead of the pack and working on their plans. For those that aren’t thinking about it at all, there seems to be four common responses: • My customers aren’t asking for it. • My core-system provider isn’t ready or isn’t even talking to us about it. • I’m waiting to see what the Federal Reserve comes up with. • We’ll start working on it later when prices come down. I have found in my career that customers don’t necessarily engage in these kinds of discussions with us as bankers. If our bank isn’t offering something that customers want, they just find a vendor that offers it. Sometimes that is a single service engagement by the customer, and sometimes it leads to the customer leaving our bank for another financial institution or financial service provider. Regarding the latter, unfortunately, by the time we know there was an issue with the customer, he or she is already gone. Therefore, I always encourage community bankers to be more engaged and proactive in this payments discussion, even though it is hard to determine an immediate ROI on these kinds of investments. Often, attempting to project customer engagement is little more than speculation at best. Build it and they will come, to quote a line from Field of Dreams . This is not exactly the ROI analysis that your finance or executive team is expecting, but banks can measure the cost of losing a customer. In this case, what is the impact of losing customers because they don’t see your bank even talking about these kinds of innovations? Many customers just go down the path of further fragmenting their financial relationship with us as banks. They have their credit card with one entity, maybe use Venmo or another option for peer-to-peer (P2P) payments, go online for I always encourage community bankers to be more engaged and proactive in this payments discussion, even though it is hard to determine an immediate ROI on these kinds of investments. ENGAGE NOW AND BE PART OF THE INITIATIVE. YOUR CUSTOMERS ARE DEPENDING ON YOU TO REACH THE FINAL DESTINATION. RTP: THIS TRAIN IS ON THE TRACK BY JEFF PLAGGE, NORTHWEST F INANCIAL CORP.