From Cash and Cards to Invisible Banking

Jim Marous (00:11):

Welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous.

Jim Marous (00:17):

The convergence of AI, real-time payment rails, open banking and embedded finances, creating both unprecedented opportunities for innovation and certainly, significant competitive pressures. Banks must navigate the delicate balance between embracing cutting-edge technology, such as generative AI, and maintaining the trust and security that consumers demand.

Jim Marous (00:40):

In this episode of Banking Transformed, we delve into the rapidly changing ecosystem of payments with Rich Clow, the Head of Innovation and Strategy at Global Payment Solutions for Bank of America. With over 25 years of experience, spanning from the early age of branches banking to today's AI powered solutions, Rich provides unique insights into the trends reshaping how we think about money, payments, and relationships.

Jim Marous (01:08):

I've known Rich for a number of years, and it's interesting how he blends his enthusiasm for the business with his pragmatic perspective on what can be done today. Be sure to stay on the podcast as we talk about what he'd recommend a new person coming into banking should do today, as well as an experienced banker, how they can be even more successful.

Jim Marous (01:33):

The payments ecosystem is experiencing its most dramatic transformation in decades or maybe ever. While consumers increasingly expect instant, seamless and invisible financial experiences, financial institutions are grappling with an unprecedented challenge and opportunities that will define the next era of banking.

Jim Marous (01:55):

So, Rich, we've known each other for a long time, and this is still your first time on the show, which is kind of crazy. But you've spent much of your career in the financial services industry, including 16 years at Citi, and the most recent seven years at Bank of America. What has been the biggest change that you've seen in the industry from your perspective, from where you come from in the banking world?

Rich Clow (02:17):

Thanks, Jim, it's terrific to be here. I see the biggest change actually being around listening to our clients (whether they be corporates or consumers because I cover both), having a discipline around experimenting responsibly and ensuring there's enough value for both sides, that the consumer experience is clear and understandable, and that the corporates have right amount of authorizations, if it's a payment, and low fraud.

Rich Clow (02:44):

And then really, making sure that what we're doing is going to scale. In my experience at Citi and Bank of America in innovation roles, moving the needle by just a little bit isn't going to help. We need to move the needle significantly, and that comes both within our own branded solutions and how we deliver experiences directly to our clients, as well as the way we work across the ecosystem with things like Zelle or now Pays that we're bringing to market that will be embedded in many other kinds of use cases across banks.

Jim Marous (03:18):

It’s interesting, when you talk about scale, it doesn't mean you have to be a big financial institution, but what we're talking about is you've got to be able to scale within the confines of your own asset class. You've talked about the need for high-tech and high-touch solutions in payments, and really across the entire banking ecosystem.

Jim Marous (03:35):

How is Bank of America balancing the push towards digital first experiences while still having the human elements that really matter a lot to the consumer?

Rich Clow (03:48):

It's a great question, Jim. The balance to us is how can clients have the option to self-serve, whether it's choosing how to load your card in a wallet, whether it's setting up a bill pay, or maybe you only occasionally send a wire across borders. And when you choose to do that the first time and you're setting up that recipient, you might need a little help.

Rich Clow (04:12):

So, for something like that, we recently redesigned our entire mobile experience around setting up a wire for the first time. And it's a guided experience, similar to a FinTech, it has a status tracker. And then actually, we use Erica for situations where you may be in the middle of something and you can ask a question that will have the context to where you are.

Rich Clow (04:36):

It may guide you to something that may help out your answer. And if it doesn't work, in each case, we'll allow you to get into a secured discussion and chat through Erica that brings all of that context with you.

Rich Clow (04:50):

One other good example is we launched, I think four or five years ago, the ability to set up an appointment in a financial center. And to us, it's really helped because there are no cues now, you have the skill of the person, if you want to talk about a loan, or if you want to talk about savings for college.

Rich Clow (05:08):

So, now there's just also a better, more contextual match of the right kind of person matching that right intent, and you're saving time, so you're not ever in line when you would really rather be getting your problem solved.

Jim Marous (05:25):

It’s interesting, a lot of the people I talk to just on the cocktail party tour or whatever, just normal people — I talk a lot about the future of agentic AI and the ability to actually have agents work on your behalf. Maybe it's just in the payment space, maybe it's on the flow of funds, the transfer of funds, even between organizations.

Jim Marous (05:45):

But then I also talk about the fact that this has been in process for quite some time, the ability to build more and more personalized experiences. Bank of America, and you just mentioned it, Erica, really goes back quite aways in building conversations with consumers as opposed to simply being transactional.

Jim Marous (06:06):

Where does that place, Bank of America in the entire overall competitive marketplace, as far as what you've learned that now is deployable on a much broader scale in a much different way than maybe we even knew was going to be possible three years ago?

Rich Clow (06:23):

Certainly. Well, Jim, I can't answer where it places us. I know a lot of people like to evaluate and consider, but what I will tell you is where we find success in one line of business and consumer was the first, and then small business.

Rich Clow (06:39):

For Erica, we are really building an enterprise thought process around how we serve these client needs. Because in many, many cases, we have clients that overlap different lines of business, like a client that could be a consumer in a Merrill Lynch or private banking client, or maybe the treasurer of a global corporate.

Rich Clow (07:01):

So, one of the things we've done over the past two years that's really, really been a success is including Erica in CashPro, which is actually our digital solution set for corporates. So, now, corporates like I said, a treasurer, whether you're investigating the status of a payment, whether you're trying to figure out how to set up the verification of a new recipient or lots of other questions, we're starting to incorporate it there.

Rich Clow (07:28):

And I'll tell you, in the consumer model where we have been running for about seven years now, we've had over 2.7 billion interactions with Erica, and in consumer for what's live today, we have about a 98% success rate when clients seek to get help.

Rich Clow (07:44):

On the commercial side of the business with CashPro, we're making steady progress, it hasn't quite achieved that yet. But again, we continue to learn. We have a real discipline, we have amazing talent around how we think and how we apply changes. And it's incredibly exciting to see the way we can learn and apply at the scale we're operating at.

Jim Marous (08:05):

Well, the future's going to be our ability to capture conversations and make them usable, make them so you can deploy against them. I mean that's the holy grail of that personalization matrix that we're working on.

Jim Marous (08:18):

Another element of payments that's really changed the marketplace, and it goes back a lot further than many of us will remember, is that embedded finance continues to grow. In fact, it's expected to grow at a rate of well over 20% annually through 2034.

Jim Marous (08:34):

How do you see this trend reshaping the competitive landscape? And what opportunities does this create for traditional banking organizations?

Rich Clow (08:45):

Certainly. So, I always like to start with embedded finance, definitionally being just that a payment is within an experience that has nothing to do with the payment. And so, as we look at that, through both lenses. So, we have consumers that may want to use a ride share and step out and just have it paid for, or order food and just have it show up on their front step.

Rich Clow (09:10):

But interestingly, all of these companies, all these innovative firms also need a bank because the only way to request funds or settle funds is with a bank or a banking partner. So, we actually get to see both sides of it.

Rich Clow (09:25):

And I think that what's going on now, when you think about the evolution of credit and debit, we've seen tremendous use, as we've gone from cards and point of sale to tokens and wallets. And I think we've really gained a ton of benefit.

Rich Clow (09:41):

And I remember in some of our first interactions is when we were doing the early work with Google Wallet and Apple Pay and how that was coming. What I see happening next is where are things going to go with either let's say a top up type model, like a Starbucks, where you have an account-to-account type debit or same as a funding model with a Block or Cash App.

Rich Clow (10:05):

And then ultimately, getting account-to-account, where we've seen around the world, there are other account-to-account solutions, or pay by bank solutions that are starting to take off. And as we see more and more, the challenge really lies in the customer experience. Because as we in the payment space, look at this shift into things like real-time payments, there needs to be an explicit credit authorization to just ensure that there isn't fraud, and if there are cases, that there's a simple way to adjudicate who needs to be reimbursed or not.

Rich Clow (10:41):

So, we're changing user experiences, things like real-time payment and transfers are coming with requests for pay. But I also think that embedding these payments into let's say permission-based apps is going to continue to evolve.

Rich Clow (10:56):

Last but not least, you mentioned agentic earlier. I really think that there's going to be a step change of innovation around the frameworks required by networks, whether they be Visa, MasterCard, or other alternate networks, to ensure that a client is explicitly loading their card into a bot.

Rich Clow (11:19):

Let's just call it single purpose. Let's say I want to buy a pair of Air Jordans, size 9.5 that are black at the best price, but then there's also the possibility that you may have to authorize the purchase also. So, in carded payments, there's always been authentication and authorization. So, it'll be interesting to see how seamless can that be for bots.

Jim Marous (11:42):

It's interesting because the way the consumers are growing their expectations, the way they're using things. You talked about double authorization, double authentication, and our use of face and biometrics and all these other tools that consumers really come up to speed very quickly because of different organizations, different industries, using them differently. We're becoming more and more accustomed to this happening.

Jim Marous (12:11):

The one thing they're very accustomed to is instant everything. You can't get it any faster. I don't want it to be any less seamless than it is today. I don't want to take a card, I don't want to take cash, I want to just take my phone wherever I go and pay instantly. In fact, I'll select who I work with based on who makes it the easiest, which I think more and more consumers are doing. Certainly, if a 70-year-old can do it this way, everybody's doing it this way.

Jim Marous (12:41):

How is this changing? How's the demand for instant everything changing customer expectations on the payment side, but even more importantly, bank operations behind the scenes? Because there's a lot of pressure.

Rich Clow (12:57):

I think there are kind of three things that frame out the client expectations that we're observing today. I think the first is it must be convenient thing, one. I think number two, it has to be secure — secure both at the time of transaction.

Rich Clow (13:14):

And then number three, if the transaction goes wrong, if they don't get the right shipment, if it doesn't get there on time, we always encourage people to talk to that merchant first, but they need to know that the bank will aid them in how they help themselves.

Rich Clow (13:31):

And I don't think that the speed of the transaction and the expectation changes for what role your bank or your card company needs to play for you. But I would say that the other side of the coin is that there are ... there's a decent number of bad actors who are trying to also speed fraud and moving money where it's getting a little harder to catch them.

Rich Clow (13:58):

And by the way, most of them are the client of a bank. And trying to figure out who those bad actors are and get them out of the system is almost an equal priority to the security and convenience of our clients who are purchasing things.

Jim Marous (14:14):

It’s interesting, we talked about it before the podcast started, that at the foundation of everything, and it's something we often take for granted, but can't take for granted, is that it's trust. Why do we pay Amazon annually for the right to buy things with them? What makes it so that that value transfers is valid? Well, a lot of it has to do with trust.

Jim Marous (14:39):

We trust Amazon not to misuse our data, not to give us false interpretations of what we buy and what we want to buy going forward, how they implement things, how they return things. But that whole trust function is much more important in banking.

Jim Marous (14:54):

If we break that bond of trust, be it institutionally or in a complete industry, we really are put behind the eight ball as far as being able to serve the customer going forward because so much is automated. We're so much believing in the industry to take care of us. And we talk about the instant and everything, but that's not so easy to do behind the scenes when you're talking about risk that runs just as quickly as instant, which is crazy right now.

Jim Marous (15:23):

So, Bank of America has been at the forefront of AI powered solutions, been that way for years, many more of them being customer-facing now rather than just behind the scenes and more along the efficiency side. What role is generative AI playing in payments innovation in the industry, maybe Bank of America, but overall? And where do you see the most significant opportunities and risk when we're talking about AI powered solutions?

Rich Clow (15:53):

Yeah, Jim, the whole push for generative AI in payments is really, I think at times, more intellectually interesting to consider than practically. And here's what I mean; our whole innovation process starts with what client problem are we solving.

Rich Clow (16:13):

And I get asked a lot of times, what's your AI strategy or your cloud strategy? And at the end of the day, we have a really big discipline on understanding and validating the problem, ensuring that as we fix the problem, it's a fit to purpose, it's going to work for the client, and then really scale the heck out of it. And to date, I'd say there's a very robust list of proofs of concept and pilots that we're working on.

Rich Clow (16:43):

Within payments, we've seen just a handful of things work really well. One example on the treasury side is as we onboard clients or we scale with clients for receivables, if you think about all of the data that needs to come with a payment, whether it's a wire, whether it's an ACH or a virtual card to reconcile, it really creates complexity for corporates. So, we've added intelligence into receivables.

Rich Clow (17:11):

I think the second area that we look at is also more back when you and I were talking about personal financial management in the good old days — with open banking now and access to data, we're looking to things like we have life plan, where if you're planning to save for your first home or planning to save for students. On the corporate side again, CashPro has insights and forecasting, where if you want to test various scenarios for US dollar rates or different types of flows.

Rich Clow (17:45):

So, we see a small number of places we're applying it. My belief is we're going to start to find areas where instead of asking Erica, maybe Erica's going to predict why you're calling or why you're touching base.

Rich Clow (18:00):

So, Erica, today in the consumer area, has insights. And let's say I have two identical transactions on my debit card from the same merchant, same dollar amount, same day, Erica will flag, “Hey, one of these may be erroneous, maybe you want to dispute it.” And if that's the case, I have to go through the process.

Rich Clow (18:21):

And again, if I go to the vending machine twice in one day, it's probably not a big deal. But I think that there's a future where given my patterns, my purchasing that maybe Erica would say, “I'm going to go ahead and submit this claim unless you tell me not to.”

Rich Clow (18:37):

And then automate that straight through end to end, and only have an agent interaction if there's some sort of evidence or document required that isn't part of the transaction flow. So, that's a very basic solution that I see coming.

Jim Marous (18:49):

So, Rich, you've been in the industry for a long time and banking hasn't changed all that much as far as their stripes. So, we're a risk adverse industry by nature and should be. How well are we doing it managing risk as opposed to simply avoiding risk, when we look at the innovation platform for payments? I look at payments, I go, there's so much innovation going on, but on the other hand, the financial institutions still has so many parameters.

Jim Marous (19:22):

Does this make it difficult to innovate in the banking industry overall? Does it put hurdles in place that maybe are too high? I use it as an example, the ability that I believe that every single customer, or at least 95% of the consumers at any financial institution should have an automatic line of credit available on their mobile phone.

Jim Marous (19:48):

That could be anywhere from $50 to $5,000 that is unsecured, that is put in place in a very short time after you've opened the account as a way to cover those expenses that are unexpected, those surprises, but the amount continues to grow.

Jim Marous (20:05):

But as an industry, we have so many rules and regs internally, not specified rules and regs that get in the way of offering open lines of credit. We think about the worst-case scenario that could happen, all these different things. You've been in the industry for a long time, is this changing at all? Are financial institutions getting better at managing as opposed to avoiding risk?

Rich Clow (20:31):

So, I think that on the whole, we're getting better at bringing all of the legal risk and compliance types of questions to the fore at the concept stage of opportunities now, instead of waiting and have someone throw up a red flag or a stop sign.

Rich Clow (20:49):

So, I'll give you an example. I run an innovation routine for small business and consumer, and we have visited and revisited buy now, pay later as an offering for our products over the last five years.

Jim Marous (21:03):

Great example.

Rich Clow (21:05):

To us, when we look at that, we think it could be really great for some of our clients. But when we do the real analysis, there's actually a very small population of clients who we serve today who choose that. In many cases, they're credit seekers, and oftentimes, they use their debit card to pay back, pay in four or pay in five.

Rich Clow (21:27):

And we might not be ready to provide that line to that individual. Or maybe we would provide that line, but we wouldn't collateralize it with a sweatsuit or a pair of sneakers or a purse. So, we see things differently, I think also, because we've been through every kind of credit cycle.

Rich Clow (21:48):

We have seen every kind of user experience, and in many cases, some of the new companies in the space haven't had to have a balance sheet that can withstand these types of things. They haven't had to answer to venture capitalists about cost per acquisition going up and credit losses going up. And that's okay, but to me, we also candidly really try to partner with these companies.

Rich Clow (22:14):

We are a bank to several big ones, and to the extent we can, we're going to help guide and advise like we would with any other client. But there's a very small number of places where I think if we got in or if we added the feature to our platform, that it would materially move the needle on the benefits to our clients.

Rich Clow (22:36):

And in some cases, and I know you've mentioned on another podcast, there's a primary bank that an individual will have where your paycheck gets deposited, and then maybe there's another bank that you use. Or you use Cash App or Venmo or Revolut. And you do other things with those accounts. And we try to really prioritize choice. We really advocate for client choice and our APIs and the ability to move money in and out of our accounts, I think creates a very level playing field.

Rich Clow (23:09):

And when it comes right down to it, when we're advocating for how we work with FinTechs, we just want a level playing field. And I do think to a certain extent, as a larger, more influential financial business, we should be managed a little differently than a startup. But the distance between the regulations with like a money service provider and a bank are significant.

Rich Clow (23:35):

So, as we start to answer questions about how far is a money service provider license, and how far can that get you versus being a depository institution, I think will be interesting in the current legislative climate.

Jim Marous (23:52):

That was a good political answer, by the way, it’s very well done. It’s as if you've used that one before. And I agree, we're dealing with the exact same consumers, we're dealing with the exact same product types and regulations should protect both sides of the equation, both the consumer and the organization in very similar ways.

Jim Marous (24:16):

We can't talk about payments without talking about the cyber threats and what we deal with every day. And it's getting worse, not getting better. I know the people around the table were in charge of those areas because they look the most stressed. That's what keeps them up at night.

Jim Marous (24:31):

But how does an organization balance the need for frictionless payment experiences along with robust security? What's that balancing act, and how do you do it from a go forward basis as you look at new payment opportunities, new payment products, new integrations within the customer's overall portfolio of products? How do you balance those things?

Rich Clow (24:58):

That could be a podcast in and of itself but let me try to give you the short answer here. I think first and foremost, and people don't think about this very often, but we've invested tremendously in resiliency. Because if you think about it, when you're down, not only are you letting your client down, you're probably more vulnerable to people exploiting weaknesses.

Rich Clow (25:20):

So, I think resiliency and uptime and things like we've done with Zelle, and a lot of our online payment solutions are really top notch. I think the second thing is that you have to have a layered security approach.

Rich Clow (25:35):

But at the end of the day, whether it's perimeter security, whether it's transactional security, whether it's new client onboarding and the combination thereof, we are investing heavily and again, at the scale that we operate in, we are expected to, it's not an option not to.

Jim Marous (25:55):

So, let's take a short break here and recognize the sponsors of this podcast.

[Music Playing]

Jim Marous (26:01):

Welcome back to Banking Transformed. Today, I'm joined by Rich Clow, Head of Innovation and Strategy, Global Payment Solutions at Bank of America. We've been exploring the challenges, opportunities and strategies that will help banks and credit unions make their payment platforms more future-ready.

Jim Marous (26:18):

So, Rich, we're seeing a shift towards behavioral biometrics in pass key authentication. How do you see the future of payment authentication evolving, and what will eventually replace traditional cards and passwords?

Rich Clow (26:35):

So, I'm going to have to speculate a little bit because often, these things take a little longer or may not play out. But I think there are a few simple things in the way we think about it, that are likely to come true.

Rich Clow (26:51):

Number one, I think there will be an expiration date on cards being printed. The utilization, most banks, including ours today, if you need to replace your debit card or you open a brand-new checking account, we can give you a virtual card immediately.

Rich Clow (27:06):

So, I think that the actual issuance of plastic is probably going to be replaced with software and tokens instead of a traditional card number. I think the second around biometrics is probably a little more challenging to determine because there are fewer and fewer opportunities to collect a biometric.

Rich Clow (27:30):

I think that the mobile operating systems have done an amazing job. Obviously, places like TSA and Clear and others are doing great, but how a bank can leverage a separate authentication factor consistently and how we track the nature of that, and even both the person and the device is pretty sophisticated today, but it would have to take another big leap, I think, to satisfy ourselves.

Rich Clow (27:55):

And last but not least, I do think that the whole path to passwordless where it will be pass keys, it will be chains of trust, it will happen because with quantum computing and other types of things hacking a 16 digit password with a capital, a number and some sort of other hyphen or explanation point isn't going to matter — but figuring out the right balance of a great user experience that's convenient and secure will take a lot of experimentation and time to figure out, I believe.

Jim Marous (28:37):

It’s interesting, I think a lot of it gets down to education as well. Consumers still don't understand how much more safe a mobile payment is versus a card payment, or that plastic versus the phone. And how much better both of those are than cash. I think they understand that now. But the reality as you mentioned, just the fact what happens behind the scenes that consumers have no idea about.

Jim Marous (29:03):

I go to one restaurant that they take my cart up front and you have the ability to pour your own beer and do all kinds of things, but you get a wristband. Well, that's great, but you got to go back and cash out at the end, and they don't take Apple Pay. Well, one of the reasons they don't take Apple Pay is because Apple Pay immediately changes what your card number is in their system and makes it so it's safer.

Jim Marous (29:27):

Well, consumers have to understand why that makes sense, why the continuous revolving account numbers behind the scenes that they don't see makes sense overall, and how much better a mobile wallet is, or a payment is than one using traditional plastic in more ways than simply that they can be stolen differently.

Rich Clow (29:51):

Hey, Jim, can I jump in there? One old payment nerd to another anecdote on the restaurant experience, and then I think something that's coming.

Rich Clow (30:05):

When Apple Pay, Google Pay, Samsung Pay all went live, there was this concern that merchants wouldn't know how to associate a person for their loyalty. And there was this big debate that went to EMVCo and others, and we said, “Okay, well, we'll create Par.” Which is essentially a party relationship ID, and almost no merchants have installed it since it's been live.

Rich Clow (30:27):

So, it's a mandatory field, everyone had to do it. The networks and issuers did our site. So, there's always something in the user experience that's going to be a gap. But I feel like technically there's an alternative. It's just hard to pull it through all the way into some of the sophisticated, like restaurant and beverage types solutions.

Rich Clow (30:47):

The second thing I'd say that I think is quite encouraging is you mentioned, people are still migrating away from cash and checks. Now, we see Zelle send today, for Bank of America represents over 1.4 times all of the cash and check transactions that we have. And think about that, Zelle, you can only do through a bank app today, so you're authorized, you're authenticating the transfer of the funds and it's immediately available.

Rich Clow (31:16):

I think that those kind of experiences are going to continue to evolve, how else you could use that kind of experience. And we've seen double digit approximately 20% year on year growth both at the bank and across the network. And when you think, let's say, 7 or 8 or 10 years ago, Venmo and PayPal and others that really owned the P2P space.

Rich Clow (31:42):

So, I think there's going to be great opportunity, and as long as people trust their bank, and we can evolve the ways you can pay from your bank app, I think we're going to have an opportunity to not just serve the payment needs, but also the digital engagement and all the data around those payments.

Jim Marous (32:00):

It’s interesting, you bring up a very interesting point that I sometimes forget is that in the payments world, especially in the retail marketplace, you also have to educate the people that are on the retail side.

Jim Marous (32:13):

It was interesting that before COVID, you could find maybe one in seven, eight, maybe restaurants that would allow you to pay at the table, either through a QR code or just on a mobile phone to device. That wasn't available, and in fact, there's still some that — I give my phone to the person and say, “Yeah, you can take this to the register, I don't want to go to the register.”

Jim Marous (32:36):

But that all really, really changed a lot almost immediately with COVID. And all of a sudden, everybody goes, “Well, this is a whole lot better than what we were doing before.” Well, yeah, it is, but it takes education across the entire ecosystem, which is different as well. And it's interesting if sometimes we forget about the fact that in the payment space, there's multiple players besides just the payee and the payer that are involved in the process overall.

Jim Marous (33:06):

So, Rich, you've worked across everything from mobile wallets to blockchain networks. What emerging business model or technology are you most excited about and which ones do you think sometimes are overhyped?

Rich Clow (33:21):

Well, I would say I'm very excited about where agentic AI will go as the next phase. And whether it's like I have a pretty decent sized transformation portfolio we're delivering on, and if I could just use agentic AI to map my business requirements to test cases, very simple things, or what if I could automate all the rules and regulations for payments into testing, that would be a game changer.

Rich Clow (33:48):

And that's not coming fast enough, but that's the kind of thing that really aid speed to market, it increases quality assurance and is going to help us with our clients. I think the second thing for agentic AI is going to be when things go wrong with a payment or when a client does need investigation or research or advice.

Rich Clow (34:10):

I feel like the ability to orchestrate, collect information, collect documents, and then really help the context for that person to person, high touch discussion to be aided with the technology is going to be great.

Rich Clow (34:25):

Whether you're fixing something, or I should say actually planning. I mean, because really, financial planning today — in a prior podcast you mentioned Acorns and these other things. We think that that's going to continue to grow and people want and need advice once they trust you. So, I think that there's some good opportunities there.

Jim Marous (34:44):

You bring up that whole agentic thing and the ... I'm an Acorns fan, stated on many of my podcasts. But basically, I feel like they're always listening, and they're always giving me additional ways to use their platform, and banks don't do a really good job of that.

Jim Marous (35:01):

Now, I really put — and anybody asks, who would be on the front end of agentic AI? I truly believe it's Bank of America, mainly because you built those listening tools through Erica way back. I don't even know how many years it is, because I keep on dating myself where I think it's like 5 and it's 10 or whatever the number of years may be. But it takes time to get used to the listening of things rather than pushing out products.

Jim Marous (35:29):

And I think that, as you said, it's extraordinarily exciting. It will be interesting because, and I said it to you before the podcast, the fact that somebody listens doesn't mean they actually deploy against what they've heard. I have no doubt that my relationship with Bank of America, you know virtually everything about the way I bank, even with other organizations. But my challenge is how do financial institutions actually deploy upon what they hear?

Jim Marous (35:59):

I have two relationships. I have a personal relationship with a very, very large bank, and I have a business relationship with a very, very large bank. Neither of those at this time are Bank of America, but on a twice a month basis, I have to write a check to myself, take a picture of it to transfer money from organization A to organization B, I've been doing that for five years because those two organizations don't talk well to each other because of the lack of stripe.

Jim Marous (36:26):

And it's the most frustrating thing in the world to me, but now, it's a game where I'm saying, who's the first one that's going to recognize that I know there's a better way of doing it, but nobody's telling me? And it's those kind of interplays that you go when does a financial institution feel incumbent upon themselves to take the “risk” of actually helping me, as opposed to maybe making a mistake?

Jim Marous (36:50):

And at the end of the day, when Amazon makes a mistake, it actually builds my trust because they're telling me, “We made a mistake, we'd like to do things differently.” I have a great case study, I've told many times with Delta; they made a mistake, the way they reacted to that was built more trust with me around how they do their business model. It's going to be interesting because agentic AI is a leap forward in trust, but it's also leap forward with regard to, geez, you may make mistakes once in a while.

Rich Clow (37:20):

And Jim, on that point, I'd add two things that I think give us an early start. One is everything about leveraging the next wave of AI requires great data classification, great data structures, all of these foundational elements, which are really hard and take a long time that I feel like we're getting down the right path to help the next wave of experimentation.

Rich Clow (37:51):

And the second thing I would tell you is that we have over a thousand what we call triggers, that we identify and listen for. There's only a handful alive today because again, there's this connection with legal risk and compliance and what would the experience be, et cetera.

Jim Marous (38:08):

It's funny, you have a lot of enthusiasm, at the same time you're pragmatic as I tend … I'd love to think agentic AI, that it could come immediately. I think it's really interesting and I think it could be developed.

Jim Marous (38:22):

And the challenge is going to be do we introduce it as financial institutions or very much like open banking that a consumer end up doing on their own, either with an outside resource or themselves in a way that they build the mechanisms themselves. It'll be interesting to see how it plays out.

Jim Marous (38:40):

So, finally, Rich, I'm just going to completely go off track on what we discussed up to this point. But you've been in the banking business for quite some time. As I said, you're passionate about what you do, you enjoy what you do, you have a lot of enthusiasm around it.

Jim Marous (38:54):

Let's say somebody is just starting their career in financial services, what do you tell them? What do you tell them to do? Take yourself back 30 years and say, “Geez, if I knew then what I knew now, I would go about this whole learning process differently.” What would you tell them?

Rich Clow (39:12):

So, I would tell them two things. One, start in a client-facing role. Really come to understand a client's needs, how we delight them, when we disappoint them how we recover, and be an advocate for continuous improvement around the client experience.

Rich Clow (39:30):

And then the second thing I'd say is always be curious. Be looking for the next thing, be reading ahead of what your mandatory training says. Experiment at home with your personal devices, with maybe things you can't have.

Rich Clow (39:46):

My start was really at a startup that led to serving call centers. So, I traveled all over the country. I had a headset in my bag, and the way I was able to start to experiment with applying some leading-edge technology was hearing the client and the agent interact and try to figure out what could make this better. So, I had a little bit of it, I didn't start at a bank, but that helped me get in at the right time.

Jim Marous (40:10):

Those are two amazing answers, and I have to agree with both of them. Number one, I started as a teller. So, I still refer to my teller days and my branch management days every day in what I do. I remember what it felt like what consumers really like which was different than what they seen, like, and the whole thing about branch banking.

Jim Marous (40:31):

The other side of it is that inquisitive nature is — the good news is with generative AI, we have the ability to ask a question every day to start our day. We have the ability to ask that unknown question, and then test to see is the answer really what it should be based on what we know in our own experience.

[Music Playing]

Jim Marous (40:52):

Great ideas, great recommendations. And I would agree, those are two of the most important things you could learn, is never lose your curiosity, and your desire for learning and start from the customer perspective. It may not be in banking, it may be being a waiter or a waitress someplace, it may be at a call center. But I think you're right, and until you hear the stories, you kind of forget that banking's still about people.

Jim Marous (41:21):

So, Rich, thank you so much for your time today. It was great having you on the show. We're going to do this more often because you have a good perspective in and outside the payment space and you've experienced a lot through the years.

Rich Clow (41:35):

Thank you very much, Jim. Great catching up today. Look forward to it again.

Jim Marous (41:39):

Thanks.

Jim Marous (41:43):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoy our work, we'd appreciate if you give us a positive view. Finally, check out the recent article I've done on The Financial Brand and the fantastic research we're doing for the Digital Banking Report.

Jim Marous (41:59):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios; and video producer, Will Pritts.

Finally, if you have not already done so, remember to subscribe to Banking Transformed on your favorite podcast app and on YouTube for more thought-provoking discussions on the intersection of finance, technology, and leadership.