For years, the spotlight in instant payments has been on consumer apps like Venmo, Zelle, and Cash App. While these platforms have transformed peer-to-peer transactions, financial institutions should set their sights on a more lucrative opportunity:enterprise business payments.
Focusing on enterprise clients isn't just a strategic move; it's a financial imperative.While both consumers and businesses contribute to a financial institution's bottom line, enterprise payments offer significantly higher returns. Why?Because businesses don't just move money; they depend on sophisticated payment solutions to keep their operations running smoothly. That translates to increased revenue opportunities for institutions through fees, additional services, and deeper client relationships.
Enterprise Payments: A Bigger Opportunity with Bigger Returns
Here's the reality: enterprise clients bring in more revenue because their financial needs are far more complex. They maintain larger accounts, require more services, and are willing to pay for efficiency and security.
Consider payroll, for example. Companies can't afford delays when paying employees.Instant payroll solutions not only provide convenience but also create revenue streams for institutions through transaction fees. Similarly, just-in-time supplier payments and advanced cash management tools make businesses more agile while generating additional transaction fees.
Real-time payments are no longer a luxury; they're a necessity. Among commercial banks,64% report feeling this demand, compared to 52% of retail banks. Larger banks are feeling the squeeze even more. The message from the market is clear: if your institution doesn't offer these services, businesses will find one that does.
The Race to Modernize Payments
Enterprise clients aren't just looking for instant payments; they're integrating them into their broader financial strategies. Financial institutions that fail to meet this demand risk losing valuable corporate clients to more agile competitors.
A recent McKinsey report advised banks to expand their footprint in payments, wealth and asset management, and transaction banking (areas that represent the fastest-growing sources of recurring revenue). Institutions that have leaned into this strategy are already seeing results. One U.S. super-regional bank, recognizing that payments made up 25% of its total revenue, embedded payments within business software and offered value-added services like budgeting and cash flow management resulting in a 30% increase in business banking revenue over three years.
A Key to Client Retention
The risk off falling behind in payments innovation isn't just about missing new revenue streams; it's about losing existing clients. Financial institutions that enable instant payments are already seeing a positive impact on customer retention.Businesses are making it clear: real-time payments aren't a nice-to-have; they're an expectation.
Looking ahead, institutions that fail to modernize will struggle to remain relevant.Experts predict that fintechs and their partners will dominate mobile payments within the next decade, forcing banks to rely on partnerships to stay competitive. The question isn't whether your institution should embrace enterprise payments; it's how quickly your team can make the shift.
The Bottom Line
The future of banking isn't just about sendingmoney faster; it's about creating seamless financial ecosystems for businesses.Instant payments are the next phase of the digital revolution, and more than 1,000U.S. financial institutions have already joined the race. Those that haven'talready invested in this infrastructure must act now, or risk being leftbehind.
