In February, NEACH leadership weighed in on what to expect in 2024 (part 1 and part 2), advising financial institutions on the best ways to prepare. As a continuation of that discussion, we spoke with four major third-party core providers and asked them to share their insights and perspectives for the year ahead. With so many hot topics—instant and faster payments, data and AI, and evolving customer and member expectations—knowing where to invest energy and resources in 2024 is a high priority for financial institutions.
Below, we highlight four areas at the top of NEACH’s, financial institutions’, and core providers' minds.
- Instant and real-time payments, specifically the FedNow® service and RTP Network®, are transforming the payments landscape. FedNow announced recently that it has more than 500 participating financial institutions. The Clearing House reports that the RTP Network currently reaches 65% of U.S. DDAs.
“The first would be real-time and how to connect, when to connect, which networks to connect to, and which applications to use,” said Matt Wilcox, President of Digital Payment Solutions for Fiserv. “Also, which applications and use cases will be critical, and which ones are gaining some volume?”
- Artificial intelligence (AI) will be a game-changer for financial institutions. AI is changing the face of banking, offering multiple use cases for preventing fraud, increasing customer engagement, and streamlining back-office processes. “Financial services statistics indicate that AI has reduced false positives in fraud alerts by a staggering 60%, saving resources and enhancing the overall customer experience,” according to LiveVox. Moreover, a McKinsey & Company report released in Dec. 2023 revealed, "Generative AI has the potential to deliver significant new value to banks—between $200 billion and $340 billion." For these reasons, providing artificial intelligence solutions is a top priority for core providers.
“Generative AI offers multiple applications for enhancing financial services. It can revolutionize interactions with virtual agents and provide targeted, personalized advice to customers and members,” Alex Campbell, Vice President, Client Services at COCC said. “Additionally, generative AI can significantly contribute to financial literacy by forecasting future trends, especially in underserved communities.”
“We use AI to enhance the accountholder’s experience across multiple touchpoints in their financial journey,” Tede Forman, President of Payment Solutions at Jack Henry, said. "Personalization within FI websites, customer support tools in digital banking, fraud mitigation for payments, and proactive insights for financial wellness are a few other areas AI can benefit financial institutions."
- Customers' and members' expectations are driving financial institutions' strategy. We live in an increasingly digital and instant society. And consumers and businesses expect the same level of service and options from their financial institutions that giant retailers like Amazon provide. Core providers have begun offering multiple products financial institutions can choose from to meet their customers’ and members’ needs.
“In the new digital age, the expectation of being able to access any of your platforms and receive the same data experience, whether it's through the branch, online, or even through a third party, is table stakes,” said Dudley White, President of Core Account Processing Solutions for Fiserv. “We continue to evolve in this space because we know digitally engaged customers are the most profitable for banks and providing digital capabilities is key to helping our clients meet and exceed their customers’ expectations.”
"Customers want their financial institutions to meet them where they are regarding how they prefer to access their accounts and the banking solutions they need," Mihail Duta, Director, Solution Consulting, Payments for the Americas at Fiserv, said. “Working with a technology partner with an open API model helps them do this, because it allows financial institutions to integrate additional services on their platform, which customers can use without leaving their financial institution's ecosystem.”
- FI/FinTech partnerships are becoming table stakes. “Cornerstone Advisors’ 2023 What’s Going On in Banking study found that 70% of banks said partnerships were important to their 2023 business strategies, up from nearly two-thirds in 2022," Forbes reported in December of last year. With financial institutions' customers and members demanding more integrated digital services, FI/FinTech partnerships are almost necessary in today's competitive landscape. That's why core providers are stepping up to better support financial institutions in engaging with FinTechs.
“We leverage our openness to support third-party FinTech integrations. We make integrating FinTechs into our ecosystem easier, helping banks and credit unions find relationships that support their specific needs,” stated Forman. “Both parties can focus on innovation and deliver superior services, essential to remaining competitive and meeting account holders’ needs in today’s evolving landscape.”
“Our products and services are based on an open-API model,” Mihail Duta, Director, Solution Consulting, Payments, Americas, said. “This allows our customers, no matter their size, to seamlessly integrate third-party solutions into their existing offerings without creating additional complexity or onboarding.”
These themes represent just a few topics we touched on during our conversation. Core providers offered additional details, which you can find by clicking on the links below, that will support financial institution planning.
- COCC
- Finastra
- Fiserv
- Jack Henry
NEACH will offer updates on these and related topics on our Innovating Payments site in Members Corner. We hope you'll join us to explore the trends shaping payments now and in the future.