In the current digital age, it is crucial for credit unions to provide members with convenient and effective digital banking solutions. As more and more members turn to online banking to pay bills, shop online and send or receive money, credit unions who fail to adapt to the times risk losing lifelong members.

While it’s obvious that digital banking solutions are a necessary part of running a successful credit union, deciding which digital payment network to offer your members may not be. One of the most popular digital payment networks serving credit unions and their members is Zelle. The payments network boasts exceeding one billion payments within twelve months, setting a new record. Let’s have a look at why Zelle has become so popular.

In the closing months of 2019, there were several reports released that touted the current and projected growth of the peer-to-peer (P2P) payment solutions market. Solutions like Zelle, Apple Pay, and Venmo were overwhelmingly increasing in adoption by consumers. There were high expectations and we have no doubt they were accurate. But, in November of last year, we had no idea what 2020 had in store.

Mobile payments are making person-to-person transactions incredibly simple and efficient. With a few clicks of an app, members can pitch in on a birthday gift, pay their landscaper, or check out at the drugstore. With the increased demand, there are plenty of providers popping up to meet it but not all are created equal. Some apps require you to hold funds in the app, while others link directly from bank account to bank account. While these payment channels may be highly convenient, it's important to educate your members on ways they can make sure their money goes where they want it and that they receive the money they are owed.

In The Wizard of Oz, a simple farm girl living her normal black and white life gets transported by force to a bright and colorful new world where things she never expected were possible. Most people who know the story would argue that the storm opened up something good for her that she would've missed out on without the shove. COVID-19 came in like a storm and the changes that we've been forced to make as a result may not all be bad. The last few months have pushed a lot of folks to try things they might never have before, like grocery delivery, Zoom calls, and digital payments. While these types of services may have once been ignored by some, that storm has pushed a lot of us into a new reality.

With a surge in demand and adoption of digital payments, including mobile person-to-person (P2P) payments, why are credit unions so ideally suited to benefit from this change? The keys can be found in the credit union difference.

In 2008, we saw the rise of the Gig Economy, an army of freelance workers trying to find whatever work they could during a recession when unemployment soared. It was expected to redefine the workforce and shake the foundations of traditional careers. Ultimately, the movement didn't hold out as expected, and the freelance work shifted more towards services work, like driving and delivery. In addition, the technology just wasn't there to drive mainstream adoption outside of major cities. But in 2020, the global pandemic, skyrocketing unemployment, and looming recession may have created the catalyst for an even broader gig economy to finally hit its stride. Simultaneously, the "socially distant" environment has shown options are needed to reduce contact while staying connected and working. This perfect storm of forced adoption, increased demand for gig work, and the need for contactless transactions - with seamless user experience - necessitates a responding change in the way we pay each other. Financial institutions (FI) need to get on board quick or they'll be left in the dust of their competitors. Enabling mobile payments, person-to-person (P2P), securely and simply is key.

Money makes the world go round, but where we once exchanged gold and silver for goods and services, we're now clicking and tapping our phones. Are we witnessing the death of cash? It is estimated that by the year 2024, non-cash transactions will nearly double from 2019. In addition, the number of people who made sure they always had cash on hand fell from 60% in 2015 to 53% in 2018. These trends lead to the same conclusion: we need to invest in smarter ways to exchange funds that meet the demands of the modern consumer, and digital banking is likely the answer.

Non-bank competition is increasing with the rising popularity of mobile payment apps such as Venmo, Zelle and Square, just to name a few. Millennials and younger credit union members, in particular, have discovered the convenience of these apps and the ease with which funds can be exchanged and transferred. Using P2P (peer-to-peer) mobile payment systems, restaurant bills and bar tabs can be paid, pizza money contributed and concert tickets repaid with just a few clicks, all while never leaving the couch. However, with all this virtual money exchanging hands, should there be concerns these transactions are being adequately protected and secured?

For the past several years, the financial industry has claimed the P2P market was finally going to take off. While P2P payments have certainly continued to grow in popularity, they have not reached the heights that FIs anticipated. However, in the past year, P2P platforms have experienced immense growth, especially among big banks. Zelle launched back in September of 2017 and in 2018 they have made tremendous strides with larger FIs. Zelle is already working with 51 big banks and 200 more are under contract to launch in the coming months. However, with larger FIs under their belt, Zelle is also looking to win the hearts small and mid-sized credit unions.