Achieving Primacy Through Modernization
By Garrett Baird
Vice President, Product – Banking & Fintech, Paymentus
What is the single greatest advantage that bills and loan payments can offer financial institutions? In a recent guest blog provided to our valued partner Alkami, I answered this question with one word: frequency.
Unlike other commerce experiences such as shopping or dining out, bill pay is a recurring monthly necessity for all consumers. Because of this, each month offers banks and credit unions an opportunity to connect with a customer or member, solve a challenge, or provide a modern, simple experience that sets the tone for a lasting relationship.
The challenge is that frequency can serve as a double-edged sword in the battle for customer loyalty. A clunky, time-consuming, or inflexible payment process can quickly cause consumers to delay payments, or drive them to paying bills through the billing organization’s website.
Once this disintermediation occurs, it is unlikely that a consumer will voluntarily revert back to their financial institution. This makes every interaction essential in terms of building relationships, which is why the biggest opportunity available today lies in deploying a billing and payment solution that is Built To Serve the needs of all consumers.
Why Primacy is a Strategic Necessity
Competition for financial institutions today is vastly increasing. Direct billers (to say nothing of industry competition) are modernizing like never before to cement monthly revenues and cash flow. We have seen these modernization efforts succeed in displacing the FI as a financial hub for consumers—a development with wide-ranging impacts.
Being replaced as a prime center of financial activity is more than an inconvenience, it’s a strategic drain. Every bill payment or interaction that occurs outside of the FI ecosystem is a lost opportunity to gain visibility into financial habits, cross-sell relevant products, or engage in customer service.
Organizations that deliver a superior consumer experience have the ability to foster loyalty, and even turn consumers into champions of the brand. A clunky, friction-filled, or limited experience impacts loyalty, which means the battle for retention must be waged on items such as interest rates and promotional offerings. Neither addresses the challenge of a poor payment experience, however, which limits their viability as a long-term solution.
What Are the Proven Benefits of Successful Modernizations?
One of my favorite success stories comes from American Eagle Financial Credit Union (American Eagle FCU), one of Connecticut’s largest community credit unions with $2.6B in assets. Its future success was being challenged due to its legacy bill pay system’s limitations. A lack of self-service features, outdated experiences, and an inability to easily deploy new product offerings impacted the member experience and operational efficiencies.
American Eagle FCU committed to a strategic modernization through a partnership with Paymentus and Alkami. In total, the project introduced a host of expanded capabilities that offered members a comprehensive experience. This included:
- A new member portal for financial needs
- Bill Pay
- Loan Payments
- Peer-to-Peer (P2P) and Account-to-Account (A2A) offerings
- Self-service options including AutoPay and interactive voice response
The partnership completely transformed American Eagle FCU’s ability to serve members and meet their needs, which drove significant adoption of automated, cost-effective payment methods, increased total payment volume, and reduced staff workload. Highlights include:
- 21% increase in total payments across all payment capabilities (Bill Pay, Loan Payments, P2P, A2A)
- 99.8% of all payments are made through self-serve channels (Web, IVR, Mobile, etc.)
- 46% growth in P2P usage in the first 18 months post deployment
- Less than 1% fraud on transactions thanks to Paymentus PayWatch
How Modernization Solves the Primacy Challenge
When considering American Eagle FCU’s success, two main takeaways immediately came to mind that I believe can benefit your organization.
1. Creating a Comprehensive Financial Hub
It would’ve been easy for American Eagle FCU to settle on improving a single aspect of its billing and payments platform. Instead, it created a comprehensive platform that provided members with a suite of products that were simple to use and relevant to everyday life.
In particular, the inclusion of P2P and A2A products meant that members could send money to family and friends without ever having to leave their FI’s experience. They could log into a single portal and pay their electric bill, car loan, repay a friend for lunch, and send funds to an account outside of American Eagle FCU. That’s the very definition of primacy.
2. Intuitive Self-Service is Essential
Of the numbers shared above, the key is that each (fraud aside, thankfully) indicated growth. Month after month, more members were using more of these services. This shows that the offerings were convenient, and had removed the friction points that had impacted the previous system.
While we were pleased to see growth in areas such as self-serve channels and P2P, the 21% increase in total payments across all payment capabilities really stands out. Just as a rising tide lifts all boats, a modernization should benefit all areas of the business. That’s what we mean when we say that we are Built To Serve.
This increase shows that regardless of capability, more members are using and continuing to use American Eagle FCU’s products, giving the credit union more ways to create stronger relationships with members. After all, a good bill pay experience can easily be offset by a bad P2P experience. But the numbers make clear that each capability reinforces the usage of the entire platform—an essential in building loyalty.
For more information on American Eagle FCU’s transformation, check out our case study detailing the project. You can also learn more about what Paymentus offers banks, credit unions, and financial institutions of all sizes by visiting paymentus.com/banking-fintech/.
