Zelle’s Rx Includes Strong but Simple Messaging, Emphasis on Requests, and Greater Generational Appeal

The newbie bank-controlled Zelle person-to-person payments service already is a major player on the P2P scene, but it could win even greater adoption through clear messaging, a mobile-first orientation, more emphasis on its underutilized request feature, and an appeal beyond Millennials.

Those and many other recommendations and observations are included in a new report, “What Banks Can Do To Make Zelle’s P2P Rollout Successful,” from Pleasanton, Calif.-based Javelin Strategy & Research. “This is a network that has huge potential,” report author Mark Schwanhausser, director of digital banking at Javelin, tells Digital Transactions News.

Zelle, a service of the bank-owned risk-control technology provider Early Warning Services LLC, is the banks’ answer to popular non-bank P2P payments services from PayPal, the PayPal-owned Venmo, Square, and others. Formerly known as clearXchange, Zelle launched its first major marketing campaign in January.

For the report, Javelin closely examined advertisements from Zelle itself as well as commercials and digital marketing for the service from several participating big banks. Javelin staff members worked as “mystery shoppers” to send and receive money through Zelle and record their experiences. Javelin also interviewed Zelle executives.

In addition, Javelin conducted an online poll in October and November of 3,000 consumers about their P2P usage in the preceding 12 months. Some 44% of respondents had used a P2P service. Among that cohort, PayPal itself was by far the leader, having been used by 52% of respondents. Venmo and Zelle tied for second at 14% apiece. Next came Google Wallet (now part of Google Pay), 12%; Square Cash, 7%; Snapcash, 5%, and People Pay and Popmoney at 4% each. Those latter two services are from processors Fidelity National Information Services (FIS) and Fiserv, respectively.

Banks and credit unions offering Zelle have a difficult task in introducing a new brand and explaining all that Zelle can do in 15- or 30-second TV commercials or short digital ads, Schwanhausser notes. They can accomplish the task easier by integrating the Zelle brand into their own marketing messages, emphasizing the core task of money movement, and getting rid of jargon, he says. Terms such as “P2P,” “person-to-person,” “ACH,” and related banking phrases are “something to avoid,” he says.

Another component of clear messaging includes being straight about enrollments and initial transactions to avoid consumer confusion or even anger. While Zelle provides near-instant payments, a user’s first transaction may have a one- or two-day clearing delay. “Right now banks are putting that in the fine print,” Schwanhausser says. “Every bank is going to have to look at this and decide how do you want to frame expectations.”

In addition, while financial institutions are keen to make Zelle a part of their online-banking services, mobile is the channel is resonating the most with consumers today, according to Schwanhausser. “Online is important, but if you’re not making it small-dunk simple and making it mobile-first, let’s go back to the drawing board,” he says.

Another major recommendation in the report is that Zelle institutions play up the request-for-payment feature. Requests run counter to the traditional bank proclivity to simply carry out customers’ payment instructions. But by promoting requests, banks might generate new transaction volume and expand Zelle usage beyond straight P2P payments into related usages such as bill pay.

“Where P2P has an opportunity to really change behavior is having the ability to request,” Schwanhausser says. “That’s going to be a key one. It goes to that bank bias for thinking about their customers coming in to do something.”

Another way to generate to volume: have marketing messages that appeal to Baby Boomers, not just Millennials as most do now. Some banks indeed want to target younger customers, but they shouldn’t assume older generations won’t use a P2P service, according to Schwanhausser.

“This is one of the things I wanted to explore with this research,” he says. “Don’t just make an assumption that this is a Millennial tool. I disagree with that.”

Zelle originated with a group of the nation’s largest banks, but smaller ones and credit unions can provide it to their customers via a number of processors. Consumers with accounts at financial institutions without links to Zelle can still use the service through a stand-alone mobile app available in Apple Inc.’s App Store or Google’s Google Play market. That app has received more negative user-experience reviews than most of its rivals.

Schwanhausser believes the stand-alone app’s user base will shrink as more financial institutions come into Zelle’s network either directly or through processors. “This is a necessary stop-gap, and it’s not where [banks] want to steer of consumers,” he says. “Everybody involved would like to see that app be extinct as soon as possible.”