PNC Bank wants to make it easier for its customers to transfer money to their friends as the financial services industry comes under increasing pressure from technology companies such as PayPal Inc. and Square Inc. that offer real-time mobile payments.
Pittsburgh-based PNC Financial Services Group expects to roll out the service this year, which will allow the bank's online and mobile customers to instantly send money to other individuals' accounts at some of the nation's largest banks, similar to services offered through PayPal's Venmo and Square Cash.
Known as peer-to-peer payments, the service from PNC will be offered through digital payments network ClearXchange. The network is owned by Early Warning Services, a Scottsdale, Ariz.-based company in which PNC invested last year.
In addition to PNC, ClearXchange's ownership includes Bank of America, BB&T, Capital One, JPMorgan Chase, U.S. Bancorp and Wells Fargo. Bank of America and U.S. Bancorp have been offering ClearXchange since March; JPMorgan Chase started this month.
PNC spokeswoman Marcey Zwiebel said the bank will start offering the service later this year to its 7.5 million retail banking customers, but declined to provide more specific timing or say whether the bank will charge fees for the service. The service will allow the bank's customers to send money to account holders at other banks that are part of the network.
About 22 million Bank of America and U.S. Bancorp customers have access to the service.
PNC's deal with ClearXchange is the latest technology investment by the bank aimed at meeting consumer demands for digital banking products, PNC Chief Financial Officer Robert Reilly told analysts Tuesday.
Many large traditional banks fell behind as technology companies made it easier for consumers to manage their money online, Reilly said during a presentation at the Morgan Stanley Financials Conference in New York.
“Admittedly, banks weren't all that friendly on the front end” of their online systems, he said. But PNC is rapidly catching up.
“A great example of that is ClearXchange,” he said. “It's a product that will be ubiquitous in the industry.”
Jim Sinegal, an analyst at Morningstar Inc. in Chicago, said big banks are feeling the pressure to roll out peer-to-peer payment services so they don't lose younger customers to technology companies such as PayPal — or even Apple and Google, which recently have launched mobile payment technologies.
“You have to be there to head off competition,” Sinegal said. “You don't want your customers to get used to using peer to peer from someone else.”
Typically, the service is free when transferring money among friends, Sinegal said. But as customers use the service more, there should be opportunities to charge them for other financial services, he said.
“It's not an area where banks are planning on making a lot of money,” he said.
Alex Nixon is a Tribune-Review staff writer. Reach him at 412-320-7928 or anixon@tribweb.com.
