Independent Banker - December 2018 - 63

between them, banks need to reflect on their business
strategy, balancing pros and cons, costs and benefits, and
future opportunities.
There really are two kinds of p2p solutions: those
secured within a bank and those that leverage bank
accounts but operate outside the traditional banking
infrastructure. Both have upsides and downsides for the
end user. For the bank, there's a clear benefit to keeping
the transactions close. However, there may be a higher cost
associated with this approach.
So what's the best option for a community bank? It pays
to weigh up the choices. Let's take a closer look at some of
the major players.
Bank-centric options
ExcheQ
ExcheQ, developed by $500 million-asset North American
Banking Company in Roseville, Minn., answers the p2p
call by utilizing the ACH Network via an app. It allows for
same-day settlement by leveraging Same Day ACH, but it
also can settle within traditional ACH windows. While it
doesn't have the social components of other p2p solutions,
it creates a simple, safe way for community banks to use
existing infrastructure-with limited added costs.
People Pay
People Pay is FIS' p2p solution that enables customers
to send and receive money from a smartphone, tablet or
desktop-securely and in real time. However, it is a " send "
network, and to receive payments in real time, recipients
need to use a MasterCard or Visa debit card. It is coreagnostic,
so if FIS isn't a community bank's core provider,
it can still be an option.
Popmoney
Fiserv's p2p solution, Popmoney, moves money directly
from one bank account to another. It is not a real-time
solution on its own, but it gives the option of Popmoney
Instant Payments, which provides real-time funds delivery.
It, too, can integrate with other systems, so all community
banks have the choice to use Popmoney. It does publicize
transaction fees for sending payments, which is something
banks will have to consider with all p2p solutions.
Zelle
The emerging frontrunner, Zelle is a p2p service developed
by the nation's largest financial institutions. As its own
network, Zelle offers near-real-time payments and funds
availability within minutes. It works with a bank's own app,
and there's also a Zelle app option. For consumers, there's
a quick enrollment process and then they are set up to send
or receive to nearly any bank account in the U.S. Zelle has
a powerhouse promotional engine behind it-an advertised
$40 million marketing spend-but with that brand
recognition comes a price, which is something community
banks will need to factor into their p2p plans.
" We're planning to offer Zelle in 2019; it's the bank
response to other fintech payment companies, " says
John Gill, chief operating and risk officer of Somerset
Trust Company, a $1.14-billion asset community bank in
Somerset, Pa. " These fintechs are competition to the banks,
and Zelle is all the banks working together to come up with
payments solutions. "
Fintech " co-opetition "
Fintech companies offer competition in the p2p space,
using the payments infrastructure but taking the
transactions outside of the financial institution. These
players exist because
electronic p2p
payments were a point
of friction historically.
The fintechs wanted to
offer digital solutions
that simplify payments.
That said, it's not
necessarily a bank
versus fintech situation.
If both kinds of
solutions are available,
it can encourage
innovation in the p2p
market. McKinsey &
Company's 2016 report,
" This is a
$100 billion-a-year
business that is still
growing by double
digits. Community
banks should
definitely be offering
a p2p solution. "
-Tina Giorgio,
ICBA Bancard
Cooperation and Competition in the U.S. P2P Market,
concludes, " Many observers ask which model will prevail;
however, this question presumes a battle between banks
and non-banks with a single winner. McKinsey expects
the two models will continue to coexist, either addressing
different aspects of the p2p ecosystem, or collaborating to
integrate existing solutions or build new ones. "
" I think that bankers need to step aside and use some of
the technologies when it comes to p2p payments, " advises
Michael Bilski, CEO of North American Banking Company.
" The important thing is the ease of use for the receiver, so
they don't have to do anything. That's what I think is the
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