Nearly One-Third of Insurance Consumers Prefer Not to Pay Extra for Real-Time Payments

Legacy payment systems in the financial and insurance industries have often resulted in delays, errors and complications, leading to damaged customer loyalty and lost business.

As noted in a recent PYMNTS Intelligence research study titled “Fast-Tracking Funds: Finance and Insurance Accelerate Payments,” 40% of insurers fail to provide the payment options that customers prefer, exacerbating the problem.

Delayed payments can also be particularly hard when natural disasters occur, leading to a quarter of policyholders switching providers to achieve faster payouts.

Additionally, the study pointed to recent incidents at Wells Fargo, where customers experienced delayed access to their funds due to technical glitches, to underscore the need for improvements in payment options for customers seeking speed, simplicity, and a seamless experience. Customer surveys also support the demand for real-time payments, particularly among millennials.

Concerns include the fear of funds being mistakenly deposited into the wrong account (34%), security of funds (26%), lack of trust in certain instant payment service providers (21%) and high fees, which have resulted in 30% of customers preferring not to pay extra for real-time payments.

To meet customer demands and prevent customer churn, finance and insurance companies must address these concerns. Credit unions, for example, are leading the charge with real-time payments deployment, with companies like Victory Insurance adopting platforms that offer near-instant payments to policyholders who prioritize faster claims processing.

Overall, organizations that have implemented real-time payments to meet customers’ demands have reported a better overall customer experience, with benefits including alleviating challenges surrounding overdue payments and improving cash flow.

This move has the potential to bolster customer loyalty, a critical component in fueling the growth of finance and insurance firms.

As the study noted, “Delivering instant payments can go a long way toward securing that loyalty. Whether a bank customer needs paycheck funds to cover an unexpected bill or an insurance policyholder needs a payout for urgent home repairs, companies that provide their customers with instant access to funds will leave a lasting impression.”