‘I can’t tell you how many millennials tell me they pay their bills at the biller’s site’: Payveris’ Marcell King

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The following excerpts were edited for clarity.

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The mission

I am Marcell King, Chief Innovation Officer for Payveris. Payveris provides digital money movement and payment technology to financial institutions in the US. We have about 300 clients that we serve, ranging anywhere from $50 million credit unions on up to $50 billion national institutions, including banks and credit unions. 

We help financial institutions modernize and simplify their digital payments technology from both a front end user experience, as well as a back end operations, efficiency perspective. When we deliver our technology stack to financial institutions, we're generally replacing legacy, fragmented digital payment and money movement technologies that banks have acquired over the last 25 years. What you generally find is that they're running multiple point solutions for things like bill pay, peer to peer transfers, and external transfers (when you want to move money between financial institutions, like new account funding) -- they generally have technologies that have been acquired over the years. That technology tends to be kind of stale -- dated -- in terms of the user experience. So what happens with these institutions is that there's a lot of redundancy within their technology infrastructure. We come in and replace those disparate, fragmented systems, giving them a more modern platform with the ability to simplify the experience and drive operational efficiencies to lower costs. 

Complexity

Think back to the mid 1990s when bill pay was introduced by CheckFree. They had their single point solution. CashEdge was another company that developed p2p and external accounts transfer systems. You've got companies like Bottomline that provide business payments and companies like SWBC that provide loan payments. So banks have acquired these technologies over the last 25 years. And again, it just encumbers their ability to minimize the friction of a user's experience, because you're trying to connect these disparate experiences to different digital channels with different UX and different back office systems that you have to maintain. 

You're really kind of using duct tape and a band aid, plugging in a payments experience that is completely disparate and fragmented from your digital banking experience. And as these banks are moving through their digital transformation stages, it's very difficult to connect all these systems together.

Banks ready to evolve

We meet banks when they’re in the position of revamping everything, but they become somewhat limited and encumbered by some of the legacy technologies. You know, as an example, they might say, hey, we want to revamp our entire digital experience. They'll go out and they'll look at digital banking providers like a Backbase, Temenos, or NCR, where they can upgrade their user experience. But then they're locked into the digital payments technology, because all that vendor offers is a kind of standard UX -- you can change some colors and some button styles, but you can't necessarily transform the entire digital experience holistically when you're locked into a UX that is locked down by the provider.

Credit unions 

No offense to the banks out there, but credit unions tend to be more focused on the member experience. They're less focused on the cost. Credit unions in general don't pay the same level of taxes as the banks. And so they are able to invest more in the user experience. They're focused more on enhancing the financial lives of their consumers. So they're looking for technology that will enable them to do that. They tend to be a little bit more risky. We found that credit unions were just easier to work with, and that they were really focused on the experience that they were delivering to their members. That's how we were able to launch Payveris into where we are today: about 80% of our business is credit unions. 

Credit unions are definitely in growth mode. Most institutions tend to be cash rich these days, because as the pandemic continued to impact American households, there was a much higher level of conservation of cash. Institutions kind of built a business off of deposits. And if they have deposits, they can provide more loans. Credit unions are cash rich. They're definitely investing in technology. If I think about our business growth in 2020, most of it came from credit unions, who were looking to drive their projects to support their digital transformation initiatives.

Payments’ role in growth

I think it's critical. If you think about the key areas of a financial institution and how they make their money, they make money on loans, on deposits, and on transactions on payments. Payments is a critical piece of the overall digital banking experience, which is where most consumers interact with their financial institutions. And if you think about the three big reasons why you might use digital banking, one is to check your balances and transactions. Two is to make transfers between accounts and three is bill pay. Right? So it's a critical function of the digital banking experience that allows consumers to pay their bills and move money to their accounts or the people that they need to when they need to. Payments are a critical part of that overall experience.

Bill pay 

Bill pay has traditionally been table stakes for an institution. If you take it away from a consumer, the demographic that primary leaves his bank over bill pay is your baby boomers. But as you start moving to the younger demographic, the Gen X, Gen Y and Gen Z, they're using bank bill pay less and less. I can't tell you the number of times I've spoken to a millennial and asked them where they pay their bills. I would say 70% to 80% of the time, they're paying them directly at the biller site. So it's becoming less important to the younger demographic, but I think there's also a shift because the billers, the direct dealers, whether it's Verizon or Comcast or State Farm or whoever, they're providing a much better experience from the biller site than banks and credit unions are now providing from their own digital banking experiences. And so you've seen online bill pay shift from the banks to the billers. 

10 years ago, 68% of bills were paid at the biller site and 32% at the bank site. That has shifted quite significantly: it's dropped to 22% of all bills paid at the bank site. So, transactions are continuing to shift. And it's because the billers are providing real time payments; they're providing real time confirmation and posting. They're providing the ability to use your credit card or debit card so you can get your rewards. 

And it's unfortunate because the legacy bill pay providers are still limited to just pay from your checking account or your savings account. It's generally a two to three day posting of that payment to the biller site and you don't necessarily get the transparency or assurance that it’s been paid from the biller. 

When I think about Payveris and where we're headed, we have a partnership with an organization that has direct biller access: they provide billers with the technology that supports all those capabilities. We are in the midst of connecting to their technology to bring that direct bill pay experience that you get from a biller site into the banking site so that from your bank, your credit union, you can use your credit cards, get real time payments, get the biller confirmation number, and get the same experience. But you also get the convenience of that one stop shop for a consumer to bring all their bills together in one location and be able to manage them more efficiently and with less friction.

Other Payveris products

We offer peer to peer transfers with an alternative to Zelle. Zelle is a great product -- I use it myself through Chase -- but for some institutions, it's a bit unaffordable. It's pretty complex to implement. And it's more challenging for them to offer because of the complexity of some of the requirements of sale. So we launched our real time p2p solution just a couple of months ago, and it's supported by the debit rails. As a consumer, you can move money from one person to another in real time using the debit card rails, both from a funding perspective and a push credit. Let's call it much more operationally economical for smaller institutions and more turnkey because we're using existing debit rails and there's no special new setup or technology or infrastructure you have to build to support it. That's doing well for us. 

We also offer external account transfers, which enables you to move money from your host institution, to or from an external account that you might have at another financial institution. Those are all offered as either standalone products, or as a holistic payments and money movement hub. So within the billpay experience, one of the things that we found is that consumers also use peer to peer transfers and A2A transfers to pay bills or to move money, but they have to go to different experiences, which creates friction. So we're consolidating all of that under one umbrella in a seamless kind of payments hub for the user to handle all of their payments and money moving from one location, as opposed to multiple locations.

Revenue model

It's a SaaS model: our contracts range from three to five years. Occasionally we'll get into a longer term, but think about how quickly technology changes these days, most institutions don't want to get into a long term contract that locks them into a specific provider, just because they don't want to put themselves at risk of being stuck with technology or user experience that becomes stale. And you think about how fast technology companies outside of banking move and how quickly they're adapting and adjusting their user experiences based on consumer preferences, it's a pretty high risk factor if an institution locks itself into any type of long term contract.

Looking ahead

The big things that we're focused on are continuing our real time money movement roadmap and executing on that. We launched our p2p service and we're now moving into real time, bill payment, and real time external transfers and A2A. We're going to continue that real time money movement roadmap -- that's our core, where we started, and where we're going to continue moving money. But I think the next things that we're looking at is how we help drive monetization of our customers' digital services. We have the ability to support credit and debit card payments. So we see that as a way to help institutions monetize our services. 

I think there's also a big play in data, right? Institutions are sitting on a lot of data. We want to help them leverage that data to recognize opportunities to cross sell their products and services, based on the payment and payment behavior of the users and the customers that are using their system. We see these as a very interesting set of opportunities and growth areas to help institutions improve the user experience, but also help offset some of the costs that they're encumbering with the technology offer. We see it as a win-win-win across the consumer base for the financial institutions and Payveris if we can pull that off.