Three Post-Pandemic Payments Trends and What They Mean for Community Banks

The pandemic has clearly had a lasting impact on customers’ payment behaviors, marked by an unprecedented rise in ecommerce transactions, projected to reach $8.3 trillion by 2025. Amidst this sea of change, community banks are asking, “What does this shift mean for my payments strategy?”

To begin to answer that question, I sat down with Amy Dawson, senior vice president at Visa Garage, the company’s innovation division, and Dave Fura, senior vice president and head of card solutions at FIS, during ICBA LIVE. The session, “The Future of Payments is Here: a Panel Discussion” yielded some interesting takeaways. At the highest level, we agreed that this payments evolution has given rise to three customer behavioral shifts that will impact payments plans:

1. Demand for immediacy

Nearly two-thirds of businesses indicate access to faster payments would be a factor in determining whether to switch banks, according to 2021 research from The Federal Reserve. Customers are being conditioned to expect results immediately; they have very little tolerance for any hold up.

With that in mind, the time has come to settle on a strategy and begin implementation planning for faster payments. If FedNow is your chosen faster payments solution, what are you doing to prepare? The FedNow Explorer site offers a host of resources to help pave that implementation path. If RTP and Same Day ACH provide answers, they are available in the market today, with solution providers at the ready to support community banks.

2. Rise in digital wallet use

As Dave noted during the session, not much had changed about wallets since the 1800s, until 1999 when PayPal began operating a digital one. Digital wallets are now a new norm. In fact, FIS research predicts that this year, digital wallets will outpace credit card ecommerce purchases, and are projected to account for nearly one-third of the overall ecommerce spend by 2025.[1]

Now more than ever, community banks need to be poised to offer solutions that support digital wallet use—from incentives to ensure your cards are top of wallet to options that allow for seamless wallet integration.

3. Looming introduction of the payments “super app”

While customers aren’t actively requesting this solution, their actions have led to the beginnings of payments super apps. Consider today that PayPal has $3 billion sitting in wallets. Then, add in Starbucks, Cash App, and others, and you have billions of uninsured dollars sitting in apps. Think about how these apps will continue to grow: They are already evolving to include cryptocurrency and new features like rewards, statements, and more.

This is where customer education is key. As a trusted partner, community banks can help customers understand where their money is protected, where they have transaction support, and potential vulnerabilities with an uninsured app.

The good news is that community banks are well positioned to address these emerging trends. If you need resources, ICBA is here to help with our ICBA ThinkTECH Accelerator cohort and ICBA ThinkTECH Solutions Directory. And of course, ICBA Bancard’s Digital Payments Strategy Guide—for consumers and small businesses—is a useful reference tool to ensure your payments priorities align with shifting market dynamics and customer demands.

As Amy shared during ICBA’s national convention, Visa’s guiding principal for innovation is that technology should enhance, not replace, the human touch. Community banks’ high-tech, high-touch model creates the perfect storm of both digital solutions and human interactions that customers need—and a level of support that can’t be replicated by an unmanned super app or a faceless digital wallet.