8 reasons financial services need online payment options

There are now a great number of different ways for people to make payments. Across sectors, Kiwis can log online on their computers or mobile devices and control every aspect of their finances.

But there’s a clear difference between sectors like retail and financial services, where money movement really matters. So should financial services businesses be using online payment options too?

We think so, and here’s eight reasons why.

1. Not every Kiwi owns a credit card

There’s no denying that credit cards are a popular tool for making payments, but for a potentially huge number of customers they just aren’t suitable.

  • Fact: 49% of Gen Z Kiwis (those born mid-1990s to about 2010) have never owned a credit card. Neither have 19% of Millennials (the generation prior). (Laybuy)

Even if many of our young people do eventually sign up to a credit card provider, it shows that there’s a clear desire in NZ right now to avoid the use of such a payment option.

Expanding beyond credit cards

When it comes to receiving payments from customers, think beyond plastic. Online payment options like POLi let customers pay directly from their online banking account through a secure, easy-to-use portal. Then there’s the likes of Paypal, Google Pay (or Apple and Samsung equivalents), Buy Now/Pay Later, electronic invoicing, in-app payment portals … the list is ever expanding.

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2. Kiwis wish online payments were faster

Our point here regards both sending and receiving payments – a clear majority of Kiwis wish that they were both faster.

  • Fact: 49% of Kiwis wish making payments was faster, and 62% wish receiving them was faster. (Yabble/Payments NZ Consumer Study 2020)

For customers of financial services businesses, perhaps more so than any other sector, money matters. Whether sending or receiving, Kiwis have shown a desire for their money to move in real time, or as close to real time as possible.

This is where there’s a clear opportunity for financial services companies to offer contemporary online payment solutions that deliver on those faster transfers (whether coming or going). Indeed, fast payments could be a real competitive advantage.

3. People are already using online platforms

We understand you might be worried that some of your customers won’t understand a new platform, or may feel nervous about making the change. But, the reality is, Kiwis already are using online payment providers.

  • Fact: A third of Kiwis have used a direct online payment option like POLi recently, and 39% have used payment apps like PayPal, Google Pay or AliPay. (Yabble)

It’s not just young people getting tech-savvy, either. To use POLi as an example, Yabble found a quarter of older people (65+) were using services like ours, in addition to 37% of those aged 35-64.

Of course, you’ll still need to carefully and openly communicate any new change, given that people’s money is on the line. But, now is a great time to start implementing these new payment options given that other sectors have already done some of the educational legwork for you.

Learn more: How to promote POLi

4. Back office staff have enough to do

The thing about sending, receiving and reconciling payments is that it all takes time. This is time that back office staff could be spending on other, more value-adding activities.

  • Fact: Even as far back as 2012 we knew that finance businesses (in the case of this stat, banks) could improve productivity by 50% through automation. (HBR)

If time is money, then any step to improve efficiency in the back office could have huge gains for the company as a whole.

Many online payment options include a degree of automation. To use ourselves as an example, when customers pay you through the POLi portal, all the appropriate sum totals and reference numbers are inputted automatically and recorded correctly at both ends of the transfer. There’s no need for a human to be involved – cash flow will directly match payments made, making reconciliation fast and easy.

5. Human error can be costly, and time consuming

Human error is the other side of the coin to manual back office tasks. Whenever staff must spend time going through individual payments, there’s always a chance of error.

  • Fact: 60% of customer dissatisfaction originates in the back office. (Capgemini)

Any system you can deploy that automates financial data entry tasks and improves reconciliation speed and accuracy could, with the right automation, have positive outcomes at the customer service level.

6. Retail e-commerce is changing customer expectations

Earlier we touched on how other sectors are doing a lot of the legwork when it comes to educating customers on new online payment options. Retail is doing the bulk of this, and it’s changing the face of customer expectation.

It’s easy to find evidence of this changing expectation – look to B2B businesses, for instance. There used to be no such thing as e-commerce at the B2B level, but now Gartner expects 80% of B2B sales interactions to take place online by 2025.

Financial services should expect to follow. If customers spend all day at home and work using smart, online payment tools, they will expect the same of all their financial interactions.

Learn more: The growth of B2B ecommerce in 2021: Are you joining in?

7. Bill payments are doing the same

When was the last time you paid a bill manually? For most Kiwis, bill payments are now made via direct debit or through a company’s online portal.

  • Fact: Bill payments were the second-largest electronic debit and credit instrument in 2019 (NZ Payments 2019). In 2020 they were the fourth-highest overall payment option, based on monthly transaction values. (NZ Payments 2020)

Our point here is to reinforce the above – when customers can quickly and conveniently make payments in other aspects of their financial life, they will want the same everywhere else. Perhaps if bill payments and the B2B sector were still largely manual then there’d be no expectation on financial services either, but this is simply not the case.

To keep up, and get ahead, the financial services sector must move online, to real-time payments, as soon as possible.

8. People are spending more time on their phones

In addition to credit cards, direct online payments, payment apps, e-invoices and various other online payment options are also custom-built smartphone apps with their own in-built payment gateways. Could this be your new offering?

  • Fact: The weekly time people spent using apps on their phone grew 20% YOY from 2019 to 2020. (AppAnnie)

As we’ve discussed, customers these days want speed. Accessing accounts on a smartphone and quickly sending/receiving payments could be a big opportunity for smaller financial services businesses to offer the same convenience as their larger competitors.

For context, 55% of Kiwis are already using their phone for banking purposes, and there are so many mobile connections in NZ it is equivalent to 135% of our population (We Are Social/Hootsuite). There’s a good-sized market here, with plenty of space for more app offerings.

Wrapping this all up together

To summarise our advice today: Kiwis are increasingly online, they love using their phone, and they are getting a fast, convenient payment service from a lot of other sectors (including banking and bill payments, not just e-commerce).

Financial services companies that send or receive customer payments should look to offer a variety of online payment options in order to delight modern customers and give them the payment types they prefer.

Introducing smart new payment features is also a way to help automate the back office, saving staff time on manual data entry and reconciling cash flow.

Read next:Definitive guide to Payment Gateways