Payments Top Use Case for US Fintech Users
November 24, 2022
Fintech Use Cases
The use of digital payment services — like Venmo, PayPal, Zelle, and Apple Pay — is the number one fintech use case among US consumers, according to Plaid’s 2022 edition of The Fintech Effect. In fact, 73% of respondents reported using such services, suggesting they are quickly approaching ubiquity. The next-closest use case was bill pay services, at 53%, while online-only banking services, which would include consumer-focused neobanks, came in at just 34%.
That payments tops this list isn’t surprising — peer-to-peer (P2P) payments have grown tremendously over the last few years, and Insider Intelligence predicts that 70.5% of all smartphone users in the US will also be mobile P2P payments users by 2026. As we recently discussed, this represents a major threat to traditional banks, as many of these apps also provide mobile wallets, debit cards, and even credit products. As such, their own P2P offerings, including Zelle, even with its recent woes, represent the greatest tool US banks have to fight back against this cannibalization. By being sure to offer such services, these institutions can help to keep their ecosystems sticky, encouraging users to stay within their own walls across the broader financial services spectrum.
However, when it comes implementing services like Zelle, efforts need to be made to ensure customers understand what is available, how it works, and the bank’s policies around fraud and unauthorized payments. Education is key here, especially with headlines flooding the internet warning of scams and potential risks. Moreover, institutions should be thinking about what the introduction of real-time payments (RTP) could do to boost their capabilities on this front. Zelle, for example, is capable of settling payments over The Clearing House RTP network if a bank is integrated with the network, making instant payments an achievable reality.
In short, it’s not enough to check P2P off the list. It’s got to be part of a larger customer engagement strategy with its own roadmap as well as a communication and adoption plan. If you can do this well, there is tremendous opportunity to deepen relationships with customers and drive cross-selling. On the other hand, those who fail to act will be effectively pushing customers toward competitors for one of their most prevalent financial activities, creating a gateway to leakage.