Payments account for as much as a third of commercial bank revenue, and that makes one message clear: The payments business is directly influential to the bottom line. Proactive banks recognize the need to address payments convergence, which involves adopting an enterprise perspective on payments processes. With a seamless, integrated view of payment information, banks can consolidate retail, corporate and small business channels to execute strategies faster and deliver flexible, competitively priced payments services with greater efficiency and less risk.
Customers are becoming comfortable with a broad array of payments methods, including: ACH, cash, check, contactless card, credit card, debit card, e-check, PayPal, purchase card and stored-value card. This means financial institutions face increased competition to be the customer's payment method of choice, need to maintain and/or improve customer satisfaction in order to retain accounts and safeguard the associated revenue. With all key stakeholders within the bank working to create new payments products and promotions, financial institutions have a better chance of warding off the competitive threat and holding their ground - perhaps even growing - their payments business.
Customer support plays a key role. Whether customers make payments by ACH, check, debit or other method, they want one statement to detail all transactions that come in or out of their accounts. They also want to access that information in a timely and consistent manner, regardless of whether they inquire via branch, ATM, online or cell phone. And, that goes not just for the money they spend, but for deposits as well.
Think Outside the Silo
Consumers are doing more of their banking online. Until recently, there was no option for online deposits. Driven by the self-service demands of retail, corporate and small business customers, alternative deposit capture now makes anywhere, anytime deposits possible. Alternative deposit capture includes all the ways in which banks and their customers are able to deposit electronically - remote capture, branch capture, merchant, ATM capture and home capture.
To most expediently bring alternative deposit capture to the entire customer base, financial institutions have repurposed what was originally a corporate product in order to extend convenience to small businesses and consumers. That requires a global view of how to leverage the work of one channel for the benefit of the entire enterprise, as well as diagonal thinking and action within a financial institution to leverage payments convergence. But just handing down technology or passing off processes isn't enough; realignment in support of a trend requires thinking like an institution rather than a profit center.
All parts of the bank must work together to achieve realignment. Without a shared objective, channels and departments are not positioned to incur an expense or take a loss so that another part of the institution can benefit.
For example: A bank has a corporate customer that eschews remote capture because they don't want to spend money on a scanner. So, once a week, someone from that corporate customer goes into his or her local branch with hundreds of checks to deposit. The sudden aberration in workload paralyzes the branch, crippling the branch capture process. Customer service is compromised, staffing levels are constantly in question and the branch has no way to effectively resolve the problem.
One way to alleviate the issue at the branch is to provide the customer with a free scanner and teach them to use it. But the problem is one that so often exists in a siloed institution: the corporate group doesn't feel and perhaps isn't even aware of the pain felt by the retail branch. The corporate group, like every other part of the financial institution, is focused on achieving its performance goals related to payments convergence. And so, in the case of the corporate group, that means selling equipment and services and not giving them away. Swallowing the cost of a scanner and the required training seems unreasonable when there will be no direct return on the investment. Likewise, the branch does not own the corporate relationship and cannot, therefore, remedy their problem. The net result is that while the branch loses, the financial institution and customer also lose.
Deploying technology and new products for the benefit of all is easier when there are clear institutional objectives for all stakeholders to rally around. Realignment removes the boundaries between fiefdoms so that all resources are put to their best use in support of an institutional goal.
It takes top-of-the-house sponsorship to enable realignment to leverage payments convergence and other trends. Executive sponsorship must endorse, and perhaps even mandate, collaboration by adapting performance expectations and compensation. Associates must be rewarded when the overall balance sheet improves, not just by department line items. This will encourage channel managers to work more collaboratively, so that opportunities will not be missed, time to market will improve and the competition will wither.
Mike Reagan is managing director of global payments solutions at Fiserv.