Today’s episode was recorded at Nacha’s Smarter, Faster, Payments 2019 event. Now on this episode, I have Lou Anne Alexander, who is the group president of payments at Early Warning. And Sarah Grotta, who is the director of the debit and alternative products advisory service at Mercator Advisor Group. During our conversation, we’re going to be talking about Zelle’s recent success. And where Zelle sees potential growth moving forward.
Ryan
Okay, so thank you for coming to talk to us. And after just having won the Nacha excellence in payments award, and congratulations to that. What aspect of EW was the award?
Lou Anne
Thank you. And we’re ecstatic about the award. This was awarded for our innovations, not only in bringing Zelle to the marketplace, but also our long history of fraud and risk management solutions that helped us brings Zelle into real-time payments.
Ryan
Again, congratulations. Bet that must feel fantastic to have won the award?
Lou Anne
Absolutely. In fact, this was a collaboration with all of our partners, as well as our participating financial institutions. It truly has taken a lot of people a lot of hard work to bring us out to the market.
Ryan
To continue on that success. Early Warning’s Zelle posted yet another great quarter in q1 of 2019. Now, I’m curious, is that growth coming from the fact that you’re onboarding more financial institutions more quickly? Or is it organic growth coming from existing clients, finding new customers and existing users executing more transactions?
Lou Anne
The answer is yes and yes. We posted $39 billion in first quarter. That was 147 million transactions, and as you can see, we’re on target to hit 600 million plus transactions by the end of the year, but you’re right this is coming for an organic growth with our existing financial institutions. All of them are seeing great growth and we’re seeing that network effect as more and more financial institutions come into the network.
Sarah
I think what’s interesting too is we’re also seeing from an industry perspective, growth and some of the other p2p apps, Venmo, Square cash and I think it’s kind of interesting. I do think that sort of, all of the p2p apps continue to feed off of each other and encourage growth. Do you have a sense of how many p2p apps would a consumer use generally? Do they share? Do they have loyalty to one app?
Lou Anne
I think it’s very generational, and, as you might imagine, when we entered the market, one of the things that we wanted to do is take p2p from millennials to mainstream. Baby Boomers tell us, 70% of those that are using p2p do so because they can get it through their banking app. I think that’s one of the things that really sets Zelle apart, as well as our ability to move money right from checking account to checking account, without additional steps.
Ryan
I certainly think that the baby boomer statistic is very interesting because I guess I kind of look at is myself being a millennial and just this type of technologies just being native to my generation in a way to kind of see older generations kind of take it and adopt it. I can certainly say that my grandmother. God bless her. She does the best that she can with electronics, but she actually does use Zelle as well too. She will send her grandkids money through, through Zelle. So I think it definitely talks about ease of use, oft Zelle,and I think it’s very interesting that you’re seeing this product be used across generations. Now if I could jump into and kind of look at beyond p2p here. I’ve heard that Early Warning is rolling out a solution for small businesses can you tell me what that product is and how it works and some use cases for?
Lou Anne
Sure. In fact, today, probably about 20% of our volume in the network is coming from small businesses. We haven’t had a product that was targeted toward that segment of the marketplace. So I think it’ll look a little different depending on where you bank. If you’re a small business that uses a small business payment product within your bank, you’ll see Zelle integrated into that product. If you’re not if you’re a Soho, it’ll look very similar to the way that p2p operates today. So think about it could be home services such as landscaping, maid services, window cleaning, pool service, could be your therapist, your piano teacher, your masseuse. All of these are great applications for Zelle.
Sarah
You know, I think that’s interesting because at this conference, the Nacha payments conference I’ve really heard the conversation about p2p start to turn to other use cases, whether it’s, you know, b2c, or this small business environment. So, is this something that you’re seeing financial institutions really get focused on?
Lou Anne
Oh, absolutely. And in small business I think is just the start. I think you’ll see other innovations come like bill pay, as you know, we are operating under a 25-year-old online banking bill pay model today. Many millennials are not adopting that, and we need a next-generation user interface for bill pay.
Sarah
Yeah that’s interesting, so yeah, I’m looking forward to seeing some of the rollouts of some of the small business applications in particular, and I think that’s going to be a great way to bring out some of the inefficient checks in the industry. I think that has to be a place where we’re still seeing a tremendous amount of check. I know just from personal experiences. Those are the only checks I write to the plumber or, the guys doing drywall out my house. That’s where I write my check so looking forward to this.
Ryan
Before we wrap up here, is there anything else that’s new for the Zelle products such as new promotions new features, or new tech for financial institutions, real-time settlement perhaps?
Lou Anne
Lots of things, well in fact, before I talk about what’s new we haven’t mentioned disbursements. So today we have many corporations who are using it for items such as home insurance claim payouts auto insurance claims payouts. We have higher education using Zelle in order to provide tuition and financial aid without having to go stand in line to get your all of the things that happened when you are a new student with a new account depositing a new check. So that’s an area I think that we will continue to grow.
Sarah
And that’s a big dollar item and that’s that kind of gets you into a different segment.
Lou Anne
It is. And in fact, our p2p payment dollar average is about $260 for disbursements that’s in the 1300 dollar range, and some very large payments even in the millions that we see particularly for home claims.
Ryan
Excellent. Well, thank you, Lou Anne and Sarah, for taking the time today for speaking to us about Zelle and we hope to have you both back on the podcast real soon.
