From sending money to college-aged children, to splitting lunch checks among friends, Gen X consumers are increasingly embracing mobile peer-to-peer (P2P). But enabling P2P payments can be a tall order for community banks, which may lack the resources to develop them, says Kristy Brandon, senior vice president of eBanking at Comerica Bank. In the latest Faster Payments Tracker, Brandon tells PYMNTS how utilizing common, shared payments platforms helps small FIs meet Gen X’s P2P needs.
Mobile P2P payments have long been considered the domain of millennials, but these 25- to 34-year-olds are not the only generation embracing this technology. FIs looking to cater to older demographics may find the time is ripe to bring P2P to Generation X (those aged 43 to 54) and baby boomer (aged 55 to 73) consumers, critical bases for many banks. American Bankers Association research shows that adults over the age of 50 were responsible for 70 percent of deposits made in the U.S. and owned 61 percent of bank accounts in 2017.
Technology use has been rising outside the millennial age group, meaning that financial institutions (FIs) can increasingly expect middle-aged and older consumers to be ready and able to take advantage of mobile services. A survey conducted earlier this year found that 53 percent of U.S. adults age 65 and older own smartphones — a significant jump over the 42 percent who owned them in 2016 and the 18 percent who did in 2013. The 2019 numbers for those aged 50 to 64 and those 30 to 49 were 79 percent and 92 percent, respectively. The latter group had only slightly smaller ownership than the 96 percent of 18- to 29-year-olds who own smartphones.
It may thus be no surprise that a Q4 2018 survey found more than half of first-time P2P service users were at least 45 years old. FIs are seeing these trends firsthand as they work to serve customers of all demographics. PYMNTS recently caught up with Kristy Brandon, senior vice president of eBanking at Dallas-based Comerica Bank, on serving this burgeoning group. The FI reports about $72 billion in assets and serves a customer base that includes a larger share of individuals aged 45 and up compared to its peers, Brandon said. Comerica partnered with financial services technology provider Fiserv in spring 2018, enabling it to offer Zelle through its mobile banking app. The solution’s popularity has since risen among customers.
“Our 55 and older customers are very active in Zelle,” Brandon said. “The fact that we’ve had such great adoption shows how, for something like Zelle, it doesn’t matter what your demographic is — everyone has a need.”
Appealing To Gen X And Baby Boomers
Gen X and baby boomer consumers demonstrate some different P2P payment uses than millennials, with many using these services to quickly send money as graduation or birthday gifts and to children in college to pay for textbooks, Brandon said. These consumers are also likely to want their banks to provide P2P offerings and are less likely to turn to FinTechs for such tools. Brandon explained that FI-based P2P payment options streamline access, meaning customers do not need to remember multiple logins.
Customers also often feel more secure using bank-offered payment services, as such tools have demonstrated security capabilities through preexisting customer relationships, she said. A 2018 Zelle study concurred, finding that 76 percent of Gen X survey respondents and 74 percent of baby boomers tried P2P payments because their FIs offered them.
“Our older demographic is much more comfortable using products like this through a bank than a FinTech,” Brandon said. “Getting Zelle through the bank makes customers feel more secure with it. The younger generations would still prefer [to get the services from their banks] but tend to use alternate solutions — which could be FinTechs — if their banks can’t solve the pain points that they have.”
Securing P2P Services
Meeting customers’ desires for security while also providing smooth experiences requires careful measures. Comerica relies on authentication and suspicious activity procedures to help ensure that legitimate customers are logging into the bank’s app or website and that abnormal transactions are not being made. Securing real-time payments requires providing real-time fraud monitoring, and Comerica uses a Fiserv solution to analyze transactions, assign risk scores and respond accordingly. The product helps authenticate high-risk transactions by verifying customer identities in-session. It could send one-time passwords (OTPs) to users’ trusted phones, for example, to confirm their legitimacy. Very high-risk transactions are put on hold until the bank can reach the customers for confirmation.
“I was a little apprehensive [about the solution] because it sounded like an inconvenience to the customer,” Brandon said. “In a way it is, but in another way, it really sells the customer on, ‘Wow, the bank is watching on my behalf.’ And either [the customer can say,] ‘Yes, that [transaction] is absolutely something I did, please release it,’ or ‘No, absolutely don’t let that money leave my account,’ — because with Zelle, it’s immediate. The money goes, and it’s gone. We’re going to pull [those funds] out right now, and getting it back is not easy.”
FIs can also help reduce risks by educating customers on common fraud attempts targeting these payment offerings. Fraudsters might pretend to be selling goods and request payment through Zelle, for example, but then never deliver on the items. FIs should therefore advise customers to send payments only to recipients they know and trust, Brandon said, adding that banks can provide in-app alerts to help remind customers to double-check recipients’ contact details.
Standardizing Services
It was important for Comerica to use Zelle rather than try to develop and offer its own P2P service, Brandon said, especially since various banks also use it. A common platform offers assurance that the service will work for sending money between banks, rather than only to other Comerica customers. Zelle owner Early Warning Services also provides banks with strict rules on how to implement the solution, she noted, which ensures a standardized experience.
She also explained that it is more cost-effective for banks to adopt a single solution and the updates that the service operator rolls out, rather than for each FI to invest in its own offerings.
“Comerica is a community bank. If we each try to do this individually, we’ll probably all end up at same place, but we’ll all spend lot of time and resources to get there,” Brandon said. “Whereas [we can instead have] the collective power of all of these entities working together with Zelle. Everyone using Zelle provides feedback that the consortium takes [and combines with] the industry knowledge it has to make enhancements [to the service] every quarter.”
Banks are well aware of the growing demand for rapid-fire P2P payments — a demand that, as Comerica found, is not limited to millennials. Consumers of all ages are using smartphones and want to quickly send money wherever they want, whenever they want.
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