In this session, banking and financial experts discuss whether customers really care about the payments experience or if experience is eclipsed by a more meaningful priority - the convenience of their payments needs. Learn more about what constitutes convenience in the United States and other parts of the world, which payments conveniences customers value most, and how to respond to the convenience generation.
Learning Objectives:
- The differences between customer experience and customer convenience
- Examples of customer convenience we're seeing in different parts of the world
- New banking conveniences gaining traction that banks and financial institutions must watch
Daniel Wolfe (00:10):
Customer behavior is interesting. I know that a lot of times a customer will say one thing and genuinely want another. So I wanted to ask each of you, what is the most surprising thing you have seen in recent months or what have you in terms of customer behavior?
Jackie Toole (00:26):
I think for me, one of the interesting, I expected a little bit more change to somewhat back to normal after things settled out from a covid perspective and people having a chance to get back into the marketplace and in person and doing activities. And I was surprised at how many of the things that people were doing and changing their payments behaviors continued to be a part of what they are doing day to day. That was a big piece of surprise for me. How would you ask?
Allison Shonerd (00:53):
Yeah, so I spend a lot of time talking to my customers about ways that they can improve their interactions with their customers. And so I think for me it is been very interesting to take a look at some of the consumer behaviors out there and especially what some of our friends in Gen Z are up to these days because I think that is really important in helping our customers decide what kinds of solutions that they want to enable in the payment space. And I learned recently that over 50% of Gen Z'ers say that they will abandon a purchase if their preferred payment method is not available to them. And then if you overlay that with the fact that over a trillion dollars in the US alone are expected to transact over peer-to-peer mobile apps this year, I think it is really interesting to see the influences that consumers are having on our clients and therefore our clients are coming to us saying, okay, bank of America, how can you help us? This is where we need to be to reach our customers.
Daniel Wolfe (01:53):
That is interesting also because I never realized just how big the generational gap was until you tried to use an app to split a meal check or something like that and none of you are using the same app. So it is an interesting window into another person's world. One thing I wanted to ask because the way we described this on the agenda is we would discuss differences between customer experience and customer convenience. So to each of you, what do you see as the difference between the customer experience and customer convenience?
Jackie Toole (02:27):
I will give you a good example of that for me. So when you think of experience when you go into a buying location, a store or whatever, some of the things that you might have, maybe they have water there or whatever. One of my places I shop on the weekends is Costcos and Saturdays was a big sample day. I would go in with the family and there is samples fit Costco and you kind of make your way around. But the flip side of it was, Saturdays were always really busy. You are standing in really long lines, you are having to get around the crowds to look at your products. And when we all kind of shopping more virtually, I really got into the habit of the convenience of being able to do that from home. I would be able to order the things, I had it at home, I would have people delivering food to my house and things like that. So it is that experience of in the store and versus the convenience of being able to do the shopping wherever and whenever you are there. And I think what we are seeing a lot of is where do you bring the mix of those two things together and be able to have that experience where the experience is important. When you go to buy a car, you are going to want to buy a car and sit in it and try it out, but versus just have it delivered. As an example,
Daniel Wolfe (03:33):
I bought a car without sitting in it. You can just do it in an app.
Allison Shonerd (03:36):
Yes, very brave.
Jackie Toole (03:37):
Yes, braver than me.
Daniel Wolfe (03:38):
I mean they let you return it if you do not like it. The previous owner was a pet owner, so there is all this hair all over it. Nothing against pets. I like animals. I am sorry, go ahead. Same question.
Allison Shonerd (03:48):
Yeah, no, I think that was a great answer and experiences is the totality of all of the touchpoints that you have. It is the servicing, it is the channels that are available, it is the way that it makes you feel. Whereas I think convenience is simply how easy is it for somebody to interact with that experience? And I think what we were hearing now more than ever is that for an experience to be excellent, it must also be convenient. I think taking your example of buying a car, we have clients in the auto space who part of their business model is to buy repurchase cars from consumers. And so they put a lot of thought into the overall experience. What is it like for the consumer to drive into their dealership to meet with somebody to have their car assessed and how long does that take? What are the different steps that individual has to follow in order to sell their car back? And then at the end of that process, are they going to be waiting in the dealership for a few hours for a check to be cut? Or can they simply provide the agent with their email address to be paid over Zelle and have the money in their account within minutes? It may have been an excellent experience from start to finish, but the convenience at the end can sometimes really put the punctuation mark.
Daniel Wolfe (05:07):
It actually, if I can talk from personal experience, that is what determined it for me. My wife was trying to buy a used car for cash and we went into the dealership and they would not take they us to get a loan, they would not take cash. I mean if we came up with a stack of cash, I am sure they would have, but we could not write them a check. We could not put down our debit card number or anything. We had to come with a money order or a cashier's check, but to buy it through an app, all we had to do was give them our bank account details and they did the whole thing behind the scenes. So it actually was the deciding factor for us because we did not want to go back into the dealership and guess how we would have to pay for a car on Costco It, it is interesting because I was doing the same thing during the pandemic.
(05:51)
I was ordering all this food, healthy food, I was really enjoying it. I would buy a whole big thing of I would be set for the week, but when they delivered it, they put it in front of my door and my screen door opens outwards. I could not open my door to get the food or to leave my home. So that actually became a customer experience issue that the retailer had no control over. And in the app they do let you put notes. I put, please do not block my door. Some people read that, some people did not, but okay, so we got very personal there for a second, but this is not just a local issue, it is a global issue. So I am wondering what trends are you seeing that are happening in other countries that we can learn from here in the US?
Allison Shonerd (06:39):
Sure, I will go first. So one of the things we are seeing that I think is really interesting is the rise of open banking. When we see what is happening in Europe and the UK with PSD two and the availability of open banking, I think it is really enabled a lot of innovation where we can have very strong partnerships between banks and fintechs to deliver excellent experiences and to drive real convenience, particularly when it comes to the payment space, which I think sometimes within that customer journey payments can be the last thing to be to see that innovation or to really be improved. And so I think that is one of the technologies that has really allowed us together with technology partners to innovate and help our clients think about ways that they can create a more convenient experience.
Jackie Toole (07:33):
The other thing I would highlight is when you look at other countries and some of the differences around the type of payment technologies and solutions that people are using in other countries and how long they have had that adoption versus what we have done in the United States, you will see QR code and person to person payments and some of the things that they do. China has been doing that for a very long time and it is just the average person can go to in the markets and things like that. And all that is a typical transaction in other countries where we have been a little bit further behind in the US on adopting some of those technology solutions. My colleague and I tell us the story a lot of times to our friends and family around, we spent the year before the pandemic was the last year we had spent three years on an assignment in the UK and we were in restaurants and they would bring the terminal to you to do your transaction at the end of your meal. And when white kids are seeing it during the pandemic and they are like, oh my gosh, this is the coolest thing and all that, they have been doing that in Europe for a long time. So it is just some of those adoptions of what we see internationally on what they are doing around the payments is another difference, I have seen.
Daniel Wolfe (08:39):
The QR code is an interesting thing because I do not know exactly when it happened, but at one point I was having to explain to people what a QR code was, what it stood for, it is that square thing. And then at some point everybody just knew what it was. And I do not know what that turning point was. I do not know if it was even during the pandemic or earlier, but just at some point it happened and we just got there.
Allison Shonerd (09:01):
Well, I think from my experience, the way I think about it is that after towards the end of and after the pandemic, it was when restaurants started putting their menus on QR codes and suddenly everybody who wanted to leave their home for the first time in however many months and have a real dining experience was looking at this card on the table thinking, okay, what next? And so now everybody in my family, from my grandmother to my nieces and nephews know what a QR code and it is and how to use it. So it was a fun one.
Daniel Wolfe (09:34):
It is weird though, when you can pay by QR code and just walk out when you normally would pay a waiter or a waitress because you feel like you know did not pay for your meal or they might tackle you on the way out the door.
Daniel Wolfe (09:44):
I do not know how to overcome that fear.
Allison Shonerd (09:48):
And I know well, and I think sometimes, and it is interesting, QR codes to me are a good example of this, but payments sometimes are a solution in search of a problem where we have these great capabilities and rails that are 24 by seven and finality and QR codes. And it is really not until there is an actual problem that needs to be solved that suddenly it clicks and adoption is driven. We have a pandemic that now we all know how to use QR codes. So I think that is just an interesting commentary.
Daniel Wolfe (10:27):
I still remember the moment in the pandemic, well, first of all, two things I remember about the pandemic one, people still recognize me with a mask. Everything Batman had told me had been a lie up to that point. It is mask your identity at all. But anyway, two, I paid for something with my wristwatch and I remember somebody being like, wow, what is that? What are you doing? I got to start doing that because they did not want to touch anything. And then at some point people stopped being impressed by that. Again, it was, that was a very fast learning curve once people were motivated to do it. But on the subject of digital payments, cash, it still exists somehow. And there are still people who prefer it and they prefer it with good reason. I remember with pre pandemic, when you started having cashier list, cashless, checkout, Amazon Go, stuff like that, there was concern that these models excluded people who were unbanked underbanked or just preferred cash for whatever reason. And then I saw that argument kind of flip around during the pandemic when you started having stores boasting that they would not take cash or at least that they had some alternative for you. But now again, some of those habits stick, some of them do not. Where are we today with regards to cash?
Jackie Toole (11:49):
Well, in the United States, I think we are probably one of the still higher users of cash in terms of transactional activity for payments. But there is other different, if you look at some of the demographics of where people are using and not using, you use the unbanked as an example and the reliance on the unbanked, there is also people that are managing their spend habits, maybe having cash and okay, I have allocated this much for me to spend this year, this month, I am going to make sure I keep that amount. So there are some tools and reasons why people will do that as well. I think when you look at some of the banking crisis that we just recently had may have attracted some interest in other people of saying, do I have risk of having this money in banks and do I start keeping a little bit more cash for payments? We will see what that transit, that is a short term reaction or whether that will be something people will consider. So those are some examples I think of where we are using.
Allison Shonerd (12:43):
Yeah, no, and it is really interesting. I saw that today in the US there is still around 7 million households where no one in the family has access to a bank account. So I think until we have a solution for cash that is universally accepted that it will still have a purpose here. But when thinking about the unbanked or underserved, I actually think that digital payments have a real opportunity to help there. And we have seen that in other markets when you think of picks in Brazil where there they have developed a 24 by seven real time payment scheme that is alias based where the, they are driving individuals who historically have maybe had less trust in the banking system towards opening accounts and making it easier for them to do so and bringing payments into the financial system that have not been a part of it. Also in Mexico, I think their UC, QR codes playing an important part as well where a business can invoice an individual where they can take a QR code to a grocery store to a retail location and pay in cash by scanning that QR code. So I think there is a lot of opportunity for innovation that digital payments can help to drive there.
Daniel Wolfe (14:00):
On the subject of cash for budgeting, I would also heard that people are going back to putting cash in envelopes to budget as a way to deal with inflation so that they know that they are staying within their budget now that their dollar is not going as far as it was before. So maybe they still keep it under their mattresses now when they are done with it. So for those who are using digital payments, QR codes, digital wallets, what have you, or more integrated loyalty programs as well online shopping, you gather a lot of data and there is a lot of influx of data, a lot of that the data can tell us as long as we know what we are doing with it, what is the role of data in these trends and what we are looking at in customer experience and convenience.
Jackie Toole (14:51):
Data? Well, I am going to say NTT data. I am going to say data is a big part of what we do with our clients. And I think what we can harness in terms of payment activities that people are doing for very positive experiences, how can we personalize the experience for people from a payments and transactional perspective? How can we, as an example, my credit cards that I have when I get the offers and the things like that that are coming in and say you can get a discount, the more they can personalize that to what I am actually buying, as opposed to setting me a hundred offers that I have to filter through and say, I am not going to use that one, I am going to use this one. Those are some positive things that people are doing can give you some insights in terms of your buying behavior and trends.
(15:30)
If you look at some of the power of our clients that have data across both issuing and acquiring and can see and can work with their small businesses to help their small businesses enable lending decisions and help say, oh, I know I can see the buying behavior of your customers. How can I help you with treasury products as an example, and to enable lending that is not high risk because I know that the way the influx of your payments and from your customers are coming in are all positive things that can come out of those data activities.
Allison Shonerd (16:01):
And I think I look at it through a few lenses. So where we help our clients with data is helping to provide them with those rich insights that will help to improve their cash management, the way that they are enabling things like these new real-time payment rails that are coming on board. We talked a little bit about that in one of the earlier tracks where clients have new liquidity concerns and they recognize that it is very important for them to remain competitive and to provide convenient experiences to their customers by enabling all of these different payment types. But it creates complexity for them when it comes to managing their own cash. So we really have the ability to use the rich data that we have to provide them with those insights. And then I think just speaking to our corporate and commercial clients, they have an interesting challenge, which is that they are getting a lot of data now from their customers, but rationalizing it is very challenging.
(16:58)
And that data oftentimes sits in silos or in applications that are not necessarily a part of the payment flow or that are speaking together to create that customer experience that now their consumer clients are really expecting. So they are sort of helping them where we can to prepare for the fact that these new payment schemes require different data types that they are going to have to be prepared to provide, or aliases and directories are on the rise, so where should they be collecting that type of information and preparing to leverage that as a part of the pavement flow.
Jackie Toole (17:39):
I was going to say another example that I think is important. If you look at processors or you look at some of the larger banks and the amount of information they have within their consumer base to do predictive around economic trends, what are you seeing in terms of customer buying behavior and is that an indicator of what might be coming from an economic challenge that you can be prepared for and make some of the smart decisions from a risk perspective within your organization to shore up some of your cash reserves or whatever it is necessary for what you think is coming. But again, leveraging that customer behavior in the payment space can be an early indicator of some of those things.
Daniel Wolfe (18:14):
And from the customer's perspective, and it is not all about my difficulties with splitting a meal with somebody younger than me who uses a different app, but that is definitely where this question is coming from. Is there too much choice these days in digital payments is even from the B2B perspective or what have you, is there mean now? And then somebody will say, well, you do not want the checkout page to look like a NASCAR eraser. You do not want it that over too many stickers there, but you know, can make sense of it. You can find a different payment type for a different need, something that needs to move fast or something that needs to move farther. But is there too much choice? Is this becoming a stumbling point for customers?
Allison Shonerd (19:01):
I think probably a consumer would say that there is no such thing as too much choice, but I do think that within that it is our opportunity to help to abstract the complexity to them and to provide the right choices for the use case that they are faced with. So I think a lot of that comes from working from the banking perspective, working with our clients to help them understand the capabilities of each of the different payment types that are now a available to them and that they can then expose to their customers and helping them to understand what the right options are going to be to present. And then I think making it simpler for them to do so. I think from a corporate's perspective, it can be really challenging from a technology investment and operational perspective to enable new payment types. And so helping them to make the right choices to say, okay, maybe real-time payments is not going to be the best fit for your particular use case, but your customers would really benefit from being able to receive payments through Zelle and helping them to make that distinction.
Jackie Toole (20:15):
And I think from a psychological perspective, sometimes when you have too many choices, it can get overwhelming. And so I think that is one of the things we manage with our customer base. But I think one of the things that we can do is to your point of how can we help simplify those choices to narrow and be personalized to you, and you think of doubt, different tools that you can bring to the table for helping your customers or clients with that. I will give you just an example with my daughter. She wanted to paint her room and it was a shade of blue and there must have been 50 shades of blue at the Home Depot store for her to choose from. And one of the things that was helpful for her was finding an app that she could go in and she could see rooms with the different colors that she wanted, her blankets and her, things like that. And then she could kind of narrow down to Hughes of things and then she turned out to pick tan as her color. But how do you find ways to help simplify that process for folks? Give them the choices, but what are the things that appeal to you? And then help it narrow down from your selection choice for your payment options based on what is important to you.
Daniel Wolfe (21:17):
So before we open up to the audience for questions, I just wanted to ask what you are seeing on the horizon. Is there something that we need to be better prepared for? Is there something that is gain traction that you are just seeing the beginnings of? What are the new trends that your customers are or the customers, consumers, businesses are driving?
Allison Shonerd (21:38):
Yeah, I think one of the interesting ones that we are looking at has to do with biometrics and the ability to secure a payment through the use of biometrics and a digital identity essentially. So helping to drive confidence and security in the payment process for consumers and our clients.
Jackie Toole (22:02):
And I think we talked a little bit about the trend around person to person payments and some of the things that are going on there and what kind of threat does that bring to financial services companies around intermediating saying that word fast, the banks in some of those transactional processes and what are things that can be done to retain the revenue streams while people are looking at other alternatives for things. And maybe bringing some new regulatory scrutiny on fees and things in the revenue stream that the banks would get, I think would be another piece to be willing to walk look out for.
Daniel Wolfe (22:34):
Okay. Do we have questions from the audience about painting schemes, shades of blue and tan or about payments? No, I can tell another QR code story just to kind of, oh, here we go. There is a microphone coming to you, sir.
Audience Member (23:01):
Thanks. I think this might be for Allison to start your comment around simplicity. It made a lot of sense to me thinking about it as a matter of helping your clients make good choices with the myriad of options that are out there to. What is your bank thinking about in terms of some of the changes or evolution of your systems or your processes to make the choices easier? So there is the, we are going to allow ingest anything and everything into our channels, right? Yeah. Is there anything you all are doing to make your systems or your processes or your lives as a bankers simpler?
Allison Shonerd (23:42):
Yeah, it is a great question. So I think from a payments perspective, there are a couple things I will say. One is that because we know that our customers first and foremost want to be able to offer as much choices as they can to their consumer clients, we are looking for ways that we can packaged together a host of different payment types into a single integration for our clients so that they have the ability to connect to us directly, have access to all of those payment types, and then as a part of the implementation process with us, we can connect with them and understand what is your use case? What are your consumers looking for? Does it make sense for you to enable ACH real-time payment sell, or maybe just one of those, but it makes it easier for them from a tech lift perspective. And I think that is really one of the biggest challenges that our clients face when they look at the host of possibilities that are out there and all these new payment types.
(24:45)
It is an investment for them. And so finding ways to simplify that and make it easier for them to connect with us through one integration rather than seven, I think is a really big part of it. And then the other thing that maybe I would add is integration just in general is challenging. We know that a lot of these payment types are really geared towards API integrations. If our clients want to take advantage of the 24 by seven near real time capabilities of a Fed Now and RTP, then it does not work as well for them to be submitting files and batch to us. But that is where a lot of our clients still are, and that is what their ERPs can support or their treasury management systems. And so when we are developing our solutions, we are sort of planning for both where our clients are today in a lot of cases and where they are going and where we were building API capabilities for our payments. We are also looking for ways that we can integrate those with ERPs and TRMs that our clients are using today so that it becomes less of a, okay, I have to start from scratch and bring in consultants and really have a massive tech engagement for our clients, and more so about enabling a module or switching something on that. A lot of the bones are already there for.
Daniel Wolfe (26:14):
All right. I think we are at time, but I did want to, there was one more question we did not get to that we discussed in terms of just the recent issue with social media driven runs on banks and such like that social media being a bigger part now of customer behavior. What can we learn from not just this incident, but anything having to do with social media and customer's use of it?
Jackie Toole (26:41):
Well, in general, I think one of the things is for the particular crisis, I think there is a lot of power in social media. Obviously they are driving trends on pieces, but I think for consumers might be a little bit more hesitant to do some of the things that they were doing before, a little bit more hesitant around going to a bank and maybe will drive more out on the payment side around the use of some of those person to person of what is the risk of me leveraging a bank when I see something like this can happen? So in that particular crisis. But I see all the time some of the things that are going, again, having teenage kids of the trends that are happening within social media, and we cannot underestimate the power of what people are saying to our businesses to how people are transacting. And I think it is just really not something to underestimate for sure.
Allison Shonerd (27:28):
Yeah, no, I think that is well said. The power of perception is definitely strong. I think that it really just underscores the need for us to be developing solutions that are adding value, that are secure and that are personalized, that really resonate with discerning clients and consumers and that they can trust.
Daniel Wolfe (27:51):
All right. Well, thank you both very much for your time today, and thank you all for being a part of this. On to the next session.