GTM Nov Webcast

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Connectivity between any two points, a digital relationship exists. A relationship that bridges today's strategic thinking with tomorrow's success. The world is going digital at different speeds and different volumes. You need a banking technology partner that creates connectivity to innovate faster, evolve stronger, and maintain trust.

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Connectivity with U.S. Bank means connecting with your customers in real time, anywhere on the go, aligned to your unique business. Blur the boundaries between the back and the front office. Get connectivity that brings true visibility to your data, with ERP integration to unite systems between finance and function.

From payments to procurement and working capital management, get a connectivity that puts your business in the lead. With APIs that turn simple code into agility and commercial strength. Conquer inefficiencies that make manual processes obsolete. Get connectivity that embraces technology and your operations with artificial intelligence, robotic process automations, and machine learning.

Connectivity is the digital steel brick expanse that bring together analytics and analysis to drive better decisions with relevant data points. Connectivity is how U.S. Bank helps you build digital, not just go digital. No matter your industry or size, we are your banking technology partner. We are your digital partner. Build, connect, innovate, U.S. Bank.

Hi, everyone and thanks for joining this month's webinar on treasury innovation, the emerging banking experience. I think that video you just watched does a really good job depicting what's happening in the marketplace and U.S. Bank's focus. I don't know about you, but there's a lot going on in the industry today, and it's hard to keep it all straight. So I thought we could take some time and break down what are some major trends happening in the marketplace and what it means for you. I'm Madison Donnini.

I'm a working capital consultant at U.S. Bank, and I brought today with me Vanessa Angeles. She is head of new product development within our treasury department at U.S. Bank, and I thought she'd be a perfect person to have this conversation with. So Vanessa, we're going to cover three main trends that are happening in the marketplace today-- the connected economy and how that's really driving these digital-first solutions, flexibility-- letting our customers drive the experience they want to have so they can enable that to do that for their customers. And finally, partnership-- both with fintechs and most importantly, our customers.

So let's dive into it. Let's start with a connected economy. And what's really driving the connected economy? It's really this-- it's the smartphones that everyone has. By 2025, 80% of the world will have a smartphone. So 80% of the world is going to be able to have that POS system in their hand and be able to make purchases when and how they want.

So that one touch payment simplicity that Amazon and Uber have really integrated in the marketplace is becoming everyday life for us, and it's actually seeping into our B2B environment as well. And what that's really called is embedded finance. Vanessa, you've got a really good perspective on embedded finance. Do you mind sharing your thoughts on that with the audience?

Absolutely. An embedded finance is this term that we're hearing a lot about in the marketplace, but a lot of times, what really is it? Fundamentally, it's integrating a financial service. Whether that's a payment,

like an ACH, a credit card, and sometimes even we're seeing lending even to insurance. And all of that financial services is embedded within a non-financial application.

So a great example of that is actually Lyft. So a customer can pay for service immediately within their app using a card. And in turn, drivers can get paid instantly, and sometimes drivers even have an option for a savings account.

So from the customer side, you're simply paying for a service. And outside of uploading your payment information, you don't really think of Lyft as an embedded finance solution. But on the back end, there's payments, there's deposits. There's all these financial services that fit within the simple, frictionless app experience.

And what we're seeing across almost every industry, from retail to health care, businesses are looking to embed financial transactions. A lot of the times, RTP or even Zelle payments within their own customer journeys. And these fast and frictionless client experiences are everywhere, and they're growing in demand.

And what's really accelerating it is the increase in the availability of APIs, and there is tremendous growth in this space. As an example, by 2026, the embedded finance market is projected to be as high as $138 billion globally. And that's actually a 215% increase from $43 billion estimated in 2021 alone.

Now if you look at the global B2B marketplace, the projected value of that market is over $20 trillion by 2027. Now that's astronomical in terms of growth and opportunity to innovate. And what this really means for banks is that we now have to look at enabling embedded payment solutions offered through a fintech, and that's becoming increasingly more important.

So for U.S. Bank, we're actually exploring opportunities to establish relationships with fintechs. Because it allows fintechs to leverage our payment rails, especially real time payment channels like RTP and Zelle. And what this really means for our clients is that we can help drive a better experience for their customers that are really demanding more digital-first solutions. And Madison, in terms of enablement, I know we have an extensive developer portal for our APIs. How are people using that today?

Yeah, we sure do. We have a range of APIs available to our customers to use. And again, like you said, it's really helping them drive the experience they want their customers to have. So think about it-- if you're a utility company and you've got a customer who's making a last minute payment to avoid power shut off, they want to be able to see that their balance is now zero and that their power is not going to be shut off.

Well, that's really powered by an API. Being able to have that real time reconciliation so that the utility company can say, yes, we received your payment and we won't be shutting off your power. So that is really powerful in driving the customer experience.

And so I think that's the whole point here. It's moving from payment as a standalone experience to really embedded into the overall experience, it can make a huge difference. So I think that's a nice segue way into our next theme, which is flexibility, and letting our customers drive the experience they want to have to enable them to do that for their customers.

U.S. Bank really anchored ourselves in two main concepts-- the DIY concept and the DIT concept. DIY, I think most people are aware. I think there's even a DIY network out there. We've all tried one of those DIY house projects, which for me don't usually go so well.

But I think people are aware of that. They want to be able to do it themselves. They want to have some more control when it makes sense for them. They know their business the best, and they want to be able

to make decisions for themselves. So we really anchored ourselves in having more DIY type concepts in our solution.

The other concept is "Do It Together," so DIT. And that's when maybe you have a more complex solution, or we need to do a task together with your banking partner. And so we've created solutions as well, so you have an online portal to be able to communicate easily, and so we can work together in a very digital-first way. Now, before we start diving into some more examples of that, Vanessa, I want to get your thoughts on these two concepts.

Oh, absolutely. And technology and innovation are critical for banks because that, to me, is what really drives the client experience. And what that means for us is that banks need to modernize their technology. We have to build an ecosystem that really creates a flexible and seamless customer experience.

And broadly speaking, it's really important and powerful to take innovative banking products that also integrate within a bank's digital, or for some clients, physical platforms. And that's mission critical because clients want banking to be easy. At the same time, they also want it personalized to meet their specific needs, and that can really be in-person or even online.

And now more than ever, banks have to integrate human connection with technology. So it's easier for clients to bank when, where, and how they want to. And the world is more connected than ever. Services are available faster than ever, and more and more of that consumer experience that we're used to is what businesses want to have.

So whether it's that do it together option like you mentioned, and you see this in our onboarding tracker, or it's a do it yourself solution, like our virtual account, which we'll talk about later, but we're starting that work at U.S. Bank. So banks really are investing more and more into data and analytics to really deepen our understanding of our clients and also help anticipate some of these needs to really help clients future-proof their business. And it's something that we need to do because we need to keep up with the fast pace of changes in the marketplace.

And what we're seeing is that businesses are experiencing a great shift, especially in the payments landscape. I'll give you an example. There's about 36% of businesses that have been surveyed, and we're seeing an increased need for what they're calling "speed of payment," and this really was accelerated by the pandemic.

So the emerging payment rails that banks have been delivering on-- there's RTP, Zelle, same day ACH-- these all help enable our clients, again, to future-proof their business because of the needs of our clients, customers, and their partners. So if they're paying suppliers, vendors, et cetera. Those are all changing, and the demand is for digital and faster payments.

So Vanessa, those are all really great points, but I want to take it back for a second, because you mentioned virtual accounts, which I want to touch on because I know your team is working on virtual accounts. Could you share a little bit more with the audience about what virtual accounts are and maybe what we're working on?

Yeah, virtual accounts personally are amazing. They give clients an easy do it yourself digital solution that really helps reduce the cost and the complexity of having many real bank accounts. And that's really because virtual accounts are simply an online [? subledger ?] system connected to their real bank account.

And we're seeing something like 65% of corporate treasurers have considered rationalizing their bank accounts over the last three years. And what that really tells us is that cash and liquidity management still remains one of the top concerns of CFOs and treasurers. And that's why the demand for virtual accounts is growing in the US, and you've actually seen them adopt it in Europe for several years now.

But in the US, we're starting to see more clients asking about it. And I think that's because it gives clients a lot of benefits. They increase flexibility in organizing and reporting balance and transaction information. It also helps reduce the costs associated with managing a large number of real DDAs because it really streamlines account opening and maintenance. And it also automates cash consolidation that really helps to support intraday liquidity management.

So I'll give a simple use case. There's a company with multiple divisions-- let's say five divisions. Each of those today has their own bank account, which means a treasurer has to manage and reconcile the incoming and outgoing payments of five different bank accounts versus a virtual account. You really manage just one account, and it's online. So you can open and close many different virtual subaccounts within that one account almost instantly.

So at U.S. Bank, we've seen consistent client interest, and it spans a wide range of industries and use cases. And what we're finding is that clients have different plans on how they're going to use virtual accounts to achieve their various goals. And we've actually used that feedback to start building a differentiated virtual account solution that we've just started the journey to building our MVP. And there is a QR code on your screen, and please go ahead and scan that to really get more information on what we're doing with virtual accounts.

I know our clients are going to be really excited about maybe reducing the amount of accounts they have to open. We understand that is definitely a process. And to take that out of their day to day in certain scenarios, I can assure you I think our clients will be thrilled. So I'm excited to see how that develops and where we go with it.

A few other examples, DIT for U.S. Bank would be this onboarding tracker. Vanessa did mention it a little bit earlier, but I just want to take a moment to explain it. Again, it's doing things together with your banking partner. So having a digital-first experience. Having a portal to digitally onboard so you can exchange documents and information. And so that email back and forth doesn't exist, and it's a little bit more transparent and streamlined.

In addition, we also touched on data and the importance of personalization. Well, in our new SinglePoint experience, there are persona-based dashboards. So if you're the CFO of your company, you can open up a SinglePoint and see the data that matters to you so you can make the best decisions for your business.

And that's not just for the executive. It's also for the AP manager or the treasurer, whatever your role is. It's going to give you the best data and information to do your job in the most efficient manner.

So let's transition into partnership. We touched a little bit on the fintech partnership, but I want to make sure we touch on the most important partnerships, which is the one with our customers. We have developed innovation studios and journey teams at U.S. Bank. Vanessa, I know that you have a journey team underneath of you. Would you mind explaining a little bit more about what that concept is and why it's so important to our customers?

So journey studios exist to really create innovative solutions with our clients. And we find that by taking a really client-centric approach towards innovation, this really allows us to prepare today for the future. And

the way we work is that while we stay on top of trends, we also collaborate directly with clients. And we're able to use client feedback to also identify new opportunities, and that really helps us deliver a differentiated experience for our clients. So within our journey studios, we explore concepts together with clients. We build prototypes, and when we find a winning solution, we work with the clients end to end, from implementation all the way to launching a solution.

So a great example of this is our newest product, Automated Escheatment Service or AES. And we actually developed this within our emerging solutions during the studio. And this solution came really from the need to solve the gap at the end of the tables process that was really manual. And so our close partnership with our clients almost every step of the way, we really were able to get one of the only offerings in the industry, and we're actually one of the only banks to offer a fully integrated unclaimed property solution that really helps automate the end to end escheatment workflow.

And client feedback has been tremendous. High client scores averaging a 9 out of 10 rating for ease of use and navigation. And this really was an absolutely great example of how client collaboration can solve a real world problem. So even if AES isn't applicable to your industry, please do scan the QR code that you see here and really read about the innovation that's coming from our journey studios.

Yeah, it's been great to watch that go from concept, understanding our customers' challenge. I was able to sit in some of those client conversations with understanding what's painful about escheatment and coming up with a solution together to prototype feedback to actually launching it in the marketplace. And so it's been a great journey to watch, and I know that we've got several other journeys like that happening right now at U.S. Bank.

So we've covered a lot today. So we've covered the connected economy and how that's driving embedded finance and how U.S. Bank is providing APIs to our customers. The flexibility to let them drive the experience they want to have so they can do that for their customers as well. And finally, partnerships with you, which is most important.

As we wrap up 2021, we really appreciate you staying with us as we've covered a variety of topics this year in our webinar program. Stay tuned for 2022 as we come up with new topics and conversations with you. We hope that you have a safe and happy holiday season. Thank you.