The rapid advancement of social media platforms into the payments and finance markets, as well as millennials' devotion to apps like Venmo, were major factors driving a 47% increase in the U.S. digital person-to-person payments market last year, according to a new report from Aite Group.

Digital P-to-P transactions soared to $147 billion last year, from $100.3 billion in 2015, and the market's current trajectory indicates it will reach $316.6 billion by 2020, the report suggests. But few of the factors fueling this transaction volume growth can be directly attributed to banks.

U.S. banks are hoping to capture some of that momentum with Zelle, the revamped bank-led P-to-P solution about 20 financial institutions are introducing this year, because even though P-to-P services don't drive revenue on their own, they're becoming vital to attracting and retaining bank customers, according to Talie Baker, a senior analyst with Aite who wrote the report.

Banks will likely face challenges in finding effective ways to market Zelle and drive use, Baker said after analyzing industry data and interviewing 23 executives at leading U.S. financial services and alternative payments firms during the fourth quarter of 2016. Aite also looked at P-to-P services from Square and Fiserv’s Popmoney.

“P-to-P service providers that do not offer a social component with their payments experience could be missing out on future revenue streams,” Baker said.

Zelle is unlikely to copy Venmo's social elements—banks behind Zelle have said as much—but banks could use social media messaging apps to advance Zelle, Baker said.

"I think banks need to plan to integrate with messaging apps so users can access payments without leaving the context of conversations," Baker said.

PayKey, an Israeli startup, is one company supporting technology banks could leverage to drive their P-to-P services, she said.

Voice- and text-based artificial intelligence also may help banks build P-to-P use.

“A variety of tools in the marketplace today can enable companies to bring AI capabilities to the P-to-P payments experience,” Baker said, citing examples like Apple Inc.’s Siri, Google's Assistant, Facebook Messenger bots and banking-specific bots like Kasisto.

Royal Bank of Canada this year launched the capability to send P-to-P payments via Siri, Apple’s voice-activated assistant.

Banks looking to drive P-to-P use also should leverage the power of real time payments that Zelle provides and the convenience of integrating P-to-P with financial management tools within banks apps, Baker said.

"Real-time payments and availability of funds will become important to consumers, and this will be a plus for Zelle, which makes a mobile payment closer to a cash payment," Baker said.

But whether banks leverage social media or new technology to drive P-to-P services, they will need to work fast to win over millennials, who will expect Venmo-like approaches for all types of payments, including cross-border transfers, Baker warned.

“With 40% of millennials already using mobile payments today, the demand for frictionless mobile payments is only going to grow as this generation comes of age,” she wrote.

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