Cognitive Banking

IBM, Zelle Look to Advance Peer-to-Peer Payments

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The future of banking is fast, intuitive, and personal. In today’s digital world, it’s also a race to provide real-time transactions to consumers accustomed to instant communications and immediate access to information. It makes sense that as our everyday lives are transformed to reflect this instantaneous need, the payments industry is focused on bringing simplicity and speed to customer’s transactions.

Payments processing was a $1.3 trillion business for banks in 2017, more than a third of total bank revenues, and it’s projected to reach even higher numbers in the coming years. Combine this multitude of growth with mobile-dependent millennials coming of age with greater spending power, and it’s no surprise that a new wave of platforms have emerged to transform the payments space.

Banks have a history of being a leader in adopting new technology, and implementing advanced systems to meet the needs of their customers. Dozens of the world’s largest banks work with IBM on new approaches to payments through its IBM Financial Transaction Manager (FTM) platform. Last year, we announced that the Federal Reserve Bank of Atlanta will use IBM’s FTM technology to process their ACH payments, which measures up to 100 million transactions a day. It’s just one example of IBM’s work with key industry players to improve existing payments systems, as opposed to more costly change.

Today at the Money20/20 conference in Las Vegas, a convention of global industry leaders building and refining the future of payments, IBM will announce an industry first solution to support the full lifecycle of P2P transactions, from the back office of financial institutions to the mobile device. The capability is the result of a collaboration between IBM and Zelle, one of the fastest growing P2P networks in North America. The Zelle Network will soon be available to customers at more than 50 U.S. financial institutions. Already 13 financial institutions are currently live with Zelle, and it is poised to reach an estimated 85 million U.S. customers this year.

Together, IBM and banks now have the ability to offer their customers real-time, P2P payments without heavy IT spend or disruption to their legacy systems. For banks, this means an increased customer experience, which leads to better engagement and loyalty overall. For customers, this means being able to securely send and receive money typically in minutes between enrolled users, rather than waiting 1-2 days to “cash out” which is standard among other providers such as Apple Pay and Venmo. This solution removes the friction typically experienced with other providers who essentially serve as a “digital check” and not real time payments.

For banking customers, confidence in their institutions stems from knowing their payments are completed quickly and securely. This trust is a key capability banks must demonstrate as they look to digitally reinvent their services to remain competitive. One example of this is IBM Blockchain, which now allows financial institutions to address the processes of universal cross-border payments and reduce the settlement time and lower the cost of completing global payments for businesses and consumers.

As digital innovation continues to change the financial services landscape, institutions must evolve or risk being punished by customers. IBM’s approach to helping banks adopt game-changing technologies ensures that they remain competitive today and for generations to come.

By implementing IBM’s approach to progressive renovation via gradual improvements to existing processes and technology solutions, financial institutions have an opportunity to overcome the challenges often met with digitization. Banks, in this moment, can redefine the future and that starts with trust, transparency and ease targeted at customers. IBM’s continued investment in the real-time payment space, including our work with Zelle, signals our ongoing intent to improve the speed, security, efficiency, reach and collaboration of every transaction around the world.

General Manager, OM & Engineering, IBM Industry Platforms

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