As we turn the corner into spring, the digital shift continues to accelerate as the industry adapts to shifting consumer perspectives and expectations in the wake of COVID-19. In response, financial institutions are developing new solutions, forging strategic partnerships with FinTechs, and identifying and solving new opportunities and challenges.
In this month’s issue, we explore the new digital consumer and how the pandemic has shaped consumers’ shopping behaviors, how application programming interfaces (APIs) are taking online banking to the next level, Finastra’s participation in the Federal Reserve’s FedNow(SW) Service Pilot Program, and more.
April 2021 At-a-Glance
COVID-19 Impact: PYMNTS’ March edition of its Pandenomics series highlights the new digital consumer and how the pandemic has reshaped consumers’ shopping behaviors.
Emerging Payments: APIs are taking online banking to the next level, offering an omnichannel customer experience and more personalized responses.
Faster Payments: Nacha rule goes into effect that extends Same Day ACH operating hours.
RTP® and FedNow(SW): Finastra announces its participation in the Federal Reserve’s FedNow Service Pilot Program, which supports the development, testing, and adoption of the FedNow Service.
The New Role of Operations Workgroup: The New Role of Operations Workgroup continues its work on defining and adapting to the new role of operations and hears from Keith Gray, Vice President of Strategic Partnerships for The Clearing House on its RTP service.
Other News: NEACH’s Cyber Watch column explores denial-of-service attacks (DDoS), including one aimed at taking down emergency services lines.
PYMNTS released its March edition of its Pandenomics series, The New Digital Consumer: How The Pandemic Has Reshaped Consumers’ Shopping Behaviors. The series is based on a census-balanced sample of close to 2,000 U.S. adults and reflects consumer attitudes about the digital shift and “everything after.”
“What jumps out of new findings is the profound and extensive degree of digital transformation of entire societies, and how that’s OK with a great many people who still palpably fear COVID,” PYMNTS reports. “Clearly, the digital shift is staying with us, even as we reemerge into the physical world.”
According to the March edition:
- 83 percent: Share of consumers who have shifted to working from home during the pandemic who do not plan to go back to their offices post-pandemic.
- 80 percent: Share of consumers who are ordering more of their food via aggregators who plan to keep doing so after the pandemic has subsided.
- 75 percent: Share of consumers who are shopping via mobile devices who plan to keep doing so post COVID-19.
For financial institutions, the implications are profound and underscore the need for accelerated digitalization, enhanced security features and fraud deterrents, and innovations around deepening customer relationships in a digital-first world.
Next-Level Online Banking Services
Application programming interfaces, or APIs, are helping to further refine financial services by supporting seamless omnichannel customer experiences and a more personalized approach, Payments Journal reports.
“One crucial consideration for businesses is the consistency at which the services they provide are offered across different digital channels: ‘does it offer the same efficiency, speed, or transparency?’ Ensuring a coherent multi-channel experience may very well be the thing that gives the company that competitive edge. This coherence can be achieved by correctly utilizing APIs –- a responsibility that falls upon the payment service provider supporting the business,” M. Galdikas, CEO at ConnectPay, told the Payments Journal.
“An API is the main element that allows a company to isolate services into something granular and adapt it, with ease, to different channels and platforms,” Galdikas added. For example, you can easily customize specific elements for different channels, thus creating a more personalized experience for the user, based on the devices used to access the service.”
With the accelerated digitalization of payments and an increasing need to personalize the digital experience for customers, using APIs to take online banking to the next level is an important consideration for financial institutions going forward.
E-Complish Partners with Plaid to Streamline ACH Processing
In other news, E-Complish, a provider of custom payment processing solutions, has teamed up with Plaid, a data network powering the digital financial ecosystem to streamline the ACH payments processing flow for E-Complish customers. The partnership, according to the company’s March 1, 2021, release, allows for instant verification of bank accounts and balance to enforce compliance with the new Nacha WEB rules, effective March 2021.
The advantages of the integration of Merchant-E-Complish-Plaid-Bank include a unique, four-way process of bank account and balance verification that will not only make compliance possible but also reduce costs associated with “ACH Returns” for “No Account Found,” “Invalid Account,” and “Insufficient Funds” Stephen Price, CEO & CSO of E-Complish points out.
The partnership is just one of the many partnerships we expect to see between financial institutions and FinTechs in a post-pandemic world as the industry faces new challenges and opportunities.
On March 19, 2021, the operating hours of Same Day ACH were extended through the establishment of a third daily opportunity to clear and settle Same Day ACH payments, Nacha announced in its March 22, 2021 news release. As noted in the release, Same Day ACH payments can be submitted by financial institutions to their ACH Operator until 4:45 p.m. ET, with settlement of funds occurring at 6 p.m. ET. With this expansion, the ACH Network now settles payments four times each business day.
“Same Day ACH is a cornerstone of the modern ACH Network,” said Jane Larimer, Nacha President and CEO, in the release. “The expansion of Same Day ACH is a textbook example of collaboration among the organizations that make up the ACH Network.”
Key to the extension of the Same Day ACH window was the Federal Reserve’s decision to extend its operating hours for the National Settlement Service (NSS), by one hour to 6:30 p.m. ET. The Clearing House uses NSS to settle ACH payments.
RTP AND FEDNOW(SW)
Finastra Joins FedNow Pilot Program
And speaking of faster payments, Finastra announced March 15, 2021 that it has joined the Federal Reserve’s FedNow Pilot Program. The program supports the development, testing, and adoption of the FedNow Service. Through its participation in the FedNow Pilot Program, Finastra will have an opportunity to shape and provide input into the service and adoption roadmap, industry preparation, and overall instant payments strategy. In addition, pilot firms can work with the FedNow Service prior to its 2023 launch.
For more information on the FedNow Pilot Program and the FedNow Service, visit FedNow.org.
NEW ROLE OF OPERATIONS WORKGROUP
The New Role of Operations Workgroup met on March 26, 2021. The group devoted the first hour of the meeting to a presentation on The Clearing House’s Real-Time Payments (RTP) service, given by Keith Gray, Vice President of Strategic Partnerships at the Clearing House. Following the presentation, Gray facilitated a Q&A session.
Also discussed during the meeting were:
- Defining what operations is today
- Challenges facing operations
- Disruptive factors in banking
- Innovating Payments Conference Planning Committee update
- Update on FedNow(SM) presentation
- NEACH training update
- Open Forum
The New Role of Operations Workgroup meets again on April 30, 2021.
Cyber Watch Highlights
In this month’s Cyber Watch column, we explore denial-of-service attacks (DDoS), including one aimed at taking down emergency services lines (a modification of the attack referred to as telephony-denial-of-service).
In our ransomware section, we explore some positive trends, such as the movement toward decreased payout results from ransomware attacks, the shutting down of the Emotet Ransomware, and arrests of members of the Egregor Ransomware gang. We also explore the trend of data exfiltration (secure data theft) in ransomware operations.
Other topics covered in this month’s column include 5G-connected cars, the continued increase in romance scams, Biden cybersecurity policies responding to China, the interconnection of cybercrime groups, and the psychology of how employees respond to cybersecurity information.
And be sure not to miss this month’s resources section, which includes links to sources we recommend you check out and/or bookmark for future reference.
NEACH YOUR STRATEGIC PARTNER
For more on what’s happening in the world of innovating payments, please stop by our Innovating Payments website. You also can look to key operational topics as part of our Payments Management Conference, taking place virtually May 10 – 11.
As always, consider NEACH your strategic partner. We are here to support you. For questions, call our payments hotline at 855-NEACHQA.
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.