For traditional financial institutions — particularly for relatively smaller firms, including credit unions — speed will increasingly be a determining factor in keeping retail and commercial clients in place, and in attracting new customers.
Innovation, after all, is what brings the formerly brick-and-mortar incumbents further along the path toward competing with FinTechs and digital upstarts, where an “always on demand” mentality holds sway.
RTP as Competitive Advantage
As reported in our latest research on credit union innovations, we found that CU executives have been aware that their own tech-driven offerings have lagged competitors. The relatively simple acts of opening accounts, funding them, and making payments have been able to make the leaps more fully to online channels.
But in the report, titled “Credit Union Innovation: Product Innovation As The Key To Membership Growth,” we found that only a small percentage of CUs might be thought of as being early adopters and innovators when it comes to tech initiatives. Only about 19% of CUs surveyed said they would be “early launchers” that would tend to debut new products before their rivals.
That statistic would leave roughly 80% of respondents as being relatively late to the innovation game, or would imply that they are watching what hits the market (from their competitors) first, and perhaps then sign on as “fast followers.”
If they embrace real-time payments (RTP), CUs can have a leg up on the competition, in the battle for customers’ mind and wallet share. The clamor is certainly there, where consumers want RTP, and are aware of the benefits tied to faster transactions. The CUs need to get millennials and bridge millennials on board in order to keep their revenue streams growing. Sixty-one percent of millennials and 59% of bridge millennials are “highly interested” in real-time payments.
Real-time payments are gaining ground across a variety of use cases and across the financial services industry as a whole. Earlier this year we reported that real-time disbursements accounted for 17% of all disbursements made in 2021, up from 5.7% last year — and instant access to wages, as they are earned, has particular appeal in the gig economy.
Read also: How Consumers Are Driving Demand for Real-Time Payments
But CUs (and, yes, FIs generally) can also find value and new revenues within their enterprise relationships as well.
As reported on Friday (April 8), transaction limit over The Clearing House (TCH) RTP network should help hasten the migration away from checks in commercial transactions — and in the meantime, help banks better serve commercial clients.
As reported this week, TCH, which operates the RTP network, has increased the value limit for payments on the network to $1 million from $100,000. The move comes after the limits for ACH transactions had increased to $1 million.
James Colassano, senior vice president, product development at TCH, told PYMNTS in a recent interview that RTP, and the increased limits, help companies deal effectively with liquidity and cash flow challenges. There’s also better transparency on settlement times and getting notification back that states the counterparty has received funds, and the transaction can be closed out with finality.
“That’s going to give businesses a lot of comfort that they run these transactions through the RTP rails and be confident in the outcome,” he told PYMNTS.
Read also: $1M RTP Limit Will Improve Supply Chains as B2B Moves Beyond Paper Checks, ACH
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More