Safe, speedy money movement is essential for providing consumers a cash lifeline in periods of economic uncertainty, Ingo Money CEO Drew Edwards writes in the PYMNTS eBook, “Baseline 2022: What the Next Six Months Holds.”
If Jamie Dimon’s “economic hurricane” does make landfall in 2022, then consumers are going to be scrambling to gain better control over their finances.
That control obviously necessitates a deeper, more nuanced understanding of income and expenses, but for consumers buffeted by rising prices, supply chain disruptions and fears of a looming recession it also means greater liquidity.
And in a digital-first world with multiple accounts and wallets, consumer liquidity is defined by having immediate access to your money no matter where it lives — PayPal, Robinhood, Bank of America or even as an IOU from your roommate.
In the best of times, modern users already expect to safely send or receive money to and from any account in real time and at a competitive cost. Consumers are becoming accustomed to these money mobility features — the ability to move money instantly and safely into and out of any account — as a default option from their preferred financial partners. Companies that want to compete for mind and market share know they must lead with money mobility in order to effectively acquire, then retain customers.
But in a time of economic crisis, when consumers must maximize every dollar, money mobility becomes paramount, even a lifeline for some households. If the rent is due or the car needs a flat repaired to make it to work on time, then waiting three days for funds to transfer between accounts or for a check to clear, is simply not an option.
To meet this consumer demand, any company that offers a card, digital wallet, mobile or other type of financial account will have to prioritize money mobility as a core element of its business over the next six months. For inbound funds, that could mean instant access options for funds received on checks or the ability to instantly transfer money in from another account. For outbound, it covers the movement of funds to another app or to pay off a bill.
Unfortunately, offering true money mobility services also means a larger exposure to risk. Instant account funding via checks, for example, is already targeted by fraudsters, but these bad actors are increasingly focusing their crosshairs on other forms of inbound account funding such as digital transfers from third-party accounts and providers.
For money mobility solutions in which instantly deposited funds can immediately be spent or sent to another account, fraud often means a loss because funds cannot be clawed back later. The risk of fraud and lost funds becomes even greater for those non-bank account providers with limited visibility into customer financial accounts or transactions.
To prevent this, many companies and providers simply clamp down on approvals or limit digital account funding options to a small group of only the most well-known customers. If there is any doubt about the validity of an account or customer, such as with brand new customers, they decline instant funding options or decline the transaction altogether in order to avoid fraud. But in an economic downturn in which money mobility is seen as a crucial service by customers, companies may no longer have the luxury to decline funding transactions, especially for the new customers they are trying so hard to attract.
Instead, many companies will spend the next six months first augmenting money mobility solutions, then reducing their risk profile. For most, both needs will lead them to outsource their offerings to industry solutions that can ease and shorten the deployment cycle plus manage risk through a network and a market-wide vantage point.
Companies that do this effectively stand to emerge from any potential economic downturn in a stronger position with a greater number of more loyal customers that rely upon them for money mobility capabilities.