… are the ambitions driving Bank of America’s investment in digital infrastructure to facilitate transactions in the supply chain. Julie Harris, Head of Global Banking Digital Strategy, and Geoff Brady, Head of Global Trade & Supply Chain Finance for GTS, discuss the impact
From bringing together global female leaders of economic growth and mentoring them at the Global Ambassadors Program in November, to being recognised for the seventh time as Institutional Investor’s Top Global Research Firm of the Year, the over 100-years old Bank of America remains relevant.
One of the ways in which it achieves this is through investment in digital technology across its business divisions. More than 38 million digital users, 28 million of them mobile, are driving 26 per cent of the bank’s sales. We spoke to Julie Harris, head of global banking digital strategy, and Geoff Brady, global head of trade and supply chain finance for GTS, to understand how the digital wave is defining service and client expectations.
THE FINTECH MAGAZINE: In this age of real-time everything, what emphasis does Bank of America put on achieving instant payments in its various verticals?
GEOFF BRADY: Real-time payments have become such a ubiquitous topic that, globally, everyone’s getting in on this discussion. Everyone is looking for fast, efficient, real-time payments to more places. In trade finance, it’s not just about the payment, though; it’s also about the underlying commercial transaction that drives that payment. It’s incumbent upon us, as an industry, to be able to tie that commercial transaction to that payment, and make the two together go as quickly as possible.
JULIE HARRIS: We’ve developed a treasury megatrends paper, which helps explain the need for real-time payments. When you think about the end-to-end supply chain, from selling goods to ordering and delivering them, the value chain along the way needs to receive those payments quickly to take the credit risk out of the process. That’s driving the need for real-time payments. There is, also, the fact that there are multiple options for payments, and we have to deliver the capabilities for our clients to make and receive them across the entire platform.
So, to enumerate how today’s pace of technology and customer expectations are driving us: number one is speed – our clients expect fast, they expect real time. Number two is smart: payments have to be intelligent along the way. And number three is secure – fast and smart cannot come at the expense of security. Those three expectations are really driving, not only payments but many other technology innovations at Bank of America.
TFM: How powerful are collaborations and partnerships in moving towards the digitally- transformed world?
GB: Trade finance is desperate for technology to carry it into its next state of play and collaborations are a good start. Over the next three to five years, it’s not just going to be about improving the payment rails, but also the commercial transactions that can tie back to those payment rails. The first step towards that is collaboration between banks and industry bodies. Next, we need to get the standards and the rules squared, so that we can make the connections.
In the next 18 months, if the community starts to strengthen around standards and legal agreements, where the jurisdictional and institutional rails get laid, then we can start to do what I think is the interesting stuff, such as looking at the kinds of transactions we could be able to do. I think it’s a really positive sign that the trade finance community has collaborated more in the last two years than at any point in recent memory.
Around the industry there’s an understanding that the goal is to be more digitized. We want to get to a point where we’re doing transactions on the blockchain or in a digital environment, and, at the end of the day, it’s not going to work unless everybody has access to it. It’s not unlike the internet. Everyone uses different internet providers, but once you get onto the internet, you’re all shopping on the same sites. I go back to the idea of having common standards and protocols, so, you don’t need to bet on one horse and say, ‘this is going to be the blockchain provider for the global community’. That’s where the collaboration is important.
JH: Digital payment ecosystems are the way of the future. Many other companies are coming up with new infrastructures around payments, business-to business, consumer-to-business, and business-to-consumer. The pace of that change (in digital payments and eco-systems) over the next few years is only going to increase, so those partnerships are really critical.
TFM: How is Bank of America preparing for that digital, inclusive future?
JH: There’s no Chief Financial Officer (CFO)or treasurer I’ve met who doesn’t have digitisation or reducing manual processes somewhere in their strategy. So, we’ve really invested in four critical areas. Number one is simplifying access to digital; whether it’s mobile, iPad, laptop, or any type of device people want to use, we want to make it easy to go digital with us. Number two is interoperability, which means any time, anywhere, across any device, 24/7. Number three is consistent experience across our platform. We have eight lines of business and we want to deliver that digital experience across the platform seamlessly. And number four is intelligent digital: artificial intelligence (AI), bots, etc, telling customers what they need to know, when they need to know it, with notifications.
I think we’re just scratching the surface of AI. It’s going to be such a critical function in finance teams going forward. Having spent 20 years in finance myself, the days of downloading Excel spreadsheets, adding multiple columns and re-uploading that will be long gone for the next generation of people in the finance function. AI will be able to automate those tasks and add additional security. The ability to overlay AI and robotics on top of the systems and processes that finance teams have is really going to reduce manual processes and allow CFOs and treasury teams to focus on strategy and value-add.
TFM: Bank of America has recently joined the Marco Polo Network, leveraging Corda distributed ledger (DLT) technology to work with major partner banks to improve trade finance. In the same way that Julie highlights AI as being key to treasury, is DLT going to be key to transforming trade finance?
GB: In the last three to five years, the real story in trade finance has been in supply chain finance. Some of the smaller companies around the world don’t have the same access to trade finance that larger, global multinationals do. Supply chain finance has been a way for these smaller companies to access that capital. Within the same timeframe, we’ve also seen the advancement of technology like blockchain and DLT. I think this will facilitate more access between corporates and banks.
I think we all look forward to the day when trade finance can be much more accessible to those small companies around the world that, right now, don’t have access to it. Fintechs are doing some good work in this area now: millions of these small companies, as suppliers to larger companies, are able to subscribe to their platforms. And I think the banks can take a cue from that, figure out how to use technology to be able to spread the capital out to where it needs to go.
The key is how we onboard those small- and medium-sized enterprises; how we conduct the due diligence, as banks, around know your customer/know your business, in all the ways we need to, but also give them access to these platforms?
I think there is a way we can achieve both, and technology will play a large role in that. That’s going to be the mission of the next three to five years.