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THE FUTURE OF FINANCIAL SERVICES 2021
The good, bad and ugly
about fast money
The speed of money movement represents the
future – success for those who deliver, challenges
for those who don’t.
By Michael Moeser
Original research from
THE FUTURE OF FINANCIAL SERVICES 2021
The good, bad and ugly about
fast money Why read this report?
This report provides
financial institutions,
Introduction as well as marketers
selling technologies into
Influenced by expanding digital technologies, consumers are increasingly expecting fast the financial services
money movement in all parts of their financial lives. If everything works quickly, a customer will ecosystem, with a
hardly notice, and will be more willing to conduct repeat business with the institution. Yet, if customer perspective
things don’t, not only is a customer disappointed, but it also opens the door for a rival. on the value placed
on the speed of money
As financial services continue to evolve, and money movement speeds become faster, the movement that will help
need to understand consumer demands and expectations becomes more critical in order inform both messaging
to drive success for organizations that deliver financial services, as well as the vendors that and future product/
enable them. This report analyzes the impact of what happens when financial organizations service roadmaps.
meet consumer expectations on fast money movement. It also highlights potential threats on
the horizon that indicate consumers are only going to demand faster money movement in
the future.
Key findings include
• Consumers have high money movement satisfaction levels for some transactions, such
as P2P money transfers and opening checking and savings accounts, while other transac-
tions, such as mortgage closing, receiving tax refunds and payment of insurance claims,
are not as high. These experiences matter, with roughly 8 out of 10 customers reporting
that the speed of money movement had a positive impact on their willingness to continue
to do business with an institution.
• Most consumers (92%) are willing to take extra steps to authenticate their identity when
transferring money or opening financial accounts to help mitigate fraud. The most popular
tools consumers are willing to engage with during extra authentication steps are PINs and
passwords. Unfortunately, more advanced tools, such as geolocation, fingerprint and
facial recognition, don’t have the same levels of consumer willingness to engage. Despite
general consumer reluctance, the asset-wealthy are more willing to engage in video chat,
knowledge-based authentication (KBA) and geolocation for money transfers, so these may
be options for financial institutions (FIs) when conducting high risk/high value transactions.
• Slow money movement has a negative impact on FIs as consumers abandon transactions
and find better options to send their money quickly. About 21% of consumers reported
that they have abandoned a financial transaction because the speed of money movement
would take too long, with higher rates among the employed, high income earners and
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THE FUTURE OF FINANCIAL SERVICES 2021
primary financial decision makers. A clear example of consumers shifting their business
due to slow money movement is how the segment of bank bill pay lags behind paying bills
directly through a biller’s website/app as a preferred customer behavior.
• Consumer adoption of P2P money transfer services has grown and there is a desire to use
it to make purchases, pay bills and fund new financial accounts, creating a potential threat
to existing FIs. Currently, about half of consumers under the age of 40 use P2P services at
least weekly, if not more. Additionally, two-thirds of consumers reported interest in using
P2P for shopping in stores and online as well as paying bills. Over half are interested in
using P2P as a funding tool for newly opened financial accounts.
• The strong interest in faster paycheck access being offered by challenger banks is an
example of how new fintech solutions could pose a major challenge to existing FIs through
an increasing demand for faster money movement. Overall 70% of consumers would be in-
terested in faster paycheck access, defined as by up to two days earlier, with 82% of Gen Z
and 78% of millennials being interested. About three-quarters of millennials and two-thirds
of Gen X and Gen Z reported that faster paycheck access would have a positive impact on
their decision to switch their primary FI to another institution.
About this report
Arizent conducted this survey to explore the impact of faster money movement on the future
of financial services - what it means for those who are able to deliver and what it means
for those who don’t - as well as the growing threats to traditional legacy organizations as
consumer demands continue to grow and evolve.
The survey was conducted online in the U.S. with 941 adults, ages 18-74, during June 24 – July
15, 2021, and is reflective of the general population based on a number of demographic factors
including race, gender, etc., as well as being representative of all U.S. geographic regions.
3
THE FUTURE OF FINANCIAL SERVICES 2021
Consumers are satisfied with some transactions, less so with others
Consumers have high money movement satisfaction levels for some transactions, such as P2P
money transfers and opening checking and savings accounts, while others, such as closing on a
mortgage or payment of an insurance claim, do not fare as well.
In terms of sending money transfers and funding new financial accounts, 71% of consumers
reported being very satisfied with the speed of money movement for a P2P money transfer and
70% for funding a new checking or savings account. While the combined “very satisfied and
somewhat satisfied” scores for these two transactions (P2P at 95% and funding checking/
60%
savings at 92%) were nearly perfect, there is danger in believing that “somewhat satisfied”
consumers (24% for P2P and 22% for funding a checking account) would not switch providers if
a faster alternative were available. of millennials were
very satisfied with the
Almost all other financial transactions explored in the survey found that roughly half or slightly speed of money
in refinancing a
more than half of customers were very satisfied with the speed of money being sent or used
mortgage compared
for funding, including using a remittance provider (59%), opening a new retirement account
to boomers (67%)
(56%), refinancing a mortgage (55%), buying stocks and bonds (52%), applying for/closing on a and Gen Xers (43%).
mortgage (52%), purchasing an insurance policy (51%) and applying for a personal or auto loan
(49%). Only investing in cryptocurrencies had a significantly lower percentage of very satisfied
customers at 36%.
These moderately strong scores can be viewed as FIs performing well enough, but not perfectly.
In other words, these scores are “good, but not great,” which means that these institutions have
some vulnerability to challenger organizations, including fintechs, that may provide a faster
money movement or funding speed.
Percent of consumers ”very satisfied” with speed of sending money or
funding a new account
Used a P2P service to send funds to a person
or company (e.g., Zelle, PayPal, Venmo, etc.) 71%
Opened a new checking or savings account 70%
Send money cross-border using a remittance
service (e.g., Western Union, Remitly, etc.) 59%
Opened or invested in/contributed to
a new retirement account 56%
Refinanced a mortgage 55%
Applied for a new credit card 54%
Bought annuities, mutual funds, stocks,
bonds, etc., in a brokerage account 52%
Applied for or closed on a 52%
mortgage or home equity loan
Purchased a new insurance policy 51%
Applied for a personal or auto loan 49%
Invested in cryptocurrencies (e.g., bitcoin) 36%
Q. How satisfied were you with the speed of money movement for each of the following transactions in the past 12
months, from the point in time you were approved or pressed “send” to the point in time when your account was
funded/activated or recipient received the money?
Source: Arizent Research Future of Financial Services Survey 2021
4
THE FUTURE OF FINANCIAL SERVICES 2021
One example that has been unfolding over the last few years has been the shift in remittances
being sent from physical agent locations, such as Western Union stores, to digital channels,
through both online and mobile apps, a trend which saw a significant acceleration during the
pandemic. In addition to convenience, one key feature of digital remittance is that money can be
sent from a smartphone and received, as well as spent, almost instantly when being sent into a
mobile wallet. This eliminates the sender’s need to visit a physical store and allows the receiver
to forgo visiting a bank or agent location in order to spend the money. Since many mobile wallets
also allow bill pay, the funds can literally be sent and spent within seconds.
When it comes to receiving funds, consumers reported nearly similar levels of satisfaction,
albeit some transactions did fare better. P2P money transfer receipts scored a 72% rating of
very satisfied consumers, followed by tax refunds at 61%. Almost all of the other transactions
were able to garner at least half of consumers being very satisfied, with the exception of
cryptocurrency sales coming in at 44%.
The challenge for FIs is that high satisfaction levels can be fleeting, as consumers are demanding
and obtaining an increasing variety of fund receipt options from institutions that want to
differentiate themselves from their competitors across a host of financial sectors. Take, for
example, the payment of insurance claims. In the past, claim payments were traditionally paid
out by a mailed paper check to the consumer which could take days or weeks to arrive. However,
as the insurance industry has digitized the claims process to speed up claim decisioning, it
has also looked to faster payment options to drive up customer satisfaction levels by adopting
payment methods such as direct deposit, P2P (e.g., Zelle and Venmo), push payments (Visa
Direct and Mastercard Send) and instant virtual card issuance. In other words, high satisfaction
levels today do not insulate a company, such as an insurance carrier, from competitors, who are
using faster payments as tools to drive customer acquisition, retention and satisfaction.
Percent of consumers ”very satisfied” with speed of receiving money
after notification or approval
Used a P2P service to receive funds
(e.g., Zelle, PayPal, Venmo, Square, etc.) 72%
Received a tax refund 61%
Received a post-mortgage or
home equity closing refund 59%
Filed an insurance claim
and received payment 58%
Sold stocks, bonds, mutual
funds, annuities, etc. 57%
Transferred a checking/savings
accountto a different institution 55%
Received a security deposit return 54%
Received a payout from
a retirement account 52%
Received a purchase rebate or refund 52%
Filed a home warranty
reimbursement expense 49%
Sold crypto currencies (e.g., bitcoin) 44%
Q. For each of the transactions you noted earlier involving a financial payout, how satisfied were you with the speed
of money movement, from the point in time you were approved, pressed “send,” or were notified that you would
receive money to the point in time when you received the money/payout?
Source: Arizent Research Future of Financial Services Survey 2021
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THE FUTURE OF FINANCIAL SERVICES 2021
Satisfaction with the speed of money can drive repeat business
Positive experiences with the speed of money movement have a direct correlation to consumers
wanting to do more business with a financial institution. Companies meeting or exceeding
customer expectations on the speed of money movement in transactions or new product
onboarding experiences can expect a positive impact on the likelihood of repeat business
from those customers. Overall, 8 out of 10 consumers (80%) reported that speed of money
movement in a recent transaction or a new product onboarding that included a funding element,
such as purchasing and paying for a new insurance policy, had a positive impact on their
willingness to continue to do business with that institution. This was almost evenly split between
a strong positive impact at 43% and a somewhat positive impact at 37%.
Boomers
are the least likely to
Similarly, consumers receiving funds or obtaining a payout, such as an insurance claim payment repeat business with
or mortgage refund, had almost the same 8 out of 10 (78%) willingness to do repeat business. an FI based on the
Roughly 43% of consumers reported that the speed of their most recent transactions involving speed of money sent/
financial payouts had a strong positive impact on their willingness to continue to do business onboarded at 71%
with the institution involved. About 35% reported a somewhat positive impact, 19% had a (vs. 80% overall) and
money received/paid
neutral impact, 2% had a somewhat negative impact and 1% had a strong negative impact.
out at 67% (vs. 78%
overall).
A good money movement experience along the customer journey
contributes to a positive relationship with a financial institution
Strong positive impact Somewhat positive impact Neither a positive or negative impact
Somewhat negative impact Strong negative impact
Speed of money onboarding/transaction Speed of money receipt/payout impact
impact on likelihood to do repeat business on likelihood to do repeat business
2% 1% 2% 1%
18% 19%
43% 43%
37% 35%
Q. Overall, how did the speed of money movement in your recent Q. Overall, how did the speed of your transactions involving
financial transactions or account openings affect your interest in financial payouts affect your interest in continuing to do
continuing to do business with the institutions or companies involved? business with the institutions or companies involved?
Source: Arizent Research Future of Financial Services Survey 2021 Source: Arizent Research Future of Financial Services Survey 2021
6
THE FUTURE OF FINANCIAL SERVICES 2021
Most consumers are willing to help fight fraud – especially the rich
As the speed of money movement increases, so does the potential for fraud, so it’s a positive
development that most consumers are willing to take extra steps to authenticate their
identity for account openings and money transfers so that financial institutions can better
mitigate risks. Overall, 92% of consumers reported that they would be willing to take extra
authentication measures during account opening and money transfers to help financial
institutions reduce fraud risks. About 55% of consumers were very willing and 37% were
somewhat willing to take extra measures.
Consumer willingness to take extra authentication measures
80%
of millionaires
reported being
very willing to take
extra authentication
measures compared
55% 37% 4% 3% to 47% of people with
Very willing Somewhat willing Somewhat unwilling Not at all willing $50K to $249K in
Q. One of the challenges of sending money quickly for new account openings and money transfers is the
assets.
heightened risk of fraud. How willing are you to take extra measures to help the financial institution safeguard
that you are the one actually requesting the money transfer?
Source: Arizent Research Future of Financial Services Survey 2021. Note: Does not equal 100% due to rounding.
In examining the amount of willingness to take extra authentication measures, the ownership of
assets, or lack thereof, had a distinct impact and is meaningful for financial institutions seeking
to enlist their customers in the fight against fraud as the speed of money movement accelerates.
Among millionaires, 100% were willing to take extra authentication measures, with 80% being
very willing and 20% being somewhat willing. For the “wealthy” group with $250K to $999K in
assets, 69% were very willing and 29% were somewhat willing (for a total willing score of 98%) to
take extra authentication measures. Among consumers with less than $50,000 in assets, only
55% were very willing and 37% were somewhat willing to take extra authentication measures.
By generation, the overall willingness to take extra measures was almost even from Gen Z at
91% to boomers at 92%. The biggest difference was that boomers had the highest very willing
score at 63%, followed by Gen X at 61%, then millennials at 52% and Gen Z at 44%.
PINs and passwords rule the roost for consumer choice in step-up
authentication measures
Overall, PINs and passwords top the list for acceptable, additional identity verification methods,
most likely because they are less intrusive, simple and have been in use for decades. One-time
passwords by text (89%), by email (89%) and by automated telephone call (83%) were the
7
THE FUTURE OF FINANCIAL SERVICES 2021
three most popular extra authentication methods preferred by consumers (combined very
willing and somewhat willing scores). Unfortunately, they tend to be weak, easy to fool and don’t
always work well with the technology-challenged or lower income consumers who may not have
easy access to adequate technology, such as broadband, at home.
Other verification methods that are relatively newer (i.e., reached mainstream in the last
decade vs. decades old) and much stronger followed in overall consumer acceptance, but not
as well as the tried-and-true PINs and passwords. These include fingerprint/facial recognition
on smartphone at 76%, speaking with a live agent/video chat at 74%, knowledge-based
authentication (KBA) at 73%, location tracking/geolocation at 62% and allowing a camera to be
used to record a face at 55%.
Consumer interest (% very and somewhat willing) in
authentication measure by type
89% 89% 83% 76%
Receive and use Receive and use Receive and use Authenticate my
a one-time a one-time email a one-time password fingerprint or facial
password texted sent to my from an automated recognition with my
to my smartphone email address telephone call to my smartphone
smartphone
74% 73% 62% 55%
Speak with a live Answer questions Allow my location Allow my camera
agent over the about my credit to be tracked to be used to
phone or through history and past during the money record my face
video chat, e.g., addresses, also transfer process
FaceTime known as
knowledge-based
authentication
Q. In terms of money transfer safeguards, how willing are you to take the following actions to help the
financial institution safeguard that you are the one actually requesting the money transfer?
Source: Arizent Research Future of Financial Services Survey 2021.
While the more intrusive and newer authentication methods did not fare as well as the older
and more familiar passwords and PINs among the general population, they were much more
accepted among the higher income and wealthy, so FIs should consider using these methods
for “step-up” authentication measures for transactions above a certain dollar or risk threshold.
In other words, the wealthy are willing to have more intrusive authentication measures used
because they have more to lose and would expect them on high value/high risk transactions.
8
THE FUTURE OF FINANCIAL SERVICES 2021
Knowledge-based authentication (KBA) was the highest accepted authentication method, after
passwords and PINs, by the wealthy ($250K-$999K in assets) at 87%, but it did not fare as well
among consumers with fewer assets. Despite KBA’s limitations and notable failures, such as
the hack of former Alaska Governor Sarah Palin’s email, it does remain a viable and inexpensive
authentication tool, especially when using dynamic KBA questions vs. static ones, and is possibly
more applicable to the wealthy, as they tend to have more assets and transactions for use in KBA
challenges.
Probably the most promising authentication method is the use of fingerprint and facial
recognition by smartphone, as it has strong acceptance across all asset ownership ranges from
82%
the under $50K in assets group at 75% to the $250K-$999K asset group at 83%. Geolocation
(location tracking) is also a possible option for step-up authentication use during faster payments
of high value transactions, as 81% of the $250K-$999K asset group were willing to allow of full-time employed
themselves to be tracked during a transaction, compared to 59% of consumers with less than consumers were
$50K in assets. willing to authenticate
themselves with a
fingerprint or facial
Consumer interest (% very and somewhat willing) in authentication recognition on their
measure by type and wealth smartphones compared
to 62% of self-employed
Under $50K in assets $50-$249K in assets $250-$999K in assets
and 66% of retired
87%
persons.
83% 82% 83% 81%
77% 79%
75%
71% 70% 68% 66%
59% 60%
54%
Knowledge-based Smartphone fingerprint Speak w/live agent Allow location tracking Allow camera
authentication (KBA) or facial recognition by phone or video during transaction to record face
Q. In terms of money transfer safeguards, how willing are you to take the following actions to help the financial institution
safeguard that you are the one actually requesting the money transfer?
Source: Arizent Research Future of Financial Services Survey 2021.
About 79% of high income households ($100K+) were willing to have their location tracked during
a transaction compared to 65% of middle income households ($50K-$99K) and 59% of low
income households (under $50K).
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THE FUTURE OF FINANCIAL SERVICES 2021
Slow money leads to abandoned transactions, especially among
desirable customers
For institutions that don’t think speed of money movement is important in financial
transactions, it turns out it can be a significant competitive advantage – 21% of consumers
reported that they have abandoned a financial transaction because the speed of money
movement would take too long.
Additionally, the wealthier and more creditworthy consumers tend to have the highest
abandonment rates—a fact that can severely punish financial institutions that have slower
money movement speeds—beginning with primary financial decision makers abandoning
slow money transactions at a 23% rate, full-time employed at 27%, self-employed at 26%
and higher income households ($100K+) at 31%. In contrast, consumers who shared
financial decisions had an abandonment rate of 15%, unemployed consumers had a rate of
14%, retired persons were at 7% and lower income households were at 18%. In other words,
busy people, the affluent and those who primarily handle a household’s finances are more
likely to abandon transactions if the speed of money movement is too slow, while people
with plenty of time on their hands, who don’t earn much money or who don’t control the
household finances are willing to wait much longer for a transaction to be completed as a
result of slow money movement speeds.
Transaction abandonment rates (%) by employment status and income
21% 18% 21% 31%
Overall Under $50K HHI $50K-$99K HHI $100K+ HHI
7% 14% 26% 27%
Retired Unemployed Self-employed Full-time employed
Q. Have you ever abandoned a financial transaction or account opening because the speed of money movement to
complete that transaction would take too long?
Source: Arizent Research Future of Financial Services Survey 2021.
10THE FUTURE OF FINANCIAL SERVICES 2021
When money moves too slowly, consumers find faster options
Bank bill pay is a clear example of what happens when consumer needs are not being met for
faster money movement, which includes recognition by the biller that funds have been received.
About 44% of consumers pay the majority of their bills using the digital direct to biller channel
(online and mobile app) compared to 23% using digital bank bill pay, 12% using digital wealth
management bill pay and 4% using third-party aggregator bill pay. Approximately 12% pay using a
check by mail and the remaining 5% using a walk-in service.
While bank bill pay was the first digital bill payment form to reach widespread adoption in the late
1990s/early 2000s, it has lost significant ground to faster and more comprehensive alternatives. Millionaires
Overall, 83% of consumers pay their bills using a digital method with the 17% remaining using are the least likely
a physical channel. Bank bill pay has gone from a near monopoly in 2000 to holding onto a slim to use biller direct at
share of the market overall, as well as a small share of the digital segment. 7%. The less money
people make, the
more likely they are
Consumer bill pay method by type to use biller direct
with under $50K
households being
the highest at 47%.
44% 23% 12% 12%
Digital biller direct Digital bank bill pay Digital wealth Check by mail
management or
fintech, e.g., Robinhood
Q. How do you pay the majority of your bills today?
Source: Arizent Research Future of Financial Services Survey 2021.
5% 4%
Walk-in service, Digital third-party
e.g., Walmart aggregator, e.g., Mint
Digital direct-to-biller penetration is common across all generations with almost no variation,
starting with Gen Z at 45%, then 41% among millennials, 46% for Gen X and 43% among boomers.
This reflects the fact that paying bills on a biller’s website or mobile app has universal appeal, as the
benefits of faster money movement, confirmation of payment receipt and immediate application
to a customer’s account resonate among all generations. The big differences between generations
occur when examining the second most popular payment choices.
11THE FUTURE OF FINANCIAL SERVICES 2021 Boomers were the early adopters of digital bank bill pay when it was new 20 years ago and have remained its stalwart champion. However, since bank bill pay’s introduction little has changed, as it still largely relies on slow ACH transfers, offers no confirmation that the biller has received the funds or even applied them to the correct account, and the funds generally don’t leave the sender’s account until the next day (or at least appear to do so). As a result, the penetration of bank bill pay falls in each succeeding generation starting with boomers at 31% to Gen X at 24%, millennials at 19% and Gen Z at 17%. Wealth management providers, such as Robinhood and Fidelity, have struck a winning cord with younger consumers, as they have seen strong adoption with Gen Z at 14%, millennials at 16% and Gen X at 13% using the service. Wealth management institutions offer greater versatility for consumers actively managing their money, as well as greater returns when comparing rates paid by money market accounts vs. bank offered checking and savings accounts. There were two interesting, albeit minor, surprises in bill pay. First, aggregators, such as Mint or Yodlee, have gained very little traction at 4% overall and just a few percentage points higher for Gen Z at 5% and millennials at 7%. Second, checks refuse to die at a 12% share. Yes, boomers have a higher usage at 16%, but Gen Z at 12% and millennials at 11% are active users. What makes this fact even more surprising is that almost all teen/college checking and basic checking accounts don’t come with checks—they need to be purchased separately—so young consumers are making the conscious decision to buy and use checks. Walk-in bill pay is relatively low at 5% and is dominated by those earning less than $50,000 at 7%, which is a statistically significant difference from middle income earners at 3% and directionally against high income households at 4%. 12
THE FUTURE OF FINANCIAL SERVICES 2021
Growing P2P adoption could cause disruption due to its faster
money movement speeds
P2P money transfer services represent both an opportunity and a threat to disrupt existing
traditional financial services for the faster speed of money movement it offers, as well as its
growing adoption. Over half of consumers under the age of 40 use P2P money transfer services
at least weekly, if not more often. Overall, 4 in 10 use the service at least weekly. About 55%
of Gen Z and 54% of millennials use P2P services on a daily, semi-weekly or weekly basis to
transfer money, pay bills and shop. In contrast, only 26% of boomers have this same level of
usage. Among Gen X, the rate is almost half (47%).
P2P
services are
Usage of P2P money transfer services by generation
used regularly by
Daily or multiple times a day 2-3 times weekly Weekly Monthly Never more than half of
millennials and
47%
42% 42% 42% Gen Z and by 4 in 10
37% consumers overall.
28% 29% 27%
24% 25%
19% 17% 17%
15% 16%
13% 12%
8% 9% 8% 9% 8%
5% 5%
2%
Overall Gen Z Millennials Gen X Boomers
Q. How often do you use digital person-to-person (P2P) money transfer services such as Zelle, Venmo, PayPal, Square Cash, etc.?
Source: Arizent Research Future of Financial Services Survey 2021. Note: May not equal 100% due to rounding.
There is strong interest in using P2P money transfer services for shopping, bill pay and funding
new financial accounts, all of which pose a threat to existing financial services currently in the
market, including credit and debit cards, wire transfers and more. About 69% of consumers
reported that they would be very or somewhat interested in using P2P services to make
an online or mobile app purchase and 67% said that they would use it to make an in-store
transaction. Paying a bill came in at a combined 68% and funding a new checking account using
a P2P service registered at 57%.
13THE FUTURE OF FINANCIAL SERVICES 2021
Interest in using P2P services for other transactions by generation
Use P2P to shop in-store Use P2P to shop online/mobile Use P2P to pay bill
76% 78% 78% 74% 75% 74%
72%
67% 69% 67% 68% 69%
53%
50% 50%
Overall Gen Z Millennials Gen X Boomers
Q. How interested would you be in using a digital P2P money transfer service such as Zelle, PayPal, Venmo,
Square Cash, etc. to conduct any of the following financial transactions?
Source: Arizent Research Future of Financial Services Survey 2021.
Millennials overall, followed by Gen X and then Gen Z had the highest interest levels in using
P2P services to shop, pay bills and fund new accounts, while boomers lagged significantly
behind in adoption. Two factors working in favor of growing P2P adoption are that the speed
of transactions is fast, and that the money leaves a user’s account almost immediately or is
unavailable shortly after using it. This last reason resonated with many consumers as a desired
feature when it came to bill pay, albeit not a top feature. This most likely has to do with the fact
that a few consumers balance their checkbooks and look to their available balances to see what
they can spend in the near future.
Faster paycheck access is enough to drive customer attrition
In order to gain a perspective of why faster money movement would appeal to consumers, a
reader need only consider the financial situation of the American household, where 69% live
paycheck-to-paycheck and 4 in 10 Americans would not be able to cover an unexpected expense
of $400 without significant hardship. It’s with this backdrop of living with just-in-time wages
and limited savings that the speed of money, particularly when it comes to receiving funds,
can become a critical differentiator to institutions providing faster payments, ranging from
insurance companies paying claims with push payments, such as Visa Direct and Mastercard
Send, to banks offering earlier access to regular direct deposit paychecks.
14THE FUTURE OF FINANCIAL SERVICES 2021
In fact, there has been a small, but growing trend among challenger banks and fintechs, such
as Chime and Current, as well as traditional banks, such as Huntington, in providing early
access to regular direct deposited paychecks to take advantage of this demand. These banks
are providing access to direct deposited funds generally when they receive notification of the
regularly scheduled paycheck deposit predicting that the funds being sent from the employer
are “good” and will settle. Normally, a bank will wait to provide access until the funds “clear and
settle” at the end of the day, and some banks also institute a 24-hour waiting period or weekend,
whichever is longer, in case of clawbacks for wage garnishments, alimony, etc.
Consumer interest in faster paycheck access and impact on decision
to switch FI to obtain faster access
Very/somewhat interested in Strong/somewhat positive impact on
faster paycheck access switching primary FI to gain faster access
82%
76%
73% 73%
70%
66% 67%
60%
52%
37%
Overall Gen Z Millennials Gen X Boomers
Q. How interested would you be to be able to access your paycheck up to two days earlier than your
normal payday if there was no cost to you? What level of impact could this have on a decision to
consider switching your primary financial services provider to one that provided such a faster payroll
service?
Source: Arizent Research Future of Financial Services Survey 2021.
Overall, 70% of consumers would be interested in faster paycheck access, as defined by the
entire paycheck being available up to two days earlier, e.g., via Chime. That figure rises to 82%
for Gen Z and 76% for millennials vs. 52% for boomers, and 78% for the full-time employed vs.
46% for the retired.
This interest in faster paycheck access also represents a potential threat to existing traditional
banks and credit unions, as almost three quarters (73%) of millennials and two-thirds of Gen X
(67%) and Gen Z (66%) reported that faster paycheck access would have a positive impact on
their decision to switch primary FI compared to 37% of boomers.
15THE FUTURE OF FINANCIAL SERVICES 2021
Conclusions
• The speed of money movement is an essential ingredient to customer satisfaction and
increases the likelihood of consumers continuing to do business with that institution.
Unfortunately, only P2P transactions and checking/savings account openings reach
relatively high satisfaction levels, leaving much of the remaining financial services
industry vulnerable to competitors offering faster money movement solutions for
transactions, such as buying insurance, paying insurance claims, etc. FIs need to
invest in creating and delivering products and services that can leverage faster money
movement speeds, as well as improve processes that cut down the time it takes to
open and fund accounts and transmit funds to customers.
• While most consumers are willing to take extra authentication steps during an
account opening or a financial transaction to help reduce fraud, many of the preferred
methods, such as one-time passwords, are outdated and vulnerable to attack. Since
the asset-wealthy and higher income households are already more willing to use
more advanced fraud-fighting solutions, such as fingerprint and facial recognition
via smartphone, geolocation and video chat, it is only a matter of educating the
general population on the value of these advanced risk measures and how they work.
For example, explaining that a consumer’s fingerprint is not stored by an insurance
company or bank, but on their phone. Additionally, FIs need to consider using these
advanced measures for higher risk transactions, where a step-up in authentication
is needed and expected to ensure ID verification, thereby minimizing the friction and
presenting the use of the advanced risk measure in a proper context.
• FIs need to recognize that the negative impacts of slow money movement can lead to
an immediate short-term loss of business, as one in five consumers have abandoned
a transaction due to slow speed. Furthermore, the more affluent and creditworthy
customers—employed, high income, wealthy and primary financial decision makers—
are more likely to abandon transactions due to slow speeds. Additionally, not all
attrition is hard, such as account closing, but sometimes soft, such as inactivity
or shift in business, as seen by the downfall of bank bill pay. FIs need to pay close
attention to their most lucrative and attractive customers as bellwethers for when
their services are no longer meeting fast money movement needs. FIs should also
continue to invest in offering additional money transfer and funding options to their
customers to take advantage of new methods gaining popularity, such as P2P and
push payments.
16THE FUTURE OF FINANCIAL SERVICES 2021
• P2P services are increasingly presenting themselves as both a rival to existing FI
services and an enabler due to their growing consumer adoption, fast transactions
and an increased willingness to use them for shopping, bill pay and funding new
accounts. About half of consumers under the age of 40 use P2P services at least
weekly, if not more and two-thirds of consumers reported interest in using P2P
for shopping in stores and online, as well as paying bills and funding new financial
accounts. FIs need to explore and offer P2P payments across a variety of transactions
due to their growing consumer demand for fast money movement. FIs should not
restrict themselves to using only bank-offered P2P, such as Zelle, but also include
rivals, such as Square Cash, Venmo and more.
• Strong consumer interest in gaining faster access to “good funds” payments, such
as regularly deposited, digital paychecks, and consumer willingness to switch
primary FIs to gain such access should be enough evidence that traditional fund
holding policies from the 1970s, when ACH was invented, need to be shown the
door or adjusted. Additional holds on paychecks and other ACH payments need
to be re-examined, as most consumers don’t have the luxury to wait while a bank
waits for “good funds” to clear and settle. Similarly, insurance companies need to
explore adopting instant claim payment options, as consumer willingness to wait on
payments is increasingly disappearing, particularly in light of competitors offering
faster payments.
17THE FUTURE OF FINANCIAL SERVICES 2021 About Arizent Research Arizent delivers actionable insights through full-service research solutions that tap into its first-party data, industry SMEs and highly engaged communities across banking, payments, mortgage, insurance, municipal finance, accounting, HR/employee benefits and wealth management. Arizent has leading brands in financial services, including American Banker, The Bond Buyer, Financial Planning and National Mortgage News, and in professional services, such as Accounting Today, Employee Benefits News and Digital Insurance. For more information, please visit www.arizent.com Interested in learning more about how to put Arizent’s full-service research capabilities to work for your company? Please contact: Janet King, Vice President Research, janet.king@arizent.com, 207-807-4806. 18
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