With core switch, small Alabama bank aims to settle transactions in real time

Without access to real-time services, bank customers don’t always see their actual balance and transaction information across digital and nondigital platforms. An account user who deposits a check can’t access the funds because the transaction doesn’t post in real time.

Citizens Bank & Trust is hoping to solve for these inconsistencies and other scenarios. The Guntersville, Ala., community bank is transitioning to Fiserv’s DNA core account processing platform, which offers real-time transaction processing, and plans to go live in February 2022.

The bank is joining a growing list of small institutions that see the need to modernize their core systems, in part to keep up with changes in consumer preferences and to better compete with fintechs.

“We’re trying to give our customers the best possible service we can, and with these systems we’ll have the ability to do that,” said Sam Pate, chief information officer at Citizens Bank & Trust.

Sam Pate, chief information officer at the $719.9 million-asset Citizens, said the new capability will allow tellers to accept a check and credit the amount immediately.

“Today if we have a customer make a deposit, they can’t immediately go out and use their debit card to get those funds,” Pate said.

Fiserv defines real-time banking as the ability to post financial transactions immediately in all channels, from digital to the branch. Chris Ward, principal consultant at FBX, part of the London-based consultancy Informa, broadens the definition to include other experiences that are not traditionally done in real time.

With onboarding, for example, “you would complete the application form, the account is open, and you could start using it right away,” he said. When customers apply for mortgages and personal loans, pre-approval would be immediate.

For now, real-time capabilities exist at some top-tier financial institutions, not regional and community banks like Citizens. But the expectation for immediate results is likely to grow as consumers become accustomed to instant delivery in other aspects of their digital lives.

“Being able to deliver on things quickly, provide immediate feedback and make things easy and fast for the customer is how you can maintain a competitive advantage,” said Ward.

Chris Van Der Stad, general manager of DNA at Fiserv, says that about a quarter of Fiserv bank clients are on fully real-time core systems.

“Customers can see holds applied [on their checks] in real time so they know what is happening in their account,” said Van Der Stad. “There is a level of comfort customers would get as they request things to happen and get validation and alerts.”

Transaction alerts will become more immediate. “There is nothing more bizarre than doing a transaction and two hours later you get notified,” said Van Der Stad.

For Citizens, the need boiled down to efficiency and improving the customer experience.

Real-time banking also goes hand-in-hand with advances in real-time payments, said Pate. He points out that if someone uses Zelle to send another individual money, those funds are available in a few moments if the recipient’s institution is outfitted with real-time processing.

Finally, he expects that bankers will be able to provide better service, for instance in cases where customers walk into a branch and need help with a transaction, by having an up-to-date picture of their customers in one spot.

That doesn’t mean every user will benefit.

“There are certain customers, whether business or consumers, that don’t want real time,” said Rolland Johannsen, senior consultant for the Capital Performance Group in Washington, D.C. “They play the float just as much as the banks play the float.”

He finds that customers generally want immediate processing when money is entering their accounts, but not always when it is leaving — for example, when someone lives paycheck to paycheck and writes a check shortly before sufficient funds are deposited in their account.

At Citizens, real-time banking is part of a larger digital push.

The bank chose DNA partly because it offers what Fiserv calls an open architecture, which makes it easier to partner with fintechs. By February the bank will also implement electronic signatures and disclosures, emailed statements, electronic bill payments and peer-to-peer payments through DNA, as well as roll out Fiserv’s virtual banking assistant, which uses conversational artificial intelligence technology from Clinc.

“You can say, ‘I’m thinking about going to a fancy restaurant for dinner. What can I spend?’ and it knows you are looking for a restaurant, it looks at your budget, and understands your spending habits so it can provide real-time data,” said Pate.

He is also looking into fintechs that provide geo-mapping capabilities on debit transactions, meaning customers can trace the sources of their purchases.

“We’re trying to give our customers the best possible service we can, and with these systems we’ll have the ability to do that,” he said.

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