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Real-time payments are still relatively new, so related best practices are still evolving.
Nevertheless, waiting to leverage the inherent value of payment data could mean losing valuable opportunities. Banking leaders who are eager to understand account holders on a deeper level and maximize returns should move in this direction immediately.
Data from real-time payments creates powerful opportunities for upselling and cross-selling because it reveals what, when, and how people and businesses actually consume. Banks will gain powerful predictive capabilities as soon as they're able to effectively analyze this payment data on a large enough scale.
This payment data isn’t just about what people are buying. Real-time payments analytics enable banks to determine what people are likely to buy and how liquid they are likely to be when they buy it.
For example, if the data shows that a borrower has sufficient equity in her home and will soon be completing payments on a vehicle, then she may soon have a debt-to-income ratio that qualifies her for a home equity line of credit.
For businesses, liquidity improvement month over month means they can use cash more strategically, and the bank can assist them in their options. This type of information will enable a bank to engage in more targeted marketing efforts, discover new lending opportunities, and even possibly disrupt a competitor’s lending process.
Additionally, banks can offer an immediate payment option in real-time payments. Before RTP and same-day ACH, wire transfers were the only real option for immediacy. Although they're still widely used, wire payments are expensive, are best suited for large payments, and carry little information. Both consumers and companies have been looking for an alternative, and now it's here.
Real-time payments have the advantage of clearing in mere seconds. So when a bill is overdue and a business owner is about to have the lights shut off, he can pay directly instead of waiting 24 hours or making an expensive wire payment. Highlighting the advantages of RTP encourages customers to use it — which, in turn, produces more data to analyze and act upon.
The next phase of payment processing, data capture, and financial analytics is upon us. Those who embrace these new capabilities will flourish, while those who don’t will fall behind. Now is the time to think about which side you want to be on.
This article was licensed through Dow Jones Direct.
Omitted from the framework is any mention of changing 401(K) plan contributions to after-tax roth contributions, either in whole or in part."
I don�t think anyone wakes up in the morning, and brushes their teeth, thinking about merchant processing. But the team at FIS does."
It has been estimated that �Rothification� of contributions could raise more than $600 billion over 10 years. The estimate is suspect, however, because it does not consider the future loss of tax revenue when Roth amounts are withdrawn from plans tax free. Earlier tax reform proposals included Rothification provisions that were broadly opposed by the retirement plan community and many key members in Congress. Sixteen Democrats in Congress recently sent a letter to the Big Six urging them to resist using Rothification as a revenue raiser. While it currently seems that such an approach is off the table, tax reform is tricky business and will be full of twists and turns as it proceeds. The current political environment is unpredictable and if you thought health care reform was complicated, this endeavor may make it look like child�s play.