Podcast: Bank of America exec talks AI-driven automation

Whitney McDonald 0:06
Hello and welcome to the buzz of bank automation news podcast. Today is July 11 2023. My name is Whitney McDonald, and I’m the editor of big automation news. Joining me today is Bank of America’s Lindsay Huston. She is here to discuss the bank’s Accounts Payable automation.Lindsay Huston 0:26
Great, thank you, Whitney. And thanks for the invitation. I’m super excited to be here. So my name is Lindsay Huston, and I lead a product team at Bank of America. I’ve been in payments for about 20 years. At Bank of America. Our goal here is just to help make payments easier and digitize payments. We’re helping companies move from paper checks and paper invoices, which are costly and error prone and bad for the moment to electronic payments. We offer solutions for companies anywhere from smaller franchise operator who maybe just wants to outsource their accounts payable altogether. To many Fortune five hundreds who have multiple subsidiaries very complicated processes and requirements, we do custom electronic payment solutions to fit their needs. So either way, our goal is to make AP easier on our customers and free up employee capacity. And my specific capacity in that role is leading the product team and innovation and strategy. They’re

Whitney McDonald 1:22
great. Well talking through some of what you do work on day to day, maybe you could start off by giving us an overview. Bank of America is account payable solutions, and maybe a little bit more broadly the b2b payments solutions.

Lindsay Huston 1:36
Yeah, absolutely. Thanks. I’m really proud of what Bank of America offers. Because we really have industry leading solutions, we are always our goal is to be top to three in every category and industry ranking for our car products in our payments solutions. And we offer a range of solutions for companies of every size. And in every region. When I started the bank, many years ago, I was in a sales capacity. And I worked with companies that were we call our in business banking. So those are companies that are, you know, 20 to 5020 to 50 million in annual revenue. And now, some of those companies and those operators that I’ve known for a while those companies are now a billion dollars in revenue. And we’ve been able to grow with them with our continuum of solutions that support every size company. So I’m super proud of that.

Whitney McDonald 2:22
Now, speaking of the banks solutions, and leveraging the data in specific ways, maybe we could talk through how those solutions actually work and talk through the technology behind them.

Lindsay Huston 2:35
Yeah, absolutely. So we have individual payment products. So a company can use our purchasing card. And they might use that for materials, for example, or we offer a virtual payables for invoice to spend, or we have end to end AP automation solutions, where companies can essentially outsource their payables to us, they send us a file of the payments they want to make. And we enroll the vendors, we maintain all that sensitive account information, we execute all the company’s payments on their behalf, we make sure that those payments actually get executed and follow up with the suppliers. So that’s really a combination of not just technology, like you mentioned, but that hand holding to ensure that that end to end experience for our clients is taken care of. We also have kind of in between solutions. So solutions that can be customized to our client’s buying behavior needs. We can manage the vendor onboarding and the credentials, but then we can let the buyer choose the payment type. Or we have intelligent routing solutions where we can recommend the best payment type based on the buyers preference. And that may be skewed towards working capital or they may be focused on rebate automation. But our job is to really navigate that labyrinth of b2b fintechs find best in breed and partner with them to bring those to our 10s of 1000s of Bank of America customers. Because b2b is really having kind of a renaissance right now. And there’s some solid, mature b2b payment fintechs. And then there are dozens of newer and emerging players. And we know our customers don’t have the resources and time to meet with an evaluate all of these. So what we do on behalf of US customers is get to know all these fintax and evaluate their technologies. And not just their technologies, like I said, also their support model, because many times we see fantastic technologies can fall down if they don’t have the people behind that to make sure that the end to end experience is great for companies. So we really take that on so that buyers don’t have to go and evaluate all of these fintechs on their own.

Whitney McDonald 4:44
Did you may we take that as a step further on what that vetting process entails?

Lindsay Huston 4:51
Yeah, absolutely. So I think of America we we hold risk in very high regard. So we are Not just meeting with the companies and evaluating their leadership, we are doing things like scanning their technologies and looking for vulnerabilities. We have industry leading technologies internally. And because of the size and scale of Bank of America, we often are on the edge of seeing what fraudsters are doing. So when we partner with fintechs, this scale of what we see in our own Bank of America portfolio, we can bring that to the fintechs and say, hey, there are these new vulnerabilities. These are things to look out for. So we’re helping fintechs in that way, with our maturity to help them get better what they’re doing as well.

Whitney McDonald 5:41
Thank you for explaining that. Now, bringing in some numbers last year, your accounts payable automated solutions process $300 billion, which was up 25%. Year over year. Can you talk us through what contributed to that increase in what was driving the adoption of those accounts payable solutions?

Lindsay Huston 6:01
Yeah, actually, we’re looking at what will be 350 billion in the next in a rolling 12 situation right now. And that’s just the digital payments, there are AP automation solutions. But to your point, it’s just been tremendous growth. And I really kind of bucket that into three things here. First is just for buyers, with fraud increasing more companies are seeing the value of payments automation. So in 2022, business email compromise accounted for almost three billions in losses last year. Through our API automation solutions. We hold vendor credentials, vendor account information. We know vendor preferences, because of the networks we manage. We know what time zones the vendors operate within. And we collect all this data and watch these transactions to help prevent fraud and business email compromise and all of these things. Last year, there was a healthcare payer that received a phishing email, we identified the fraud for them, we called the supplier who was an architecture firm that was building a wing for buyers for that buyers hospital. We told that supplier that they’d been hacked. And that actually helped prevent fraud with a lot of their other buyers who had also received a phishing email and not anticipated that fraud and that that architecture firm actually ended up joining our payments network because they realize the benefits of the additional monitoring and the network solution, which goes along with that. So the great story of how we prevent fraud, not just for the buyer, but for the supplier as well.

Whitney McDonald 7:32
Yeah, great example. Thanks for sharing.

Lindsay Huston 7:34
Yeah, another thing that we see driving that growth is supply chain issues. suppliers have more leverage and more power than they have in many times. So our buyers want to find solutions that provide value to the suppliers as well. And that’s, that’s always been here. But this, the pandemic has shined a light on this. So now we have introduced a lot of options that can benefit the supplier and how they get paid. With a card payment things that are as simple as pushing the payment into a suppliers account, where typically it’s a pooled payment. We also offer not just a basic Ach, but an enhanced ACH. So the vendor gets much better reconciliation data, they get custom cashed application files, w h and w nine. So this is making reconciliation a lot easier for the supplier, encouraging them to move away from check as well. And then the industry is also evolving to offer things like proprietary interchange rates as well. So if a supplier is processing millions of spend on card or on ACH to and that cost becomes a challenge, we have a different level where you can set a one to one interchange rate on that card or on that ACH. So instead of playing two and a half percent, it can be one and a half percent. And so that helps also move spend off of check and making it more economically feasible to move that to an electronic payment type. And then lastly, a lot of that increase is being driven because everybody’s being asked to do more with less in our current economic environment and looking at a potential recession, everybody’s looking for cost savings. And this is a really well illustrated by we had a family on regional retail shopping center that does property management, and they wanted to grow but they didn’t have the help headcount to do that in their kind of very manual operations environment. What we saw during the pandemic was they were putting invoices in a folder, passing that desk to desk than going to AP for a data entry. And it’s just they’re losing a wild amount of float from that desk to desk operation. And then on top of that during the during COVID They had to send check printers home with their AP staff, which opened them up for fraud and they had to have check printing parties in the office where they wore masks and printed checks and licked envelopes. And so all of that drove them to Do AP automation because they recognize the the fraud and the risk and the opportunity there. One of the benefits here. Yeah, yeah, it was just and you know, it’s it’s not a typical, we see this a lot. Everybody is looking at, you know, a hiring freeze and reducing expenses. And so they’re looking at how can they reduce headcount or do more with less. And I think one of the really interesting things is, ultimately, as Gen Z becomes more of the workforce, they are going to find it hard to believe that so many companies still do things like sending faxes and cutting checks and walking invoices around and and I think, as we try to backfill boomers who roll off of AP departments, Gen Z’s aren’t going to be willing to do that kind of work. So we’ll have to automate these roles, because there’s not going to be as many people who are willing to work with paper in the way that many have in the past, especially, again, older millennials and Gen Z’s who have grown up in a digital native environment.

Whitney McDonald 11:06
Yeah, I mean, this brings up several areas of opportunity, I’m sure for Bank of America in areas of innovation in this space. So based on this adoption, and move toward digital away from paper, anything that you guys are focused on working on for the second half of 2023.

Lindsay Huston 11:28
Yeah, for us, we’re looking at a lot of AI and ML, right, I’m super excited about the convergence of these, and it’s something that’s super a passion of mine. Everyone’s looking at the most the initial use cases for our worlds would be like, we do invoice digitization right now, and, and with digitization across most companies right now that offer that they’re doing what we call zonal invoice scanning, they’re looking for heading level information in one zone, and they’re looking for detail level information in another zone, and it’s maybe 80% Correct and 20% manual human has to come in and correct information. So now we’re seeing AI for invoice scanning. And the AI algorithms can actually extract relevant data for the invoices much better. That vendor detail the invoice number dates and amounts, they can actually anticipate what formats that should be at. And so that’s going to reduce a lot of human intervention that goes along with invoices. zation.

Whitney McDonald 12:33
Yeah, and you know, of course, all things right now are all AI and how to make it work best for for different financial institutions. So definitely an area that you can look into AI for.

Lindsay Huston 12:45
Absolutely.

Whitney McDonald 12:47
Now, looking ahead, and it doesn’t have to be super short term, but just kind of trying to get a gauge of what payments technology you’re looking out for, or what innovation is exciting right now that you’re monitoring.

Lindsay Huston 13:01
Yeah. For us, I think it’s so interesting. And and I kind of go a different direction with this question. We are always looking forward about the modernization opportunities. But as as just thinking about this question, I think about our customers and once friend of mine for them. And there’s still so much opportunity in what our customers are dealing with in basic API automation. That, you know, we’re excited about real time payments, and we’re excited about machine learning. And we’re excited about AI. But, you know, we, I was meeting with the other day, a well known company that is building rockets, and they are still 100% Check. And they struggle with getting off check. And they struggle with a fraud there. And I think many times there’s actually an inverse relationship between the maturity and technology, technological savviness of a company, and their API automation maturity. And so we’ve seen that repeated many times we another one is a hybrid car company we work with, they have grown super fast, they’ve modernized the modern car technology. And still they’re very behind in how they run their AP. So I get super excited about all the technological advances that the products may offer, but there’s still tremendous headway that we can make. across our entire portfolio of buyers, there’s still a ton of opportunity to help companies mature and advanced their API automation. If the listeners take away anything, it’s that as we look towards the end of the year, potential increase in rates and potential for recession. It’s a really good time to look internally into companies, AP departments, and there’s just tremendous opportunity to digitize As payments to reduce fraud, to improve operations to reduce expenses to be able to take people and put them on more valuable activities by driving automation within their company. So, thank you again for the opportunity to come and meet with you. This has been really fun and maybe we can do this again sometime.

Whitney McDonald 15:22
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