Faster Payments: What’s all the fuss about?
An Insider Q&A with Alloya’s Experts
When something is trivial or inconsequential, there’s a helpful idiom that many of us use: small potatoes.
“That late-spring cold snap was small potatoes compared to the deep freeze of winter!”
Why the rambling about this centuries-old idiom? It’s equally helpful with articulating something trivial as it is useful in articulating something momentous.
Like anything, payment systems are ever-changing. Remember when checks had their heyday? As we look to the future, faster and real-time payments will take the world by storm.
This brings us back to our opening idiom. Faster and real-time payments? They’re not small potatoes. In fact, some of these instantaneous new “rails” are going to disrupt the payments landscape unlike anything we’ve seen in decades.
That’s why Alloya has created a new, credit-unions-only community, called Alloya Insights: Faster Payments, to help credit unions understand what it takes to bring faster and real-time payments to their membership.
We sat down with Alloya’s team of senior payment experts to learn more about Alloya Insights: Faster Payments – and what credit unions are risking if they don’t seize this opportunity.
Interviewer: Let’s start with the basics. What is Alloya Insights: Faster Payments?
Jim Schneck, Chief Strategy & Innovation Officer: In the simplest terms, it’s a community of credit unions getting together to learn and help one another in their pursuit to bring faster payments to their membership. Faster payment capabilities will improve each credit union’s value proposition for their members, and by working with Alloya, they will be equipped to make better, more informed decisions, and to make faster and real-time payments a reality for their membership. The information and value of Alloya Insights: Faster Payments is delivered through a series of webinars, a progression of collaborative events and an online community portal.
Interviewer: Why should credit unions care about real-time and faster payments?
Kurt Stevenson, SVP of Payments: There are two main reasons why credit unions should care: survival and growth. On the survival side, as the NCUA has noted in their Strategic Plan 2022-2026, “credit unions have been losing their competitive advantage in terms of customer satisfaction in recent years.” According to the American Customer Satisfaction Index (ACSI), member satisfaction has been lower for credit unions than for banks for the past three years. This is attributed in part to non-traditional competitors providing advanced payments platforms, and more generally to the differences in the digital experience. On the growth side, we believe that implementing the more advanced real-time capabilities will provide a backbone to power new value-added use cases for members.
Interviewer: How will consumers benefit from faster and real-time payments?
Margo Giles, SVP of Operations: There are numerous use case examples that illustrate how consumers and businesses are going to benefit greatly from faster payments, and real-time payments especially. Real-time payments leverage entirely new infrastructure not experienced since the 1970s when ACH was launched. The time is now for each credit union to develop a plan to incorporate faster and real-time payments into their digital strategy. This will allow adequate time to put solutions in place. Credit unions are going to need to offer faster and real-time payments just like they offer checking accounts today. Otherwise, the credit union is likely to lose its members to financial institutions that have incorporated fast, digital payment capabilities that consumers and businesses will come to expect. So, it's a competitive move, and we would argue it’s a survival move, too.
Interviewer: So why has Alloya decided to create this community for credit unions?
Kurt Stevenson: At Alloya, our primary goal is to simplify credit unions' operational lives so they can spend more time focusing on their members and communities. That lays the foundation for everything we do at Alloya. And to be frank, we believe a monumental change is coming down the pike for the payments industry. Given the magnitude of this change, we recognized that simply rolling out new products would not be effective or helpful for credit unions. We do intend to release products that support the facilitation of faster and real-time payments, but to truly simplify credit unions’ lives and support their success, there needs to be a channel for the education and planning stages that are required first. Unlike other payments systems, there's going to be more considerations for credit unions, and we can help them understand what those are from a variety of perspectives.
Interviewer: What do credit unions stand to gain by joining the community?
Jim Schneck: Community is a differentiator for us. The Alloya Insights: Faster Payments community gives participating credit unions the ability to connect and interact with other credit union professionals about their approach to faster and real-time payments. In addition, our community participants get to shape the educational curriculum and tell us what they want to learn about, so it's very co-creative.
Margo Giles: Plus, the Alloya team is involved in a multitude of projects, committees and industry groups related to faster and real-time payments. We are working directly with the real-time payment providers. And we are reviewing copious amounts of research, distilling that down and making it easy to understand and absorb. So, while many credit unions are stressed by the need for talent, they can outsource the research and synthesis of insights to Alloya and use the decision-making tools we will be providing.
Kurt Stevenson: Eventually, Alloya will have a set of products for credit unions to deliver faster and real-time payments to consumers. In addition to getting discounted access on these products, community participants will have the opportunity to influence their design, which is another unique component of the Alloya Insights: Faster Payments value proposition.
Interviewer: What is the danger for credit unions not being prepared for the transition to faster payments?
Jim Olney, VP of Payments Strategy: We’ve found there are a lot of credit unions taking a wait-and-see position for faster and real-time payments; they have decided they are going to wait and see what happens. Now the danger is this: If you realize too late in the game that you must act, you have to rush, and when you rush, your resources can be allocated inappropriately. Getting ahead of faster and real-time payments allows you to create a member experience strategy and overall payment strategy that allows you to optimize your resources.
Margo Giles: Plus, if you wait until there's more awareness, you could find yourself in a position where you can't move quickly, because you have to go to the back of the proverbial line.
Interviewer: You mentioned a community portal. What types of things will credit unions find there?
Jim Olney: In the portal, we are compiling an array of resources that will help credit unions understand the implications of faster payments and develop a faster payments roadmap. The portal also includes blog posts on related topics. Another key function is the Q&A forum, where credit unions can submit any questions they have. In turn, we'll be able to bounce those questions off the experts at Alloya and off other credit unions that are part of the community. We also plan to pose poll questions along the way in an effort to continuously keep tabs on what’s important to our community. And if we find there are topics that are universally important, we'll address them together. So it becomes a place where credit unions can share their knowledge with us, we can share our knowledge with credit unions and we can exchange that information between everybody online.
Interviewer: What's unique about Alloya's approach compared to other organizations that are offering faster payment education?
Jim Schneck: It’s a combination of everything we’ve discussed so far in terms of community, co-creation, collaboration and knowledge-sharing. But it doesn’t stop there. We have designed the content and curriculum of this program with great thought and intentionality. This is not a drop-and-run program where users are provided a flurry of links to resources and then left in the dust to make sense of it all. Instead, Alloya Insights: Faster Payments is designed and written in a way that ensures our experts are coming alongside credit unions to walk them through the things that matter most. Ultimately, community participants will not only understand the "What?" but also the "So what?" and the "Now what?" It all comes down to meaningful and actionable insights.
To learn more about the Alloya Insights: Faster Payments community, visit www.alloyacorp.org/insights. Join the conversation!
About the Experts
Kurt Stevenson
Senior Vice President, Payments | President, Alloya Solutions, LLC
As Senior Vice President of Payments, Kurt Stevenson oversees the corporate’s payment strategy and operations, compliance and member product support. Separately, Stevenson also serves as the President of Alloya Solutions, LLC (Alloya Corporate FCU’s wholly owned CUSO). In this role, he oversees activities for the broker/dealer services and financial products offered through the CUSO. As a leader of Alloya Insights: Faster Payments, Stevenson brings over 30 years of experience in executive leadership as well as balance sheet and earnings optimization in the financial services industry.
Jim Schneck
Chief Strategy & Innovation Officer
As Chief Strategy and Innovation Officer, Jim Schneck leads the strategic planning process, which ensures that organizational objectives and initiatives are directed towards increasing value to the membership of Alloya. Prior to Alloya, Schneck worked as a management and strategy consultant where he helped numerous companies create new technology-driven business models. As a leader of Alloya Insights: Faster Payments, Schneck leverages that experience to help credit unions move toward new and innovative payment offerings.
Margo Giles
Senior Vice President, Operations
Margo Giles oversees the corporate’s payment operations functions, which consist of product delivery along with compliance, fraud prevention and product implementations for credit union members. Her responsibilities include supporting innovative and efficient delivery systems for wires, ACH, check processing, coin and currency, international payments and real-time payments while remaining compliant with all applicable regulations. As a leader of Alloya Insights: Faster Payments, Giles brings over 30 years of experience with building, integrating and leveraging systems and teams. She has extensive background in technology solution development and system integration, often with third-party service providers, with a special focus on the accurate, timely, secure and compliant delivery of payment services.
Jim Olney
Vice President, Payments Strategy
As Vice President of Payments Strategy, Jim Olney provides research and analytical expertise to support the strategic decisions of Alloya. Olney joined the corporate in 1989 and has held roles in research and development, innovation, product management and strategic initiatives, all with an emphasis on payment services. He was instrumental in Alloya’s check processing consolidation projects, successfully migrating over 900 credit unions to the corporate’s current platform in 2017 and another 90 in 2021. As a leader of Alloya Insights: Faster Payments, Olney’s strong analytical background is useful in researching and analyzing payment trends to identify opportunities to position credit unions for the future. He expects to collect and summarize research reports on a variety of payment topics from checks, person-to-person (P2P) and cryptocurrency to empower participants with information to make decisions on faster payments.