Learn How a Risk Management Crew Can Help Your Financial Institution Mitigate Risk Every move your financial institution makes will involve some degree of risk. That is why managing your organization’...
Payments
|
4 min read
If you haven’t noticed, the era of in-person transactions is fading in the rearview mirror of a society that has recently weathered its first global pandemic. Today, thanks to the internet, smartphones, and other digital technology, commerce can occur anywhere at any time—usually with just a few clicks.
In the wake of COVID-19-related shutdowns and the mass migration to working from home, even the most reluctant adopters of digital technology are now competently using video messaging platforms, mobile apps, and web services as many continue working in a remote environment.
The click-of-a-button ease of access that we’ve become used to while shopping on Amazon and ordering an Uber has shifted consumers’ expectations of payments.
According to Pymnts, “Consumers expect payment capabilities to be embedded in the services they use and to be able to execute transactions seamlessly, without having to fetch card information or toggle between apps or screens. In a very real sense, consumers are becoming the point of sale wherever those sales take place. These dynamics were already present before the pandemic hit, but the crisis has been a force multiplier for these trends, hastening the obsolescence of cash and greatly increasing the share of retail commerce transacted online.”
Data from 2020 supports this shift. A McKinsey survey of U.S. consumers confirms deeper digital engagement. Their study found that the penetration of digital payments reached 78% in 2020. Other key takeaways include:
- More than half of U.S. consumers reported shifting purchases online from brick-and-mortar stores since the onset of COVID-19
- The share of consumers using two or more digital payments methods jumped from 45% in 2019 to 58% in 2020
- More than 3/4 of Americans use some form of digital payment
In this blog post, we’ll discuss the value of facilitating payment options for your borrowers quickly, securely, and digitally.
Convenient Payment Options Can Help Offset Borrower Default
Your borrowers are busy. Requiring them to take time out of their schedule to call or write and mail a check just to make their loan payment is tedious and inconvenient. Most borrowers prefer to simply log in to an online payment portal from the convenience of their computer or smartphone to quickly and securely make their loan payments, rather than having to take time out of their day to call or drive to the nearest branch.
When your borrowers have a convenient payment platform that is available 24/7 with multiple payment options (credit or debit card, checking or savings account, ACH payments), they are less likely to experience delinquency issues due to lack of convenience.
Offering Digital Payments Options Helps Free Up Internal Resources
Did you know that more than 60% of U.S. consumers say their go-to channel for simple inquiries is a digital self-serve tool such as a website (24%), mobile app (14%), voice response system (13%), or online chat (12%)?
Only accepting phone or in-person payments from your borrowers requires substantial customer service resources. In most cases, your employees wear multiple hats, and the time spent on the phone taking a loan payment could be spent elsewhere, on more productive tasks.
Giving borrowers the capability to self-serve can result in major cost savings for your institution. Rather than adding multiple employees to your staff to take phone payments, paying their wages and employee-related expenses, and training them, just making the initial investment in an online and mobile payment solution can be much more cost-effective in the long run.
When Should You Expand Your Digital Payment Options?
The short answer? Yesterday. Given the fact that the pandemic has accelerated the adoption of digital products and/or services by six years, if your institution was planning to expand digital payment options to your account holders in the next one to six years, you are now even further behind the curve.
To keep pace with the rapid acceleration of digital payments, your financial institution must be prepared and equipped to facilitate payment transactions quickly and securely through an online payment portal or other digital platform.
Let Us Know What You Thought about this Post.
Put your Comment Below.