AFP recently spoke with Lynn Cirrincione, director of cash and banking for Allstate, and Liz Guthrie, director, disbursement products executive for Bank of America Merrill Lynch, about their session at the 2015 AFP Annual Conference. Faced with a claims payment process that was very check-heavy, Allstate implemented BofA’s digital disbursement service, which routes payments to customer bank accounts using mobile phone numbers and email addresses as identifiers.

AFP: As I understand it, Allstate’s claims payment process was looking to move away from checks when paying customer claims. Can you talk about how Allstate and BofA came up with a new payments solution? What payment options did you consider and how did you decide on digital disbursement?

Lynn Cirrincione: Prior to adopting Bank of America’s disbursement product, and offering Fast Mobile e-Payment to customers, individuals could only receive payment via check and ACH. We were looking at other possibilities, because we really wanted to get out of the check business and most customers don’t know their ACH information. Only those people who carry a checkbook know their bank routing and account numbers. You can find that information online at your bank, but that can be very difficult in some cases.

We were looking at what else we could do to improve the process for our customers, and we considered a variety of options including prepaid cards. We were talking with our BofA partners over the course of a couple years about what we wanted to do. We tested BofA’s digital disbursement product in a very small market and our customers really liked it, so we began offering it to customers more broadly in early 2015.

Guthrie: We have a close working relationship with Allstate and one of the things that our leadership is very passionate about is finding new ways to solve pain points that our clients are experiencing. So when Allstate came to us and said they were looking for a new way to pay—specifically something in the mobile space—we started looking around internally at different options.

An easy way for us to deliver a solution quickly was to leverage our internal P2P platform that runs on the clearXchange network. On the consumer side, we enable consumers to pay each other by simply using either an email address or a mobile phone number as the identifier. That technology seemed to fit nicely with what Allstate was looking for. So we thought it would be interesting to leverage the infrastructure that’s already in place, make some adaptations to it, and enable Allstate to pay their customers.

AFP: What has the response to digital disbursement been from Allstate’s customers?

Cirrincione: Customers have responded very positively to the offering. We rolled it out using a phased approach, in order to conduct the necessary training of our teams. When we initially introduced the service last year, we averaged about 4,000 payments a month—and that number continues to grow. We’ve had some great customer feedback about ease-of-use and instant access to the funds that are deposited.

It can be a very disheartening feeling when something happens to your personal belongings—whether it’s the result of a natural disaster, theft, fire or other loss. Allstate is here to help people recover—to get their lives back together. So if they need to stay in a hotel or purchase food and clothes for their family, those funds are available immediately through this system. Our fastest payment so far was available in under a minute.

AFP: The speed of these payments is an important consideration as the U.S. moves towards real-time payments. Last month, at the Payments Innovation Alliance meeting, panelists discussed the value real-time payments could have in paying insurance claims. Oftentimes, like you said, these payments need to be made right away. Would you say that insurers as a whole are going to get on board with solutions like this one?

Cirrincione: I can’t speak to what other insurers are doing, but one of the driving forces for our implementation was making continuous improvements to customer service—helping our customers begin the rebuilding or recovery process as quickly as possible. A lot of times, in a large scale catastrophe such as a hurricane, our customers can’t return to their homes—they need a hotel room, for example. In instances where there’s widespread damage to an area, there could be power outages; banks may not be accessible or open for business as a result. They may not be able to cash a check or access the ACH information. This is a way that we can really help our customers get their lives back together quickly.

AFP: With so much innovation in the payments space today, are Allstate and BofA exploring any additional options for the future? Are you looking into virtual currencies, digital ledgers, etc.?

Cirrincione: We really want to provide the best service to our customers that we can. We are always looking at new options for payment that are being introduced in the market that will improve a customer’s experience and work closely with our banking partners to implement these solutions.

Guthrie: We have a team internally that focuses on strategy and innovation that is always piloting and testing new things. They’ve been looking at how we could leverage virtual currencies, virtual ledgers, etc. to determine how we could bring them into our space and make them make sense. In the last 12 months, you’ve seen a shift in the way banks partner with third parties that have a lot of new and innovative products.