Like all businesses, banks aim to keep increasing their revenue streams. However, these financial institutions face challenges like inflation, rising interest rates, the effects of the pandemic, and supply chain disruption. Yet, despite these difficulties, statistics show that in 2022, bank revenue grew by $345 billion globally.
To adapt to the latest trends and challenges, banks are exploring new technologies to increase their profitability. For instance, with the rise in digital payments, banks now need payment processors that allow them to accept these forms of payments. Apart from easing payment operations, payment processors can help unlock new revenue streams.
This blog post will explore how payment processors can help banks improve their bottom line, the benefits of these partnerships, and how to choose the right partner.
Why Are Payment Processors Important for Banks?
While banks are increasingly adopting the latest technologies, they still need to outsource some services, such as payment processing. Digital and contactless payments are becoming more popular among consumers; therefore, banks must use gateways that make these operations easier.
Additionally, payment processors allow banks to offer customers alternative payment options. They can process credit cards, email invoicing, and use virtual terminals. Payment processors act as intermediaries, releasing banks from the complexities of payment transactions.
Benefits of a Bank Partnering with a Payment Processor
As a bank, you need to invest in payment processing partnerships. Here are some of the benefits you'll see:
Increased Efficiency
Banks have specialized business systems that streamline operations, and therefore, need a payment processor that easily integrates with existing systems. Banks operate much better when operations are integrated with other workflows, like billing, accounting, and customer relationship management.
Reliable payment processors have hosted payment portals that integrate with your brand and existing website, allowing customers to make payments without leaving the site.
Security
According to a 2022 survey by PwC, about 46% of organizations have been victims of economic crimes over the past two years. Banks have been the biggest targets for identity fraud as fraudsters try to access customer accounts. However, working with a payment processor that uses machine learning to reduce the scope of identity fraud boosts security. Banks don't have to worry about customers losing money to fraudsters.
Customer Satisfaction
In the modern world, customers prefer banks that offer digital and contactless payments. Statistics show that active online banking users stood at over 2 billion in 2022. If you want to tap into this audience and attract more customers, you need to partner with payment processors that allow you to accept these forms of payments.
How to Choose the Right Payment Processor for Your Bank
Before you select a payment processor to work with, consider these factors:
- Security Protocol: The payment processor should have highly secure technologies to reduce the PCI scope of all your transactions.
- Fees: You need a partner that allows the bank to save money. As you choose a payment processor, confirm the fees you'll incur to use their services.
- Integration Capabilities: Your bank needs a partner that easily integrates with your existing business software and systems. Check the availability of APIs and developer plugins before starting a partnership to make adoption much easier.
What's the Impact of a Payment Processor Partnership on the Bank's Bottom Line?
Bank operations are tailored to its profitability, which is one reason they get into strategic partnerships with businesses that offer beneficial solutions. Let's examine how a payment processing partnership contributes to the company's bottom line:
Unlocking New Revenue Streams
Bank customers want a choice when it comes to how they pay. Some clients need multiple payment methods, including ACH payments, SMS invoicing, credit cards, and IVR payments. So, if you run a bank, a partnership can help to get a good mix of payment alternatives.
The more options you provide, the more your customers are satisfied. In the long run, this will increase your revenue.
Increasing Customer Satisfaction
Payment options are evolving fast, and payment processors will help your bank stay ahead and adapt to rapid changes in the marketplace. So, if you want to drive growth and improve your bottom line, you need to work with a payment processing partner that makes meeting your customer's needs easier. If your customers are satisfied with your payment services, you can sign up more clients and boost your revenue.
How N26 Partnered with Stripe for Instant Payments
Banks have successfully collaborated with payment processors to boost their growth. One bank that has used these types of partnerships is the digital bank N26. With more than 7 million customers, N26 partnered with Stripe because they needed a payment processor to allow their clients to deposit funds into their accounts instantly via their preferred payment methods.
With this Stripe partnership, clients can use credit cards, debit cards, or digital wallet top-ups within the N26 app. They can access easy-to-use APIs making the onboarding process more seamless. and thanks to Stripe's global presence, N26 can now access more customers and increase its revenue.
What Should a Bank Expect after Partnering with a Payment Processor?
Working with a tech-savvy system is a step in the right direction, and it allows the bank to focus on its core functions and delegate other duties to professionals with the right tools. If you want to expand your operations, consider contacting reliable payment getaways like iCG that will improve the customer experience and increase efficiency.
As a Nacha Preferred Partner, iCG simplifies the sales process. In addition, this one-stop payment solution is PCI-DSS Level 1 compliant, so you don't have to worry about the security of your customer's information. We provide excellent partner and customer support, and you can contact us for any assistance.
