Featured in Raddon Report

November 15, 2012

The following is an article written by Payveris Vice President, Jim Cahill.  The article was recently featured in The Raddon Report, an online publication from The Raddon Financial Group.

Integration – What Matters Most in the Remote Channel

Online banking and bill pay have both reached the point where even the late adopters of new technology are coming on board. Today, over half of checking account customers will regularly login to their financial institution’s online banking and over half of these users will regularly pay bills online. These rates of adoption grew at a double digit pace for many years but have now slowed to a mid-single digit growth rate. The slowing growth rate of bill pay adoption in particular should be a concern to community banks and credit unions who already have lower rates of online banking adoption than the four largest US banks who control close to 50% of bill pay transactions and invest heavily in the channel. Why is this a concern?

Online and now Mobile bill pay is the anchor relationship in the remote channel. Study after study have concluded that online bill payers are more profitable, attrite less and tend to consolidate assets at their primary financial institution where they pay bills online. The financially and technically savvy expect the most from the remote channel. For these highly profitable customers now and in the near future, the current remote service delivery offering of many community based financial institutions is subpar. So, what is the problem?

Online banking and bill pay have evolved over the past fifteen or so years as a compilation of poorly integrated solutions from multiple third party service providers. A typical financial institution will have one vendor for online banking, others for transfers, another for bill pay, another for mobile, another for personal financial management (PFM), and so on. The largest of the core processors have tried to solve for this integration problem by acquiring the legacy bill pay and online banking companies and pitching a one-stop online channel suite of services. Unfortunately, many financial institutions have found that this model is inflexible to their needs and objectives and innovation is lacking. Instead, it makes sense to select best in class providers who focus on a particular area of expertise, but integration of third party providers into a seamless user experience must get better. Now that online banking adoption is flattening and mobile is growing fast, one of the most frequent complaints heard from early mobile banking adopters is, “where is the functionality that I have with online banking?” The most common complaint is lack of bill payment functionality. What is the cause of such poor remote channel integration?

The number one problem in creating an innovative, seamless and consistent online and mobile banking user experience is the outdated technology used by legacy service providers. For example, some bill pay companies do not offer API libraries to allow for seamless integration of payments in the online and mobile channel. As a result, utilization may not even exist in the mobile channel and overall adoption is not increasing by making the products easy to access and use. The model is still a single-sign-on deployment of stand-alone third party applications to a vendor’s UI. What to do?

The good news is that service providers have arrived with better technology geared towards integration and putting the financial institution in control. These companies utilize architecture that is API driven and in some cases run in the cloud for fast, reliable and cost effective performance. Their value proposition is flexibility and innovation and legacy providers are now struggling to respond by trying to adapt older technology and platforms. Some examples of new companies that are built for integration include: Alkami Technology for online banking, Payveris for bill pay and transfers, Dwolla for P2P payments and Yodlee for PFM. Open Solutions, a core-banking provider, selected Payveris for their new DNA remote channel suite in part to take advantage of the improved payments integration. So what is the take-away?

In summary, there are three key points to consider in planning for your financial institution’s online and mobile banking service:


    Bill Pay is the anchor relationship and the remote channel needs to make this service accessible from multiple touch points, easy to use, and of the highest quality.


    Mobile and Online Banking are one and the same from the users perspective. A consistent, feature rich, seamless user experience should be standard across the Remote Banking channel. Third party providers must be able to respond quickly at low cost, with integration to rapidly evolving remote service delivery models.


    Best in class offerings should be pursued even if independent companies are providing the services. The new model is “white label” with the financial institution in control or at least having input into their customer’s user experience. The key drivers in selecting remote channel service providers should be quality plus the technical architecture designed for innovative and flexible integration.