61% of Millennials Want Real-Time Payments in Finance and Insurance

As the financial and insurance sectors evolve, the demand for swift and accurate payment systems has never been more pronounced. Legacy systems often need to improve, resulting in delays and errors that can damage customer loyalty and business viability.

A PYMNTS Intelligence Report, Fast-Tracking Funds: Finance and Insurance Accelerate Payments, in collaboration with The Clearing House, shows how growing customer dissatisfaction drives financial institutions and insurers to adopt real-time payment solutions to meet consumer expectations.

Outdated Payment Systems Delay Customer Transactions

Swift payouts are essential in the finance and insurance industries, where delays can severely impact customers. The aftermath of natural disasters exemplifies this urgency; payouts for such events in the U.S. exceeded $275 billion from 2020 to 2022 — prompting a need for immediate funds. Notably, more than 25% of policyholders reported switching providers to access faster payouts, highlighting a significant gap in service delivery. Nearly 40% of insurers do not offer preferred payment options, driving customers to seek alternatives.

Past technical issues at Wells Fargo underscore the potential fallout from ineffective legacy systems. In that case, a processing error left some customers without access to their funds for several days, a crisis that can be particularly devastating for those living paycheck to paycheck. Such incidents reveal how outdated payment methods can lead not only to delays but also to lost trust.

Insurance and Finance Customers Seek Improved Payment Options

The evolving expectations of customers are clear: they want faster, simpler payment options. According to the report, 61% of Millennials expressed high interest in real-time payments, indicative of a broader shift toward instant transactions. Organizations implementing these systems reported substantial benefits, with 77% noting an improved customer experience. Consider 54% found that real-time transactions alleviated issues surrounding urgent payments.

Additionally, 30% of customers prefer to avoid extra fees associated with real-time payments and many still need to be convinced about security and accuracy. Specifically, 34% worry about erroneous deposits, while 26% express concerns about fund security. Financial institutions must address these issues through transparent communication and offering free or low-cost real-time payment options to bolster consumer confidence.

Finance and Insurance Firms Roll Out Faster Payment Solutions

Recognizing the pressing need for change, many insurance companies and banks are beginning to adopt real-time payment solutions. Victory Insurance has implemented Insurity’s Sure Claims Payments platform, enabling payments to be processed in as little as 30 seconds after approval. This action not only satisfies customer demands but also positions the company favorably against competitors.

Credit unionsare also leading the charge in this transition. Partnerships like that of Corporate One Credit Union and CU*Answers are streamlining the integration of The Clearing House’s RTP network, making real-time payments more accessible. This initiative aims to simplify the onboarding process for credit unions, which resource constraints can hinder.

Financial institutions and insurers must adapt to the growing demand for real-time payment solutions in a competitive landscape. By overcoming the limitations of legacy systems and prioritizing customer needs, these firms can foster loyalty and drive growth.