In the first two parts of this blog series, we covered the initial topics of choosing an instant payments network, as well as the benefits of proceeding with a “receive-only” strategy at the outset of integration. In the third and final edition, we’ll take a closer look at the instant payments journey and address a particularly critical challenge facing many payments professionals today: communicating the value of instant payments to secure approval and support from the C-suite.

Aligning Your Real-Time Payments Business Case with Enterprise Goals

If you’ve worked with almost any financial institution for an extended period of time, chances are you’ve become pretty familiar with the overarching goals at the executive level of the organization. In many cases, these goals are directly tied to facilitating further growth or, at the very least, creating additional value for shareholders. Unfortunately, payments as a stand-alone business case may or may not generate immediately adequate incremental ROI, which has the potential to cause ongoing delays in the C-suite’s approval of payments-only initiatives.

At the end of the day, gaining the approval and support of executives is a matter of communication. And if highlighting the individual benefits of instant payments integration simply isn’t generating the positive response you’re looking for, framing payments in the context of furthering enterprise goals could turn out to be an effective alternative strategy.

To see how this might be done, let’s take a look at a few common executive-level goals and concerns, as well as what instant payments capabilities can potentially contribute to these areas:

1. Increasing Deposit Base. It goes without saying that the ability to consistently grow deposits can be a significant advantage for any bank or financial institution. Increasing the size and frequency of deposits, as well as attracting new customers and accounts, is quite naturally a core source of balance sheet growth. As we explored in the last edition of this blog series, even gaining the interim capacity to simply receive instant payments has the potential to considerably increase both the velocity and volume of incoming deposits.
2. Generating Interest Income. When you consider that interest generated on loans is typically the lion’s share of total banking revenue, the value proposition of instant payments in this context becomes relatively straightforward: faster funding of payments by a significant margin means an institution can fund loans more efficiently and in turn create additional revenue from the interest. While the extra interest generated on an individual loan won’t necessarily be very compelling by itself, the thousands of new loans issued over time as a result of instant payments capabilities is incredibly meaningful from a long-term growth perspective.
3. Operational Efficiency. It’s no secret that bringing in more revenue per dollar spent is a continual battle of every financial institution. To this point, driving customers toward digital payments by supporting real-time transactions can (and should) be viewed as yet another opportunity to create positive shareholder or member value.
4. Reducing Account Attrition. While revenue generation is certainly top-of-mind for executives, it’s also likely that the entire C-suite shares the more foundational goal of keeping account holders happy by generating positive experiences. After all, unsatisfied customers are often just one more bad experience away from becoming former customers. Fortunately, there are plenty of opportunities for consumer, small business, and corporate account holders to benefit from instant payments, and more specifically in ways that reinforce your institution’s attention to detail and dedication to good customer service. This might come in the form of more efficient claims disbursement processes, or providing customers with the opportunity to conduct business after hours and on the weekends.

To conclude, in addition to ensuring connections to emerging real-time networks and committing to an integration plan that reflects your institution’s level of readiness, enacting a successful instant payments strategy will also require an ability to clearly communicate the true value of this transition to the organization. By illustrating in concise terms how instant payments contribute to addressing the organization’s highest priorities, you’ll have a much better chance at accelerating approval and gaining the much-needed support of the C-suite.

If you found this blog series helpful and would like to learn more about how best to prepare for instant payments, please reach out to Volante and we’d be happy to explore the best approach for your bank.