FIs must win payments to win primacy with customers

By Prakash Natarajan, Senior Managing Director,​ Payments Advisory at SRM

The financial institution that wins payments wins the primary customer relationship. That is one of the central conclusions from SRM’s 2026 Financial Services Outlook Report, which highlights five interconnected forces shaping strategy, scale, and competitive positioning.

Payments are the most frequent point of interaction between consumers and the financial ecosystem. According to Federal Reserve data, consumers make an average of 48 payments per month. Yet an increasing share of those transactions occur outside a customer’s primary financial institution—via P2P platforms, digital wallets, and emerging real-time payment rails.

For banks and credit unions, top-of-wallet status is no longer secured simply by issuing a card. It is earned by enabling real-time, mobile-integrated, and personalised payment experiences that fit seamlessly into customers’ daily lives.

Why Payments Matter: The Front Door to Primacy

Fintech disruptors have reshaped financial services by simplifying money movement. They have made it frictionless to onboard, fund accounts, access cards, use buy-now-pay-later services, and self-serve through intuitive digital channels.

As a result, payments have evolved from a back-office utility into the front door of the customer relationship. Financial institutions that recognise this shift and align their strategies accordingly are positioned to win primacy. Those that do not risk disintermediation.

The implications for loyalty and revenue are significant. Customers who actively use a financial institution’s payment capabilities are more likely to remain engaged. Institutions that invest in and promote integrated payment features experience lower attrition than those that treat payments as a peripheral digital add-on, according to JD Power churn data.

For credit unions, the impact is especially clear: members whose CU-branded cards are their primary payment method are 57% less likely to leave, according to a 2025 Velera/PYMNTS report. Similarly, small and medium-sized businesses (SMBs) demonstrate stronger loyalty when institutions provide instant access to funds combined with digital tools that connect payments, payroll, and cash flow management.

Importantly, it is not the transaction itself that drives loyalty. It is the value created around the payment—speed, visibility, control, and insight—that deepens the relationship.

Designing Payments for a Multi-Generational Customer Base

Delivering effective payment experiences is complicated by the diversity of today’s customer base. U.S. banking customers are now distributed across four major generations—Gen Z, millennials, Gen X, and baby boomers—each with distinct expectations.

Older customers often prioritise reliability and familiarity, favouring ACH for recurring payments or wires for time-sensitive transactions. Younger consumers, by contrast, are largely indifferent to underlying payment rails. They prioritise speed, transparency, and convenience, expecting funds to move instantly and information to be available in real time.

However, generational differences should not be oversimplified. Customers across all age groups increasingly expect experiences that are intuitive, secure, and personalised. The common denominator is the desire to feel “known and supported.”

This is where data becomes a differentiator. Financial institutions must leverage insights from every interaction—transactions, channels, and behaviours—to deliver contextual recommendations, proactive alerts, and tailored financial guidance at the right moment and through the preferred channel.

Bank of America’s Life Plan tool illustrates this approach. By integrating goal-setting, tracking, and personalised guidance into its digital platform, the bank has created a payments-adjacent experience that deepens engagement. Since its launch in 2020, more than 10 million users have adopted the tool, contributing tens of millions in incremental balances.

While not every institution has the scale of Bank of America, the underlying principle applies broadly: payments data can, and should, serve as the foundation for more holistic, relationship-driven experiences.

Building a Winning Payments Strategy: Three Pillars

For financial institutions ready to elevate payments from a functional capability to a strategic priority, success depends on three interconnected pillars:

Product Strategy

Institutions must assess their current payment capabilities against evolving customer expectations. This includes identifying gaps in real-time payments, digital wallets, embedded finance, and cross-border solutions. Decisions must then be made about what to build internally versus what to access through partnerships or acquisitions.

Operations Strategy

Delivering modern payment experiences requires infrastructure that supports speed, scale, and security. This includes real-time processing, mobile-first design, and effective fraud controls that minimise customer friction. Just as important is the ability to scale non-linearly. Institutions must build highly efficient, technology-enabled operations that rely on automation and streamlined processes rather than incremental headcount. These capabilities must support both seamless customer experiences and increasing regulatory demands. In the end, balancing efficiency, control, and resilience at scale.

Vendor Strategy

Third-party partners play a critical role in payments innovation. Institutions must evaluate whether their existing vendors are accelerating or constraining their roadmap. Contract structures, pricing, and service levels should reflect the institution’s strategic priorities and market position. This is an area that is frequently overlooked.

While incremental improvements are possible, transitioning to an integrated, data-driven payments strategy is inherently complex. Disconnected upgrades can exacerbate fragmentation and limit future agility. At the same time, FinTech partnerships—particularly payments-as-a-service providers—are likely to remain essential. The key is disciplined governance, strong risk management, and a clear focus on delivering customer value.

The Bottom Line

Consumers are not consolidating their financial relationships; they are expanding them. However, they concentrate their activity with the providers that best meet their day-to-day needs. Payments sit at the center of this dynamic. They are the most frequent, visible, and data-rich interactions in a customer’s financial life.

For banks and credit unions, the path to primacy is clear: win the payments experience. Institutions that invest in integrated, intelligent, and customer-centric payment strategies will strengthen engagement, increase loyalty, and secure their role at the centre of customers’ financial lives