Independent Banker - January 2023 - 18

PORTFOLIO
some interesting dynamics to keep
an eye on with respect to legacy
payments and emerging payment
types: emerging inclusivity of instant
payments as well as paying with
buy now, pay later [BNPL] or other
products, " Denning says.
For its part, BNPL has already
had repercussions on the industry.
According to a Lending Tree survey,
43% of Americans have used BNPL,
up from 31% year-over-year. The
same survey found that 42% have
made a late payment and 70% have
admitted to overspending. The
growing unease with BNPL solutions
provides an opening for postpurchase
plans that support the end
goal, but without added concerns.
" Post-purchase is more responsible
to offer to cardholders, " says Rebecca
Kruse, executive vice president
and chief operating officer at ICBA
Bancard. " It offers a payment plan
based on a purchase they've made on
an already approved line of credit,
instead of these one-off loans. "
5
Address fraud
and security.
According to " The State
of Fraud and Financial
Crime in the U.S., " a report from
Featurespace and PYMNTS on fraud
and financial crime, 62% of financial
institutions reported an increase in
fraud volumes from 2021 to 2022.
Across the board, nearly all payment
types saw an increase in losses.
" If community banks aren't highly
focused on fraud, they should be, "
Doyle advises. " Fraud is running
rampant. Whether you're talking
about P2P, wires or washing of
checks, every payment rail is getting
pounded on when it comes to fraud.
You really need to build a strategy on
how to combat that, not just for the
customers but for the bank as well. "
In 2023, experts agree that
" Payments is not only the biggest
challenge for banks but also brings
the greatest value to our franchise. "
-CHRIS DOYLE, TEXAS FIRST BANK
advanced screening technologies
will be more widely deployed by
community banks to help identify
troublesome transactions before they
are executed.
" Real-time behavior-based fraud
detection before a payment is sent-it
has to happen, " Kruse says. " If you're
going to implement instant payments,
you have to have fraud detection
before you send the payment. "
Interconnected developments
While these five trends offer
individual concepts, they are deeply
intertwined, and that's precisely
where payments strategies excel.
" I grew up hearing this from my
father at the bank: Payments is not
only the biggest challenge for banks
but also brings the greatest value to
our franchise, " says Doyle. " So, at
our bank, we developed a payments
strategy years ago and continue to
develop that as things change. "
Yet, with today's rapidly shifting
industry, it can be hard to see the
forest for the trees. For Texas First
Bank, that meant engaging outside
expertise for a neutral assessment
of its options. " There's a lot of really
smart consultants out there who can
help community banks with that
strategy, " Doyle says.
" At the heart of every account you
have in your bank is a payment, " says
Giorgio. " When you think about it,
if you have a new account, the first
thing they do is make a payment via a
deposit into that account. If I have a
loan, what do I do? I make a payment
every month. If I have a credit card,
I make a payment every month. I get
paid; there's a payment going into my
account every month.
QUICK STAT
30%
of banks' revenues come
from payments.
Source: EY
18 // ICBA Independent Banker // January 2023
" How easy it is for your customers
to be able to respond to those
required actions is going to drive their
behavior as to how they facilitate
those payments. "
In short, payments matter, and as
the new year rolls on, their prestige
and impact will grow. Experts advise
getting a payments strategy in place
to ensure preparedness for whatever
comes next.
Colleen Morrison is a writer
in Maryland.
Independent Banker - January 2023

Table of Contents for the Digital Edition of Independent Banker - January 2023
