P2P has been a notable success of nonbank players such as PayPal, which offers a host of consumer-facing payments products, perhaps most notably Venmo. In October, PayPal CEO Dan Schulman noted Venmo was on track to process more than $20 billion in 2016. (We’ll find out if he was right when PayPal reports earnings next week.) Venmo’s success is built on its inclusion of notes, often just emojis, along with payments. Banks didn’t think of payments as social, but now, Zelle’s marketing is essentially identical to Venmo’s.
Early Warning is a bank-owned company that specialized in fraud detection before it acquired P2P provider clearXchange last year. Zelle is owned by the banks that use it, in other words, and functions within bank apps. A separate Zelle app will launch this year. At Money 20/20 in Las Vegas, Early Warning announced it was rebranding the product as “Zelle,” to the bewilderment of many. (Its meaning remains unclear.) Most major banks are part of the network. Citigroup, the last significant holdout, signed up in September.
Demchak discussed Zelle at some length on Friday’s earnings call as a defense against fintech players and as a revenue opportunity:
And I think, [Zelle] does a couple of things. One is, it puts our consumers back in our hands, right. The whole idea behind it is, we don’t want our customers using third-party application, particularly in what potentially is insecure — in insecure fashion. So [Zelle] solves that issue and then, it gives us mindshare. It’s not a revenue opportunity out of the gate, as it relates to the product specifically. But I think it is another part of the customer relationship that makes it more sticky.
And I think through time, the concept of realtime payments, whether P2P or business-to-consumer, or on the corporate side, it’s where we’re rolling out realtime payments through the clearing houses, is an alternative to ACH.
I think it becomes table stakes. I think there is revenue opportunity against it. I think the U.S. is behind, and I think it’s a trend you’re going to continue to see build and on the back of it, you will see, I know we have many product applications that we are developing on the back of that basic capability, which will be revenue-driven.
PNC also reported that more than half (51%) of its deposits now came via nontraditional channels — meaning mobile and ATM — for the first time. Last quarter it was 50%, and the year prior, 46%.
Mobile, in other words, is much on Demchak’s mind these days.
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