Somani, who leads the U.S. Bank Payment Innovation Studio, talks about what instant payments mean for businesses and consumers alike.
Anu Somani, head of U.S. Bank Global Payables and Embedded Payments, is responsible for developing the next generation of embedded and instant payments solutions. U.S. Bank launched its Global Treasury Management (GTM) Payment Innovation Studio in 2019, under the leadership of Somani. The studio’s partnerships include a collaboration with Driveway.com to deliver payments instantly to online car sellers and with Payactiv to bring Earned Wage Access to our clients. Somani was named one of the Emerging Leaders in Banking and Finance by Crain’s New York in 2020, Most Influential Women in Payments in Payment Source’s Next Award for 2021 and recognized by Crain’s as one of the Notable Diverse Leaders in Banking and Finance 2022.
Can you tell me about some of the work you and the Payment Innovation Studio team have been doing to help clients come up with new solutions and eliminate pain points?
The U.S. Bank Payment Innovation Studio was designed to identify innovation that helps to solve “real world problems” faced by our customers during their business-as-usual activities. Clients are so busy running their day-to-day operations – growing revenue, driving operational excellence, and managing customer relationships – that incorporating new digital capabilities are not always top of mind, even though these capabilities may ultimately lead to improvements in their process or revenue.
We created the studio to build bridges from their current state to their desired end state. For us it’s very important to isolate problem identification from the solutioning discussion. I’ve been a product manager for my entire career, and product managers are problem solvers. So we try very hard to not prematurely jump on the solution right way. We focus on understanding the root causes of a problem in the first few meetings, and then try to find different ways of solving it. Not every problem is solved by something brand new; some problems can be solved by an existing technology, new capabilities, or some combination.
So our clients could engage us in a myriad of ways. One reason clients seek our advice is because they have a pain point – for example, their payments are a very check-heavy process driven by regulation. We help them isolate the pain points, identify the constraints they must operate under and then show them ways to overcome pain points. Another reason clients come to us is to plan for a long-term strategic objective – such as where they want to be in 10 years. We help them break that large strategic goal into smaller achievable tasks and convert that into building blocks and a roadmap on how to get there. And a third way clients come in is out of curiosity. They may have read about something we did specific to the car-selling industry, but they’re an insurance company and want to see how this idea could apply for them.
We’ve heard a lot about how real-time payments benefit vendors and businesses, but what can faster payments mean to me as a consumer?
When real-time payments first came on the scene, the expected use case was to help businesses optimize cash flows and costs. We’ve realized since then that an even larger benefit exists in improving the B2C and C2B payment experiences. Think of streaming services – I don’t have to wait for a movie to come to a theater, buy tickets, drive to the show, and all of planning that goes with it. With the click of a button I can literally watch a movie, or an entire season of a show, whenever I want. All of us have been trained for this instant gratification, and real-time payments enables that. You can receive a payment at 1 a.m. on a Saturday when everyone is sleeping, or you can make payments and settle bills. The power of real-time payments for a consumer is incredible. If you’re selling a car to a dealership, in most cases you’d take it to the dealership, get your car assessed and then they would mail you a check. Covid changed that and now someone may come to your house to assess the vehicle, but that didn’t change how the consumer was paid until now. Customers selling a car on Driveway.com can now have the payment deposited instantly into their bank account after a sale is complete and before the vehicle even leaves their home. Think of insurance payments – how awesome would it be if you got paid right away for a claim, when you need the money? Think of welfare checks or benefits, real-time payments enable customers to get instant access to money when they want without having to bother about branch hours, Fed operation hours or processing windows.
In announcing the collaboration with U.S. Bank and Lithia Motor’s Driveway to instantly pay customers who sell their cars to the dealership, Driveway noted that in this competitive market for used cars this quick payment gives them an advantage. Are businesses increasingly seeing instant payments as a competitive differentiator – especially at a time of supply and labor challenges?
Real-time payments are definitely a competitive differentiator not just with new customer acquisition, like in Lithia’s case, but also for retaining customers and providing a higher level of customer service. They are also proving critical in creating a competitive advantage in the employee market. We have a lot of clients – traditional brick and mortar companies – who are used to bi-weekly payroll. But they have employees who now drive for Uber and Lyft, where they get paid instantly, and they want to be able to compete with that. For us, instant payments are a way to lead to a better customer experience and better employee retention and relations.
What are some of the larger scale impacts this technology could have beyond the transfer of funds?
Instant payments may be the last remaining piece of the puzzle for the 24/7 “on-demand economy.” It was only a decade or so ago that smart phones were introduced, and they have only grown smarter by the day – to the point that each of us now carries a supercomputer in our pockets. With the advancement of enabling technologies like APIs, we have a core piece of infrastructure that will allow businesses and consumers access to money where and when they want it. And it’s not just about the speed of payments; there’s an incredible amount of information enveloping it that has helped disrupt the old and create value. Just like the smart phone created an economy we never thought possible, we’re going to see the same with real-time payments.
As someone who has been focused on innovation pretty much her entire career, how do you keep yourself attuned to what’s next?
By making my seven-year-old daughter’s favorite song – “Try everything” from Zootopia – the mantra of my professional life. I’m willing to try an idea and fail, because that failure will uncover valuable insights that can eventually lead to success.
And, secondly, I’m not afraid to ask silly questions. One thing I unapologetically do is not assume anything is a given. A lot of people brush off innovation because they are intimidated by it, or it doesn’t make sense. My career has been in delivering innovation and making innovation accessible. As the payments landscape rapidly evolves to be faster and embedded in the processes and systems we use every day, I am focused on making sure whatever innovation we as a bank are delivering makes sense for our clients. I’m not into creating the next moon shot if all that is needed is a step ladder.
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