Financial institution powers fintech clients with Deluxe Payment Exchange

Founded in 1902, Lincoln Savings Bank (LSB) is dedicated to being a progressive, relevant bank that offers its customers the best service possible through convenient, innovative technology. With a goal to merge traditional payment systems with new and emerging technologies, Lincoln Savings Bank added a fintech-venture (LSBX) in 2014 and began partnering with several financial technology companies.

Challenge

There are two major drawbacks to the volume of check payments in the market that businesses cite: Cost and fraud. Cost is the largest deterrent for traditional check payments, with 20% of businesses reporting the cost of a single check to be more than $5.00.

To better meet the high-volume payment needs of their fintech customers, LSB wanted to streamline their manual check processes by moving to a digital payment platform to reduce cost, save time and elevate their customer relationships.

Mike McCrary, LSB’s First Vice President, Relationship Manager, said it’s been important for the bank to find a payments solution that reduces the friction of requiring an end user to enter information to get money they’re owed. This payee friction is one of the main reasons that prevent businesses from digitizing their payments. By only requiring a valid email address, Deluxe Payment Exchange filled this need, and the payee doesn’t need to share his or her financial information with the payer.

Solution

As part of their dedication to innovation, LSB recognized the continued shift to digitalization and began using the Deluxe Payment Exchange platform. “We want what’s going to work the best now and into the future. When we chose Deluxe, it was a very easy choice because we felt it was the best for issuing large quantities of checks in an efficient and cost-effective way,” says LSBX Operations Manager Brooke Dahlquist. “We really loved its flexibility. It works with our Positive Pay system and there wasn’t a strict file layout when we needed to import checks. We could set what we wanted.”

By shifting to a digital payment platform, LSB eliminates the cost of shipping and mailing traditional checks, while also improving their client relationships by offering them more deposit options. Some clients find this digital payment method “too easy to be true,” which is where McCrary says Deluxe’s 100-year history in the industry and trusted name comes in. “The Deluxe name has been around for a long time. Everybody’s heard of it and so there’s a trust factor that’s built into it,” adds McCrary. “If someone receives one of these emails and has a question. They call the number on it and they’re talking directly to someone at Deluxe who can help. The trust is continually built back into the process.”

In addition to the flexibility that Deluxe Payment Exchange offers, LSB didn’t need to invest hours of onboarding for its employees to learn how to use the system or spend development dollars to set up the platform. “It was very simple. Even if employees don’t get into it every day, it’s very simple for them to go back in and know how to navigate and upload a file or create an individual check—so that was really nice about choosing Deluxe,” says Dahlquist.

Business impact 

When onboarding clients, Dahlquist says the process was equally simple: “Our fintech clients were the ones that were ready to use electronic payments. It was exciting for everyone and it wasn’t difficult to get them on board with it at all.”

On average, it takes approximately 42 seconds to prepare one physical check. With a valid email address, the payer can deliver an eCheck to the payee in seconds and avoids costly mailing fees or risk of physical fraud interception. Dahlquist says implementing Deluxe Payment Exchange has significantly reduced the amount of time the bank spends on check issuance: “What would have taken us days, if not weeks using our old way, now takes us minutes. All you do is add a few columns to a spreadsheet, upload it and then we upload it to our Positive Pay system.”

McCrary says each of Lincoln Savings Bank’s fintech partners have seen an increase in deposits since implementing the Deluxe Payment Exchange platform. In fact, since using Deluxe Payment Exchange, almost half of the eChecks are cashed the same day Lincoln Savings Bank sends them. “The speed at which they’re going through is really unbelievable,” says Dahlquist.