Operating a person-to-person (P2P) payments network in the United States gives us a front row seat to how financial institutions are moving into the digital age. Innovators, such as FirstBank, are again leading the way, meeting their customers where they bank and delivering new customer experiences that make it easy, fast and safe to move money digitally.
FirstBank was one of the early participants in the Zelle Network®. Today, there are more than 100 financial institutions signed up to offer Zelle®. I had a chance to catch up with Jeff Kaufman, President of Digital Banking and Payments Innovation at FirstBank (to hear more about the success they’re seeing with Zelle® since it was rolled out to customers late last year).
Ian: Jeff, always a pleasure to spend time with you. You’ve been busy lately with a number of projects, including the rollout of Zelle®. How’s it going so far?
Jeff: Without hesitation, I can tell you that FirstBank customers are loving Zelle®! We’ve seen customer adoption skyrocket by 56 percent in 2017. Payment volume increased by 72 percent, from more than 587,000 P2P payments in 2016 to just over one million in 2017. It’s been great.
Ian: What do you think is driving the dramatic increases you’re seeing in payment volume?
Jeff: We’ve benefited significantly from the Zelle® marketing campaign. It’s really put a spotlight on how a service can be used to send money to almost anyone you know and trust, regardless of where they bank in the U.S. We’re seeing many of our customers try Zelle® for the first time, while others are discovering new ways to use the service every day. It’s this repeat use of Zelle® for things like splitting a dinner bill, or paying back a friend for concert tickets, that is particularly exciting because it means that our customers are becoming more comfortable with mobile payments, and including Zelle® as part of their regular banking behavior.
Ian: FirstBank is known as an innovator in the banking field. You’ve always focused on digital channels to deliver services, such as eStatements, eBills, eBill Pay, online new accounts and online/mobile banking. What are some areas you’re exploring today?
Jeff: Our approach to innovation is driven by our core values that have stayed constant since we were founded in 1963. Do what’s right for the customer and allow them to bank with us through whatever channel they choose. If we deliver great technology to customers and supplement that with easy access to friendly and intelligent customer service, then we feel like we are well positioned to meet a customer’s needs. If we do these things, we get rewarded with customer loyalty. The center of gravity for banking is moving rapidly towards the mobile device, so our innovation is dictated by a “mobile first” philosophy. We’re focused on putting the bank at the fingertips of our customers 24/7 so they can bank anytime and anywhere. For every customer-facing service there are a set of backend processes we have to enable to make sure the experiences are safe and secure. That’s what drives our innovation agenda.
Ian: You had a few choices in P2P to make available to your customers. Why Zelle®?
Jeff: Our early ventures in P2P first looked at easier ways to move money between accounts. Quickly, we saw that consumers didn’t want to just transfer money between their own accounts, they wanted to move funds to others, inside and outside our bank. They had seen the move to mobile payments, especially amongst millennials. The markets we serve in Colorado, Arizona and California have become popular destinations for millennials. Who can blame them? These markets have a lot of exciting things to offer. We literally saw thousands of our customers start to use products outside of our banking ecosystem. That let us know that there were experience gaps we needed to get ahead of. These customers wanted speed and convenience, and they were willing to give up security by going outside of the financial services industry. That was telling.
Ian: So it sounds like Zelle® really helped to plug some experience gaps, but what does Zelle® mean for some of your operational processes?
Jeff: Table stakes in payments is to provide a fantastic customer experience that’s easy and delightful. These types of experiences keep our customer satisfaction rates high, and ensure that our trusted relationships with consumers remain strong. Zelle® certainly delivers a great experience, but doing what’s right for consumers has to be balanced with doing what’s right for our bank.
It’s these benefits of Zelle® that are sometimes not as recognized by consumers. Given that it’s backed by a network of banks, we can make money move not just fast, but safe. There are a common set of rules within the network that account for this, and help us mitigate fraud and lower risk. But, at the end of the day, Zelle® provides our consumers with a viable alternative to cash and checks, which also benefits our bank by lowering the costs associated with currency handling and check processing.
Ian: Great insight, Jeff. Another thing that people may not know is that the Zelle Network® is operated by Early Warning Services, LLC. Can you speak about your relationship with Early Warning?
Jeff: Being in banking for such a long time, I’ve been very familiar with Early Warning and the services it delivers. You have such a strong reputation in fraud and risk management. While we may not yet use all of your products, we know that behind the scenes, your products are helping keep things running safe and sound, not just for Zelle®, but for other banking processes, like New Account Openings, for example. Early Warning isn’t just a technology provider to us. You are a true partner, an extension of our team. We share data and insights to help reduce fraud in this new real-time space and create a frictionless enrollment process. We need a secure experience, but understand that customers want speed and ease. Zelle® delivers that real-time risk decision platform that verifies accounts quickly but feels seamless to consumers.
Ian: What advice do you have for other bankers looking at payment solutions?
Jeff: Our journey with Zelle® has taught us a number of things that are worth looking at if you’re considering a payments network.
First, Zelle® is a credit push network, which has the potential to change the payments landscape. There are a lot of things to understand when you have a model like this, from the role of aliases, and the need for multi-factor authentication, to applying the right protections at enrollment to mitigate fraud. Money is moving fast and there are risks to be aware of, not only to protect your bank, but to protect consumers.
Second, implementing Zelle® involves implementing an entirely new payments channel. It’s not just a feature in your mobile banking app. Because of this, you’ll need to allocate the operational support to make it successful.
Third, for many consumers, this is still a new way to pay. There’s so much education required to ensure that all banking touchpoints help the consumer. We’ve found that engaging employees and building awareness in our communities is key to success.
Ian: Finally, I love the impact FirstBank is having in its communities. Why is this work so important?
Jeff: Thank you. Doing what’s right for customers and our communities has been our operating philosophy since our beginning. “Banking for Good” speaks to our responsibility to empower the lives of our customers, whether it’s providing access to capital to make small businesses big, to charitable donations that enrich the lives of our customers. We’re proud of our philanthropic activity, and our employees love participating. Every year each employee gives the gift of time in their communities, participating in service passion projects. This is really rewarding!
About the Author:
Ian Macallister is vice president and Head of Sales and Customer Success for Early Warning, with responsibility over Early Warning’s sales organization. He brings substantial industry and leadership expertise to the role with a focus on how to always keep the customer at the center of product and service solutions.