Big Banks See Success in P2P Payments with Zelle

In recent years peer to peer payments have been a growing business that’s attracted various companies including PayPal, Square, and Apple. With 42% of those aged 18 to 24 trying P2P payments compared to just 29% of adults overall, the userbase for these apps has been traditionally dominated by younger folks who have even made “Venmo” into a verb — the height of coolness. Still, not to be left out, several (decidedly uncool) big banks including JPMorgan Chase, PNC, Wells Fargo, and Bank of America have teamed up to launch their own peer to peer app called Zelle. Now according to the lattermost Zelle partner, the play is not only paying off but could also be helping to change the future of banking.

As MarketWatch reports, while announcing their first quarter earnings, Bank of America noted that 29 million peer-to-peer payments had been processed through Zelle during the quarter. That amounted to $9 billion in transfers and was up 130% year over year. Meanwhile PayPal saw $27 billion in peer to peer transfers earlier this year during their last reported quarter.

For Bank of America, Zelle isn’t about fighting back against FinTechs who have been increasingly stepping in on their domain but about efficiency and cost cutting. In fact B of A CEO Brian Moynihan said during an earnings call that P2P payments were “getting more meaningful” in terms of reducing cash and check usage. Both of those alternatives are more expensive for banks to handle and process, making Zelle and other digital initiatives worth their investment. Although Moynihan warned analysts that the state of banking was “not going to be immediately changed,” he suggested the company was making progress.

There are many reasons why Zelle is seemingly performing well despite strong competition. For one, while Millennials might be more distrusting of big banks than their elders, older generations may be skeptical of FinTechs like Square or PayPal. As a result they may not have considered trying P2P payments before there was an option backed by their bank. Additionally MarketWatch notes that Zelle’s “bare-bones experience” might also be a factor in attracting older users who might not have taken the time to download and explore the likes of Venmo.

Overall the increasing success of Zelle once again highlights the ability for traditional banks and FinTechs to coexist in harmony. In this particular case having big banks jump on board the P2P bandwagon seems like it could lead to a larger embrace of financial technologies across the board. As a result of both outside and inside influence, it seems that a course for the future of banking is now being set — and it promises big things.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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