Why Real-Time Payment Traceability Matters for Lenders 

Apr 19, 2022

Like many others, the lending industry has seen upheaval and its fair share of challenges these last few years. As we enter the next stage and the next era, the emphasis is on resiliency, improved delivery, streamlined processes, and speed.

“The lending chain is no stronger than its weakest link. Manual data collection and processing in the procedure of underwriting has been outdated for years. It lacks consistency and accuracy.” Dmitry Dolgorukov Co-Founder and CRO of HES Fintech

This is where real-time payment steps in. And with it, the value of real-time payment traceability and transparency.

This article discusses real-time payments (RTPs)  for lenders and how real-time payment traceability delivers on value. With more and more lenders going digital, the flood gates have opened, and real-time payment traceability is here.

More and more lenders are going digital

The ability to adjust in response to changing market conditions has always been a requirement for success in lending. This has never been more true in the post-pandemic new normal, where the only constant has been change. As Ben Miller of Simple Nexus (Mortgage software & technology for the modern lender) puts it

 “Lenders are striving to adopt digital processes to help them become more nimble and more efficient.” 

Digital transformation comes first 

There is ample research to illustrate that lenders are moving digital and fast. Firstly, in 2020, Mckinsey reported 50% of financial companies made digital development a top priority. This was a notable 20% increase from 2019. Secondly, Forbes’s Next Steps For Lenders in 2022 stated that by 2024, we would see $2.4 trillion spent on business technology innovations. Not to mention, today, 70% of executives say digital transformation is critical to surviving.

To sum it up, the lending industry is undergoing a digital transformation, and lenders are living and breathing it.

Digital Payments: The flood gates open for real-time payments

The rise of digital payments has been well documented these last few months. Consumers have embraced the convenience, getting used to both the immediacy and lack of friction. As a result, real-time payments ride the coattails of contactless payment trends.

Real-time payments (RTPs) deliver on consumer expectations.

As we can see, the real-time payment market continues to grow worldwide.

• Real-Time Payments Industry will reach US$ 16 Bn this year. According to GlobeNewswire, the real-time payments market will surpass US$ 277.09 Bn by end of 2032.

• Real-time payments have skyrocketed in the U.S. with year-over-year growth sitting at an impressive 69%. (Deloitte)

• Canadian businesses are getting in on the action. The total number of real-time transactions in 2020 was 70.3 billion, up 41% from 2019. 

RTP adoption has accelerated. More than 40 countries have RTP solutions in place, plus six more countries launching before 2023, including Canada

So the market growth is there, but where is the real value for lenders? The answer is real-time payment traceability, transparency and a whole lot more.

Real-time payments Real-time payment traceability for lenders 

Current payment systems may or may not have last-mile connectivity. Still, real-time payments are designed for end-to-end straight-through processing with complete visibility to all parties involved in the transaction. This can also help payment service providers catch sanctioned payments or report suspicious transactions to regulators.

Many Canadian businesses still struggle to process payments efficiently; manual payment methods create a labour-intensive process without visibility into a transaction’s status. Thus, adding in automation means traceability becomes a breeze. Real-time payment transactions get rid of manual methods and paper cheques.

Lenders who engage in real-time payments now have visibility at their fingertips. Determining where a payment came from or where one is going becomes much easier. When lenders have a complete picture of who’s on the other end of a payment, this ensures data accuracy and becomes key in protecting their reputation and finances.

Not to mention, this level of increased traceability frees up time and resources. Imagine the results if both the accounting team (and potentially the legal team) had more time to focus on essential tasks. A further consequence of less manual and more automation means lenders take on less risk when it comes to fraud.

Real-time payment transparency for lenders

With a moniker of “real-time payments,” it is easy to spot that speed is a crucial benefit. Especially when one considers the advantage of immediate confirmation of payment. However, RTP’s actual value lies in its robust data and messaging capabilities, known for far outperforming previous payment methods. Much more data can be attached to the transactions when real-time payments are made, including remittance data. 

By tying data to transactions, there is an abundance of data and insights that can be used to: 

• Enhance business performance

• Improve operational efficiencies

• Monitor fraud

• Manage and limit risk exposure

Consumers want faster access to their funds; however, it is critical to do so safely without putting the consumer or the business at risk. Advanced ID verification services and data aggregation enable organizations to provide innovative payment processing that offers superior customer service while at the same time remaining safe and transparent.

Risk mitigation in real-time payments is dependent on the information that travels within each payment, with senders and receivers having more detailed conversations about each payment, using a standardized format, and providing accurate data. With such robust data and messaging functionality, lenders can not only offer real-time settlement to their customers but also innovate around customer pain points and inefficiencies (see table below)Real-time payment benefits for lenders

Did you know – According to the 2022 Canada Fintech Lending Study by Smarter Loans, more than half of Canadians approved for a personal instalment or payday loan received their funds the day they applied. By comparison, only 40% of auto loan seekers and about 30% of home equity, mortgage, and truck and trailer financing seekers received same-day funding.


VoPay’s industry leading payment solutions built for lenders

The messaging and data capabilities of real-time payments have set a new standard across the board. The ability for lenders to access real-time payments has simply become table stakes, as more lenders look to payments as a way to differentiate themselves and provide the customer experience clients are looking for.

No one gets the importance of real-time payments better than us.

Send and receive payments in real-time with immediate confirmation using VoPay e-Transfer for Business Solution. That means faster access to funds and better management of your liquidity. Full payment traceability and rich remittance data allow businesses to reconcile transactions with less reliance on paperwork to streamline records.

Contact us today to learn more!

Learn more about real-time payment transactions in our RTP series. 

Real-Time Payment Series: Part 1 Understanding the Landscape

RTP Series: Part 2 Are Canadian Businesses Ready?

How Real-Time Payments Will Reshape The Future of B2B Payments

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