Smaller FIs fail to meet customer demand for Zelle

Credit unions and community banks have some catching up to do when it comes to meeting changing customer payment needs, according to new data from Aite Group published yesterday. Although 67% of community bank customers and credit union members want Zelle , only 13% of institutions currently offer the service, according to Aite’s new report, “Faster Payments for Community Banks and Credit Unions: Market Overview.” Zelle is a U.S.-based digital payments network owned by Early Warning Services , a consortium of financial services companies that includes Bank of America, Capital One, JPMorgan Chase and Wells Fargo. Launched in 2017, it has more than 500 member banks, and its users sent $133 billion via 519 million transactions through the peer-to-per payments network during the first half of 2020. In fact, about one-third of the 117 community banks and credit unions surveyed don’t currently offer connectivity to a faster payments rail, according to the report, which looks at the current state of faster payments through FedNow, Clearing House’s RTP, Zelle, same-day ACH and push to card. Of the institutions surveyed, 37% of respondents were community bank executives and 63% were credit union executives. Those institutions risk losing out as customers — along with their deposits and fee revenue — migrate to other FIs. Simply put, “not offering faster payments is not an option for any FI that wants to stay in business for the long haul,” the report stated. While one-third of community banks and credit unions do not offer Zelle, it remains the most recognized faster payment method among their customers; 93% of respondents reported their customers were familiar with Zelle, compared with 77% for ACH, and 31% for push to card. Smaller institutions have not fully committed the network to their faster payments roadmap, despite customers specifically requesting it, the report said. Among the institutions that do not offer Zelle, 65% offer another P2P payment solution, with Jack Henry’s iPay solution and Fiserv’s PopMoney and Payzur products being popular alternatives. Transaction volume among these alternatives is “very low,” Aite said, with nearly 72% of these lenders reporting fewer than 500 transactions per month. Zelle adoption and usage has seen an increase throughout the pandemic, and it continues to be a popular payment option among the country’s biggest financial institutions . Meanwhile, enrollment in Zelle jumped 17% year over year, Early Warning Services reported in July, and it has gained traction in the small business space , moving beyond peer-to-peer payments.

Smaller FIs fail to meet customer demand for Zelle

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Smaller FIs fail to meet customer demand for Zelle

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