Bank of America: Driving the Future of Payments through Collaboration

By vicky684 Wednesday 24th of July 2024

For financial services companies, payments modernization means more than just upgrades. It encompasses innovation, collaboration, and tangible business outcomes. Wally Mlynarski, head of merchant solutions and receivables at Bank of America, discussed with PYMNTS in the “What’s Next In Payments” series how modernizing payment infrastructures transforms transaction handling and processing.

Mlynarski emphasized that modernization extends beyond infrastructure upgrades, involving new transaction types, information, and data that enable innovative business models. This comprehensive approach is driven by client demands for improved customer satisfaction through enhanced payment experiences. He noted the pressure on clients to adapt to new payment types due to their strong correlation with customer satisfaction.

One focus area is the adoption of alternative payment methods (APMs), which vary by region. Europe is advancing with SEPA open banking, while the U.S. sees growth in domestic initiatives like Zelle. Mlynarski highlighted Zelle’s significant uptake and mentioned the industry's next steps include expanding its use cases and investing in request for payments.

The Real-Time Future

Real-time payments (RTP) and the adoption of ISO 20022 messaging standards are crucial in the modernization journey. Bank of America is actively participating in these developments, utilizing platforms like The Clearing House’s RTP® Network. The introduction of the FedNow® Service by the Federal Reserve aims to support smaller banks and ensure interoperability across different platforms, advancing real-time payments and creating a seamless payment ecosystem.

Mlynarski also discussed the global landscape, citing Brazil’s Pix payment system as a successful example. The Brazilian government leveraged Pix to provide robust remittance data, automate receivables reconciliation, and reduce return risks. This innovation highlights the importance of investing in infrastructure and ancillary products that optimize the transaction process, such as Bank of America’s Brazil Auto-Invest product, which enhances cash management efficiency.

Role of Digital Assets and AI

Although digital assets generate interest, they are not currently a client-driven initiative for Bank of America. Mlynarski noted that clients are not seeking new payment acceptance methods at this time.

Conversely, artificial intelligence (AI) has significant potential to enhance payment processes and client experiences. Bank of America has invested in AI-driven solutions like Intelligent Receivables, which uses AI to match invoices to payments, improving straight-through processing. The bank also extended its AI assistant, Erica, from consumer models to corporate clients, providing AI-powered self-service options.

Bank of America also offers valuable data aggregation services to its merchant accounts, helping them gain customer insights. Mlynarski acknowledged the challenges and opportunities in effectively leveraging the vast amounts of data generated daily. He advocated for creating business cases that use data for cost reduction and revenue enhancement through AI deployment. Future advancements in AI, such as small language models, could further refine data utilization and improve business operations.

Strategic Investments and Collaboration

For businesses navigating payment modernization, Mlynarski advised prioritizing investments that provide speed, scale, and industry support. He stressed the importance of executing current, industry-backed initiatives and highlighted the role of collaboration and partnerships in enhancing customer experiences. Interoperability efforts, such as the FedNow platform, require cooperation across the financial sector.

Mlynarski emphasized the potential of real-time payments and enhanced data to shape the future payment ecosystem. Innovations in identity verification, security, and fraud prevention will further influence this landscape. He also pointed out sector-specific opportunities in areas like healthcare and hospitality, where payment modernization can drive significant improvements.

“Whenever there’s a transfer of payment or money, there’s an opportunity to enhance the process and improve the customer experience for both consumers and businesses,” Mlynarski concluded.