55% Of Property-payout Recipients Need Money Within Hours

That is the larger opportunity inside “Banking Both Sides: Instant Payouts Turn Receivers Into Customers,” a PYMNTS Intelligence report on how banks can use commercial payout flows to reach the people and small businesses on the receiving end. Banks already serve many of the businesses sending payouts.

What they often miss is the chance to serve the recipients, too. When a bank helps a property manager, platform, employer or marketplace pay recipients instantly, it can also offer those recipients a co-branded account that gets them paid faster and keeps the relationship inside the bank.

The most practical opening may be property management. Rent payments are recurring, sizable and often central to the recipient’s cash flow.

A property owner waiting several days for a check or ACH transfer may have a mortgage, maintenance bill or tax obligation due before the money clears. That makes speed more than a convenience. It becomes a reason to change behavior.

The data showed why banks have room to move.

• The share of property-payout recipients who need money within hours was 55%. That urgency creates a natural point of entry for a bank-issued account that delivers the money instantly.
• The share of senders who offer instant payouts rarely or never was 77%. That means recipient demand is running ahead of sender capability, leaving banks with an advisory and product opportunity.
• The share of property managers who have sent at least one instant payout was 76%. The report suggested the rails are not the main barrier. The harder step is making instant payout the default experience rather than an occasional option.

The positive angle for banks is that this does not require them to start from scratch. They already hold many commercial relationships. They already see the payout flows. They already have compliance, deposit and card infrastructure.

The missing piece is packaging those parts into a receiver account offered at the moment the recipient is choosing where the money should go.

That timing is important. The report revealed that recipients are more likely to accept a new account when it is presented as the fastest route to money, not as a generic banking offer. In one conversion scenario, 37% of recipients chose a sender-issued account when the alternative was waiting three days for money to reach a current account. In another, 52% chose the sender-issued option when instant transfer to a current account carried a fee.

The economics can also scale. The report modeled a regional bank processing $4 billion in annual disbursements. Under a base case in which half of volume moves through instant rails and half of those recipients open co-branded accounts, the bank could hold about $38 million in average daily receiver-account deposits. That would produce about $1.15 million in annual net interest margin before card interchange, balance stickiness or cross-selling.

Other categories showed similar potential, including gig platforms, tips and hospitality, payroll, earned wage access, trucking, construction and supplier payments.

The common thread is that when the payout is recurring and financially important, recipients care about speed. Banks that make speed the start of a relationship may keep deposits that used to leave with every payout.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.