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PayPal and FIS team up for careless ATMs www.businessinsider.com
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Earlier this year, Fidelity Information Services (FIS) and Payment Alliance International (PAI) teamed up to bring Cardless Cash, which allows users to access ATMs via their mobile devices, to thousands of US locations.
That functionality will be enabled by PayPal-owned Paydiant, according to a PayPal blog post. Now, mobile banking users at banks including BMO Harris will be able to use their phones to access ATMs.
Mobile-driven branch banking helps engage consumers without negatively impacting banks.
Innovations like cardless ATMs help keep customers engaged. Banks are cutting branches to lower costs, but consumers are still using ATMs on a regular basis — 44% of millennials would be unwilling to give up cash entirely, according to a BI Intelligence study. Features like Cardless Cash allow banks to give mobile-oriented younger consumers the opportunity to use their phone while accessing in-person banking services. In addition, Cardless Cash shortens transaction times, thereby improving efficiency and resolving pain points associated with branch banking.
But they also keep costs to banks low. Banks can build Cardless Cash into their own mobile banking apps. And it doesn't require ATM hardware upgrades —a potentially expensive and time-consuming process. And on top of that, Cardless Cash helps reduce ATM fraud that comes from skimming or “shoulder surfing” by allowing customers to input secure data on a better-protected device. That’s critical as ATM fraud, which grew by 546% year-over-year in 2015, continues to rise.
For PayPal, the FIS-Paydiant partnership helps them meet a key goal: addressing emerging customer needs in new ways. PayPal, which traditionally focused on enabling customers to make online payments, has been working to build out a payments ecosystem and moving into a wide array of payments-related areas, including remittances, peer-to-peer (P2P) payments, and in-store mobile payments.
Cardless Cash likely fits into the firm’s push to offer users flexible options skewed towards mobile and other high-growth areas. And this could continue the company’s gains — PayPal processed $86.2 billion in total payment volume in Q2, and saw increases in average quarterly transactions per account.
This partnership is part of the broader move toward digital banking, particularly among millennials who are walking into their banks' traditional brick-and-mortar branches less often than ever before.
This generation accounts for the greatest share of the U.S. population at 26% and the employed population at 34%, so it's easy to see why their behaviors and preferences will have a profound effect on the future of the banking industry, particularly with regard to the way banks interact with their customers.
Third parties are expanding their role in providing services that consumers use to manage their money. And the more that role grows, the more it will disrupt the relationship between banks and their customers.
To paint a clearer picture of the future of the banking industry, John Heggestuen, managing research analyst at BI Intelligence, Business Insider's premium research service, surveyed 1,500 banked millennials (ages 18-34) on their banking behaviors and preferences — from their preferred banking devices, to what banking actions they perform on those devices, to how often they perform them.
All of that rigorous research led to an essential report entitled The Digital Disruption of Retail Banking that dives deep into the industry and details what its future will look like.
Published Date:2016-08-25
