Commerce Conversations

Fast(er) Payments with Rich Clow (BofA)

Episode Summary

Step into the future of payments with Rich Clow and Ysbrant Marcelis as they delve into the transformative power of real-time payments. Drawing inspiration from global markets already adopting this innovation, he emphasizes the collaborative spirit needed for swift progress. In this episode, Rich underscores the potential for partnerships to catalyze innovation, describing a payment landscape undergoing a profound and gradual evolution. Join the journey of reshaping payments, where real-time transactions are not just a trend but a powerful force shaping the future of financial interactions.

Episode Notes

Rich Clow's Role and Team:

• Rich Cloud leads payment innovation at Bank of America.
• Focus on evaluating new technologies and solutions.
• Assessment of new networks, checkout solutions, and step-function capabilities.
• Pro-stage gated process for evaluating and validating solutions.
• 75% of his time dedicated to consumer and small business solutions.
• 25% of the time with the GTS function, bringing Bank of America capabilities to large corporates.

Real-Time Payments Basics:

• Real-time payments involve instant settlement of funds between banks.
• Reduces risk and friction compared to existing frameworks like ACH.
• Credit transfers with an evaluation of account standing before sending.

Importance of Real-Time Payments:

• Speed of funds transfer is the essence of real-time payments.
• Enables the development of innovative solutions for consumers and corporates.

Consumer Transactions with Real-Time Payments:

• Immediate confirmations in consumer transactions.
• Improved bill pay experience with proof of fund availability.
• Introduction of "Request for payment" user experience.

Corporate Implications of Real-Time Payments:

• Significant opportunities for collections departments.
• Ensures timely payments with proof of fund availability.

Real-Time Payments Landscape:

• Two main networks for real-time payments in the United States: FedNow and the Clearing House.
• Similar to the existence of multiple networks for ACH and wires.
• Competition is expected to drive better innovation, cost, and terms, similar to Visa and MasterCard in the card payments space.

Fintech and Developer Impact:

• Successful FinTechs leverage tools and standards from networks to create innovative user experiences.
• Integration of standards like ISO 8583 and ISO 20022 into businesses and applications.
• Continuous innovation in payment flows, such as virtual cards for B2B payments.

Looking Forward:

• Real-time payments are considered transformative in the payment landscape.
• Predicted to be a major shift in payment experiences, comparable to the evolution from knuckle-buster credit card authorizations to modern payments.
• Global adoption of real-time payments in various markets, with the U.S. learning from international experiences.
• Emphasis on collaboration and partnerships to accelerate innovation and time to market.
• Acknowledgment that real-time payments will play a significant role in the majority of payment settlements globally.
• Recognition of the need for inspiration from markets ahead in real-time payments, fostering a collaborative and iterative approach to innovation.

Find Rich on Linkedin