Credit union and bank executives share their top concerns and opportunities and make the case for faster payments.
This article is sponsored by CUES Supplier member Jack Henry™.
We talk a lot about silos these days—data silos, department silos, even industry silos—and the barriers they create to improving efficiency. The necessary first step for removing silos, cross-communication, is often the hardest to take.
That’s why I was so impressed by the free exchange of ideas I witnessed at our most recent Jack Henry™ Payments Meetup, where industry experts shared their experiences and strategies—from both credit union and bank perspectives—for navigating this chaotic but exciting era of payments reinvention.
This fascinating 45-minute conversation, led by Raksha Bhola, senior advisory payment strategist from Jack Henry, covered a lot of ground.
Early polling of the audience (a mix of credit unions and banks) revealed them to be keenly aware of the value of payments to their institutions, with 71% saying they viewed payments as a key driver of revenue and deposits. And yet, just 10% of the respondents have a robust payments strategy already in place. For a whopping 63%, their institution’s payments strategy is “still in development.”
Current Concerns
On the topic of the economy, panelists shared a considered approach to the current, challenging environment.
CUES member David Pierce, CIE, chief information officer at $4.4 billion Canvas Credit Union, Lone Tree, Colorado, said, “We’re making very careful choices about our investments. Everything we do comes in with a business case and is following our existing strategies. We also have a large emphasis on one of our strategic pillars, which we call ‘ease of use.’ That can mean ease of use for internal staff or for our external members, but specifically, we’re focusing on frictionless account opening.”
$2 billion Incredible Bank, Wausau, Wisconsin, is focused on continuing to grow deposits. Their VP of Innovation, Philip Suckow, said, “Not necessarily taking them from other community banks, but we think there’s a lot more market we can gain from the ‘bigs’ and the next step up from the community bank market.”
Making the Case for Faster Payments
There was much talk about faster payments, largely on the need to take a long view when making a strategic business case.
Chris Richards, SVP/Chief Banking Officer at $5 billion Cape Cod Five Cents Savings Bank, Hyannis, Massachusetts, said, “In this day and age, it’s hard to make a financial case. We still need to build a lot of use cases around both RTP® as well as FedNow®. So, it’s more about understanding that we want to remain relevant for our customers.”
Richards added, “We don’t want to become a utility. And that’s one of the existential threats we have as community financial institutions. If we don’t remain relevant, we’re simply going to be a pass-through for the payments.”
Pierce was quite bullish on faster payments at his credit union, saying, “It’s just been in the last year that we implemented Zelle® … and, honestly, without even doing any marketing, we saw 30,000 of our members use the product to make about a half million transactions with $100 million being transacted, most of that coming to our credit union. And that’s only with a $500 limit.”
Suckow indicated that Incredible Bank is also enthusiastically pursuing faster payments, explaining, “We really believe that financial institutions that control payments ultimately control deposit balances.”
Show Me the Opportunities
Everyone wants to know what new opportunities are out there. Pierce said, “I truly believe that we’re in a liquidity crunch and it’s going to be challenging to find deposits and ways to fund things. At the same time, there’s about $2 trillion in assets that’s outside of the traditional financial industry and it is in all of our best interests to find a way to bridge to those distributed ledger technologies. I think credit unions and small banks are perfectly suited for that type of thing.”
Suckow talked about the benefits of working together on fraud mitigation. “I think fraud is something that we can band together and leverage each other’s knowledge and skills to be able to fight, because at the end of the day, the fraudsters are all part of their own community, using what they’re learning against us,” he said. “And so how can we turn some of those tables back on them?”
Overall, Suckow offered this advice to fellow financial institutions: “I’d say be curious. Keep an eye on all things payments. There’s a lot of concepts that are starting to gain a movement—like early wage access—and things like that have the potential to impact our industry and accountholders.”
Remain curious, break down communication silos, and stay open to ideas, wherever they may come from. These are good takeaways for us all!
Peggy Gordon is a brand marketing manager for CUES Supplier member Jack Henry with a special love for all things payments. She lives and works remotely in Birmingham, Alabama from a little old house filled with art, plants, and, maybe, too many cats.
