In an interview conducted by PYMNTS’ Karen Webster, Tina Giorgio, president and CEO at ICBA Bancard, the payments services subsidiary of the Independent Community Bankers of America®, said 2017 has brought exciting new changes to the payments industry as a whole — and for ICBA Bancard.
Among the biggest news headlines this year: the need for speed. Giorgio noted that the world of faster payments via technology platforms has gained footing, and community banks are well positioned to participate in the shift.
Tina Giorgio, who is a former community banker and has served on numerous boards and committees with the Federal Reserve and NACHA, said that the focus on real-time payments, via online or mobile avenues, has been one of her priorities since she took the helm of ICBA Bancard a little more than a year ago. During her short tenure, ICBA Bancard has already brought to market a small business receivables solution with same-day ACH, real-time payments, remote deposit capture and card payments. Under her leadership, ICBA Bancard has also launched prepaid solutions for reloadable and payroll cards.
With the debut of real-time online payments on the horizon, the impact on community banks will be significant. “The material difference,” Giorgio told Webster, “will be ensuring that banks manage the liquidity involved when the transaction is initiated. There are no after-the-fact NSF [non-sufficient funds] or returned items in this new world.”
The move to real-time payments may also streamline and reduce collections, late notices and delinquencies. And, in the event a customer has forgotten to make a payment, the bank can send a reminder to the customer to confirm that a mobile payment should be made, and the issue is taken care of on the spot.
As the discussion turned to the “double-edged sword” of speed — such as erroneously sending $10,000 instead of $1,000 in payment — Giorgio conceded that this “evolution” toward online payments through technology platforms is necessary and that the transition “is not going to be perfect” in the beginning. However, appropriate checks and balances will be put in place to quickly identify and correct the error and limit future occurrences.
Switching gears, Giorgio said community bankers, who dole out 50 percent of the nation’s small business loans and 90 percent of U.S. agricultural loans, are also dealing with a number of issues unrelated to payments, such as crushing regulatory burden.
“As a subsidiary of ICBA, the only trade association dedicated exclusively to community banks, we have a bird’s-eye view of the challenges facing community banks, so we are very strategic when deciding what innovations to invest in and deploy,” she said.
Beyond real-time payments, Giorgio is working on card-not-present (CNP) fraud solutions. She noted that 21 percent of ICBA Bancard’s card portfolio losses came from CNP fraud last year. “Most trends tend to hockey stick,” she said, “but I think this one is going to rocket ship.” The culprit? “We have a quick transition to EMV occurring, which is pushing everything to the online, CNP rails.”
ICBA Bancard is also looking at a white-label digital wallet solution, “so that community banks can have their own version of a ‘pay.’ We know that customers trust their community banks, and we feel very strongly that if we have a competitive product, customers will migrate from the device-driven wallets to the community bank wallet.” The mobile payment model would be one “backed by a large wallet, but it would feature the community bank’s logo and branding.”
The key, then, in a world where customers are used to an ever-tailored experience across payments and across commerce, is relevancy, as Webster and Giorgio agreed. Financial institutions need to offer low-friction payments products and services that are in line with their customer’s expectations of speed and ease of use.
While community banks can certainly choose to build their own in-house solutions, ICBA Bancard is strategically partnering with FinTech providers and harnessing its economies of scale to deliver payments solutions that will ensure community banks remain strong and vibrant in the years to come.
Picture the community bank — that stalwart granite fixture in your hometown. On your corner, in your corner. Now imagine that same bank as the face of payments and a hotbed of innovation. “High-touch meets hi-tech,” a powerful combination, Giorgio said.