A few years ago when I took a seat on the Secure Payments Task Force, you started hearing from us about the importance of evolving a payments strategy. We told customers that it was time to start looking at the role of faster payments in your bank. We issued a challenge to incorporate faster payments into five-year strategic plans. We encouraged banks to poll customers and see what they desired. We asked banks to fill out surveys and create timelines.
Fast forward and today several payment solutions have gone live. You’ve most likely heard of Zelle and The Clearing House solutions. Likewise, if you are using one of the big core processers you have already been told the benefits of these two systems, designed largely to meet the needs of the top 25 banks in the country. So where does that leave Kansas banks? Those $2 billion and under? Do the banks in the Bankers’ Bank of Kansas network need to jump on board right now to a very expensive, long-term contract? These are the questions many of our banks have posed to BBOK.
The fast-moving pace of the fintech world can leave community banks feeling one step behind the banking giants, but the reality is the solutions out there now may not be an ideal option. We suggest that now is the time to pull on the reigns. Be wary of long-term contracts, as new technologies are emerging every day. I am not suggesting you rest and think that your bank doesn’t need a strategy. There will absolutely come a time when every bank who wants to be competitive will need to offer this service.
How will banks know when the time is right and what is needed to prepare? We encourage banks to assess today’s market needs and anticipate future ones. Use bank data to develop customer profiles that outline customer’s preferences. How do they interact with your bank? What businesses would benefit from distributing real-time payments? How do customers prefer to pay for goods? What account-based services do they use the most? How is this different than just a few years ago? How are these preferences changing?
Bankers’ Bank of Kansas, along with 10 other bankers’ banks from around the country are collaborating with regulators, banks, fintech companies and other stakeholders to create the best solution for banks in our network, specifically those $2 billion and under. Ideally the system will integrate with other faster payments participants through a central infrastructure, have widespread use through open architecture and be a complete system that works with all core processing systems.
As the payments system evolves and new technologies emerge, we encourage banks to continue researching and creating strategies to continue evolving while mitigating risk. Rest assured we are also working strategically to define a right-sized solution BBOK customers.
Chris Gilbert is the chief information officer at Bankers’ Bank of Kansas. He can be reached at 316.681.9224 or firstname.lastname@example.org.