Consumer lending executives lack optimized data and in-house expertise to obtain actionable insights and take advantage of AI models
MONEY 2020, LAS VEGAS, NV, Oct. 23, 2023 – PayNearMe, in collaboration with Datos Insights, today released, “The Value of Payments Data,” a study examining the value and utilization of payments data within financial institutions. The study revealed that the consumer experience is being hampered by insufficient human and financial resources for collecting and analyzing payments data, diminishing consumer lenders’ ability to meet evolving consumer expectations.
- 75% of consumer lending executives surveyed recognize the power of data-driven insights, but face resource challenges.
- The large majority of financial institution executives surveyed (77%) are not using data to train machine learning (“ML”) or artificial intelligence (“AI”) models to assist with decision-making.
- Most financial institution executives surveyed said they are currently managing multiple payments platforms to accommodate a range of payment types. These disparate systems are causing data collection and analysis issues, a problem that is expected to intensify as lenders work to meet consumer demand for more modern payment options.
The study highlights a critical challenge faced by consumer lending executives. While 75% of respondents surveyed strongly agreed that expanding data variety and volume, along with improving data access, would benefit their organizations, these executives grapple with resource limitations. The lack of usable data, along with an internal analytics skills deficit and budgetary constraints, are hindering their ability to transform raw data into actionable insights.
“During our interviews, consumer lending executives admitted their institutions have trouble consuming and utilizing the data they already have, much less combining vital data related to customer satisfaction with the payment experience—something only 50% of institutions surveyed are doing,” Stewart Watterson, Strategic Analyst, Datos Insights, said. “Applying AI and ML to data seems even more out of reach. As one survey respondent told us, ‘We see great potential in investing in our data science capabilities; we just don’t know where to start or how to justify the expense.’”
“In today’s competitive environment, data analytics is essential,” he continued. “Financial institutions that choose to delay investments in analytics are quickly becoming laggards. They will continue to operate inefficiently, miss opportunities for strategic growth, fail to mitigate risk, lose customers who expect a seamless payment experience and ultimately, forfeit their competitive advantage.”
Compounding the issue, 77% of executives surveyed said their financial institutions manage multiple payments platforms in order to present more payment options to their customers, which makes capturing and using data more complex.
This issue is expected to intensify as additional modern payment types and channels are integrated into legacy technology solutions. According to data from Datos Insights, 50% of consumers rank loan terms and payment options as important factors in choosing a lender, but very few lenders surveyed (8% or less) accept payment types beyond check and ACH.
“Lack of hyper personalization due to limited data resources is compromising the customer experience,” Anne Hay, CMO and Senior Vice President of Marketing at PayNearMe, said. “Lending customers now demand payment experiences that match the simplicity and convenience of the Amazon-like experiences they are accustomed to, and any shortfalls can become a source of frustration.”
“When our lending clients offer their customers a wide-range of payment types that replicate that frictionless e-commerce shopping experience, they achieve higher rates of on-time, self-directed payment and increased customer satisfaction,” Roger Portela, Sr. Director of Product Management, PayNearMe, added.
“The key takeaway from this study is that lenders are at a crucial point where they must develop a unified payments data analytics roadmap, or risk falling behind and losing their competitive edge.”
The study is based on market intelligence and insights developed by Datos Insights from previous and ongoing research and available public sources. It draws from interviews with 13 executives from a range of North American financial institutions varying by size, geography and type. Also included are data and insights derived from a Q3 2022 Datos Insights survey covering 2,006 U.S. consumers’ financial services preferences.
Download the full study for a deeper look at the findings.
PayNearMe develops technology that drives better payment experiences for businesses and their customers. Our modern, flexible and reliable platform helps businesses increase customer engagement, improve operational efficiency and drive down the total cost of accepting payments. PayNearMe enables more ways to pay by offering major payment types and channels in a single platform.
PayNearMe today processes all major forms of payment including cards, ACH, Apple Pay, Google Pay, PayPal, Venmo and Cash App Pay and has enabled cash payments through our proprietary electronic cash network since 2009. PayNearMe cash payments are accepted at more than 60,000 retail locations in the U.S. including participating 7-Eleven®, Walmart®, Family Dollar®, Casey’s General Stores®, Dollar General® and ACE Cash Express®, among others.
Thousands of businesses partner with PayNearMe to manage the end-to-end customer payment experience in industries such as Consumer Finance, Property Management, Insurance, Utility and Municipality and iGaming and Sports Betting.
To learn more about PayNearMe, please visit www.paynearme.com. Follow PayNearMe on Twitter, LinkedIn and Facebook. The PayNearMe service is operated by PayNearMe MT, Inc., a licensed money transmitter.
About Datos Insights
Datos Insights delivers the most comprehensive and industry-specific data and advice to the companies trusted to protect and grow the world’s assets, and to the technology and service providers who support them. Staffed by experienced industry executives, researchers, and consultants, we support the world’s most progressive banks, insurers, investment firms, and technology companies through a mix of insights and advisory subscriptions, data services, custom projects and consulting, conferences, and executive councils. To learn more about Datos Insights, please visit www.datos-insights.com.