Posted by Bethany Frank on 03 May 2016
Many top financial institutions are looking to build real-time payments solutions to keep up with new consumer demands, tough competition, and changing market forces. This may cause some growing pains for banks, but for businesses, updated payments rails could bring significant potential benefits. Integration into a real-time payments framework can enhance and reduce friction in the entire payments process. A faster payments solution could make paying bills more convenient for a business’s customers by eliminating cutoff times for submitting payments. Drastically reduced payment reconciliation efforts can also save businesses both time and money.
A real-time payments solution could bring significant positive impacts on a business’s overall cash flow, as it enables faster availability of funds, allowing for a greater precision in budgeting and a sharpened approach to overall cash management. Furthermore, businesses are often required to pay various fees to process and receive payments via credit card, ACH, and other methods; a real-time payments solution could help reduce or eliminate these kinds of expenditures.
Faster payments will likely lead to increases in customer satisfaction over time, especially as consumers become more comfortable with the technology. In an age where consumers not only prefer but expect convenient mobile and digital services, modernized payments capabilities can help businesses engage customers through their preferred channels. Real-time payments allow businesses to offer their customers more speed and convenience, which usually have a strong correlation with positive consumer sentiment.
Updated payments rails hold the potential to completely transform transactions such as down payments on big-ticket items and emergency consequence payments. Speed, security, and reliability make immediate payments a better alternative to checks, cash, and ACH payments for these time-sensitive transactions. A far more advanced payments infrastructure could also help improve consumer-to-business and business-to-business micropayments, as well as P2P services.
Perhaps the most important effect of real-time payments on businesses will be the proliferation of products, services, and business opportunities made possible by the new technology. Banks are likely to take a fresh look at product and service offerings with the goal of enhancing them to suit the needs of corporate and business customers. Real-time payments also provide a foundation to design more efficient financial applications for small business and online commerce; this could open up the possibility for more businesses to compete with the likes of Amazon, especially as the market for immediate goods and services continues to gain steam.
As financial institutions seek to keep up with a fast-growing technology sector, businesses are likely to witness improved banking services, enhanced financial products, and accelerated cash flow driven by real-time payments. Financial institutions will probably pay especially close attention to their corporate and business customers as new technologies are integrated into the existing payments landscape. Regardless of how it all plays out, businesses are in perfect position to become one of the biggest beneficiaries of the banking industry’s investment into the future of payments.
02 Apr 2019 Blog Fintech Disruption: Creating Opportunities for Financial Institutions Fintech can help financial institutions deliver better customer experiences. This blog examines opportunities that fintech can help unlock in faster payments, conversational commerce, and data and analytics.