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We are proud to be payments nerds – we love sharing perspectives on all things payments. The Payments Nerds podcast features expert guests who explore the most important issues, topics and trends to consider in payments today. If you are a payments nerd too, or are a little bit curious about what’s going on the payments world, just download the “Payments Nerds” podcast from The Clearing House.
Cassandra Tucker - 00:00:06:
You're listening to Payments Nerds, A podcast where we share perspectives on all things payments. If you are A payments nerd too, or are A little bit curious about what's going on in the payments world, you're in the right place. Let's start the show.
Greg - 00:00:21:
Hello, and welcome to Payments Nerd, the official podcast of The Clearing House. I'm Greg MacSweeney, and I'm your host today. And we are back with another episode where we will talk about really anything that's payments related. Today's episode is A follow-up show to one that aired last September when we spoke with Cassandra Tucker, who is Director of Operations at ABNB Federal Credit Union. ABNB is A Virginia-based credit union that joined the RTP network in May of 2024. And then ABNB turned on sending capabilities late last year, November, if I'm not mistaken. So last September in the episode, Cassandra gave A very detailed accounting of ABNB instant payments journey, really up until that point. So if you're just starting out with instant payments and you're looking at joining the RTP revolution, jump back and give that episode A listen. You won't be disappointed. Cassandra covered how to build A business case, select A technology partner, and why really instant payments are important for their customers and members. Now, we're going to talk about instant payments today. So first, the RTP network, where A lot of these transactions are happening, is seeing A ton of activity. Really A lot of growth in the last year. Last year, the RTP network processed 99.6% of all of the instant payments in the United States. That's 343 million transactions. Valued at about $246 million. We're seeing about A million transactions A day and close to A billion dollars in payments. It's really great to see. But we're really here to talk about ABNB and its journey. It's its journey from being A send-only financial institution to A send-and-receive financial institution on the RTP network. Cassandra is joined by Mark Majeske from Alacriti. Mark is Senior Vice President of Faster Payments at Alacriti. And Alacriti is A technology provider. That has worked with Cassandra, an ABNB Federal Credit Union, to bring in some payments to their members via the RTP network. And Mark will help us dig into some of the technology details there. So, Mark and Cassandra, time flies. It's September. It doesn't seem that long ago, but welcome back to the show.
Mark - 00:02:20:
Thank you.
Cassandra 00:02:20:
Happy to be back.
Greg - 00:02:22:
Great. So we're going to dive right in here. Let's talk about what you've seen, Cassandra, over the last few months. I think ABNB went live with Send in November. What have you seen? What are you seeing in terms of volume?
Cassandra 00:02:34:
So we went live on November 25th, right before Thanksgiving. For us, it was really important to get that payment rail out to our members on A date. As we were approaching the holidays, as you know, on those days where we're closed, as an FI, our members are left without options to move their money. So we wanted to really get that out ahead of Thanksgiving, ahead of Christmas, ahead of New Year's. And we were really interested to see how it performed with it being our very first week and having our business close that day. And we saw great volume. And so we were really, really, really excited to see our members be able to take advantage of those money movement tools on A day where traditionally they wouldn't have been able to do business. So it was very reaffirming for us that we made the right decision by giving our members more control and access to how and when they move their funds. So that was definitely A little bit of affirmation for us that we were on the right path. So we're really, really excited about Send. We've seen great volume for us. As you guys know, we're A little bit of A smaller institution. We're just under A billion in asset size. And we're hovering about 75,000 members right now. And for us, we've already done about 2,300, A little over 2,300 transactions on Send in two months. We've moved over $1.1 million in funds. And our average transaction size is sitting just under about $700, which is... About in line with what we expected. So it was nice to see that some of the forecasting that we had, you know, was actually accurate. So you dig into the data and you think you've got it right, but it takes A little bit of time to make sure you do. And, you know, so A lot of our modeling and projections that we did were based off of kind of various adoption rates, various transaction sizes, different fee structures. And based on the volume that we're seeing, we feel like we took the right approach. We haven't had any fraud, knock on wood. And I hope that I can say that again later. But I mean, I think our fraud systems are just working. We're seeing... Go ahead. Did you want to jump in there, Greg?
Greg - 00:04:49:
Yeah, no, I was going to ask, you know, the $700 or so average transaction size, what type of payments? Are they? Can you tell, you know, are they, what type of payments are they sending?
Cassandra 00:04:59:
Right now we're doing A to A. That's our primary use case. Yeah. Do I think that sometimes that's people splitting bills or, you know, sending money to A college student, you know, their kids that are away or things like that? Absolutely. You know, but our primary use case right now is that traditional A to A model. We're really looking to expand upon that on the commercial side more next year or this year. It's already 2025. So we're developing and launching A beautiful new suite of commercial products and the RTP and instant payments networks as A whole are part of that redevelopment and launch. So we're really excited to see some of those additional use cases on the commercial side. We are still seeing some on commercial, but right now we're seeing the most of our volume from people using that A to A functionality.
Greg - 00:05:47:
Let's talk about the consumer versus business in A bit. I want to turn to Mark. Mark, you know, moving A financial institution from just received to Send. There's A little bit of work there that needs to be done technology-wise and preparation. What did Alacriti help with and how did you get ABNB to be ready to go?
Mark - 00:06:05:
I think what we did was work with ABNB in terms of getting them certified for Send, right? So that was A process. I think we also worked with Cassandra and her team. On looking at that fraud piece that she was talking about. So how do you... Sync up the fraud piece with the actual transactions. Very important that you do it. And they did A great job. And that's proof of the results. The other thing I'll say is from A market perspective, Cassandra's transactions are about twice the size of the average. So that's kind of interesting.
Cassandra 00:06:37:
And I will say on receive, we're seeing them about 330. But on Send, we're seeing about just under 700.
Greg - 00:06:46:
That's pretty good. You brought up fraud, and we'll talk a little bit about this later, but one of the obstacles that A lot of financial institutions point to about why they're delaying instant payments is that fraud concern. So I'd definitely like to hear more about how you approach that. Obviously, knock on wood, we're not seeing any fraud at this point, but it's great to hear that you have been able to, so far, build out some technology to help monitor for that.
Cassandra 00:07:16:
Yeah, Alacriti was instrumental in us having A successful fraud program for this, fraud mitigation program. So, you know, we don't have a Verifin that we could plug in directly. So we actually leveraged the partnership through Alacriti with one of their fraud providers that was built directly into the tech stack that allowed us to have that real-time fraud monitoring. And we also layered our approach to fraud. So the first thing you got to look at is having A detailed approach to risk management, right? Eyes open, making sure that you're looking at all of the different areas or potential attack vectors. So for us, we started with limits. Obviously, that's going to be, you know, your first line of defense is making sure that the limits make sense, that you can limit the amount that someone can, you know, kind of get you for. And so we started with limits and we intentionally, have those limits A little bit higher than what we're going to see for ACH Web. And that's because we just have better fraud monitoring on it. We've got A lot more... Real time. Actionable fraud insights on the RTP and instant payments versus ACH, which A lot of that stuff you're going to see kind of in the rears. So the next day or, you know, within two days is when you're going to really start to see that. And so being able to catch that up front, not only does it help stop that payment in real time, if we're riding the RTP side of that, it also can be an alert to fraudulent behavior that we maybe wouldn't have caught previously. So after we structured around our limits, the next thing we looked at is how do we prevent account takeover? That is clearly the biggest possible risk in this situation, especially with the instantaneous nature of these payments. Whether you're sending via ACH Web or instant payments, your liabilities are the same. There's no guarantee you can ever get those funds back. So. I think that helped with our comfort level with this on the Send side is that if we're allowing them to do ACH Web or if we're allowing them to do RTP, our risk is the same. The only difference is the speed at which that happens. And so we looked at limits and the next piece was, you know, account takeover. And so we actually have A tech product that we leverage through our online banking provider that helps look at the behavior of that login of that session. Did they use biometrics? Did they copy and paste their password when normally they type it or vice versa? It's so incredibly granular with how it scores those member actions and activities and sessions. And so I think that is a huge piece of this for us is we're really doing a lot to stop that at the front end before they even get into online banking. Then you add in that every single one of these transactions requires MFA. We want to make sure that they are. We are putting that intentional friction point there. We want A smooth frictionless experience for the most part. But there are times where intentional friction is important. And for me, that's MFA. So we've got the limits, we've got the behavioral monitoring, we've got MFA, and then we have that real-time fraud detection directly in the tech stack that Alacriti provided us on that Send rail. So if something scores at a certain rate, it will block and reject that transaction right then and there. There's no waiting. It's A pass-fail for us. We chose not to take A cute approach because these transactions are supposed to be instant. And we want to follow through with that. It's either going to instantly go through and you're going to see it in the other bank, or it's going to instantly fail and you're going to need to try a different method. And we've only seen, so like I said, we've done about 2,300 Send transactions, and we've only seen about 165 rejected transactions so far. So we're really, really satisfied with how we've structured our fraud tools because we're not seeing a high rate of false positives. Are there a couple? Absolutely. But working with Alacriti and the fraud provider that they've partnered with has really helped us understand maybe if we need to make a tweak to that or not, or what we're seeing. Do we need to approach something differently in how we, you know, obtain email or phone number or things like that just organizationally as well? So that's been really helpful for us.
Mark - 00:11:45:
I just wanted to share one point, Greg, that... One of the things that Cassandra and her team did really well is to look at everything that they could actually influence. And in the limits area, I'll just share with you that I know of one institution that didn't put any limits on on day one, and that didn't work out very well. So. I encourage anyone to look at the limits similar to how Cassandra has and use that to your advantage. You know, dip, dip your toe in the water with certain limits as you feel more comfortable, then you can expand upon them. That's extremely important no matter what system you have in place. Little things like limit or limitations. Extremely important in the process.
Greg - 00:12:31:
Right. And Cassandra, you did say that most of the transactions so far have been on the consumer side, there have been some business transactions as well. So that kind of answers my next question. Have you opened up, or maybe it answers my next question. Have you opened this up to all of your members at this point?
Cassandra 00:12:46:
We have.
Greg - 00:12:48:
Okay.
Cassandra 00:12:48:
Yep. There's a couple of small groups that are restricted, obviously, but that's the same group of users that traditionally wouldn't have access to any electronic payments. But outside of that, all of our members have access to this. Our goal is adoption. From a fee income perspective, from A network growth perspective, we're really, really looking to promote adoption. We want this to be successful. We made a financial investment into this product. And the only way it's going to work is getting more people on Send, highlighting and expanding our use cases. This was our first step. This was us getting comfortable. We are looking for every other use case that's going to come down the pipe, and we're excited for it. Request for payment for me is something we're really, really excited for in the future for us, especially on the commercial side. And even use cases like account funding, we'd love to see things like that. But it's going to take more institutions. Getting on the networks and being comfortable both sending and receiving before the other use cases can start to really make an impact in everyday member and customer lives.
Greg - 00:13:55:
That makes a lot of sense. So 2,300 transactions. Actually very, very good for just a couple of months. Have you received any feedback from your customers? Have they reached out to their-
Mark - 00:14:06:
Oh, no.
Cassandra 00:14:08:
So that's, I think, kind of the funniest part about this whole situation. I'm going to tell you a story. It'll be quick. But so the day that we're going live, I've got our digital solutions manager, Stephanie, on with me. We're on a call. We're nervous, of course. You know, we're sitting there. We're sweating A little bit. We're like, all right. Time to turn it on. We said, we're going to do it at nine. Let's do it. So we turn it on. And we had had this in pilot for a couple of weeks with just staff in there just to test it out, make sure we worked through any kinks, everything was good. And, you know, it was time to pull the trigger. So nine o'clock rolls around, we're on the phone and she's like, all right, I just turned it on in production. I'm going to move us into our production package and out of our pilot package so we can test. So she does that. By the time she got done moving her and I and one other person into our production package. And I mean, I'm talking three to five minutes. We already had five transactions on the network. And they just... Member use. And we were so shocked, but so pleased. And we're like, okay, like people are using this. And I could not believe how quickly that happened. Like the second that option was presented to a member, it was used. And, you know, we always thought that build it and they will come. And that, you know, by providing that instant transfer option directly in their transfer widget, in the way that they do their business every day, just presenting it to them, they're going to pick that option. And that's, you know, kind of one of the things that we had founded our use case around. And, you know, obviously it was a challenge to get, you know, this approved internally. It's a big decision. And it's up to our senior leaders to make sure that we're making smart decisions and that we've looked at the risks and that this is something that makes sense. So, of course, the due diligence process was super rigorous. And, you know, trying to explain that people will use this, you know, is challenging. And then to see it happen so instantly, it was so beautiful for us. Surprising, but awesome. And it was probably the biggest breath I have let out in 18 months. Just knowing that it actually worked and that our members were happy to have it. I will say that, you know, we are monetizing Send. And so there is a fee structure associated with that. Again, we've had less than 20 members reach out to us to say, hey, I didn't mean to do this. I got charged a fee. Obviously, we're going to do a courtesy reversal, you know, for that first one. And we've had less than 20 of those instances happen and over 2,300 transactions. So, again, I'm feeling really good about how this is being received by our members.
Greg - 00:16:56:
So that's a very pleasant surprise, right? You turn it on and then all of A sudden transactions start happening. Mark, does that mirror what you see with some of your other clients? Is it just it goes on and then it just...
Mark - 00:17:08:
Yeah, I mean, absolutely. And that's the way it's designed to work, right? I will tell you that on the business side of things, when I'm seeing in our marketplace, is that people are very interested in going to the next step with business applications. And so there are two things they're looking at. I think Cassandra alluded to this in RFP. And I do know for a fact, and I've heard from others, that The Clearing House is working. On some POCs with various banks. And there's progress being made. That's a good sign. I also get a lot of input that since you've increased your limits to 10 million, a lot more people were working on business applications as a result.
Greg - 00:17:50:
Yeah, that was one of the that was the feedback we were receiving for the last couple of years that, hey, you know, we're a business, small, even some small businesses. We're a small or medium sized business, especially the large corporations. We like RTP, we like what it does, but we need a higher limit. So we kind of got that going. That's actually happening very shortly. So that's going to be going live February 9th. Um, So. Going back to rolling out Send capabilities. You turned it on and people started using it. Did you market this? How did they find it? How did that go?
Cassandra 00:18:28:
Yeah, I can walk you through that. So we didn't want to full-blown market this functionality until we had at least 30 days, right? We just needed to work out any kinks, make sure we had enough room to breathe in case all of our best plans failed, right? We worked really hard. We prepped. We tested. We piloted. We validated. But you never know what's going to happen day one in that production environment with 80,000 or 75,000 members having access to that. And, so, you know, the first thing we did is that when you log into online banking, we did a pop-up, kind of that, again, that intentional friction point between putting in your credentials or doing your MFA and actually the application loading. They just said, hey, instant transfers are here. And we didn't brand this as a product or anything like that. It's a function. And we just wanted them to know that that function existed because, again, it is new and there was a fee associated with it. But so in order to prevent any of the, oh, I didn't mean to or I didn't know, you know, we wanted to make sure that we were being upfront and being aware of how that could be received by our members. And so the first thing we did was we did that intentional friction point that said, hey, instant transfers are here. You know, it had kind of a quick little overview and then a learn more button. And we did a landing page on our website. That explain the use cases, the benefits of it, and how they can access it with no setup, pretty much, in their account. All they have to do is access any of their external accounts. If they're on network, that option will just instantly be available for them. And so we just kind of gave them a little bit of information on what it was and where to find it. And, you know, they would click through into online banking and go about their everyday business. And, you know, we have users that do a lot of external transfers. And so we were hoping, you know, to get, you know, 10% adoption, right? Or, you know, at the minimum. And we're already seeing well over those numbers. And that's with no true, true marketing, more awareness than marketing. After Thanksgiving, after we had a couple of weeks on network, we did do our newsletter that goes out regularly every quarter. So the timing for that was nice. We included that in our newsletter. Just, hey, instant transfers are here. Check it out. You've got more options. And we kind of talked a little bit about the way that they could leverage, receive, and Send, but more anecdotal, everyday, you know, just lifestyle use cases. And that was really about it. We've started to do some targeted marketing to our existing users that already take place or take part in external transfers or are heavy, like Venmo users or wallet users, things like that. But we didn't want to get too deep into the targeted marketing until we could at least get, 90 days to six months on the network. To see what we're seeing. We wanted to have a lot of time, not a lot of time, but enough time to really dig into the data and make sure that we're marketing the right things to the right people. Obviously, you have to be careful with marketing because you're not just marketing to your members or your customers, you're marketing to the fraudsters. And that's not something we're interested in. So again, nothing crazy. We're not throwing billboards up. We 100% didn't want to do any print advertising. The only piece of print we had was in our newsletter. And that was just because it's an existing document that goes out anyways. But this is a digital tool. And so we want to market that digitally, because that's our user.
Greg - 00:21:59:
And you mentioned it's in your online portal. Is it in the mobile app as well?
Cassandra 00:22:03:
Yep. So basically the way it works is our members go in to do their everyday business, right? And they go to our transfer screen, which is how they move money. That's kind of our money movement hub. And directly in there, they select their external account. If that account is on network, the instant option becomes available right then and there. And they have an option to toggle it, you know, and go back to A standard ACH delivery with a one to two day, or they could do instant with a fee. And it's very clear. It shows the fee amount. Um, and, and then there's some disclosures, you know, as they kind of click through, um, again, we put that another friction point in place that says like, are you sure you want to do this? And there's that little disclosure that again, highlights the fee and we rocked and rolled and our members are using it every day. And we're not getting any, um, like confetti or glitter or attaboys from them. They haven't said they're happy, but they haven't called to complain. And for me, that means everything.
Greg - 00:23:01:
I know when they say to customer service, you know, if you have A happy customer, they're 99% chance they're not going to call you. It's when they're quiet, they're happy. When they're unhappy, they call. Next, you know, you talked about your member education, which. It was just kind of turning on and it started to work. What about staff? Were you able to, did you have to do, you know, your staff education and get your customer service reps, your even, maybe even tellers off to speed on this capability?
Cassandra 00:23:34:
Yeah, so we did staff education, but we centralized most of our requests in our back office team. So, you know, even with its ACH wires checks, any of those money movement tools, if A member calls in, our frontline team is going to provide great service to them. But if it's something a little bit more complex, if they need, you know, some additional research or due diligence, we have channels that are available for our frontline team to kind of use to communicate with our back office folks, to provide real-time responses and support. And so, you know, we made it very clear that this is a real-time payment network. And, you know, we're going to provide kind of that real-time support during office hours, of course. Um, and, you know, so if our frontline team had any questions, had any concerns, you know, they could reach out to us. And I think that's A testament to how well our operations department and our teams support our frontline departments and how comfortable our frontline departments are reaching out to our back office staff. You know, it's important for those teams to work together. Especially because it's kind of two different areas of the business and you can't have one without the other. And so we did some basic training. We provided an FAQ to our frontline staff. We had them do kind of like a small course, which was just kind of like a short screen grab video of, you know, what that transaction flow looks like for the member in the digital experience with some basic information. And then we did A couple of open forums. So we just allowed staff to ask questions, provide feedback. We met with, you know, like our branch managers and our call center management team. And again, we just gave them time to ask questions, but they didn't really have a lot. And, you know, they were like, what do you think these members are going to call in and ask? And I said, you know, I'm not sure they're going to call in at all. And I said, but if they do, we'll be here to support you and we'll adjust whatever FAQs or training material we need to. And it was a non-event. We went live and we didn't really hear A word about it. I think we got our first request for, a fee waiver, like a week later. And, you know, somebody was doing a transaction and they didn't realize they just click, click, click, you know, real quick, did MFA, did the whole thing real fast, but weren't really paying attention. And then they reached out to us. So, of course, you know, we took care of that for them and use that as a point to educate our member. And funny enough, some of the members where we did do that fee waiver on the first one, after we provided that education, they have since actually started utilizing that instant network as well, which I thought was a fun fact. You know, at first I thought, okay, these are going to be people that probably aren't interested in instant, but they still work. Not all of them, but a couple of them have since went back and leveraged that instant rail on purpose now, which has been great. But yeah, no, very limited training, but we did a lot around awareness for receive. So I think that's why the lift on Send was so light for us was because when we were going live with receive, we took, you know, a lot of time to really educate our staff on like, what is an instant payments? What is the RTP network? How is that different than Venmo or a wire or a debit card transaction? And so we took a lot of time to really just kind of educate them on that. And they could learn as much or as little as they chose to. But that was important for us.
Mark - 00:26:49:
Yeah, Greg, one of the things I wanted to mention was that from A market perspective, Every bank that I know that is supporting from a customer service perspective. Is only doing so during bank business hours. There was a time when we were talking to banks and they said, well, if I do 24-7 support for maybe credit card, then I might train. Those people to handle RTP. But quite frankly, that really hasn't caught on. So. It seems to work pretty well for financial institutions only supporting during bank business hours.
Greg - 00:27:23:
That's very interesting because that is one of the things that we hear from folks who are looking to. Offer instant payments is like, oh, well, I'm A smaller financial institution. Now I have to staff a call center 24-7. Overhead costs. And it sounds like it's, kind of business as usual for customer support?
Cassandra 00:27:45:
We're running Monday through Friday for Ops Center. You know, our customer support teams, they haven't changed their hours and we're not seeing a need to. That was something we talked about that we would have to reevaluate and just make sure that, you know, our members were supported and all of those things, but we're not seeing any need for it. We haven't added any staff to our operations department. You know, if anything, it's improving our efficiency. The more and more people that are choosing to use that over the ACH Web transfers, the more efficient that department becomes, the smaller our ACH files are, the less load errors, the less rejects and returns. So, you know, we're really hoping to see more and more of that migration to that instant payments space because of the operational efficiency specifically. We're a small shop. It's important for us that we're running as efficiently and as effectively as possible. We have to be good stewards of our members, you know, investment in us and in our money. We're here to protect it and serve them. And that's our goal. And we want to do that the best way we can. And that's why it's so important to bring new tech solutions like instant payments to our membership and to our organization.
Greg - 00:28:59:
Now, ABNB, you also offer Zelle transactions to customers. And to many people, Zelle seems like it's instant. How do you differentiate that to your members, and how are they comprehending that?
Cassandra 00:29:14:
I mean, for us, we didn't really tell them the differences, but... I think the use case kind of speaks to that. So right now where we're presenting the option for that instant RTP style payment is in that transfers widget, whereas Zelle is kind of housed in a different section of our online banking. You know, if I'm going to pay, you know, the housekeeper or the neighbor kid that's mowing the lawn, right, I'm probably not going to go and link their external account and use that as an RTP option to Send money. But Zelle makes sense. And so for us, it was just more about giving our members options. It's really their choice how they want to move their money. And we just want to make sure they have the right choices available to them. You know, we want them to be able to leverage our application for their money movement needs instead of having to go out to all these different third parties. So whatever they're trying to do, whether it's originating a wire, whether it's sending an ACH transaction, whether it's, you know, moving money from their account at ABNB over to another FI where, you know, maybe. They have, you know, A legacy loan product or something like that. And they need to make that payment today so they don't get a late fee. But they couldn't do it until Friday because they didn't get paid until Friday. Or if they're sending money to, you know, somebody that's doing work on their house. So we just wanted them to have a suite of products that served them and that they could leverage whenever they needed them and however they needed them.
Greg - 00:30:41:
One of the things, so a little plug here, TCH and payments.com, we published A study last week called the Financial Institution Real-Time Readiness Report. And one of the major obstacles cited by many banks and credit unions is they didn't know how to build a business case for instant payments, specifically for instant payments Send. So do you want to touch quickly on like how you went about that and how you helped? Cassandra and ABNB formulate this business case with data and examples, things like that.
Cassandra 00:31:14:
Mark, do you want to start?
Mark - 00:31:16:
Yeah, quite frankly, for any financial institution who's looking at RTP, This is a business decision. And so with that comes responsibility in terms of monetization, what type of use case you're going to have, if you have any cost saves within the organization. So a lot of people are confused at first because it is... One of the first new rails in 40 years, right? So a lot of people aren't used to the newness of it. And so what we encourage people to do is to look at cost saves, look at... But building your business via use cases, right? Explain to me if I'm A bank executive. How am I going to make money off of this? And what's the long-term strategy for it? And I think so it's important when making that decision to understand that. So building a good business. Plan around it and the strategy is extremely important. And Cassandra, I think I worked with you on this when we were. Oh, yes. Working together on the implementation. So I'm going to hand it over to you and you can... Share your story as well.
Cassandra 00:32:27:
Alacriti was a huge help for us. We knew we wanted to do Send right out the gate. Our initial use case was really Send. Receive was almost A byproduct of our want to do Send. Which I know is kind of, different than, you know, how some of the other institutions are looking at it. I think there's value in going live with Receive First. I think that's something you should do. But I think it's important to, you know, make your decisions about whether you want to do Send in receive kind of at the same time. And so that's what we did. So we knew right out the gate we wanted to go live with Send. You know, we wanted that structure to help support it. There's costs, right, associated with implementing a new payment rail or any new tech stack. And so we needed a way to afford that. And so by looking at Send and looking at different fee structures that, you know, we could apply to that product, we realized that it could be, you know, affordable for us. And, you know, Receive was really important for us because of things like earned wage access and, you know, having our members be able to get those real-time payroll deposits when they need it. We serve the underserved. And, you know, we're in a lot of local communities that truly need access to their money as quickly as possible. And, you know, so that was the biggest reason, I think, on the Receive side that we went with that. Whereas on the Send side is that was the enabler for us. That's what allowed us to. You know, offer both rails, right? Send and Receive. That was, you know, that was truly our enabler is Send. And it allows us to get into this new space and provide more service and function. So the first thing we looked at is what do we want to do, right? Like, do we want to do Send? Do we want to do Receive? Are we unsure yet? Well, okay, so where are the gaps in our business? Where are we struggling? Where could we just do better? Again, I'm going to say efficiency is everything for me. I'm an ops girl through and through, right? So I love to see a really efficient operation. And when I started in banking about five years ago, I've been in financial services longer than that. But banking, you know, at the FI level last five years, I was really shocked by how antiquated some of these payment systems were. And it was truly surprising. And so I was like, we've got to find a way to do better and be better and be quicker. Our members need that. They deserve that. And so, you know, the RTP and instant payments networks were an answer to that problem. So how does that fit within our business model, though? And that, I think, is the challenge, right, is finding out how you can make the different use cases applicable to your business. So we looked at all the different use cases and we looked at the areas of our business where we thought that they could fit. And, you know, for us, the A2A transfer was a clear winner. That was going to allow us to have the most impact with our members and give them the biggest reward for that service, the access and the everyday utilization. And so on the commercial and on the retail side, getting it into our members' hands first and foremost was our number one concern. And that's how we approached building that use case. After that, we looked at, okay, so once we have the rail and it's turned on and our organization can leverage it, what are the other ways we can be productive on this space? How can it help solve problems? And so you look at things like loan funding. You look at things like mortgage closures. You know, you start to see all of the different pieces of that process that are cumbersome or have friction, where this can be leveraged to improve that. So find A use case that makes sense for you. Right. See what type of user do you have? Do you have a retail user? Do you have a consumer? I mean, a commercial user. Are you doing A lot of money movement right now? What is your business? Are you focused around indirect lending? Are you a huge mortgage shop? And look at your business and see where it's going to have the biggest positive impact first. Stand on that use case, and then use that as kind of a springboard to, you know, get that into other areas of your business. We did a lot of data mining. And that was, I think, the hardest part for us was understanding that we didn't really have the data we needed and understanding kind of what data we did need. I don't think either of us knew that up front, you know, when we were starting that process. And Alacriti was an immense help with that part of the process. I was like, I need data, I need to figure out how this works. I've got to have some numbers to be able to present, you know, in a documented use case to, you know, our senior leadership. If I walk in there without any data, they're going to laugh me right out the door, you know. And so Alacriti was a huge help in helping us, you know, look at our ACH data and our volumes there. You know, their team was willing to, you know, take some extracts of our ACH files and some of our card transactions to help us identify. What type of member segment we actually had. In there? We looked at all of our external ACH transactions. We're like, how many people are even on network? If we turn this on today, how many people would have access? And we found that about 70% of our external web users would have been on a network or banking with an FI, either with us or with an external that was on network. And so we're like, okay, we have members that can use the service. There's enough people there that could get value out of that. And so we just really started to dig in on the data and just continued to build on that initial use case.
Greg - 00:38:19:
That's great. I mean, that's what we're seeing. The RTP network is, we're A little over 70% reach right now in the U.S.. You saw your customer base also at about 70% leaching. So that's great to hear.
Mark - 00:38:32:
The one thing I wanted to add was that What I've seen at each financial institution is their customer or their member portfolios are all different. And so we did some analysis even on the receive side. And found that there are certain organizations, we did some case studies. Our normal say, for instance, on received transactions from all of our customers. It's normally around 18% we'll receive from A wallet. Right? Or payroll. What I'm finding is some organizations are as high as 57% for that same category. So I think Cassandra made a good point is that you do need to look at your customer base or your member base. And say, what is the makeup of that portfolio and what are my customers interested in? That makes an effective use case. And hence, downstream, a really good business case.
Cassandra 00:39:29:
I think you're spot on with that, Mark. I think that this is actually like A deeply personal service, you know, and your membership is made up of people. And, you know, you've got certain demographics or groups or behaviors that you'll find within your membership. No two FIs are the same, you know, the way that you structure your business and, you know, the members that make up that business, that's going to be different from FI to FI. And so like for us, we're seeing about 30- 32% of our volume is coming from like square. And then we're seeing another 15% just in earned wage access. This is on the receive side. And then 15% in investment services. Right now, only 5% of our volume is Venmo. We expect that to increase, of course. You know, Venmo didn't start sending, you know, receive to us until a few months back. But so I expect long term, that number is going to get A lot bigger. But, you know, honestly, we expected to see kind of a different spread. But once they were on network and we got to see kind of, you know, how they're leveraging that, so that teaches us how to maybe market or educate our members differently or kind of target services. You know, it's giving us A lot of insight into, you know, what our members need and what they're doing with their funds in A good way. It's allowing us to understand how we can better support them.
Greg - 00:40:49:
I like that little sound bite. Payment is really a deeply personal service. You don't think of payments that way, but that really puts it into perspective. That's right. I'm going to use that.
Cassandra 00:41:01:
All yours, Greg.
Greg - 00:41:02:
You know, we were just talking about the business case, and that was one of the obstacles that financial institutions are. Have cited. I'm going to throw a couple other ones at you that came up on the top of the survey of some of the obstacles to instant payments. Here's one. Technology integration is too difficult. Yes or no?
Cassandra 00:41:21:
No way.
Greg - 00:41:23:
I like that.
Mark - 00:41:25:
I would agree.
Cassandra 00:41:27:
It's all about your partnership, right? It's all about your vendor selection. For us, Alacriti was the clear winner for us. They made sense. They were directly integrated with our online banking provider. And since our primary use case was going to be A2A, we needed something that could be stood up within our online banking environment. That was it. That was a deal breaker for us. And there were very few other opportunities out there with other vendors that could do that. So they were the clear leader in the space for us. But again, there's no one-size-fits-all approach to this. So find the vendor that makes sense for you. But we were able to get a solution that was pretty much turnkey. We implemented Send with A team of about five people. So that was myself, our ops manager, our digital solutions manager, a couple of our IT people, and, you know, a resource from accounting. It was. And our network team, I take that back. Our network guys were phenomenal. But yeah, it was a basic process. It was very easy. It was honestly probably one of the easiest implementations I've ever done. We turned it on. It worked. We had a couple of pain points, obviously, because no project is perfect. But the way that it was handled was great and very indicative of the service that Alacriti provides. The day we were getting ready, the day before we were getting ready to go live, we had an issue in our pilot environment, in production, but in our pilot package. And within 24 hours, they had resolved both of those problems for us after a simple email chain. There wasn't an all hands on deck call. Nothing was on fire. And we just sent an email, said, hey, this is what we're seeing. And they're like, give us a few minutes. Let's work through it. And they did. And since going live, we've still had immense support. And we're able to say, hey, this is what we're seeing with our transactions. And they're saying, okay, let's look at this. Or do we need to make a tweak here? And it's not something where you implement it and they kind of wash your hands and you're on your own now. This is definitely a partnership. And so I think for us, that's why the tech implementation was so easy. So again, it's not one size fits all. You got to look at your business and your tech stack to see where it fits in. But for us, because of our approach to open. Banking and wanting to be a digital first institution and focusing heavily on being able to partner and integrate, it made that really easy for us.
Greg - 00:43:56:
Next one is staff training is too difficult. I think you answered this right.
Cassandra 00:44:02:
No way. Again, we did an FAQ. It was pretty basic. We provided some content. We did a couple of open forums, you know, some Q&A, kind of town hall style. That was it. They don't even really have to tell their members about it. There's not a lot they have to discuss. If you build it the right way and if you provide the right education in your online environment, there's not really a whole lot of need for that communication. But our staff is prepared to answer questions. They understand what it is. They know how to help. They know how to identify those transactions within our core. And they know who to ask for assistance if they need, you know, kind of that expert level support. So, you know, it's just about making sure you've got good support structure and making them comfortable. A confident and comfortable, you know, frontline representative is someone that's going to be able to provide the best service. So we wanted that to be the case. So we gave them the time they needed. And we got the sign off from our frontline teams and our retail training teams before we went live. You know, you sit down for the famous go, no go decision and you've got to get the sign off. And they were a stakeholder in that. They had to be comfortable and they were. And so, you know, we went into this with everybody on board and everybody prepared and everybody ready. We took the time to make sure that, you know, that was the case. But the lift on that was limited. I mean, I wrote the FAQ myself, myself and our ops manager did. And, you know, it took. 30 minutes. I mean, it's, it's. It's not a lot of content, right? And, you know, there's a lot of stuff available on the different, you know, on the Clearinghouse's website and, you know, on some of the other instant payments options that are available out there. There's good content you can find. And then we just worked with our training team to make sure that it was provided in a way that was palatable and easy to ingest for our frontline teams.
Greg - 00:45:47:
Got it. And the other big one was... Entered this before was a fear of fraud and data loss, but I think You guys both covered that earlier in our questions about how you prepped. Looking at your data and the court controls you have in place.
Cassandra 00:46:02:
I will say it again, layered approach to fraud mitigation. You have to do it. Have to layer your approach. So please, please, please.
Greg - 00:46:12:
That's a great plug there. Yep. So, you know, I think we've covered A lot here today. Everything from your business case, technology, your reaction from your members. It's been a really great podcast. Is there any other advice you'd like to offer our listeners, especially those from other financial institutions who are looking to add instant payments? Let me start with Mark and then we'll go to Cassandra.
Mark - 00:46:36:
Yeah, I think I was going to throw out a fun fact. If there is such a thing in payments.
Cassandra 00:46:41:
Aren't they all fun?
Mark - 00:46:43:
They're all fun, of course, um, But when you look at, to me, what I see a little, when I look at data, I look at relevancy. And so when I look at the RTP network and what, and when our transactions, right, when our customers' transactions are being done, It's a very interesting fact that You know, from a network perspective, from the RTP network perspective, about 50% of the transactions are done outside of bank business hours. When you look at the Alacriti data, the data for our customers, it's just short of 70%. What that tells me is people are seeing the relevance in this offering in the 24-7 perspective. They're doing banking. They're banking when they want to, right? And I think that's key here. But to see like a 50% to 70% delta. Is pretty impressive. So we are seeing a lot more activity and we're seeing it. People banking when they want to bank.
Cassandra 00:47:46:
I agree with that. We're seeing the same thing, Mark. And it's A beautiful thing to see. We love seeing people utilize this service outside of business hours. Again, that's so important for us as, you know, as ABNB here, we're... Our goal is to make sure that our members have everything they need to be successful in their lives. And we want to support them. And I think supporting them means giving them the tools they need to manage their financials appropriately. If I could say one thing is that we need to get more community and regional FIs on this network. You know, from a Send and a receive perspective. Everybody wants this, you know, ubiquity of the space, right? Everybody's looking for that, right? That's the goal. That's the buzzword. It's not going to happen until we can get, you know, the moderate to midsize, small FIs, regional community banks and credit unions on the network. It's so important. Those are the ones that are going to really provide this service to those small local rural communities all over the country that desperately need access to real-time money movement tools. So get on the network. You can do it. I promise.
Greg - 00:48:57:
You know, it's interesting you say that, you know, ABNB , as you said, A smaller financial institution that's out there. I will say that when it comes to the payments, you guys are punching way above your weight. What you're doing and the sending capability you have, it's really nice to see. It's great to hear the story. And I think our listeners will appreciate it as well.
Cassandra 00:49:16:
Thank you.
Greg - 00:49:18:
On behalf of The Clearing House and our guests, Cassandra from ABNB and Mark from Alacriti, I'd like to thank all the listeners for tuning into this podcast. And if you enjoyed today's episode and you want to hear more about payments, especially our last episode with ABNB back in September, you can find it on Payments Nerds. The podcast page on The Clearing House. Or wherever you listen to your podcast, whether that's Apple Podcasts. YouTube, wherever it may be. Thank you and have a great day.
Mark - 00:49:44:
Thank you.
Cassandra 00:49:45:
Thanks, Greg. Thanks, Mark.
Sponsor - 00:49:47:
The Clearing House is full of payments nerds who just can't wait to tell you about how the RTP network helps U.S. financial institutions create a faster and smarter experience for their corporate and retail customers. Check out the schedule for online and in-person events at theclearinghouse.org.
Cassandra - 00:50:06:
You've been listening to Payments Nerds. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. Thank you so much for listening. Until next time.