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  • Writer's pictureW.B. King

2021 MX Money Experience Summit Takeaway: FIs Stop Riding the Payments Pony Express

By W.B. King

The second annual 2021 MX Money Experience Summit brought together nearly 1,000 attendees, including credit unions, fintechs and banks. And while some registrants were able to meet in-person at the Snowbird, Utah –based event, many attended virtually.

“We’ve felt safe and enjoyed our time here,” said MX’s Director of Open Finance Katt Benedict, who added that approximately 40% of attendees were from credit unions.

“I’ve learned an incredible amount about how my financial institution should think about partnerships and how we can leverage the data insights to help our members,” she noted.

Among takeaways for Benedict were the keynote speeches, which took place over the course of the three-day summit (September 28 to 30). Speakers included two-time Super Bowl champion quarterback Peyton Manning, race car legend Mario Andretti and BECU’s EVP and Chief Information Officer Fumbi Chima, among others. They all spoke, in part, about organizational transformation.

“The more you know about the people on your team, the more of an effective communicator you can be,” said Manning. “It is also important to be a good listener. Take input from people on your team — words have power, but silence does, too.”

Chima said “the aspiration at BECU is not just to be a credit union, but be a digitally savvy credit union that serves members and the community, so we can improve our financial health.”

She noted that this goal is “huge,” but will be attained by “transforming so that we can continue bringing them [members] to life as the world changes around us.”

The Change Has Come

Among featured panels was “Next-Gen Payments: A Vehicle for User Experience.” The conversation covered many topics, including how businesses and consumers are viewing payments in a post-pandemic world.

When asked how COVID-19 impacted payments and what changes will remain a permanent part of the landscape, Dwolla CEO and panelist Brady Harris said the answer is found in the company’s gross payments volume data.

“I came on as CEO in March/April of 2020, so right when COVID was taking off. Our gross payment volume at that time was 17 or 19 billion per year, and like most, we didn’t know what was going to happen,” said Harris. “At the end of 2020, our payment volume was 30 billion. This year we think we will do 40 billion or more in payment volume.”

The Des Moines, Iowa –based company, founded in 2008, provides businesses with a easy-to-use connection to ACH or RTP Networks and counts among its partners Veridian Credit Union.

“A lot of companies that were paper-based or were relegated to pushing transactions via a gateway or through their merchant account on the credit card side, they started to figure out, because of COVID, that they need to be revolutionary in a contactless way — digitize payments for consumer preferences,” Brady continued. “COVID has quite literally doubled our payment volume in less than a year-and-a-half and there are no signs of it letting up.”

From left to right: Dwolla CEO Brady Harris, BlytzPay CEO Robyn Burkinshaw and BillGO’s CRO Ken Salazar.

Fellow panelist and BillGO’s Chief Revenue Officer Ken Salazar said that traditional financial institutions are not receiving the following message: Without change, more branch locations will close driving consumers to alternative banking models.

The Fort Collins, Colo. –based company, founded in 2015, offers a bill management payments platform and network that serves more than 8,000 financial institutions.

“The FIs are not making the changes necessary and their customers are continuing to leave in droves. They are not as loyal to the bank just because it is a bank and are willing to look at other options,” Salazar said. “Bank branches are closing everywhere and that is exactly the case as to why we have to evolve and the ecosystem has to change.”

Digitizing the Pony Express

While Salazar conceded that many financial institutions haven’t always had “many options” for change, this factor won’t be a viable excuse for not adapting to new digital constructs.

“That is why we are in this room now — to come in and solve these problems and fill gaps and voids,” he continued. “The legacy players that are out there – they are still running the Pony Express, but the problem is that it is so expensive to get off these legacy systems. At what point do they [financial institutions] finally bite the bullet and make the investment?”

Salazar noted that BillGO’s website is “blowing up” with incoming leads from new fintechs, which is another indicator that the payments space is rapidly changing.

“Some of these guys [fintechs] are going to hit. You look at the number of accounts that were open with Square and Credit Karma this year — millions and millions of accounts in months,” he said. “There are banks that have been opened for a 100 years that don’t have as many accounts.”

BlytzPay Founder and CEO Robyn Burkinshaw also sat on the panel. She agreed with Salazar, but added that while banks and credit unions will play a role in the next generation of payments, they are “bogged down” by technical debt, legacy technology, bureaucracy, and "heavy" regulatory and compliance burdens.

“To be fair, the fintechs can run circles around those institutions because we don’t have nearly the garbage to engage with that they do," she said. "Banks aren’t often payments experts any more than a doctor on the corner is."

The Draper, Utah –based company, founded in 2017, offers a text-based, app-less payment acceptance and customer communication platform designed to eliminate the barriers of "complicated technology" for merchants and their customers.

“It is the same conversation: It’s how do we bring technology and give them the ability to plug it into their ecosystem and then figure out ways we can improve the experience — whether it be a merchant or end-user consumer,” Burkinshaw said.

And whereas on the surface Dwolla, BillGO and BlytzPay may be viewed as competitors, Brady said that premise could be misleading.

"If the three of us were to put our core tech stacks - the core essence of our products - you might see there is a little bit of overlap, but I think you would see the vast majority — all being payments companies — really don't overlap with each other," he said. "We are all complimentary tech."

Burkinshaw agreed adding that in her view what Brady noted is best described as "coopetition." She said that each company is attacking "very different" problems in the payments space.

"I think this is the point of fintech — to some degree — it's more of a cooperative," she said. "Everyone sees things from a little different perspective. As we come up with these unique solutions, we make challenges to really difficult problems a lot easier and a lot more palatable for the consumers on the other side."

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