Jim's Journal

From B2B To P2P, Faster Payments

I’ve watched the business-to-business , person-to-person, and account-to-account payments industry from an insider’s perspective over the last 20 years. Moving through time from commercial online banking, to retail online banking, to mobile banking, to digital banking – payments is always at the heart of the end-user experience. Sure, we all want to view the amount of money we have online, and being able to see transactions come in immediately has changed the way we use bank accounts completely. Think about it: from the drudgery of reconciling your checkbook to today’s mobile apps that give you immediate access to credit card transactions; we all bank differently now. The real value, however comes from moving money. Look at how PayPal and Mobile Remote Deposit Capture changed people’s behavior, and they way they thought about banking. In fact, the buzz today about Millennial’s is that they don’t even bank, they just do.

Electronic account to account transactions have always been around in the commercial banking space. Wire transfers and eventually the ACH morphed into online account-to-account transfer products. Commercial customers paid for speed and transaction volume stayed low. The credit card industry accelerated velocity and reliability in the retail banking space, but there was no real transfer to commercial banking. Sure, there were commercial credit card accounts and the purchasing card industry boomed; but omni-channel technology and interoperability just wasn’t possible.

Then came the iPhone, and the Android OS: Mobile payment applications changed everything. We saw it in digital banking as our banks clambered to bring in P2P and A2A Solutions in order to compete with the disruptors like PayPal. Then new solutions from companies like Uber, Airbnb, and Venmo cropped up and broke every paradigm in the industry. People have changed the way they do financial transactions, especially those under 30. Your average college kid doesn’t really need a bank account, as long as there’s money in their Venmo account or as long as their iPhone is handy, they can pay for something with a mobile wallet driven App. From a vendor account, a debit card or a credit card, transactions just happen.  Usually as part of using Apps like Uber or Starbucks

The reality is, banks are behind all of this, they’re just not driving innovation. In other words, they really are behind. And they’re not making the kind of money that they used to make. There is always a bank behind a PayPal or Venmo account, it’s just not aparent. And there’s always a bank behind a credit card, but the banks use antiquated operating environments and stale product offerings that today’s customers don’t understand. 

Now the Fed and TCH are getting smart, taking advantage of the global move to faster payments. Big banks are moving beyond band-aid (and in my opinion doomed) solutions like PopMoney and even ClearXchange. These offerings don’t even show up in the world outside of banking vendor provided offerings. I was frankly embarrassed to sell them in my days at Digital Insight.  In fact the big banks got smart and combined ClearXchange with EWS to separate it from their closed minds to create an outside entity that can think differently. Bank of America already leverages this P2P network for B2P digital disbursements. And Chase has created ChasePay to control and capture the P2B market. Bringing these forces together with faster payment networks will bring the banking industry back. 

So that’s why I am where I am. I joined a ACI because I saw the opportunity to create new products, and change the way banks process and manage payments. The buzzword is omni-channel but the need is for new product development. We can facilitate any-to-any and Omni-channel; but banks have to change the products and services they create and offer. They also need to open up their minds to thinking differently about the way they buy and implement technology. We vendors also have to change the way we sell and implement technology, there has to be give-and-take and a recognition that this is a long-term challenge. Investing now for the future will pay off the way it has with many of these venture-funded disruptors. This is my job, and it isn’t easy. But I’m learning and growing; teaching and showing – that’s what matters to me most.