The outlook for payments in the United States underwent a significant change. One of the most important ingredients for this change was the arrival of the P2P application backed by Zelle banks.
The application, created as the collective effort of seven of the major US banks. UU In order to offer users an alternative to payment applications such as PayPal and Venmo, it has assembled an impressive number of banks in its network so far. (Here is the complete list).
Even so, there are many small and medium banks that need to enter the Zelle network. That's where the multinational technology company IBM comes into play.
A few weeks ago, IBM, based in New York, made public its 18-month partnership with the P2P application backed by the Zelle bank. The main objective of this association is to allow more financial institutions (FIs) / banks to connect to Zelle's payment network.
The task is not easy. On the one hand, the incorporation process requires banks to make significant changes to their existing legacy infrastructure.
The biggest challenge with this, particularly with smaller banks, according to Rajesh Venkatraman, IBM's Worldwide Payments Sales Director, justifies the cost of restructuring those older systems.
The problem, he said, is that there is no immediate ROI for the bank to provide this capability to customers.
But the costs do not end simply by changing the payment system, he said. The bank needs to make sure that they can provide these P2P capabilities "in the right way, all day, every day, in the most efficient and secure way, because that payment transaction is revocable," he said. Therefore, it requires that the rest of the operations of the banks work as fast as the payment system.
"For example, faster payments, means faster fraud detection," he said.
For smaller banks, the problem is magnified due to its limited resources in terms of budget and scale.
And yet, despite these challenges, Zelle is a crucial survival measure for many banks, even the smallest ones.
"The world is moving beyond legacy and other older methods, and modernizing at a rapid pace," Venkatraman told Bank Innovation last week, "In the world of instant gratification, it is almost a fact that the movement of money should be as instantaneous as possible.With the available technologies, it is becoming very acceptable to send money through a mobile device through a messaging service, then those payment technologies are something that financial institutions and banks require for keep up with the world around them. "
Speaking of payment through messaging services, the social networking platform Facebook has been actively adding p2p capabilities to its chat system, also known as Facebook Messenger.
These P2P features in companies that do not pay will affect Zelle and the rest of the payment landscape. What will be that impact is too early to say, said Venkatraman.
But Zelle is well equipped to adapt to that landscape, he said. In fact, believes Venkatraman, Zelle has a great competitive advantage because it is backed by banks that have access to a user's financial and consumer habits. This means that Zelle can provide many benefits for the user in the form of money back, rewards and contexts.
IBM is currently working with a list of banks to obtain them in Zelle. Venkatraman refused to reveal the names.
