Independent Banker - January 2025 - 31

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their cards hold a " top of wallet "
position as customers' first choice
for transactions.
" Consumer expectations are
continually evolving, " says Nick
Denning, head of product and strategy
at ICBA Payments. " The onus is on
community banks to make [sure]
that they're not getting in the way
of consumers' natural buying and
purchasing behavior. "
That means banks need to provide
contactless cards and enable
digital issuance so they're not
creating unnecessary friction for
consumers. " It's a lost opportunity
for banks to optimize their
portfolios and improve interchange
income if customers are not using
the bank card in their digital
wallets, " says Denning.
And if consumers can't find what
they're looking for with a bank,
they'll move it to other platforms
like PayPal or Venmo, " even though
consumers' money isn't insured
" The onus is on community
banks to make [sure] that
they're not getting in the way
of consumers' natural buying
and purchasing behavior. "
-NICK DENNING, ICBA PAYMENTS
there, " points out Mick Oppy, CEO of
fintech Neural Payments. " Consumer
protection is not necessarily a driver
for consumer behavior. It comes
down to convenience. "
Oppy believes more community
banks need to get involved in day-today
transactions. " If the bank makes
it really easy for customers to do
everyday spending, they're going to
keep putting money in their accounts
because of how convenient it is, " he
says. " Deposit recapture is actually
about spending, not necessarily about
deposits first. "
QUICK STATS
52%
The percentage of all U.S.
e-commerce transactions that
digital wallets are expected to
account for by 2027
31%
The percentage of U.S.
POS transactions that digital
wallets are expected to
account for by 2027
Source: Worldpay
Active management needed
As community banks compete for
the top priority position in digital
wallets, they must examine their
card programs and why customers
would choose their card over another.
According to Denning, " If banks
aren't engaging their accountholders
and targeting them with campaigns,
they're losing a chunk of their
accountholder spend, because
accountholders are reacting to
promotions or engagement from other
competitors that might be outside of
the banking system, like fintechs or
other providers. "
Oppy believes that once consumers
have made a choice, they aren't likely
to choose a different card within
their digital wallets unless they
have a compelling reason to do so.
Community banks should dig into
data to look at how customers spend
their money and how the bank can
make that more convenient or offer
perks to encourage accountholders
to use the bank card within their
digital wallet. For example, banks
could create relationships with
vendors to create special offers and
targeted marketing campaigns.
Oppy thinks community banks
need to take some risks with their
card programs. Even while banks are
spending money on core conversions
or digital banking platform switches
to compete on digital functionality,
those changes aren't affecting
customer spending behavior.
Amid technology changes,
community banks could run a
marketing campaign for a few months
that improves card usage or recaptures
more deposits.
" There's a hesitation in rolling
something out, knowing it might
not be 100% successful, " Oppy says,
" but at least you tried a program,
attempted something and saw some
adoption. Or you saw some change,
positive or negative, and learned for
next time. "
Anna Burgess Yang is a writer in Illinois.
independentbanker.org // 31
http://www.independentbanker.org
Independent Banker - January 2025

Table of Contents for the Digital Edition of Independent Banker - January 2025
