Study Finds Most FinTechs Don’t Meet Consumers’ Instant Payments Expectations

The consumers powering today’s economy are increasingly digital-first, meaning money mobility is a top requirement for any financial services provider — especially FinTechs set on winning consumers away from traditional banks. PYMNTS’ research finds that peer-to-peer (P2P) transfers are the top services that consumers expect when using a FinTech provider. While supply has not always met demand, FinTech account issuers are closing this gap, increasingly offering P2P transfers to their account holders.

As a result, FinTech issuers reported increased customer satisfaction for the completion of both money-in and money-out transactions. On average, issuers were 5.5% more likely to offer satisfactory experiences to customers this period than in Q3 2022. Despite their efforts to meet consumer demand for instant transfers, our data also suggests that FinTech issuers need to better understand their customers’ needs. While consumers are mostly likely to cite prompt availability of good funds/speed as their biggest issue when depositing or transferring funds, FinTech executives cite customer experience and limited transfer as their customers’ biggest concerns.

“Issuers Report 2023: FinTechs’ Instant Payments Mismatch,” a PYMNTS and Ingo Money collaboration, provides a snapshot of the current state of services FinTechs offer to consumers in the United States. The report is based on two surveys: a census-balanced survey of 2,292 U.S. consumers conducted between Jan. 6 and Jan. 10 that investigated consumers’ adoption and overall usage of instant payments, and a survey of 150 FinTech issuers conducted between March 13 and May 6 that examined the services issuers offer their customers and their customers’ satisfaction with the money mobility capabilities they provide. These FinTechs generate revenues of $5 million or more and are in the areas of payment products or services for consumers and/or finance or financial operations.

More FinTechs now offer P2P services, which has improved their customers’ overall level of satisfaction with their service.

P2P transfers for money-in and money-out transactions are the most popular services among consumers, with 51% and 44% of consumers, respectively, using them. We found that 47% of FinTech respondents reported they allow consumers to send P2P transfers and 41% allow consumers to receive these transfers, representing increases of 10 percentage points for sending and 9 percentage points for receiving since Q3 2022.

FinTech issuers sell convenience and customer experience, but consumers buy available payment options and speed.

Consumer account holders gravitate to FinTech providers that offer an expanded array of fund transfer options and fast transactions. Transfer speed is the leading reason why consumers use FinTech providers, with 27% citing this reason. This is followed by the availability of a wide variety of payment and fund transfer options, with 26% of consumers citing this reason.

Yet 27% of FinTechs erroneously believe that convenience is the top reason why consumers use these accounts. Customer experience also ranks as a perceived top reason, with 21% of FinTechs believing it to be a priority, even though only 4.8% of consumers actually cited customer experience as the top reason they use FinTech providers.

FinTechs recognize that their customers experience money mobility issues, yet they underestimate the importance consumers place on instant access to good funds.

Nearly all FinTech issuers believe that their customers encounter issues when depositing or transferring funds, yet they fail to properly identify where consumers have trouble when doing so. Among consumers who reported issues when depositing money into their accounts, 41% said that the guarantee of good funds/speed was the issue they faced most often, while 28% cited the guarantee of good funds/speed as the issue they experienced most often when moving funds out of their accounts.

Yet FinTechs were more likely to report that consumers were more concerned about customer experience when depositing funds, cited by 37% of the CFOs surveyed, and more about limited payment options with 32% of CFOs citing this as their most-often experienced issue when moving funds out.

FinTechs hoping to gain market share and win consumers away from banks and credit unions need to make sure they are in alignment with what consumers demand. Download the report to learn more about consumer satisfaction with instant payments options.