Podcast: The future of mobile payments

Whitney McDonald 0:04
Hello and welcome to The Buzz a bank automation news podcast. Today is August 8 2023. My name is Whitney McDonald and I’m the editor of bank automation news. Joining me today is Dave Baxter, Chief Executive of solutions by text. He is here to discuss the idea of turning messaging into payments.Dave Baxter 0:24
My name is David Baxter. I’m the president and CEO of solutions by text. We’re a messaging company that was founded in 2008. Based in Dallas, Texas, with remote offices throughout North America, as well as Bangalore, India, we were one of the first messaging companies that really pioneered text messaging. And we lead a most compliant messaging platform in the industries that we service, specifically, consumer finance in some verticals of consumer buy, we service roughly 1500 customers throughout auto mortgage community banks, credit unions, card issuers, and marketplace lending.

Whitney McDonald 1:08
Great. Well, thanks for joining us on the podcast. I would love to start off by setting the scene here on how you have determined how clients want to be communicated with what works, what doesn’t work. Tell us about your strategy.

Dave Baxter 1:22
Yeah. So when we were thinking about the messaging platform really started with thinking through, we’re an extension of our customers brand, to the extent that we believe that the consumer is always going to win, and you have to meet consumers where they’re at from acquisition of an account all the way through delinquency and everything in between. And there’s no denying the fact that everybody is mobile first, right. And as far as messaging goes, in Gen Z, they’re on their phone greater than, you know, 10 hours per day, on average, people look at their phones, roughly 20 times a minute, there are billions of messages sent every single day. And so we felt that a logical play for us is really thinking through bill pay, and meeting consumers like just give them a very seamless, quick on demand way to view and subsequently pay a bill on the device that they carry with them throughout the day.

Whitney McDonald 2:29
Now, if you could talk us through this idea of turning messages into payments, you discussed that everyone’s on their phone all the time you gave those data points, I think that you said you look at your phone 20 times per minute, can you talk about really meeting the customer, where they are and how you turn this into a way of payments?

Dave Baxter 2:49
Yep, so 87% of Americans and this is through the the last at how Americans pay their bills, the latest one is coming out. So the there will be refreshed data, we can discuss that you know, at another time, but 87% of Americans prefer to be met over their mobile device than any other channel. So it’s don’t phone me don’t write me a letter, don’t send me an email. So it’s clearly the most preferred channel I mean, look at your your daily life, right? And everything that you do, you’re likely, you know, in an in and around your phone using different applications, you’d like to communicate with your friends and colleagues and family through their phones. So why not communicate with a biller through through text messaging? Interesting stats, and so far as 65% of payments are made on demand as a result of an alert, or reminder. So what not they better way to get an alert or reminder than through a text message or for that matter, you know, there’s a myriad of different sorts of messages, right, you’ve got rich communication you got you got Apple business chat, you have iMessage, you have SMS, you’d have text and WhatsApp and so on and so forth. So the technology is really lending itself to this place to meet consumers on demand in real time. And so no wonder that 97% of messages are opened and read in under five minutes. Whereas I look at my phone right now, I probably have 3000 unread emails, because most of my emails are probably either I don’t know who it is, so I delete it or it gets wound up in my spam folder. And I think that that’s part and parcel to why we have such high success deliverability rates so 99% of the messages that we attempt to send actually hit the consumer at the right time in a compliant way to keep our customers on the right path. We operate and really to two very difficult Markets, consumer fi highly regulated market, as well as telecommunications. And one of the reasons that we have very low opt out rates and very high deliverability rates is we maintain the integrity of the rules of the carriers and the carriers are trying to protect against spam. And that’s where email just failed. Only 21% of emails are actually ever written threads he’s been.

Whitney McDonald 5:28
Now if we could talk through how you actually achieve this.

Dave Baxter 5:32
Yep. So proprietary platform that, you know, we built, we just came out with our two Dotto platform that we call fintechs. Because we operate in the center of financial services, as well as tax, we coined the phrase, Fin fintechs. So how do our customers leverage the platform? There’s outbound messages, there’s inbound messages, inbound and outbound MMS. So imagine if, for example, when I said that acquisition piece, I could open up a credit card, through taps with a call center agent, we create some efficiencies for agents, right? How do we make a payment, there’s an alert or reminder. And that first payment, all we need to do is capture the funding information. And we do that in a very seamless way. So in real time, we’re extracting customer account information. So your account number, your address, the amount due the due date, and then we just capture that funding information, whether that’s your bank account information, or your card information, and then you subsequently, you know, make that make that bill pay for all other transactions. So now we’ve tokenized the funding information. We’ve stored and vaulted that funding information. So for the next transaction, it’s all driven by key keywords. Whitney, your American Express bill is due tomorrow. For $500, would you like to make a payment? Reply? Yes, and it’s just it’s really just as simple as that. So that’s how, you know we convert messages to payments, but there’s a lot more that goes into the messaging platform. We were working on text AI, where we can empower the end user of these see themselves in the status of delinquency, we can enable somebody to self cure their debt online, imagine if you know, I have a delinquent credit card, I might be able to negotiate with my bank or card issuer songs, any you know, human interaction, I can make a promise to pay, I can make a series of payments, maybe I could make a payment, make a payment right now just to, you know, satisfy satisfy the debt. We started in consumer fine, because it’s highly regulated. Obviously, that’s not to say that we couldn’t, you know, go after other verticals. But, you know, that’s kind of where we’re playing right now. And then of course, there’s leveraging our platform for marketing services, remarketing, cross sell and upsell opportunities. And what we have found is that the customer satisfaction goes up, call center times go down.

Whitney McDonald 8:22
Now I know you just gave a great an example of an added efficiency any other efficiencies that financial institutions might be able to benefit from?

Dave Baxter 8:31
Yeah, so I think, you know, going back to that whole delinquency piece, you know, we would, we believe that we could reduce charge offs by 10 to 15%, just by enabling somebody to self cure their debt. It’s not like people are, you know, think about tax, there’s a level of anonymity and a texting conversation. Whereas when you’re speaking to a bill collector, one, it’s next to impossible to capture somebody on a phone to the regulatory bodies that make it really difficult to establish right party contact, which you can do over tax. So why not meet the consumer in a way that’s non invasive, make it a little bit easier on them? So I think, you know, reducing charge offs, I think, you know, customer satisfaction goes up, I think this notion of real time. And, you know, capturing a payment right before it’s due, as I said, most payments are made on demand as a result of, you know, an alert or a reminder. And I think that, you know, you know, we obviously live in this world, it’s mobile first, but text messaging is the most widely used app on your phone.

Whitney McDonald 9:42
Now and a question about adoption for this because everyone has a phone in their pocket or is using these types of capabilities and getting text messages in adoption pretty easy to to get folks to opt in to this type of tool.

Dave Baxter 10:00
Yeah, it is. And, you know, we look at it in terms of like, adoption, but also opt out. And, you know, opt out, we opt out less than 1% of all of our transactions. And, you know, and think about, like I have, for the most part part gone paperless. So that’s another material benefit to a financial institution, think about the documents that I could send letters of consent of Bill, just not like isolated to the payment, there are many things that we could be doing to help these financial institutions, you know, reach their consumers and in ways that they hadn’t been able to and often in in real time, right. You know, think about just the, not that long ago, the the amount of clutter that you had with all of the bills that were coming into your house, and I think that there’s a much more a efficient way to be able to, you know, achieve the same outcome and do it where were the consumers at right.

Whitney McDonald 11:01
With that in mind, and Bill Pay in mind and reaching folks by text and allowing this this payment to, to happen. Where’s this all headed? What’s next in the future of payments? Or even in bill pay?

Dave Baxter 11:18
Yeah, you know, um, well, I think that we’re onto something. But, you know, the like, here’s the thing, bills are not going away. You know, there’s, I think there’s a double moat around our business. You know, there’s roughly 16 billion bills per annum 4 billion of which are related to consumer consumer finance vertical, but it’s 40% of the total spender about a trillion dollars is in and around consumer finance. And then I think a few things one, I think that the the notion of like, so we’re more of a push strategy, not a pull strategy, I think people have app fatigue. I know myself, I’m constantly forgetting my username and, and passwords for all the, you know, the different sites that I have to have a username or password password, there’s obviously two factor of that. So it’s like, it’s very complex, I think that what, you know, payments has got to be easy, fast, real time, also, and that it like, has to be great customer experience. And I think that’s where real time payments are, you know, we’re bill pay is going, you know, we live in this world of real time. Nobody has cracked the code in real time as it relates to, to build back, which is strange meat, because everywhere else in the world, real time payments is taken off. So I think you’re gonna see Bill Pay, coupled with real time. I do believe it’s mobile. First, I think it’s tax. And I think that the technology is empowering us to get there with us being able to render a bill over a text message. So there were like two other things that I think are really interesting that afford us to do. So we’re building a text wallet with network tokenization. So imagine if like, I contend that your mobile phone number is your new social security number. When was the last time you changed your mobile number and it’s very secure. Think about I know it’s Whitney, you biometric into your phone, your phone has a phone ID, you can geo located so I know it’s you, I know you made the billpay. And imagine if I could, you know you have wallets that are in your phone, imagine if a wallet was attached to your mobile number that you could use over a text message. So we’re working on that, that you can take to different billers. Hence that that network tokenization of the funding information so I can recognize Whitney, for all of your different bills without you having to continue to reenter your funding information. So I think that, you know, that is another area and no other channel can really do that in such a way that gives you ease of mind that, you know, it’s a secure transaction and the other beauty of gopay there’s very, very limited fraud, right? The likelihood that Whitney is going to pay David’s you know mortgage is zero, right? So that’s another benefit of you know, kind of proving this out and and built that

Whitney McDonald 14:34
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Transcribed by https://otter.ai