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CUs that know what’s going on will be better poised to keep up.
With a new year comes new resolutions, disruptors and trends. This will especially ring true in the payments space, which boasts one of the biggest growth markets in the world: fintech. Research estimates that global fintech solution usage is currently at 33 percent and is expected to increase to 52 percent in 2018. To keep a big picture perspective, credit unions will want to look at four key technology developments in 2018.
1. Business-to-business payments are finally going digital. B2B payments are perhaps further behind the fintech curve than they should be. This is often attributed to the complex nature of these payments—most involve multiple stakeholders, are usually attributed to purchase orders and budgets, and are managed manually. The check is still the most common method of payment acceptance in U.S. B2B payments, but only just. The Association for Financial Professionals found that in 2004, 81 percent of B2B organizations paid by check, but by 2016 this number had shrunk to 51 percent.
The U.S. government has already mandated that in 2018, all invoicing for business-to-government payments will be electronic-only. This is bound to have an effect on the B2B market as a whole. In 2018, expect more CFOs to begin to realize the efficiency benefits of digitizing B2B payments.
2. The rise in healthcare patient responsibility will drive electronic payments. According to eHealth's analysis of the healthcare marketplace during the 2017 open enrollment period, the average annual deductible was over $8,200 for a family plan, accounting for a 3 percent or $249 increase over the previous year.
Maximizing the chance of capturing patient payments means providing a friction-free payment process. Recent statistics show more than half of patients prefer to be billed electronically. In fact, 79 percent of patients are happy to provide their email address for billing and correspondence, yet 90 percent of practices are still mailing paper-based statements.
3. More healthcare payments will land in accounts receivables. The reality of the rising number of patients with high-deductible or preferred provider organization plans means more healthcare payments will fall into accounts receivables management. Much like providers themselves, healthcare organizations will need to be able collect payments online using all payment types, including health savings account and financial savings account payments.
The 2017 BillingTree accounts receivables management industry survey found the number of ARM organizations processing payments from health savings accounts/flexible spending accounts had increased 10 percent from 2016. Expect this number to grow in the year ahead as patient, provider and accounts receivables adjust to the sharp rise in patient responsibility and the shifting healthcare payment landscape.
4. Card brands are leveling the property management playing field. Currently, the cost for using a credit card to settle community fees and rent payments is higher than those consumers are used to when purchasing retail goods. To compete with debit account and ACH rates, costs for using credit cards for housing need to come down.
Already, certain card providers are creating new rate categories for such payments. In 2018, this will open the door to the availability of more electronic payments options that offer convenient ways for tenants to pay rent and community fees.
For credit unions, 2018 will carry a familiar challenge: staying competitive with the big banks. This means creating competitive offerings while delivering personalized service to keep members happy.
When it comes to technology, the size of a credit union can actually become an advantage. Smaller businesses have smaller infrastructures, so adapting to integrate new technologies takes less time, meaning they can quickly accommodate the evolving needs of a tech-savvy membership base.
In 2018, we will witness more credit unions turning to technology providers to help expand their payment solutions, a trend that was identified by respondents to a 2017 Q4 BillingTree survey on financial services technology adoption. The survey found 66 percent of respondents plan to adopt new payment technology in 2018, a steep rise from just 14 percent the year before.
The fintech revolution is now touching almost every market in the payments space. Some are still further ahead than others, so expect 2018 to be a year of consolidation in more mature sectors, but one of rapid change in those with some catching up to do. How will you position your credit union within it?
With over 26 years of experience in marketing and advertising, Dave Yohe heads up BillingTree’s corporate marketing team. His responsibilities include marketing, lead generation, advertising, trade shows, public relations, marcom and branding. He also works on analyst relations and new market penetration.
If you liked this post, you might also like CUES School of Sales and Marketing I and II, July 16-18 and July 19-20 in Seattle, and Payments University, Aug. 13-14 in Denver.
