[Editor’s note: This is a guest post from Steve Kramer, the Vice President, Product at PayNearMe. With more than 25 years of payments and product experience, Steve ensures PayNearMe’s solutions lead the market by reducing consumer friction and offering the widest range of payment options and channels, all while staying focused on security and reliability, to ensure clients collect every payment, every time.]
During the pandemic as consumers have grown more accustomed to shopping, meeting and interacting remotely, their expectations as to how they manage their personal finances have changed as well.
At PayNearMe, we keep a close eye on emerging fintech trends to understand how they will affect client needs and consumer preferences. Even in a year of seemingly endless change, we’ve seen three distinct trends that should make lenders sit up and take notice.
1. Digital payments and disbursements are boosting speed and convenience
As customers grow increasingly comfortable with peer-to-peer payment apps, like PayPal and Venmo, they want that same fast and fluid experience with their other financial interactions, including bill payment and disbursement. A Visa study found that 76 percent of North American consumers prefer direct deposit of disbursements to any other payment method.
Now technology has enabled similar fluidity in everyday bill payment. For instance, customers can use a debit card, ACH, Apple Pay, Google Pay or even cash to make a payment from any electronic device and at any convenient time, day or night. On the biller side, push payments make digital disbursements possible by using similar systems in reverse. The funds go straight from the lender’s bank to the customer’s bank within minutes.
This fintech trend benefits families and businesses alike. Borrowers can time their payments to accurately match the ebb and flow of their available funds. That means they are much less likely to incur late fees or failed payments.
Lenders gain better management of cash flow, fewer NSFs and improved customer satisfaction. They also enjoy all the protections of digital transfer, like fraud detection and anti-money-laundering programs, and mitigate compliance scope because only the customer handles his or her bank information.
2. Mobile methods of bill payment are gaining traction
Burgeoning adoption of mobile payments in the retail sector is taking bill payment along for the ride. Just two years ago, the United States ranked sixth in the world with 29 percent use of mobile payments.
Compare that to April 2020, with 51 percent of Americans using some form of contactless payment, including mobile wallets and tap-and-go credit cards, according to a Mastercard poll.
That growing comfort with mobile payments for goods and services is certain to push boundaries on bill payment as well. Millennials and Gen Z consumers, who make up 50 percent of the population and the largest demographic of smartphone users, have shown double-digit increases in mortgage, auto and personal loan holdings over the past several years.
To satisfy those customers, companies must incorporate smart fintech solutions into their loan payment options now. A bill payment platform that enables multiple mobile options for payment – from card or ACH to mobile wallet and pay-by-text – will ensure you cover all your bases.
3. New payment technology is enhancing customer engagement
Bill payment may not strike you as the most obvious place to engage with customers; but when you consider that most lenders rarely see their customers after the initial loan application process, bill payment becomes the most reliable, long-term interaction you have. It pays to leverage that opportunity to provide your customers with helpful information or reminders, save them time or effort, or help them independently find answers to pressing questions.
Luckily bill payment technology has made enormous strides in developing customized communications that help inform and motivate your customers. A few examples:
Push notifications or text messages – Very popular for applications like social media and news, these tools can easily translate to bill payment. Use them to communicate important announcements, remind customers to pay and even send a customized link that takes them directly into the payment flow without the need to remember or input complicated login information. One definite plus: you can easily segment these messages by audience. For example, send earlier and more frequent notifications to those with a history of delinquency; specific payment links to those who use digital wallets to pay; or messages in Spanish to those who indicate that preference.
Chatbots – This emerging technology is perfect for helping borrowers independently accomplish simple payment tasks or get answers to FAQs, like checking account balances or help accessing their account. Customers want to avoid calling customer service for help — something younger customers, in particular, dislike – and fewer calls enables lenders to reserve live agents for more urgent or complicated interactions.
QR Codes and IVR – With consumers gravitating toward self-service options, QR codes and interactive voice response technology are experiencing a resurgence. These tools make everything from shopping to dining to bill pay touchless and easy. Customers who prefer paying or seeking information over the phone can do so independently, 24/7, by following IVR voice prompts. Or they can scan a unique QR code on their bill to go directly to their payment screen. Billers benefit by preventing customer service overload and helping maintain PCI compliance since customers handle their own card information throughout the payment. Consumers benefit from a fast, frictionless digital experience.
Mobilizing these types of communications and options keeps borrowers informed and empowers them to stay on top of their payments. They can pick messaging and payment options that sync with their preferences, technical ability and everyday routines. Lenders, in turn, build a more engaged, loyal, and equipped customer base.
Of course, all these trends require companies to invest in engineering talent and development resources; or, alternatively, partner with a third-party bill payment platform built specifically for the task. Lenders with limited tech manpower, especially, prefer accessing ready-made, plug-and-play solutions that integrate smoothly with existing software and systems and can be quickly customized for their industry, customer base and billing functions.
Selecting a bill pay platform known for innovation is another smart move since technology and customer demand is changing rapidly. Your customers, especially digital natives, will expect your bill payment offerings to stay in step with their day-to-day practices.
Fintech has enabled financial organizations of all types to adjust to COVID-19 demands by allowing their customers around the globe to function remotely and electronically. Don’t overlook the importance of enabling customers to self-service and pay bills remotely. With bill payment platforms ready to provide convenient, quick and customized engagement and payment options, you’ll be able to provide the service your customers have come to expect, and now demand, when it comes to their personal finances.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.