ZELLE

OVERVIEW

• Zelle is a P2P payment service that offers a fast, safe, and easy way to send money to friends and family within minutes, using only an email address or US mobile number.
• The transaction is direct between bank accounts, performed through either the user’s banking app or the Zelle app, if their bank has yet to offer Zelle.

BUSINESS MODEL

• Zelle is free to the user, but it charges the participating banks between $0.50 to $0.75 per transaction. Zelle lets banks set user fees, but none have announced plans to charge customers for bank-to-bank transfers.
• Banks are willing to subsidize the transaction costs for the users for various reasons, mainly due to competitive pressure from Venmo and Square Cash, which are both free. Banks believe that by providing satisfactory P2P payment services, users will keep their money in their bank accounts and will increase the likelihood of extended engagement with them.
• Zelle is widely used due to its ability to convert existing bank clients to Zelle clients. It has the unique advantage of working inside banking apps. 76% of Gen-X and 74% of Baby Boomers also said that the offer through existing financial institutions was the key reason that they would trial P2P payments.
•  Gen-Xers and Baby Boomers make up half of Zelle’s new customer. A public report of Zelle emphasizes the higher dollar per transaction than Venmo. This is mainly driven by the Gen-Xers and Boomers. Boomers are making relatively the largest payments through Zelle compared to other platforms and age groups. Zelle sees educating consumers on the value of peer-to-peer payments as one of their challenges.
• Zelle’s other advantage is its speed; setting it up takes a few seconds. Money transferred through the network will be available to the recipient in real-time because the money moves directly from one bank account to another.

CURRENT USER STATUS

• Unlike other services, Zelle is backed by big banks. Eighteen banks in the United States, including most of the biggest players, are using Zelle, and 70 more are setting it up. Summed together, they represent about half of the checking accounts in the country.
• It is estimated that thousands of new users sign up every day. Most users are from existing bank clients. In Q1 2019, Zelle had 147 million transactions with a total worth of worth $39 billion.
• While offering a service similar to Venmo and Square, Zelle mentioned that their largest competition is still “checks and cash”. Consumers moved more than $172 billion in funds to other people through their banks in 2018. Compared to that, Zelle still has a relatively small market share.

EARLY WARNING SERVICES (EWS)

OVERVIEW

•  Early Warning Services (EWS), is a fintech consortium jointly owned by seven of the US' largest banks. They have been providing network intelligence, such as consumer reports, to assist financial institutions in preventing fraud throughout the United States for almost three decades.

BUSINESS MODEL

• While EWS did not have huge brand recognition in the public domain, it is well regarded in the financial services industry as a security provider.
• EWS provides specific services to serve financial institutions' identification, authentication, and payment needs. They find and report fraudulent activity associated with checking and savings accounts. Examples of such activities are bank fraud, forgery, counterfeit checks, check alteration, and check kiting.
• A typical record from EWS will include personal information, account information, such as checking and savings account history and activity, bank’s name(s), account number(s), opening and closing dates of account(s), balance and status information, transactions, and any inquiries made by entities wishing to see the consumer’s report.
• A “deposit score” is also provided to estimate the consumer’s risk level for opening new accounts. Having a negative item on your EWS record can make it more difficult to do business with some organizations.

CURRENT USER STATUS

• EWS’s network includes 2,500 financial institutions, government entities, and payment companies. Their partners include 45 of the top 50 financial institutions.

RELATIONSHIP AND HISTORY BETWEEN ZELLE AND EWS

• EWS is best known as the owner and operator of the Zelle Network.
• Zelle, formally clearXchange was a bank-owned venture launched in 2011 to streamline US P2P payments. The service is orientated to serve banks more than consumers, was fairly outdated, and its design and features varied at each bank.
• EWS acquired ClearXchange in 2015, with the intent to build a real-time platform that integrated its fraud prevention services, authentication capabilities, and bank network. The acquisition gathered enough influence and resources to build a platform that other banks couldn’t ignore.
• EWS introduced Zelle as that platform in 2017, a real-time platform that integrated the key services under a unified consumer brand. It was built atop clearXchange’s infrastructure, featured EWS services and drew on some of Venmo’s popular features. Today, clearXchange is migrating to become part of Zelle, claiming such a move will not only enable easy and safe payments but make them faster.
• EWS claims involvement in processing the $100+ million through Zelle each quarter.

MARKETING PRACTICES

• Zelle focuses most on aided awareness among its target audience.
• It also regularly monitors transactions, enrollments, and sales volume growth in the network.
• During its introduction, the first marketing practices in 2018 were more focused on promotion through awareness and, therefore, targeted all channels, including print and TV.
• Currently, the focus is on channels that can reach consumers in their daily lives.
• Zelle is in out of home in a few markets and will be on radio and cinema.
• It also uses social and digital media. Working with streaming publishers such as Hulu is also useful for creating awareness and reaching consumers directly.
• According to Melissa Lowry, Zelle's VP of marketing and branding, the market position is obtained through partnerships with institutions that help to get the name out.
• Zelle does its campaigns and also partners with credit unions and banks to give them messaged to reach customers.
• People can hear about Zelle from institutions that they already know and trust, helping with awareness.

ADS RELEASED OVER THE LAST YEAR

• Zelle's campaign titled "Everyday Better" from Huge Brooklyn features several ads and plays around with yearbook-photo type visuals to portray use examples for its service. It is the most recent campaign.
• The “Everyday Better” 2019 Zelle marketing campaign uses every day Person-to-Person (P2P) use cases to drive more profound levels of awareness.
• It was launched in March 2019 and continued through to the end of September 2019.
• In about 30 and 15 second spots running online, the characters who appear in the videos are ready to have their photos taken.
• However, they start to say that they would like to have their money wired to them through Zelle rather than provided in the form of gifts or checks.
• The campaign contained several ads that were tailored for different circumstances in people's daily lives.
• These ads highlight moments that appeal to a wide variety of people who have been dissatisfied when receiving sub-par gifts. 
• Ads tap into occasions such as graduations, birthdays, family reunions, and brunch.

• In the graduation ad, a check is given as a graduation gift, and the recipient highlights the struggle of having to deposit the check and wait for it to mature.
• She says that she wishes she could check her bank account and find money sent with Zelle instead.
• The ad ends with the words "Gift better. Send money with Zelle."

• The speaker says that rent is the only reason the viewer checks and that they should instead send rent to their landlord using Zelle.
• It ends with the words "Rent better. Send money easily with Zelle.

• This ad is about gifting. A man is given chocolate as a gift, and he says that next time, he would rather be sent money with Zelle, then he can but his gift.

• The ad ends with the words "Gift better. Send money with Zelle."

• In this ad, a man says that he wishes his roommates would send him money with Zelle to pay him back for the cable bill.
• It ends with the words "Roommate better. Send money with Zelle."

CURRENT ADVERTISING STRATEGY

• In March 2019, Zelle decided to move from awareness-focused digital advertising and broadcast to education and usage focused media, which is more likely to appear on existing and potential users' laptops, mobile phones, and tablets.

• The "Everyday Better" campaign is the current strategic marketing choice.
• With this strategy, ads appear online and in mobile and are more about explaining the opportunities to use Zelle, which are also available within most mobile banking apps.
• The advertising strategy is focused on trying to thread the needle in appealing to an older demographic who might think that Zelle is retro, and a younger demographic who feels that it's fun.
• The use of the color purple turns the campaign into more of Silicon Valley than Wall Street.
• The strategy reaches people across their daily behaviors (commute, programs and content consumed, and social media channels).
• Melissa Lowry, Zelle's VP of marketing and branding, said that the campaign is a direct reflection of Zelle's promise: When money moves, life happens.
• The Everyday Better campaign is a continuation of Zelle's brand story. 
• The top 3 use cases highlighted are paying rent, gifting, and splitting bills, which appeal to most people.

MARKETING CHALLENGES

• Zelle's marketing challenges are caused by the indifference to its services by some potential users.
• Some people believe that their money transaction needs are being fulfilled using other mechanisms.  
• Others think that cards are more secure, while others prefer to use an old-fashioned plastic card.
• Even though Zelle has become popular among young users, its popularity among the older generation is still minimal.
• This calls for the use of expensive television ads to make consumers aware that they already have Zelle in their banking app.
• Small banks have no budgets for national campaigns for Zelle and they have to look for unique techniques.

AGE

• Based on a study conducted by Cornerstone Advisors in the fourth quarter of 2018, the generation that has the greatest uptake (20%) of Zelle is the older millennial generation, which encompasses ages 30-38.
• Following older millennials, generation X (ages 39-53) is the generation with the second-most adopters at 14%.
•  Young millennials (ages 21-29) have adopted Zelle at a rate of 11% and baby boomers (ages 54-72) have a 5% Zelle adoption rate.
• However, baby boomers send the most money using Zelle at an average of $270 per transaction.
• Generation X again comes in second, sending an average of $164 per Zelle transaction, followed by older millennials, who send an average of $94 per Zelle transaction, and young millennials, who send an average of $25 per Zelle transaction.
• Seniors are the least likely to embrace any kind of peer-to-peer (P2P) payment app.

INCOME

• Approximately 39% of mobile payment users have incomes of at least $75,000.
• The income breakdown of mobile payment users is as follows.
•  10% of users have an income of $10,000 or less.
•  8% of users have an income of between $15,000 and $24,999.
•  25% of users have an income of between $25,000 and $49,999.
•  17% of users have an income of between $50,000 and $74,999.
•  15% of users have an income of between $75,000 and $99,999.
•  24% of users have an income of $100,000 or more.

GENDER

• Females use mobile payments more often than males at 53% to 47%.

EDUCATION

• Of mobile payment users, 36% have at least a college degree.
• The breakdown of the educational level of mobile payment users is as follows.
•  8% of users have less than a high school education.
•  31% of users have a high school education.
•  25% of users have at least some college education.
•  23% of users have a college education.
•  13% of users have a post-graduate education.

Marital Status

• About 55% of mobile payment users are married compared to 32% who are single.
• Just 10% of mobile payment users are separated or divorced and 3% are widowed.

EMPLOYMENT STATUS

• The vast majority of mobile payment users are employed at 70%.
• Unemployed users make up 6% of mobile payment users and people who aren't in the workforce make up 24%.

RACE/ETHNICITY

• People who identify as white make up 63% of mobile payment users.
• People who identify as African-American make up 14% of mobile payment users.
• People who identify as Hispanic make up 16% of mobile payment users.
• The remaining users (7%) identify as another race or ethnicity.

GEOGRAPHY

• People in the South region of the U.S. use mobile payments more than any other region at 36%.
• Metropolitan residents (85%) use mobile payments much more heavily than non-metropolitan residents (15%).
• The geographical breakdown of mobile payment users by U.S. region is as follows.
•  18% of users live in the Northeast region.
•  20% of users live in the Midwest region.
•  36% of users live in the South region.
•  26% of users live in the West region.

RESEARCH STRATEGY