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The evolution in payments technology to drive faster, easier options for sending and receiving money was well underway prior to the COVID-19 pandemic; however, it has certainly heightened the need to accelerate this direction. The infrastructure behind new payment platforms carries a flood of data that can ultimately transform the bank's role in customer commerce.
At TD Bank, we're working to apply that data toward building a more holistic, personalized financial experience for customers—an intuitive, easily navigated one-stop-shop that will serve customers' incoming and outgoing transactional needs and, more broadly, help them achieve their financial goals. Listening to customer intel is key to evolving programs, especially during this difficult time, as products need to adapt to today’s new norm.
Fintechs, to a large extent, already have figured out how to remove friction from consumers' financial lives and offer user-friendly experiences and guidance. Many traditional banks risk falling behind if they don't lean into new payments capabilities to keep up with evolving consumer expectations. The significantly expanded transactional and behavioral data accompanying new payments platforms—notably Real-Time Payments (RTP)—can expand to eventually offer insights that can transform the traditional transactional role into one where new areas of value can be offered to both customers and merchants. Data to fuel personal financial management tools (PFMs), small business transactions, and benchmarking insights, including hyperlinks within the payment stream for the customer that are relevant to the transaction; these are all examples of the expanded potential. Using transaction location information to provide additional pricing/servicing comparisons for both customers and small businesses. The potential for providing invoicing within a payment request is yet another example of how RTP could add significant efficiency, cost reduction, and experiential value going forward. I see this as complementary to the information streams we'll be able to gather from data aggregators or data brokers, weaving together a fulsome picture of the customer and helping enrich their experiences and product offerings.
The industry needs to be thoughtful in how this once-in-a-generation new payment capability can interoperate within the customer's financial life
Customers, especially during this strained time, have come to expect these experiences throughout an era in which they're accustomed to smooth, secure, personalized, and efficient digital transactions from services like PayPal and Amazon. Customers want the same level of relevancy, security, and efficiency for their banking transactions as they get in the rest of their everyday lives and we can either supply it or risk losing share. The industry needs to be thoughtful in how this once-in-a-generation new payment capability can interoperate within the customer's financial life. Giving choice and control via a cohesive user interface can provide a streamlined menu of options covering bill payment, invoicing, and other processes to simplify their daily financial lives, with the ability to choose payment timing and rails, such as credit cards, RTP, wires or international remittances.
Beyond transactions, though, consumer data can help us serve as trusted financial advisers and offer tools to coach and support customers. Depending on the demographic, for example, we might help young customers with basic budgeting and saving, to gain balance in their financial lives. Or we can guide more established clients in their investment choices and retirement planning.
Among other features, we'll be able to tie customers' transactional data to expense-tracking and budgeting tools to bolster their financial management activities, working with them even as budgets and goals shift from unexpected events.
How do we get to this more holistic relationship?
While it will take time to evolve, RTP can represent a significant turning point, allowing businesses, consumers, and employers to instantly send and receive funds around the clock through their financial institutions. Small businesses will be able to send invoices and receive payment in seconds, through the same data stream. Employers will be able to make real-time payroll. (Grubhub offers something like this already with Instant Cash Out, an app feature that allows its drivers to cash out earnings into their bank accounts at any time.)
While banks generally are just getting started with RTP infrastructure, significant change is on the horizon. TD Bank currently offers customers the ability to receive RTP and is even laying the groundwork for sending them, along with offering a payment request message so billers can invoice customers over these rails.
The financial data standard underpinning RTP allows for transmission of significantly more information than previous technology — the electronic difference between a water main and straw, like 3G versus 5G in the telecom industry. We'll gain greater insight into consumer behavior and preferences as the technology provide more granularity on purchases and other customer choices.
Not only will customers enjoy more convenient payment options, but banks will be able to offer consumers more relevant services by analyzing the data to better understand them.
Banks have not fully optimized all dimensions of consumer data, but that's changing as needs continue to evolve during this time. TD is investing in readying its data management capabilities to handle data from this new rail and turn it into actionable insights to better support customers.
These insights will enable customers to get more value out of banking relationships and live more stable, fulfilling lives, even when instability hits.