By Jeff Koyen
In the age of streaming movies and same-day shipping, many banks and financial institutions may not be delivering the instant results consumers increasingly expect. Bank transfers, for example, often remain sluggish: According to research from Visa, nearly two-thirds are conducted via ACH, which can take days to settle.1
More customers are demanding real-time account funding, where deposits can become available instantaneously. This is more than just a convenience for them. It’s also a strategic advantage for banks themselves.
“Financial institutions that offer real-time account funding … recognize the importance of optimizing their customer and prospective customers’ experience at a critical moment in their engagement with the bank,” says Jim Filice, vice president and head of North America Money Movement at Visa. “It can set a financial institution apart from its competitors.”
That’s because being able to fund or move money between accounts in real-time can help engage and retain customers, build loyalty and even drive cross-selling opportunities. How?
Read on to explore how banks that provide real-time account funding could benefit their customers, and themselves.
Reducing Barriers To Account Usage
With more options available than ever, today’s banking consumers can afford to be more selective. Every hiccup in the onboarding process risks a decrease in customer acquisition and conversions—especially among younger demographics.
For instance, research from FICO finds that 42% of those aged 25-30 will abandon a new account application if they’re required to mail physical documents or visit a branch.2
This makes sense to Jaspreet Singh, Senior Director, Visa Direct Product Strategy. These days, frictionless onboarding and fast access to one’s own money are reasonable expectations.
“[As a customer] I would rather bank with a bank [that] allows me to move money in and out quickly when I want,” Singh says. Too many barriers, including delayed account funding, “leads to them thinking twice … and they never come back.”
For banks, account abandonment can be a source of friction. New accounts that are never funded are usually automatically closed within 60 days. This can drag on administrative resources. If the customer does return, reopening their dormant account may require hands-on attention from customer service, yet another expense.
Real-time funding can help prevent dormancy. It also encourages ongoing use. When balances are made available immediately, customers can pay their own bills more reliably. They also have fewer accidental overdrafts, which reduces fees and frustration.
“Moving money between accounts at different financial institutions, providing reliable, immediate access to money helps consumers feel more in control of their finances, boosting confidence in the institution,” says Filice.
Ultimately, Singh notes, real-time* funding products—such as those from Visa Direct—can drive measurable results for banks.
“The magic happens [when] engagement with the account goes up,” he explains. “The deposits keep coming [and] the card you’re issuing on top of that account gets used more because the customer feels more financially liberated.”
Enhancing The Digital Banking Experience
It wasn’t long ago that personal banking was still conducted at the branch, with a teller, checkbook in hand. With the ubiquity of digital banking apps, this is markedly less common.
These digital-first consumers expect fast results. Real-time* account funding helps meet expectations and can even improve the customer experience in three key ways:
- Increased control of their personal finances: banking customers can open, fund, transfer and invest in one sitting, rather than having to wait three days between each action.
- Better visibility into their cash flow: customers can fund a new account to pay their rent now, and not worry about insufficient funds a week later.
- Convenience: customers can manage their money from their phones on Sunday mornings—or whenever.
“Younger customers and gig-economy workers increasingly want instant transfers and deposits,” says Filice.3 “Meeting this need supports customer acquisition and retention.”
Driving Long-Term Engagement
Happy customers stick around. And happy banking customers stick around to use new products and services. This is crucial if banks expect to create long-term value for their users.
“[Customer engagement] could lead to more usability of the services offered by that platform,” says Singh. “That—in turn—means that the bank gets greater share of mind from the customer, which ends up in more usage of the card, leading to more revenue.”4
To this end, real-time funding should be on every bank’s roadmap. It not only creates a better experience for account holders, it gives them confidence that their bank is looking toward the future with their best interests in mind.
“Providing advanced, tech-forward solutions signals innovation and a commitment to customers’ evolving needs,” says Filice. “Immediate and frictionless banking solutions could turn satisfied customers into brand advocates who promote the service to friends and family.”
Paired with positive brand perception, real-time visibility into one’s finances also creates opportunities to offer new products and services at precisely the right time. Consider a long-term customer with questions about financial planning: Who better to ask than their trusted banker?
“Real-time funding and transaction tracking can facilitate deeper engagement with customers, enabling proactive financial advice at critical moments [and] creates fertile ground for introducing new financial products and value-added services,” Filice explains.
Finally, happy customers don’t call customer support. But when they’re worried about a transfer, they’ll pick up the phone or start a new chat. This kind of customer support is not cheap.
“Typically, there’s a lot of cost involved … supporting those calls,” Singh says.
Instead, Singh advises, banks should aim to create “a wow type experience [for] their customers.” More and more, that experience includes real-time account funding.
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*Actual funds availability depends on receiving financial institution and region.
1 Aite Group and Visa Inc’s Banking and Brokerage Consumer Study, “Survey of U.S. Interfirm Account to Account Transfers”, December 2020.
2 FICO, Customer Development Origination. “Riding the Digital Wave with Faster, Smarter Account Opening”, November 2021. https://www.fico.com/blogs/10-questions-or-less-why-consumers-abandon-account-opening#:~:text=Of%20those%20that%20don’t%20immediately%20abandon%2C%20an,to%20mail%20documents%20or%20visit%20a%20branch.
3 Industry report by Payments and Commerce Market Intelligence, commissioned by Visa, “Empowering Marketplaces for Payout-Led Growth: A Guide to Understanding and Leveraging the Payout Preferences of Online Marketplace Sellers”, August 2024.
4 Visa Direct and POS, VisaNet data, November 2020 to October 2021.