business

Banks Hire Rapping Broadway Star to Give Venmo Run for Its Money

  • Zelle, a bank-backed payment system, tries to lure millennials
  • In debut year, it showed some progress, handling $75 billion
Daveed Diggs, right, in Zelle’s marketing campaign. Source: Huge Inc.

To pitch their payments system of the future, U.S. banks hired an actor best known for playing Thomas Jefferson and Marquis de Lafayette -- and he raps.

Zelle, the person-to-person payments network that went live last year, will make its Super Bowl debut this week as part of a national marketing campaign. The spot is one way Zelle’s backers -- such as JPMorgan Chase & Co. and Bank of America Corp. -- hope to woo millennials, who latched on early to alternatives, such as PayPal Holdings Inc.’s popular Venmo app.

Spokesmen for the still nascent campaign include Daveed Diggs, who won a Tony award for his work in the smash Broadway musical “Hamilton” that infused rap, hip-hop and other genres into its score. Banks also are leaning on their relationships with older generations, who sometimes pick up millennials’ bills.

So how is stodgy finance doing so far?

Banks processed $75 billion of person-to-person transactions via Zelle in 2017, according to a statement this week from Early Warning, the bank-owned venture that operates the network. That tops the $34.6 billion sent over Venmo. Still, when you also include person-to-person payments made over PayPal’s namesake network as well as those made on its cross-border platform Xoom, PayPal has the edge.

Closing the Gap

Zelle's purchase volume gained on PayPal during the fourth quarter

Source: Company filings, Early Warning

Note: PayPal's person-to-person payments volume include payments made on PayPal, Venmo and Xoom, its cross-border platform.

For PayPal, “this is not a threat this year at all, but it’s definitely a long-term risk,” said Thomas McCrohan, an analyst at Mizuho Financial Group. Zelle is spreading by helping traditional banking customers send money to other groups, he said. “It does create a viral effect. If you’re going to send your daughters funds, they have to open their bank app to look at the funds to make sure they got it.”

Millennials embraced a new generation of person-to-person payments systems to split dinner checks or pay rent. But banks see handling those payments as key to controlling vast reams of customer data. The Zelle network now includes more than 60 banks, which encompass about 50 percent of U.S. deposit accounts, Early Warning said in the statement.

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