Lauren Jones, International Payments Ambassador, Icon Solutions
Instant payments are the ‘new normal’. The last decade saw a ramp-up in adoption as regulation, customer expectation and technology dovetailed to create immediate, 24/7 demand for financial services.
This means that banks and payment service providers (PSPs) who rely solely on speed of payments as a competitive differentiator will struggle to get ahead. The focus is now on leveraging instant payments rails to deliver value-added services that can drive a return on investment. Understanding where these opportunities lie, therefore, is crucial.
- Request to Pay for more control
Perhaps the most valuable new way to leverage instant payment rails is Request to Pay (R2P). R2P is an umbrella term for various scenarios in which a payee takes the initiative to request a specific payment from the payer.
Corporates have two key challenges in that they only receive funds when a customer wants to pay them, and they only receive the information the customer chooses to provide. This makes reconciliation difficult and can even negatively impact workflow and working capital.
However, the R2P options for bill presentment and payments solve these problems, significantly reducing operational cost, liability for chargebacks and fraud risk, as well as improving reconciliation and liquidity. A secure R2P service also has the potential to simplify managing receivables and reduce processing costs.
R2P also benefits consumers. As they are presented with a payment request rather than funds being debited automatically, they can enjoy more autonomy and control over their money across various channels.
As a result, several solutions have emerged under the R2P banner, such as the IDEAL scheme in The Netherlands and PromptPay in Thailand. Further traction will be gained, with EBA Clearing gearing up to launch a pan-European R2P solution in 2020. Certain banks in the US have also begun to go live with The Clearing House ISO 20022 R2P messages using instant payments infrastructure.
- Amplify the power of QR codes
QR code solutions have surged in popularity in recent years as a simple, low-cost alternative payment method, offering consumers and merchants more choice at checkout.
We are now seeing various banks and payments industry players reviewing their strategies to take full advantage. QR code-based solutions, combined with instant payments rails, can extend utility beyond the physical point-of-sale to include online and bill payments.
Thailand, India, China, Singapore, Malaysia and Hong Kong have all established payment services that leverage QR codes to initiate real-time payments. And although Europe and the US have been slower to adopt QR codes, some European countries such as Sweden and Switzerland have already embraced the technology with country-wide schemes for both retail and corporate payments. In the US, adoption is market-led with several retailers such as Target and Walmart implementing proprietary QR code payment systems.
- Leverage valuable real-time data with ISO 20022
While instant payments does not inherently provide enhanced data opportunities, most of today’s instant payments systems are built using the ISO 20022 data standard. This is due to the extended data-carrying capabilities and the added value this messaging standard can offer banks’ customers. For data to be truly valuable, it needs to be machine-readable, consistently structured and standardised – ISO 20022 enables all that.
However merely collecting data is not enough. Mining and extracting value from this data will be a decisive differentiating factor for banks and other players looking to take their customer propositions to the next level.
The good news is that banks and PSPs are well-positioned to collate and leverage data to deliver tailored interactions, unlocking new revenue opportunities while remaining compliant to stringent regulation.
- Deliver convenience for corporates
The combination of instant and enhanced data-carrying capabilities is extremely attractive to large corporates, and in turn, greater corporate usage of an instant payment system will increase volumes and lower costs.
Instant payments give corporate treasurers greater control over their payments, allowing them to make on-the-spot payment decisions and hold on to liquidity for longer. Instant payments enable informed and timely views on cash positions, enabling management of treasury risk. ISO 20022 data- carrying capabilities also allow corporates to attach invoice data to a payment, allowing for more efficient reconciliation.
Benefits are not only limited to corporate treasurers, but also B2C treasury departments. Instant payments offer new ways to make payments to customers. As mentioned, R2P can also lower cost, reduce risk of fraud, and increase information around each transaction, all of which are key requirements for modern treasury departments.
Moreover, as domestic instant payments schemes grow, there is an opportunity to line these systems together to deliver cross-border real-time movement of both funds and data for corporate and commercial transactions.
- Embrace new channels
As payments become increasingly embedded in our daily lives and interactions, it is inevitable that instant payments will become more ingrained in the social media experience.
This is already the case across many Asian countries, but momentum is slowly building in Europe and the US as well. For example, First Direct’s Fdpay service allows customers to make P2P payments within social media apps. In addition, Instagram, WhatsApp and Facebook are all actively exploring instant payments and checkout options. Watch this space.
Building on strong foundations
It is clear that building a foundation for innovation now will enable banks to create points of differentiation and tap into new revenue streams through R2P, QR codes, leveraging enhanced data, corporate instant payments and new channels.
But to fully realise the return on investment, banks will need to overcome the legacy payment environments many are encumbered with, and will need to develop a powerful transformation strategy to ensure their payments landscape is equipped to fully harness the benefits.
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn
We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.
The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.
For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.
Increase employee productivity
How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.
Deliver a consistent customer experience
When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.
Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.
Accelerating employee training and onboarding
Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.
Improving employee satisfaction
Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.
Identify knowledge gaps
Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.
Augmenting customer service
Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.
Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants
The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.
The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.
To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:
- Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
- Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
- Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
- Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
- Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
- Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
- At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
- Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
- Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
- Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.
Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.
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