Money Mobility Tracker – March 2022

How significant will money mobility be for consumers in the future when choosing where to open an account?

Money mobility will emerge as one of the top defining features in a consumer’s choice of a financial partner over the coming months and years.

Consider how Amazon made two-day delivery standard and is now upping the game to same-day delivery. It forced large incumbents like Target and Walmart to follow suit and has made speed and cost key considerations when consumers choose a shopping partner online.

Consumers use those same filters of speed and cost when picking a rideshare or food delivery service. They can toggle between Lyft and Uber or DoorDash and Uber Eats to see which service will arrive faster and for less money.

That same determination is coming to money mobility, with the added feature of customer choice. People expect to safely send or receive money to and from any account in real time and at a competitive cost. As this capability becomes more ubiquitous, consumers will pick and choose their preferred financial partners based on the quality of their money mobility features.

Providers that offer ubiquitous payments choice, instant transactions and complete confidence at a competitive price will earn loyal users and gain top-of-wallet status. Money mobility will become the new “sticky.”

What areas of money mobility are more challenging for FinTechs and digital-only FIs in comparison to traditional FIs?

One of the biggest challenges in offering money mobility is the ability to mitigate risk and reduce fraud.

A true money mobility capability allows for the instant deposit of funds from any account or transaction medium — checks, cash, ACH, app, etc. — and the ability to then immediately send those same funds to any destination account. This creates a number of liabilities that impact a company’s risk factor, especially when the customer acquisition and onboarding flows are 100% digital through online or mobile.

For one, instant inbound account funding — from any modality — is rife with fraudsters. In a money mobility solution, deposited funds can instantly be spent or sent to another account. If fraud is found after the fact, providers cannot claw back this money and are on the hook for the loss.

Traditional FIs have a built-in fraud filter by virtue of their account-opening process (especially when in person), creating friction and potentially introducing a human component that makes it harder for a fraudster to succeed.

FinTechs and digital-only FIs are most at risk in this scenario because they are built around an easier, digital account-opening process, exposing them to a higher number of fraud attempts. Many of these FinTechs are also operating in specific niches and without the scale of the large banks, which leads bad actors to target them more frequently and to test their defenses.

Furthermore, they have limited visibility into the larger financial ecosystem, in part because nonbank FinTechs have limited access to bank-shared databases. But even these databases are not foolproof because they are devoid of data points tracking nonbank transactions and behaviors. Without full visibility into what’s happening both inside and outside of the banks, these FinTechs are challenged to offer a good customer experience while controlling for bad actors.

For those companies with limited visibility beyond their own horizons, it’s critical that they enlist fraud databases and select partners that incorporate marketwide visibility of good and bad actors. This provides a fuller view into the larger marketplace and, by leveraging a cross-functional network effect, can significantly lessen their risk profiles.

Drew Edwards
CEO at Ingo Money

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