Digital payments are quickly becoming the new normal worldwide, with more than $6.6 trillion in digital payments expected to crisscross the globe this year.
This growth is not likely to slow down anytime soon, with a projected increase to $10.5 trillion in value within the next four years. Speed has become the name of the game, as research from the Federal Reserve found that three-quarters of businesses said offering faster payments is essential.
This growing demand for fast digital payments has become a key driver in businesses’ decisions when selecting banking partners. Two-thirds of businesses surveyed said that instant payments would play a vital role in any future decision regarding selection of a banking partner. The same amount said the ability to accelerate payments would be a key motivator in switching bank partners. These factors make offering faster payments a top priority for financial institutions (FIs), as those that do not provide such services risk falling behind.
The October Disbursements Tracker® explores the latest disbursement developments, including new digital wallet developments, the growing popularity of instant payments and how FIs aim to make these technologies more commonplace.
Around the Disbursements World
One of the most popular methods of digital payments is digital wallets. A study of employees at merchants, banks, FinTechs and payment companies found that 79% had increased their personal use of mobile wallets in the past year. Sixty-five percent said they had taken advantage of their wallet’s discounts and offers to get better deals on products. The organizations themselves reported that card-linking programs had also grown in popularity, with 35% of respondents saying their programs had grown by more than 100%.
This growth of digital financial options has customers questioning the role of traditional FIs. A survey found that 40% of consumers say non-bank lenders can better fulfill their financial needs, and 30% of customers with no experience in online banking are open to trying a digital lender for the first time. This finding has sent reverberations throughout the banking industry, with less than 20% of banking executives feeling prepared for the sector’s future.
Businesses are also growing used to faster payments, with a survey finding that 90% of businesses expect to accelerate their payments within the next three years. Nearly 75% of microbusinesses and 60% of all other businesses said that cash flow issues were their top concern in the current economy, making implementation of faster payments a top priority to ease these issues.
Find out more about these stories and other news in the Tracker.
Fifth Third Bank on How FIs Provide Instant Payments to Corporate Customers
Consumers are not the only ones who expect instant payments these days. Business customers also rely on accelerated cash flows to make payroll, vendor payments and more. FIs that manage to provide instant payments options are likely to gain a significant competitive edge over counterparts that do not.
In this month’s Feature Story, PYMNTS talked with Bridgit Chayt, senior vice president and head of wholesale payments at Fifth Third Bank, on how it provides instant payments to corporate clients, helping them manage their capital and pass this speed on to their customers.
Deep Dive: How Small FIs Leverage Faster Payments to Compete Against Their Larger Counterparts
Small banks and credit unions (CUs) are often at a competitive disadvantage in the banking industry, as they lack many of the amenities offered by their larger cousins. Customers are spoiled for choice regarding banking services, so implementing faster payments could go a long way in steering customers toward small FIs.
In this month’s Deep Dive, PYMNTS explores how smaller banks can use instant payments to compete and digs into the expectations businesses have for their current and future banking experiences.
About the Report
The Disbursements Tracker®, a PYMNTS and Ingo Money collaboration, is the go-to monthly resource for the latest trends and changes in the digital disbursements space, covering developments occurring in the government, insurance and retail sectors as well as instant payments adoption’s global progress.