Latest / Leaders In Payments / Rich Clow, Head of Innovation & Strategy, Global Payments Solutions at Bank of America | Episode 482

Transcript

Rich Clow, Head of Innovation & Strategy, Global Payments Solutions at Bank of America | Episode 482 · Leaders In Payments

• 0:00
  SPEAKER_00: Welcome to the Leaders in Payments Podcast, where we talk to sea level leaders from across the payments landscape.
• 0:07
  SPEAKER_00: We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments.
• 0:14
  SPEAKER_00: We will also hear stories from our guests about their journeys to the top.
• 0:18
  SPEAKER_01: Hello, everyone, and welcome to the Leaders in Payments Podcast.
• 0:20
  SPEAKER_01: I'm your host, Greg Myers.
• 0:22
  SPEAKER_01: Joining me today is a very special guest, Rich Clow, the head of innovation and strategies for Global Payment Solutions at Bank of America.
• 0:29
  SPEAKER_01: So, Rich, thank you so much for being here and welcome to the show.
• 0:32
  SPEAKER_02: Greg, thanks very much.
• 0:33
  SPEAKER_02: It's uh it's great to meet you.
• 0:35
  SPEAKER_02: I'm a fan of the podcast and uh look forward to our chat today.
• 0:39
  SPEAKER_01: Yeah, well, thank you for for being a fan.
• 0:40
  SPEAKER_01: I appreciate that.
• 0:41
  SPEAKER_01: So before we go deep into the actual content, can you walk us through your professional journey and how you got to Bank of America?
• 0:49
  SPEAKER_02: Certainly.
• 0:49
  SPEAKER_02: I spent most of my career now, over 25 years, in payments at banks.
• 0:55
  SPEAKER_02: And it started at Citibank back in 1998, where I was a technology architect on our first branchless bank at that time.
• 1:04
  SPEAKER_02: And through that, I led a number of different modernizations around the world, actually, between call centers and financial centers.
• 1:11
  SPEAKER_02: And then really, we saw a big movement into mobile.
• 1:15
  SPEAKER_02: And at that time, City operated in over 40 countries.
• 1:18
  SPEAKER_02: And I was asked to lead a mobile development center of excellence to speed our solutions out to the markets that needed them critically.
• 1:26
  SPEAKER_02: And that just so happened to also intersect with the timeline where there's a lot of international experimentation with mobile payments back when we tried to put a credit card on a sim.
• 1:37
  SPEAKER_02: So I was kind of in the right place at the right time around a lot of payment innovation for mobile.
• 1:43
  SPEAKER_02: And then after doing Apple Pay and Google Pay at scale, I had an opportunity to move to Bank of America.
• 1:49
  SPEAKER_02: And at that time, it was 2018, and a lot of the innovation was pivoting from more credit cards into deposit accounts for things like Zell and real-time payments.
• 2:00
  SPEAKER_02: So uh I was asked to join the team.
• 2:02
  SPEAKER_02: I led an innovation function in a group called Enterprise Payments.
• 2:06
  SPEAKER_02: And one of my first priorities at the bank was to build a stage-gated innovation process focused primarily on consumer and small business.
• 2:14
  SPEAKER_02: And the goal was to define how do we look at the client needs and the business cases with a lot of rigor and then look at the technology solutions only as an enabler to drive those business strategies.
• 2:28
  SPEAKER_02: And that approach led to several different types of new launches, including a number of the use cases for real-time payments, and including being one of the larger banks for requests for pay, and then another major launch about two and a half years ago for our mobile wires solution.
• 2:45
  SPEAKER_02: So, really, that was the start.
• 2:47
  SPEAKER_02: And then about three years ago, through a structural change, the enterprise payments group I was a part of was joined together with uh what was called our legacy global transaction business.
• 2:58
  SPEAKER_02: So there was now one place where all of payments across our full client continuum is supported, whether it be strategy and innovation, product development, compliance, contracts.
• 3:10
  SPEAKER_02: So everyone's under one roof.
• 3:13
  SPEAKER_02: And it's been pretty exciting to have a front seat to really see not just what's happening in the United States, you know, where we're a big-scaled operation, but now also supporting our global corporates.
• 3:24
  SPEAKER_01: Okay.
• 3:24
  SPEAKER_01: Well, obviously, most, if not all, of our audience will be familiar with Bank of America.
• 3:29
  SPEAKER_01: But maybe for context, can you give us a quick kind of overview of maybe where your group fits in with the broader company and maybe how your team fits into that?
• 3:37
  SPEAKER_02: Certainly.
• 3:38
  SPEAKER_02: So the Global Payment Solutions Organization sits really in the center of Bank of America.
• 3:43
  SPEAKER_02: We power all our lines of business from consumer wealth and business banking here in the U.S., as I had mentioned, all the way up to the global commercial banking and our multi-corporates business.
• 3:52
  SPEAKER_02: Just as a order of magnitude, you know, the consumer side is one of our, you know, largest, one of the largest in the United States.
• 3:59
  SPEAKER_02: And we run everything from Apple Pay to the peer-to-peer payments we manage with Zell.
• 4:05
  SPEAKER_02: And order of magnitude scale, we're about more than$4 trillion in payment value per year, approximately$20 billion in transactions.
• 4:13
  SPEAKER_02: We have 49 million digitally active users and 25 million active Zell users.
• 4:20
  SPEAKER_02: And then on the corporate side, we have both corporate and institutional clients for a range of solutions, including liquidity management, accounts payable, accounts receivable, merchant services, corporate cards, trade finance, as well as advice.
• 4:35
  SPEAKER_02: And that footprint spans 44 countries and jurisdictions and over 140 currencies.
• 4:40
  SPEAKER_02: Again, order of magnitude size there is we have more than 450 trillion in payments value, about 9 billion in transactions, and 35,000 clients.
• 4:50
  SPEAKER_02: And really what differentiates the way we go to market is that it's all really led with our relationships, pairing up what we know about the client, the industry that they're in, the, and then aligning the products and advisory expertise we have to suit their needs.
• 5:05
  SPEAKER_02: So it really becomes a bit of a unique proposition versus a one-size fits-all.
• 5:10
  SPEAKER_02: And then today, our organization, Global Payment Solution, roughly supports 70% of the global Fortune 500 and over 30 to 35,000 corporate and institutional clients.
• 5:22
  SPEAKER_02: My organization within Global Payment Solutions is responsible for all the strategy and innovation across that group.
• 5:29
  SPEAKER_02: So basically, I like to say we answer why something that's emerging matters and does it matter for Bank of America and our clients.
• 5:37
  SPEAKER_02: And then if it does, what we should do about it is kind of the beginning of the innovation funnel to figure out how we find that intersection of a new business model or new technology and our client needs.
• 5:47
  SPEAKER_02: And then, like I said earlier, kind of stage gate that into pilot or potentially production.
• 5:52
  SPEAKER_01: All right.
• 5:52
  SPEAKER_01: Well, let's dive into the discussion.
• 5:54
  SPEAKER_01: And as you mentioned, you sit at the intersection of innovation strategy and client needs.
• 5:58
  SPEAKER_01: So what's top of mind right now, say for the early adopters of new payment solutions?
• 6:03
  SPEAKER_01: And what is that therefore then like pushing the market towards?
• 6:07
  SPEAKER_02: Sure.
• 6:08
  SPEAKER_02: You know, this is a great question.
• 6:09
  SPEAKER_02: And I kind of thought about how to how to answer by talking about two different types of clients that we serve.
• 6:15
  SPEAKER_02: The first are merchants.
• 6:17
  SPEAKER_02: So if you think about it, we serve everyone from a sole proprietor in New Jersey, where I live, or maybe Prosper, Texas, where you are, to global household names.
• 6:25
  SPEAKER_02: You know, some of the biggest companies in the world.
• 6:27
  SPEAKER_02: And regardless of their size, they're all focused on a few core things.
• 6:31
  SPEAKER_02: They want to deliver simple and intuitive experience to their customers.
• 6:34
  SPEAKER_02: They want to improve their authorization rates.
• 6:37
  SPEAKER_02: They want to reduce fraud and claims, and they want to get their funds settled faster.
• 6:42
  SPEAKER_02: So that's a mouthful.
• 6:44
  SPEAKER_02: That's probably a whole separate podcast, but there are a lot of things that merchants need.
• 6:47
  SPEAKER_02: And as I understand your background, you're pretty familiar with that.
• 6:51
  SPEAKER_02: The second group that I like to talk about are financial institutions globally, right?
• 6:55
  SPEAKER_02: So they're always looking for guidance, particularly around the regulatory landscape, around emerging areas such as stable coins or tokenized deposits.
• 7:04
  SPEAKER_02: They're asking, what are the real use cases?
• 7:07
  SPEAKER_02: How are the regulatory environments differing between the regions?
• 7:11
  SPEAKER_02: So what we're doing here in the United States is different than AMIA or LATAM or Asia.
• 7:16
  SPEAKER_02: And really what that enables us to do with our footprint is to bring a unique perspective.
• 7:22
  SPEAKER_02: And not just for through the lens that we're looking at here in the United States and in Washington, DC, but also comparing it across the other regions where we're operating and we're engaging in payment innovation, as well as some of the types of the groups that we work with or consortiums, things like uh Swift Working Groups, the globally systemic important banks or GCIBs, the Claringhouse, and then things like Early Warning and some of the announcement that they've had around uh Zell International.
• 7:50
  SPEAKER_01: Okay.
• 7:50
  SPEAKER_01: Well, as you look at, you know, across the whole payments landscape, what are you seeing to be like the highest transaction volumes today?
• 7:58
  SPEAKER_01: And what do those type of patterns tell you?
• 8:00
  SPEAKER_01: I mean, you mentioned some already, the real-time payments and you know, all of those kind of things that are that are really top of mind for everyone, stable coins, all those kinds of things.
• 8:09
  SPEAKER_01: But where do you see those patterns and what what are they telling us about where the market's heading?
• 8:13
  SPEAKER_02: Yep.
• 8:14
  SPEAKER_02: That's another great question.
• 8:15
  SPEAKER_02: And really, the vast majority of payments are still domestic payments, right?
• 8:19
  SPEAKER_02: And if you think about whether it's the United States or India or Brazil or the UK, the vast majority of volume is still on domestic payment networks.
• 8:30
  SPEAKER_02: And it still skews more for like the ACH clearinghouse variety than real-time payments.
• 8:36
  SPEAKER_02: But part of what we're seeing are how cross-border payments are in a lot of discussions.
• 8:43
  SPEAKER_02: But again, the vast majority of cross-border payments are still wires, right?
• 8:47
  SPEAKER_02: And they're still managed by Swift.
• 8:49
  SPEAKER_02: But we are starting to see in these domestic networks first a migration to RTP.
• 8:56
  SPEAKER_02: And one of the things that's kind of slowed that progress is the great amount of data.
• 9:03
  SPEAKER_02: So there's a standard called ISO 2002, and that is terrific in terms of how it can help carry data that accelerates reconciliation and settlement, but that also requires more data out of the enterprise resource planning systems than any other payment, like a carded payment or ACH requires.
• 9:23
  SPEAKER_02: So that's kind of slowing down the adoption, but we're starting to see some signs that the major ERP systems are starting to integrate a little bit better.
• 9:32
  SPEAKER_02: And as we do that, we're seeing key industries like insurance, real estate, payroll start to integrate use cases, particularly on payouts, right?
• 9:41
  SPEAKER_02: So if I'm a major insurance company, a client has a claim for their car or their home, they need that funding immediately.
• 9:50
  SPEAKER_02: And it's just so much faster and simpler to pay it out using, you know, RTP to get that to them instead of a check or another kind of slower payment method.
• 9:59
  SPEAKER_02: And then next, you know, we also see some domestic transfers, right?
• 10:04
  SPEAKER_02: If you think about it, domestic wires are used pretty often for higher dollar value and wanting to track and trace those movements.
• 10:11
  SPEAKER_02: We are seeing more domestic RTP work increase.
• 10:15
  SPEAKER_02: So let's say a company is doing an acquisition or they're doing a major buy with a supplier.
• 10:20
  SPEAKER_02: They might wait a little later so they don't have a two-day or three-day lag in the payments, and then start to use the real-time payment system for just in time payments so that they can better manage their liquidity.
• 10:31
  SPEAKER_01: Okay.
• 10:32
  SPEAKER_01: Well, how are customer preferences around payment types evolving and what features seem to matter the most to clients when they decide to adopt something new?
• 10:41
  SPEAKER_01: I mean, there was a time, right, where it was like, hey, you should have every payment type available because you might have a consumer that wants to pay with it.
• 10:47
  SPEAKER_01: But I think we've we've got a little bit smarter about that.
• 10:50
  SPEAKER_01: But just curious, your your thoughts on when they decide to adopt something new, what really seems to matter the most?
• 10:56
  SPEAKER_02: Sure.
• 10:56
  SPEAKER_02: You know, we we've seen a lot of rapid consumer adoption.
• 10:59
  SPEAKER_02: So I thought for this question, I'd probably focus more on treasurers, more on the B2B segment.
• 11:04
  SPEAKER_02: And as I you know work across a lot of different treasurers and our customer advisory boards, there are two consistent themes that we hear.
• 11:12
  SPEAKER_02: One is how to streamline accounts payable and accounts receivable across payment types.
• 11:18
  SPEAKER_02: And two, how can they continue to increase their resilience or their thwarting different types of security or fraud prevention mechanisms?
• 11:29
  SPEAKER_02: So I'll talk about both of those.
• 11:31
  SPEAKER_02: As it relates to the streamlining accounts payable and accounts receivable, treasury functions are often very small within a corporate context.
• 11:39
  SPEAKER_02: And they're always seeking efficiencies to receive and send out payments, recognizing there's a very, very large diversity of the payment types where most places still support paper invoice and checks, right?
• 11:52
  SPEAKER_02: We're trying to get rid of that, but it's still there.
• 11:54
  SPEAKER_02: Many still have electronic forms of ACH or wire.
• 11:58
  SPEAKER_02: And then as you look at it, there are more and more opportunities for carded payments, right, in different payment networks.
• 12:04
  SPEAKER_02: So the goal is how do you accelerate the reconciliation of an invoice payment you receive or as you're making payments out across all of these things, which could include a lockbox, a merchant services account, virtual card networks, traditional ACH and wires.
• 12:22
  SPEAKER_02: So it's really, really challenging.
• 12:24
  SPEAKER_02: So what we're doing is how can we help them with some tools as well as advice by plugging in and enabling them to migrate each of those to optimal level and then monitor the way that those things are used, but most importantly, eliminate the kinds of manual reviews and cues that build up so that they can improve their efficiency as well as the timeliness for the payments.
• 12:50
  SPEAKER_02: The second area I mentioned is around security and fraud prevention.
• 12:55
  SPEAKER_02: The threat landscape continues to evolve really rapidly.
• 12:58
  SPEAKER_02: And in the business-to-business space, you know, we see our clients needing some solutions from our tool set as well as advice around a layered security approach.
• 13:09
  SPEAKER_02: So, yeah, one example that we've we've provided where we have to continue to support this balance of security and convenience.
• 13:20
  SPEAKER_02: So we've enabled a secure QR code solution to access the solution through multi-factor.
• 13:26
  SPEAKER_02: So if you think about, you know, a lot of solutions still have a password, you know, a regular username and password.
• 13:33
  SPEAKER_02: So we're trying to raise the bar on that a bit.
• 13:36
  SPEAKER_02: And we found that this solution's really worked well.
• 13:38
  SPEAKER_02: And then secondly, as it relates to advising our clients, very simple things to prevent inbound email threats are like how can they use their architecture to filter email domains, right?
• 13:52
  SPEAKER_02: How can they use some intelligence to do those types of things?
• 13:56
  SPEAKER_02: So basically, that lowers the risk of receiving an inbound invoice, right?
• 14:00
  SPEAKER_02: That's like an imposter, as well as malware and other types of things.
• 14:04
  SPEAKER_02: So that's just a couple of things in that space.
• 14:07
  SPEAKER_02: But those two areas around streamlining accounts payable and receivable and ensuring their security and safety are really big ones.
• 14:15
  SPEAKER_01: Okay.
• 14:16
  SPEAKER_01: Cash Pro, we're gonna talk about that a little bit.
• 14:19
  SPEAKER_01: That's one of obviously your major payments products is continue to evolve with AI, real-time data, and digital capabilities.
• 14:27
  SPEAKER_01: So, how are those changes improving two things the client experience and how are they helping you win more business globally?
• 14:33
  SPEAKER_02: Yep, that's terrific.
• 14:34
  SPEAKER_02: And listen, we're really proud of Cash Pro.
• 14:36
  SPEAKER_02: It's now our flagship digital product.
• 14:39
  SPEAKER_02: It serves our corporate clients with a combination of its own user experience, mobile device, as well as APIs for where clients want to embed our solutions into theirs.
• 14:49
  SPEAKER_02: It's used by more than 35,000 companies around the world today.
• 14:54
  SPEAKER_02: And what really matters for clients is that it brings together a single unified experience connecting them to, you know, one of the world's largest bank and the networks that we have, as well as helping them make decisions to move faster and operate with greater control across their cash, liquidity, and payment solutions.
• 15:13
  SPEAKER_02: A big part of how Cash Pro will continue to evolve is how we utilize AI and how we deliver those solutions to our clients.
• 15:22
  SPEAKER_02: So one of the first examples I have is in Cash Pro Forecasting.
• 15:27
  SPEAKER_02: If you think about what types of things treasurers need to know about, it's really what are their liquidity positions, what are their cash positions, how are they optimizing the business of really cash management?
• 15:39
  SPEAKER_02: So uh cash pro forecasting is an AI-driven data intelligence tool that automatically pulls account data across accounts payable, accounts receivable, applies machine learning to analyze global cash positions, right?
• 15:53
  SPEAKER_02: So it's not just domestic, and then it provides accurate forecasts and insights that allow them to guide where they should be potentially making changes or not.
• 16:04
  SPEAKER_02: One of the examples, you know, there's been a lot of questions around different currencies and valuations and interest rates, et cetera.
• 16:13
  SPEAKER_02: So that's a good example of the kind of sensitivity analysis that the tool can provide.
• 16:17
  SPEAKER_02: And just last year, more than 3,000 companies used Cash Pro forecasting to save over 250,000 hours of the treasury team's time.
• 16:27
  SPEAKER_02: So that's really been a big one.
• 16:29
  SPEAKER_02: And then the second is Cash Pro chat, which is the virtual assistant that we use to help support corporates using the AI-driven Erica technology.
• 16:37
  SPEAKER_02: Erica is a chat bot that we've built within the bank, and I'll talk about that a little bit more later.
• 16:42
  SPEAKER_02: But basically, it allows clients to answer some of the most frequent questions that they get 24 by seven.
• 16:48
  SPEAKER_02: And it also, to the extent you can't get an answer, like investigating a specific payment, it then uh connects people 24 by seven to the operations folks who know exactly what those types of questions are.
• 17:00
  SPEAKER_02: And the average response time for these types of solutions is under 30 seconds.
• 17:05
  SPEAKER_02: So the most common topics we see are user management, payments visibility, access controls, and account verification letters.
• 17:12
  SPEAKER_02: And overall, about 42% of the increase today are fully resolved just through the chat.
• 17:17
  SPEAKER_02: So the cash flow, lastly, the cash flow mobile app has become an indispensable tool.
• 17:22
  SPEAKER_02: So if you think about doing your job where you are instead of just like you'd want to as a consumer, right, or a small business owner, being the treasurer of a big company, you want that same flexibility.
• 17:32
  SPEAKER_02: And we're seeing a record number of sign-ins and usage growing about 20% year over year, which really helps us understand how we're really helping our clients day to day.
• 17:41
  SPEAKER_02: And then last year alone, our clients approved$1.2 trillion in payment value through the app.
• 17:47
  SPEAKER_02: So that's roughly$38,000 every second just through using the Cash Pro Mobile app.
• 17:53
  SPEAKER_02: And the last thing I'll leave you with is how are we engaging with our clients?
• 17:57
  SPEAKER_02: How are we listening?
• 17:59
  SPEAKER_02: So we have a series of Cash Pro advisory boards that we do across all of our regions, and they play a really big part in how we target the various different segments of corporates that we serve, the various different industries that they sit in, and understanding what would make the biggest difference to them.
• 18:18
  SPEAKER_02: And then actually utilizing those forums to prioritize our different investments in the platform.
• 18:23
  SPEAKER_02: And it's really deeply embedded in our culture for using this kind of client-driven innovation.
• 18:29
  SPEAKER_02: And uh we're we're we're looking forward to continuing that.
• 18:31
  SPEAKER_02: And actually, as a matter of fact, my colleagues are off to Singapore, Malaysia, and India over the course of the next month or so to get this year's feedback.
• 18:39
  SPEAKER_01: Okay.
• 18:39
  SPEAKER_01: Well, you mentioned 24-7.
• 18:41
  SPEAKER_01: So enabling 24-7 banking is a major shift.
• 18:45
  SPEAKER_01: So, what have been some of the biggest lessons learned from making that transition for clients?
• 18:49
  SPEAKER_02: Yes, whether it's consumer banking or corporates, the lesson is the same.
• 18:54
  SPEAKER_02: Redesigning for end-to-end processes, technology, and operations has to be done at the same time to achieve the goal.
• 19:03
  SPEAKER_02: Zell was an early first solution where we started to get an understanding of what's needed to achieve the 24 by 7 goal.
• 19:12
  SPEAKER_02: And it provided a lot of lessons to help the other real-time payment investments we've had.
• 19:17
  SPEAKER_02: So some of the types of examples were that the all the primary solutions and channels that the clients used were included in the scope.
• 19:26
  SPEAKER_02: But things like payment investigations and some other things that are more tertiary or don't happen that often as an edge case were not included in the first round just by basically by mistake.
• 19:39
  SPEAKER_02: So we came up with compensating controls.
• 19:41
  SPEAKER_02: We did prioritize those types of investments.
• 19:44
  SPEAKER_02: And now those types of solutions are end-to-end 24 by seven, including hours of operation and staffing, the types of training that are required.
• 19:55
  SPEAKER_02: So we see that there's also a big need for us as a major financial to do upgrades, right?
• 20:02
  SPEAKER_02: A weekend upgrade, whether it's quarterly or more frequent than that.
• 20:05
  SPEAKER_02: So now we're also figuring out what are the right ways to create stand-in or queuing up transactions and then figuring out how to disposition them in an orderly way.
• 20:16
  SPEAKER_02: So we don't have to, you know, reject payments on a hard, hard line basis if we're down.
• 20:21
  SPEAKER_02: We have kind of softer ways that we can handle the payment and provide the confirmation afterwards.
• 20:25
  SPEAKER_02: So those are just a few of the things.
• 20:27
  SPEAKER_02: And by the way, I think we're still learning, right, as we do it in different regions and different markets with their payment networks as well.
• 20:35
  SPEAKER_01: Okay.
• 20:35
  SPEAKER_01: You mentioned small businesses earlier.
• 20:37
  SPEAKER_01: And one of the more interesting trends in payments is that small businesses really they're increasingly getting these experiences that used to be reserved for larger enterprise kind of companies.
• 20:49
  SPEAKER_01: So what's driving that shift and and why does it really matter?
• 20:52
  SPEAKER_02: Yeah, it it's really interesting.
• 20:54
  SPEAKER_02: You know, I actually see the tale of two different types of small businesses, you know, and we have a good number of them here.
• 21:01
  SPEAKER_02: On the smallest business side, in many cases, those businesses want more of a consumer-like experience where it's very simple to send a wire, all of the data is connected into their whatever their specific industry solution is, and then all of the bookkeeping data is available to flow in and out.
• 21:21
  SPEAKER_02: And we see that constantly for restaurants, medical providers, manufacturing, and these smaller companies where they really just want one simple solution.
• 21:31
  SPEAKER_02: And one of the biggest things that we've seen, which is like a nice benefit to the consumer mobile wire solution, is we've seen great uptick with businesses, right?
• 21:40
  SPEAKER_02: Because a lot of times it's the same thing as like the cash pro mobile for a treasurer.
• 21:44
  SPEAKER_02: A lot of times, you know, a small business person doesn't want to have to go to the office or doesn't want to have to be have a key fob and these other things.
• 21:52
  SPEAKER_02: So enabling mobile wires has been a big unlock for them.
• 21:54
  SPEAKER_02: Now, to your point, what I would say the larger small businesses or the medium sized enterprises are really.
• 22:00
  SPEAKER_02: Seeing increased sophistication in the way that they have to source materials, the way that they sell, the way they go to the market.
• 22:07
  SPEAKER_02: So, in one example, like merchant services, you know, we've seen a big rise in adoption where in many cases, merchant that that's either growing or just starting out, in many cases today, they're going to have to have an online and in-person solution approach to accepting payments.
• 22:27
  SPEAKER_02: So we we've actually rebuilt our merchant services stack from the ground up with the recognition that you should be able to use one platform, right?
• 22:35
  SPEAKER_02: You shouldn't have to split your platforms for the the where your clients choose to buy from you.
• 22:41
  SPEAKER_02: And it's been integrated on a reporting basis and really help summarize the primary business activities.
• 22:48
  SPEAKER_02: And then the second thing that came to mind as you were talking about this is suppliers.
• 22:53
  SPEAKER_02: And a lot of these suppliers for these larger businesses are all over the world.
• 22:58
  SPEAKER_02: So in many cases, you know, we're working on how do we help a client who's going to make a payment, let's just say with a wire, understand what are the implications of FX, right?
• 23:07
  SPEAKER_02: And in most cases, you know, the supplier wants to receive it in their local currency.
• 23:12
  SPEAKER_02: Their bank wants to get the FX on that transaction.
• 23:15
  SPEAKER_02: So they say you should just send it in US dollars.
• 23:18
  SPEAKER_02: So again, through the tools that we have, the experiences we offer and the advice that we can provide, we're really trying to help small businesses in many cases save some money in those transactions.
• 23:27
  SPEAKER_02: And then also we're starting to open up more and more of that large small business and median segment to some of the payment networks where there are suppliers that are online, virtual cards are the typical usage.
• 23:39
  SPEAKER_02: All the data goes together with the transactions.
• 23:43
  SPEAKER_02: And often that simplifies the transaction as well as the payment getting there on time and the business getting credit for it immediately.
• 23:50
  SPEAKER_01: Well, Rich, as you lead payment innovation across this really broad client continuum, how do you think about evaluating new technologies, new business models?
• 23:59
  SPEAKER_01: And where do you know where to put the right bets?
• 24:02
  SPEAKER_02: Yeah, so that's the million-dollar question.
• 24:04
  SPEAKER_02: To be fair, I think we spend a lot of time.
• 24:07
  SPEAKER_02: I mentioned we have a stage-gated process, we call it a funnel.
• 24:10
  SPEAKER_02: And to be honest, it's a lot bigger at the top.
• 24:12
  SPEAKER_02: It gets pretty small at the bottom because we really do need to just place a few bets.
• 24:17
  SPEAKER_02: So I have a couple thoughts on the AI space, because it's a space we're really deep into.
• 24:23
  SPEAKER_02: And then also business model as two examples.
• 24:26
  SPEAKER_02: So the first is you know, we spend a lot of time focused on our client needs, how they're evolving, and making sure our technology is evolving with them.
• 24:33
  SPEAKER_02: And that's why we do continue to invest in areas like AI.
• 24:37
  SPEAKER_02: And AI specifically, we're really intentional about how we approach AI.
• 24:42
  SPEAKER_02: And rather than looking at AI as a series of one-off projects or one horizontal project, we really focus on what's the business problem we're solving.
• 24:52
  SPEAKER_02: How do we look at building a capability to solve that problem?
• 24:55
  SPEAKER_02: And then as we're doing that, how do we look at sharing that capability for other clients that have that problem?
• 25:02
  SPEAKER_02: Right.
• 25:02
  SPEAKER_02: And I mentioned Erica earlier.
• 25:05
  SPEAKER_02: So Erica was started in 2018 and it started with the consumer banking on the mobile application as a chatbot with natural language processing to help navigate.
• 25:17
  SPEAKER_02: Because as more and more feature functionality was put into the mobile application, we couldn't keep creating these deep hierarchies with the navigation map.
• 25:25
  SPEAKER_02: It was very frustrating to clients.
• 25:27
  SPEAKER_02: So we said, well, what if a client could ask how to do something either by using their voice or typing it and then accelerating the navigation to those features?
• 25:36
  SPEAKER_02: And at that time, the technology team did some really smart things around key design principles and the architecture.
• 25:44
  SPEAKER_02: So we could integrate this framework across channels while not needing to commit to one specific third-party software company or one natural language processing model.
• 25:54
  SPEAKER_02: We had optionality to swap those out and do some champion challenger.
• 25:58
  SPEAKER_02: So now over time, the Erica architecture has been extended in a disciplined way across many different channels and businesses.
• 26:05
  SPEAKER_02: We've had over 3 billion Erica interactions since 2018.
• 26:09
  SPEAKER_02: It's now included in all of our consumer and small business client channels.
• 26:14
  SPEAKER_02: It's also included in Cash Pro and then our wealth advisors.
• 26:18
  SPEAKER_02: And then, secondly, we're using it for any of our clients who assist our consumers or corporates.
• 26:23
  SPEAKER_02: So think financial center, call center, back office operations.
• 26:27
  SPEAKER_02: They use something called Erica Assist, which kind of helps guide uh the conversation and answer more complex questions.
• 26:33
  SPEAKER_02: And then last but not least, every employee at the bank.
• 26:36
  SPEAKER_02: So our over 200,000 employees have Erica for employees.
• 26:40
  SPEAKER_02: And that's everything from how you get help finding your paycheck image to starting an inquiry about how you might need help with a help desk.
• 26:49
  SPEAKER_02: So we've seen really, really great success.
• 26:51
  SPEAKER_02: And we feel like we're just getting started with AI.
• 26:54
  SPEAKER_02: The next part of your question was how do we think about evolving new business models and how do we evaluate them?
• 27:01
  SPEAKER_02: So a lot of the that, like I said, that stage-gated process where we look at client needs up front, conducting upfront validation.
• 27:08
  SPEAKER_02: So engaging our clients, talking to them, and just making sure, hey, is this a real priority?
• 27:12
  SPEAKER_02: If we did this, what is this something that would scale?
• 27:15
  SPEAKER_02: And in many cases, we also are gifted with the purchase data that we have across all the various client segments that we have and our scale consumer and small businesses.
• 27:24
  SPEAKER_02: So one example that came up about six years ago was buy now pay later started to get really popular through a number of different merchants and fintechs.
• 27:32
  SPEAKER_02: So we said, okay, both for uh through the consumer lens as well as through our merchant business lens, let's take a look at what this might offer.
• 27:40
  SPEAKER_02: And we did some analytics, we were able to actually see that the target clients that we had in consumer, as well as merchant, weren't large adopters of the buy now pay later.
• 27:51
  SPEAKER_02: And the way we could check that was by their debit card information where we could see where are they setting up a purchase plan and paying it back.
• 27:58
  SPEAKER_02: And then since then, we we re-evaluated it two or three or four times.
• 28:02
  SPEAKER_02: And then ultimately we wound up seeing, hey, we do have a segment, a small segment of our credit card population that may want to have the ability to make installments.
• 28:12
  SPEAKER_02: So now we've actually developed something called custom pay plan, which is in the midst of rolling out today, where you, for certain qualified credit card transactions, you can split that transaction into multiple installments.
• 28:25
  SPEAKER_02: So we're pretty excited about that.
• 28:27
  SPEAKER_02: It's very consistent with our better money habits and the ways to set goals, track progress, get advice and guidance on how you manage your household.
• 28:35
  SPEAKER_02: So that's something that went from kind of being a buy now pay later lending tool potentially to now being part of a broader set of uh serving a broader set of our consumer needs.
• 28:46
  SPEAKER_01: Okay.
• 28:46
  SPEAKER_01: Well, one final question, and and again, it's gonna be have AI in it, because what question nowadays doesn't.
• 28:53
  unknown: Yeah.
• 28:53
  SPEAKER_01: So um, what excites you most about the role of AI and biometrics is you know, as ways to improve payments specifically, and how do you see treasury teams becoming more strategic as these tools start to mature?
• 29:06
  SPEAKER_02: Yeah.
• 29:06
  SPEAKER_02: So I'm gonna lean in more on the AI because I think thematically, like I unfortunately in my job, I'm not allowed to use a crystal ball or look out too far.
• 29:16
  SPEAKER_02: But let me talk to you about the type of uh one example of something that we're doing that we feel really proud about that's getting the flywheel going in the AI space that we believe is gonna help really power a lot more innovation on the back of it.
• 29:30
  SPEAKER_02: So we recently launched internally something called Ask GPS for Ask Global Payment Solutions.
• 29:37
  SPEAKER_02: And it's a generative AI assistant built specifically for the Global Payment Solutions team.
• 29:42
  SPEAKER_02: And it was developed in-house.
• 29:44
  SPEAKER_02: It did discovery across thousands of internal documents, whether they be product guides, term sheets, FAQs, competitive intelligence.
• 29:53
  SPEAKER_02: And what it means in practice is that anyone from a starting analyst all the way up to a managing director who's leading a deal can ask basic questions in a very simple way and get very complex, client-specific, context-sensitive solutions back in clear, accurate statements in seconds.
• 30:14
  SPEAKER_02: And it will cite all of it in case you want to go see the extra areas, the extra details.
• 30:20
  SPEAKER_02: So for us, we've gone from kind of a static knowledge or pockets of knowledge within the business to this online, real-time intelligence layer.
• 30:29
  SPEAKER_02: So we're and we're starting to be able to answer and prepare for more sophisticated client questions that might have taken an hour, then someone would have to review it, or you have to find a specialist.
• 30:39
  SPEAKER_02: And now Ask GPS is building those insights quickly and then it's remembering it.
• 30:45
  SPEAKER_02: And there's actually an area where if you've asked a question for the first time and there isn't an answer where you can try to go source the person to populate it over time.
• 30:53
  SPEAKER_02: Our impact is from an efficiency standpoint, has been really meaningful.
• 30:58
  SPEAKER_02: We've saved, we expect that we'll save tens of thousands of employee hours annually.
• 31:03
  SPEAKER_02: If you think about it, every client meeting, quarterly updates, et cetera, there's a lot of prep.
• 31:08
  SPEAKER_02: So, how do we get the first draft of that automated so that then our teams can review, challenge, look for insights, sharpen the message, and then go forward and ultimately engage with the clients and then provide the feedback after we meet with the clients?
• 31:24
  SPEAKER_02: And really for our clients, what it means is we have all of the real insights, we have the data, we have the landscape, and we're better at getting to what it means to them or what it can mean for us, what are options to consider, and how do we help lead them to achieve their goals?
• 31:45
  SPEAKER_02: So again, this is something where, you know, if you had asked me a year ago, are we going to be using generative AI?
• 31:51
  SPEAKER_02: I might have hedged, but we see this as a real proof point.
• 31:55
  SPEAKER_02: We see this as the start of something pretty large, and we're really excited about how Bank of America is using leading tools to solve our client problems once we're really sharp on them.
• 32:07
  SPEAKER_01: Okay.
• 32:08
  SPEAKER_01: Thank you so much for being here.
• 32:09
  SPEAKER_01: I know your time is very valuable.
• 32:10
  SPEAKER_01: So again, thank you so much for being on the show today and sharing everything that you guys are up to.
• 32:14
  SPEAKER_01: Thanks very much for your time, Greg.
• 32:16
  SPEAKER_01: Great to get to know you.
• 32:17
  SPEAKER_01: And to all your listeners out there, I thank you for your time as well.
• 32:20
  SPEAKER_01: And until the next story.
• 32:22
  SPEAKER_00: Thank you for joining us this week on the Leaders in Payments Podcast.
• 32:25
  SPEAKER_00: Make sure you visit our website at leadersinpayments.com where you can subscribe to the show and where you'll find our show notes.
• 32:33
  SPEAKER_00: If you enjoyed listening, please share on your social channels as well.