Hoosier Banker 27 That said, the fact that Apple Pay Cash uses the iMessage app means that it already has an enormous pre-existing network of hundreds of millions of iPhone and iPad users, even pre-launch. This will make it incredibly easy for even non-P2P users to try out the service and get comfortable with it very quickly. For this reason alone, Apple is expected be a major disruptor in the P2P space. Financial Institutions Bet on Zelle The other significant new player in P2P is Zelle. Zelle hopes to leverage its existing financial institution network, which includes several household bank names, to scale up very quickly. The company claims 86 million mobile users are already within the network. With many financial institutions concerned about losing their consumer bases to Venmo and other P2P upstarts, Zelle is aiming its sights squarely at the millennial audience. As the fastest-growing and largest market segment today, it is easy to understand why. But despite Zelle’s advantages in infrastructure and distribution, it’s hard to see how it will overwhelm Venmo’s compelling social media strategy. Financial institutions would prefer Zelle to win out, because the Apple Cash model moves money away from their DDA accounts and into a prepaid account. There are still questions about how many consumers will move to Zelle from competing solutions. Many FIs that implemented Zelle have moved the P2P component to central navigation, leading to increased usage by default. For this reason, it is hard to determine the comparative impact of Zelle versus the accessibility offered by the FIs themselves. Behavior to Drive Adoption Ultimately, consumer behavior will drive the P2P landscape. Regardless of what solution, or combination of solutions ends up owning the largest piece of the P2P pie, the pie is growing larger. In fact, adoption is robust across all generations. A cross-section of nearly 50 percent of non-user millennials, Gen Xers and boomers plan to try a P2P service for the first time in 2017. There is a lot of churn happening right now in the P2P space. FIs are betting on Zelle and the experience they can drive in their apps, but consumers have strongly gravitated toward third parties up to now. The challenge will be winning them back. Payment processors are gearing up to support a wide variety of P2P solutions across different channels. One thing seems certain: P2P is growing, and is well-positioned to be the preferred form of payments for a long time to come. HB 1 “This Week in Credit Card News: One-Third of PayPal’s Transactions are Mobile; P2P Payments Grow 55%,” 4financenews.com, July 28, 2017, Web 2 Trends in Consumer Mobility Report, Bank of America, 2017 3 “Venmo Continues to Shine for PayPal,” by Jaime Toplin, Business Insider, July 31, 2017, Web 4 Trends in Consumer Mobility Report, Bank of America, 2017 Editor’s note: Read insights about Zelle from Greg D. Carmichael, president and CEO of Fifth Third Bancorp, Cincinnati, in the September/October 2017 Hoosier Banker, pages 38 and 39. Michael A. Renninger Principal (317) 695‐7939 mrenninger@renningerllc.com Securities offered through Ausdal Financial Partners, Inc., 5187 Utica Ridge Road Davenport, IA, 52807 (563)326‐2064 Member: FINRA, SIPC. Renninger & Associates, LLC and Ausdal Financial Partners, Inc. are independently owned and operated. www.renningerllc.com "For an ���e���e��ssess�en��of Your Challenges and ����ess��nal���e����n�of Your �������n��es"
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