FF.INT.004_1.mp4

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This is FinTech Futures at

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Finovate Spring, and I'm joined

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by Anu Somani of US Bank.

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How are you?

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Wonderful, Paul.

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How are you doing?

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Excellent.

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Very well, thank you.

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Very well.

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How are you enjoying

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the conference so far?

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It has been wonderful.

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You know, sort of, there's clearly

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a lot of excitement going on.

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The conferences continue to get

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bigger and bigger post pandemic, so

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it's really nice to see everybody

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back and I think the in-person

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still holds a fascination for me.

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So it's very, nice.

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Excellent.

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Excellent.

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Great.

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So just to get started then, we'd like to

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give a quick introduction then to your,

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to yourself and your role then US Bank.

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Absolutely.

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So I'm a part of what we call

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the Global Treasury Management

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Business Line at US Bank.

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I head up global payables and

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embedded payments, and what that

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essentially means is our clients.

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Which could be small,

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medium, large businesses.

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How they pay their business

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partners, their vendors, their

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employees, their customers.

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How do they do that safely and securely?

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How do they do that in the most cost

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efficient process, optimized way,

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and how do they do it in a way that

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is aligned to their business goals?

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That's what I spend my

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time thinking about.

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Excellent, And you're gonna be taking

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a part in a discussion today on how

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the pandemic has impacted payments.

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So just get started then.

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How do you think payments have evolved,

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particularly over these last few

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years then, and what are some of the,

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key changes that we've been driven?

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Yeah, absolutely.

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I mean, pandemic, I would say has been

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the great catalyst in our industry, right?

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So after the, initial frenzy of just

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getting used to you know, whatever

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the pandemic brought along with

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it, a lot of organizations started

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holistically looking at their payment

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processes and, that was needed

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because, you know, checks existed.

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They were not ideal, but

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they were acceptable.

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They still did the job, but when

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the pandemic hit, there was nobody

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in the office to sign the check.

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There was nobody in the office

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to receive clear the check.

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So it was almost at an accelerated pace

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that our clients started to look at

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their manual paper intensive processes,

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whether they were payments, like I said,

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whether they were to their employees,

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their business partners, their vendors,

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they started evaluating what it would

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mean to digitize those payments.

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And it is easier said than

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done because think of it, I'll

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give you one small example.

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When you have to send out a check,

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all you need is a name and an address.

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Think about wanting to change

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it into a digital payment.

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You need to be able to collect

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all of the information that's

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required to make a payment.

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Whether it is the routing number and

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the bank account details, whether

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it's you know, sort of a debit card

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number, you need to be able to collect.

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That, but not only collect that,

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but also store that securely so that

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you're not in the news for a big

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breach that happened at your end.

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So it is a transformation at

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many levels, and a lot of our

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clients started to think about it.

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A lot of our clients started to

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think about security and fraud as

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they evolved from this paper world.

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And we are engaged with a whole bunch

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of clients who are thinking about

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completely getting rid of paper.

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They have lofty goals of wanting

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to digitize completely and,

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you know, timeframes vary.

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But to me, I feel like this was

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already in the works, but the pandemic

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really sort of accelerated and,

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became the catalyst in what I'm hoping

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will be the big demise of, paper.

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Excellent, excellent.

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I mean, on that front, I mean, US has

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historically been a bit slower in terms of

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adopting digital payments with, as you've

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mentioned, their checks and cash still

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kind of relatively common ways to pay.

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Why do you think that is, and do you

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think that shift is, happening now?

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Yeah.

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Absolutely right.

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So I come from India, right?

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So I, always love to give this example

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that when India was one of the fastest

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countries which adopted mobile phones.

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Why was that?

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Because there was really

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no landline that existed.

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So when the mobile technology came,

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pretty much every single person had

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their mobile phones in, you know, sort

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of in a matter of a very, short time.

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So think about that,

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extrapolate that here.

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Before the, whole payment explosion

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payment innovation happened that

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we've seen in the last few years,

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payments were still happening, right?

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So checks  existed.

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We had ACH so they were not ideal.

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They didn't really solve for

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every single pain point, but

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payments were still happening.

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So the need and the burning urgent desire

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to undertake what I just described, a

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rather a holistic digital transformation.

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The driving force never existed.

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However, I feel like that's changing.

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We've seen newer and newer networks,

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whether it is bank owned networks like

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T C H R, tp, Zelle you know, sort of

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visa and MasterCard owned

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networks, or even FinTech networks.

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We've started that.

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The emergence of the networks.

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We've started seeing adoption.

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We've seen several drivers.

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The, you know, sort of whether it's the

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need for speed, whether it is the need

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to control how I receive my payments.

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We've seen a lot of drivers and

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then we've seen some market leading

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use cases.

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So absolutely.

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I think it is almost like the

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avalanche effect that we will now see.

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We've got the infrastructure in place now.

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It's a matter of how you know,

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sort of we see the emergence

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of newer and newer use cases.

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So yeah, we will absolutely, you

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know, Sort of, we will see sort

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of now an accelerated movement

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towards digital payments.

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Excellent, excellent.

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And what are some of the payments

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trends that you're noticing them

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from your, customers at the moment?

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Yeah.

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How important is their personalization?

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Absolutely.

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I think personalization, and I would say

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the biggest trend in my head is really

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meeting the clients where they are.

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What do I mean by this?

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So essentially think about you know, a B2B

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payment, think about an account payable

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clerk and their their day-to-day, usually,

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let's just say they work in a treasury

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management system or a procure to pay.

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They would spend their entire day

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approving payments, looking at

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payments, doing their business, and

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then they would have to take that

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payment, go onto a banking portal and

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retype there, or they would create

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that into a file, upload it somewhere,

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or sent through, you know, sftp.

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That is changing.

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Clients want to see payments being

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kicked off from exactly where

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we are, so we, you know, whether

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it's a procure to pay system.

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So we do see a lot of times where banks

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like us are working with all of the

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applications that we see our clients

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using day-to-day so we can pull payments

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and we don't create a disjointed process.

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Now that's the B2B world.

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In the B2C world.

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Just think about how

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you do payments, right?

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So I may want you know, I may want to

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receive my landlord wants to pay me the,

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you know, return of my rental deposit.

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I may want that in my bank account.

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However, I may want my friend who

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I'm sharing lunch with, I want

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to receive that payment in Venmo.

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So there is a lot of choice that exists.

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And that is, governing The payment

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options that our clients need

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to provide to the consumers, and

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they make the choices accordingly.

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So absolutely, I think meeting where the

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clients are meeting, whether they're peers

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or pays, whether they're bank clients

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or our clients that is, I would say

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the emerging trend that I start to see.

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And within that, as we built

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all of these rails, like R T P,

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those are just enablers then.

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Excellent.

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And in the US you obviously got

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fed now, just around the corner.

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Absolutely.

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How much of the impact do you

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think that's gonna happen?

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Is there a lot of positivity

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across the country for that?

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Absolutely right.

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I mean, we have seen forever in a day.

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You know, fed Enterprise working

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hand in hand with private enterprise.

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So Fed Wire and has existed

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for a very long time.

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ACH has existed from both a Fed

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perspective as well as you know,

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a private enterprise perspective.

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So certainly I think Fed now

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brings a lot of excitement,

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whether it comes to banks like us.

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Or even clients.

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We, for us, it is what Fed now

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will do to accelerate the adoption.

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How more and more banks will participate

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now to create a universal reach.

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The one thing that is different in

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US as compared to some of the other

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geographies is it is faster payments

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and realtime payments in these instant

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payment rails are not mandatory.

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So banks tend to have you

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know, their own choice.

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Of which rail they want to connect to.

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So for, us, fed Now is a wonderful,

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you know, sort of amalgamation of

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the learnings we've, had so far with

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the rails that have come so far,

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it can take the, you know, sort of

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what we have essentially gleaned.

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You know, best practices that we have

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and it would bring together the network.

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So, so really I think to us, it's a

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matter of how all of these networks

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come together in a wonderfully cohesive

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way to create a seamless experience

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for from our clients' perspective

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and from a recipient's perspective.

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Because, you know, at the end of the

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day, do I really care if my insurance

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company wants to pay me a claim?

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Do I really care whether it gets

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paid you know, by a fed rail, by

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you know, sort of A T C H rail?

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No, not really.

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For me, it's a matter of I bank with,

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you know, bank A and B and I wanna

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make sure that if I wanna receive my

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funds in a bank, they get cleared.

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They get cleared instantly,

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24 by seven in a way I want.

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So that is the part.

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So for me, I think fed now

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completes the story that has been

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building over the last few years.

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Excellent.

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Excellent.

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And are there any other kind of

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payments, tech developments that you're

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seeing in this space at the moment

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that you think that, you know, you're

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really excited to find, you think

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of the bank should looked to tap?

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Absolutely.

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I would say, I think the payment

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trends are perhaps not, payment at all.

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Right.

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And I, when I say that I'm specifically

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thinking about embedded payments.

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Think about, for example, your

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taxi journey process, right?

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Just a couple of years back before the

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advent of Uber and Lyft, We used to

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take a taxi and, especially for somebody

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like me, I do not carry cash ever.

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Right?

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So taking a taxi in New York City

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used to be an immense source of stress

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for me because I'd be wondering, is

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the taxi driver gonna accept my card?

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Yes.

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No.

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Or will I, when I get down, will I

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have to start thinking about, drop

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me close to an ATM so I can go pull,

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or, you know, drop me close to my

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office so I can go to my office and

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get, a couple of dollar bills, right?

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It used to constantly

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be a part of my ride.

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Fast forward a couple of years in Uber,

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you set up your payment, you the only

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thing you then care about is your ride.

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You do not think about

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how the payment happens.

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It happens seamlessly.

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In fact you know, a couple of hours

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later they will even send you an

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email on whether you want to tip the

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driver, how much you want to tip.

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So payment has become the, in

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the background, even though that

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is what enables the whole ride.

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So that trend of embedding

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a payment and experiences.

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That is really, big.

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I think it is starting to come pretty

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much everywhere, whether it's, you know,

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rides, whether it's how you get paid.

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So, you know, eco gig economy players,

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how you buy and sell cars, how you trade

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you know, sort of on your market account.

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All of these use cases are being

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enabled by what we call embedded

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payments where payments exist but

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they are not front and center.

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So that's a big trend.

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I see.

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You know, sort of what will govern

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and what will lead to the birth

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of many, use cases in the future.

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Excellent.

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And just to quickly finish off then,

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with the advising popularity of digital

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payments, do you think there's, a place

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for a cash society kind of in the, near a

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long term future, or is is a  Absolutely.

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I am rooting for it completely.

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I mean I, stopped carrying

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cash a couple of years back.

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No I, will tell you, I one of

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the reasons why I am in, payments

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is because I have seen it work.

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I've lived and worked in South

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Korea where it is, you know, to a

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very, large extent, even a decade

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back, everything was cashless.

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Everything from, you know,

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buying to taking a train.

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So we are getting there.

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I think you know, the pandemic

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and, accelerators like some of the

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experiences that we get outside of the

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banking world are certainly leading.

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But it will be, ultimately, I

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think it is a step by step process.

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You know, the underlying infrastructure

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needs to change so that you know, sort

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of cash starts to lose its significance.

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Then once the infrastructure gets

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built, you start seeing some use cases

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that drive these, newer and emerging

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payment trails, and that's start you

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know, sort of making people realize

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that all the benefits of paper that have

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existed in the past no longer are valid.

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And then, you know, it's

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ultimately the demand of consumers.

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So I think the first two we have,

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we've certainly started to see a lot

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of infrastructure update has happened

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both from a market infrastructure

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update as well as the banks.

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We've started to see some leading use

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cases, whether it's through, you know,

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sort of banks like us, whether it's

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finTech driven.

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We've started to see market leading

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use cases, so, so absolutely.

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You know, will it happen

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in the next two years?

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Perhaps not, but certainly

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in our lifetimes.

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Excellent.

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I'm looking forward to it.

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Anu, thank you so much for taking

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the time out to talk today.

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It's been pleasure.

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Thank you.

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Same here, Paul.

So just to get started then, we'd like to

the great catalyst in our industry, right?

At the FinovateSpring 2023 conference in San Francisco, FinTech Futures caught up with Anu Somani, head of global payables and embedded payments at US Bank, to discuss how digital payments have evolved over the last few years and the major changes driven by the pandemic.