North American Banking Company: Winning the p2p game

North American Banking Company’s ExcheQ app aims to make p2p payments faster and easier—and CEO Michael Bilski hopes other community banks will jump on its bandwagon.

By Colleen Morrison

Have you ever played the game “Spot the Difference,” where you scan a series of images in an attempt to discern the subtle differences in one of them?

For community banks, evaluating today’s person-to-person (p2p) payments market can feel a lot like that game.

Almost daily, reports reveal another p2p provider jumping into the mix. From relative newbies gaining traction, like Venmo and Zelle, to mobile-player options like Apple Pay and processor offerings like Fiserv’s Popmoney, p2p apps saturate the American market. The proliferation of options challenges community banks to distinguish the service that will benefit customers and the bank itself.

A desire to help community banks navigate these waters drove Michael Bilski, CEO of $500 million-asset North American Banking Company in Roseville, Minn., to dream up what today is called ExcheQ. This payments app leverages the ACH Network to send secure p2p transactions directly between consumer bank accounts, regardless of institution.

“ACH is such a cheap way to move money,” reasons Bilski. “The whole concept of trying to do something with a credit push just made sense to me. Why can’t I use all of the security features of the phone and come up with a way to generate a transaction using the ACH rails?”

Bilski engaged collaborators in developing this idea. Bridge Community Bank, a $92-million asset institution headquartered in Mechanicsville, Iowa, served as a pilot partner, helping test and work out kinks with end-of-day transactions. But it was the ICBA’s support in creating a proposal for the Federal Reserve’s Faster Payments Task Force that ultimately bolstered the product’s development.

“We were able to take the critiques from the Faster Payments Task Force and come up with a better name and graphics, and ways to process things a little smoother,” Bilski notes. “We launched it in our bank starting February 1 [2018].”

From concept to reality

“That’s mostly people getting used to it,” he says. “But now we’re having people coming into the bank and saying, ‘Well, I saw this commercial for a payment application. Do you have something like it? Do you have a way that I can pay people through an app?’”

ExcheQ meets the customer’s p2p need and does so cost-effectively for banks, says Bilski. While other white-label p2p solutions exist, there are often transaction fees associated with their use, which can be a deal-breaker for small community institutions. Bilski set out to create a tiered pricing solution that offers a fixed expense that can be factored into annual planning.

Quick stat

Monthly fee for a white-label ExcheQ p2p app for a bank with less than $130 million in assets

If a bank wants to white label ExcheQ for its institution, the process is simple; it can work directly with North American Banking Company. Pricing includes a set-up fee, a one-time licensing fee and a monthly maintenance fee, which, for a bank of less than $130 million in assets, amounts to $240 per month.

Keeping costs down drove the app’s design. “I don’t know if there’s a revenue play for banks when it comes to p2p payments,” Bilski says. “I just tried to come up with a simple way for community banks to participate, keep a handle on their costs and not have to pay transaction fees as the volume goes up.”

Because the app uses the ACH Network for processing, all of the back-end operation exists for originating financial institutions. The monthly fee supports ongoing app development, along with brand customization opportunities.

There is a downside to leveraging the ACH infrastructure: Payments are not instant. When the Faster Payments Task Force evaluated ExcheQ, they didn’t award it the highest marks because it’s not a real-time option. Bilski, however, does not see that as a deterrent.

“Most people don’t necessarily need the just-in-time payment,” he says. “They need to know that they’re getting the money. I’m still a big believer that if we can make notification faster and settlement somewhat faster, we’re going to get to 95 percent of the population.”

Future plans
Bilski plans to further develop ExcheQ as community bank adoption grows. Features like more robust data and card functionality offer potential, along with enormous possibilities if universal payments directories come into play.

For now, Bilski hopes that as community banks continue to scrutinize p2p payment options, ExcheQ is a contender. With its “not like the others” persona, it just may become a community bank’s game-winning solution.

Colleen Morrison is a writer in Virginia.