Drivers for changing accounts receivable in 2021
Hi there, and thanks for joining us today. Kim Anderson is joining me, John Melvin, your host here, to 
dive into the receivables process and digitization in today's world. As we look at where we've been over 
the course of the last 10 years, that really has laid the foundation for where we are today and where 
we're going.

So just think about this. 10 years ago, the Federal Reserve processed over 6 and 1/2 million checks in 
2010. Conversely, in 2020, the Fed only processed 3.7 million. 49% decrease over a course of 10 years. 
That's an incredible statistic when you compare that to the fact that, by 2023, there are five countries 
that are anticipated to go completely cashless.

And that really is the basis of what we're looking at today when we dive into this even further because 
digital is really paving the way for where we're going. And obviously, we've seen a number of different 
things occur over the last year-and-a-half that have driven a lot of those. So before I dive in any further, 
Kim, I know you and I talk about this a lot. What are you seeing in both the consumer as well as the 
business space when we talk about digital?

You know, John, I mean, historically, companies have been implementing their own payment solutions 
based on their requirements. And that paradigm has completely shifted. Consumers are squarely in the 
driver's seat because they can choose who they want to do business with. They have choice.

And we know consumers actually value customer experience so much. Some research show that 86% 
said that they will actually pay more just to have a positive experience. And then transversely, a third of 
consumers said they'll walk away from a brand they love after just one bad experience.

And I can speak to this myself. I used to shop a-- and I'll call it a nameless big box retailer for groceries. 
And I had one bad experience. And because of that one bad experience, I now shop at their competitor.

Interestingly enough, 80% of consumers point to speed, convenience, knowledgeable help, in that order, 
as the most important elements of a positive customer experience. So clearly, clearly the consumer is in 
the driver's seat. Research just released revealed 35% of consumers want to pay by text, yet only 4% of 
businesses actually offer it as an option. And 62% of consumers under the age of 35 always or frequently 
pay by text businesses actually offer to them. So speed and convenience is key.

Flipping it on the business side of things, businesses need to meet consumer demand in order to 
mitigate attrition and increase overall satisfaction with their customer base. And given the preference of 
today's consumers, it's no longer a choice to offer digital and mobile billing and payment options. It's 
absolutely essential.

A recent study showed 76% of CEOs agree their company will fundamentally change the way they 
engage and interact with their customers. And providing an omnichannel experience is the most 
immediate critical step to make things easier for consumers in providing a very cohesive and seamless 
payment experience. Bottom line here, consumers have choice who they want to do business with.

So companies need to invest in delivering a seamless payment customer experience. Otherwise, they 
run the risk of attrition. So switching gears a little bit, John, what kind of payment trends are you seeing 
in the non-financial space?

Well, it's really interesting, Kim. You had alluded to the customer-driven experience, right? And a lot of 
the non-financial players are really playing in that space.

And really speaking to that a lot is the PayPal experience, when you start thinking about where they 
have really driven the market share quite frankly in an incredible amount. They are up over 35% as a 
trusted source over all the other competitors in that space. And a lot of that is attributable to them 
adding 10 million new accounts at the beginning of the first quarter. So you know, it's really an 
incredible foray into the financial space. And a lot of financial institutions are trying to find partners in 
that space to not only drive that customer experience, but also drive customer behaviors.

So I have to ask the question. Have you seen that any influence COVID has had with regards to how 
companies are behaving?

Oh, absolutely. Obviously, the remote work environment is here. And part of that is the new normal. 
And a lot of what we're seeing is reduction in cash.

And obviously, the statistics I threw out earlier in terms of the Federal Reserve processing checks, it's a 
49% decrease over the last 10 years. Well, what's driving that? A lot of that is the contactless payments 
and a lot of what you alluded to in terms of that customer experience, the speed, the ease, and the 
accessibility to drive a transaction quickly and efficiently and also receive goods quickly and efficiently.

63% of CEOs have said they are making greater investments in technology on account of COVID. I mean, 
think about that. That's a huge piece.

And as you start looking at that same study, 49% of them indicated that digital transformation was not 
only a strategic priority prior to the pandemic onset, but it has become a more of a have-to-do. There is 
a must factor there with a lot of the companies that are out in the space today. So Kim, as we talk about 
the business side of that and how COVID has impacted, how have you seen the consumer side?

Yeah, unbelievable shift last year, in particular. I mean, I think with all the stay at home orders that were 
implemented, we saw surges in e-commerce online sales last year. It hit over $791 billion. That's up over 
32% from $598 billion just in the prior year. That's the highest annual digital growth of any year for 
which data is available. So that's just astronomical.

And it probably is no surprise to anybody that the online retail giant Amazon represented roughly a third 
of all e-commerce spending last year. Kind of a running joke in my house is how many Amazon 
shipments have showed up at my doorstep each week. In fact, 80% of all consumers have shifted at 
least some of their in-store spending online just this past year alone. What does that mean?

I mean, brands in every sector, 2020 brought a loss of predictability entirely. Consumers were driven 
online at a rate that amounted to a jump of 5 to 10 years in projected adoption. I mean, just think about 
that.

We'll continue to see an upward trajectory of consumer or digital adoption this year and ongoing. Let's 
talk about, like, John, the C2B and the B2B space. Can you see what we've seen over the last year or so?

You know, Kim, it's really interesting. There are a number of customers that have previously been 
unknown to a lot of companies. Specifically, when we start talking about that C2B and the B2C space, 
right, 63% increase in customers that were previously unknown to them. And then we turn around and 
look at the B2B space, that's at 57%. So partners are trying to find new avenues for resources, for goods 
and services, et cetera where they may have not previously been able to define that before.

And I think a lot of that has been driven by the remote work environment because what we do as 
consumers at home really transcends itself into that business world space and the things that people 
want to be able to do. For example, when we start talking about digital changes, the average basket size 
of a customer has increased significantly over previous years. And we're talking about almost a 50% 
increase in basket size.

And what do I mean by basket size? Think about that checkout cart at the end of the day when most 
companies-- or when most consumers are checking out. So a lot of that is significant.

And we start talking about the C2B space specifically, we really start rolling into the true contactless 
payment space. And it's kind of interesting. Over the weekend, I had the opportunity to go to one of my 
kid's favorite restaurants, In-N-Out Burger. If you haven't had one of those, I'm sure you're probably 
envious right now because they're a lot of fun.

However, the interesting piece was the checkout experience was still the same checkout experience, but 
what I found really interesting is that when you went to the soda dispenser, they had an option to be 
able to, with the wave of a finger, distribute your soda. I mean, think about that. Something that outside 
the norm and just a minute detail for a customer experience is now changing the way customers actually 
conduct business in terms of just that whole contactless payment. And I think we're going to see more 
and more of that.

And the reason why I say that is because a recent study indicated that over 70% of consumers want a 
contactless option, and 78% have now indicated they will use a contactless option post-pandemic. So 
what does that mean for us? And what I see is a pretty big shift, if you will, from traditional payment 
methodologies into the digital world we've been talking about because the compression of cash is real.

I mean, how many times, Kim, have you been to a restaurant or to a store who has said, card is our 
preferred payment method? We have a shortage of cash. And that's across the board at any number of 
locations, whether it be a gas station or whether it be a restaurant or whether it be a local store. Cash is 
starting to be less and less a factor in our systems. So that aside, Kim, what have you seen from the C2B 
space when it relates to contactless payments?

Yeah, so last year, we saw a surge of app downloads, 218 billion, to be exact. Instacart saw a 313% 
increase just in the first three months of the pandemic. Astounding numbers. And as all of you probably 
know, Instacart allows the consumer to order groceries online as well as order from other thousands of 
retailers and Instacart partners who have all contactless delivery.

In the fast food delivery alone last year, there was a 20% growth. DoorDash was the most, followed by 
Uber Eats. I don't think that's a surprise. Clearly, companies are quickly adapting to the changing 
consumer demand, largely driven by COVID and lockdown restrictions and the desire to have a 
contactless experience. And many companies are capitalizing on this by providing consumer rewards for 
using their goods and services, which further drives adoption and brand ambassador rates.

Just in the mobile banking space alone, I think it's worthwhile to mention that we saw a 51% of users 
interacting with mobile banking apps just last year over prior year. So you mentioned, John, what's going 
on in the C2B space from contactless. What are you seeing, and what will we see in the B2B space?

Well, really, it's a transformation because think about it. For most businesses, historically it's been a 
paper-based system, whether it's invoicing or the actual payment itself. Obviously, the check volumes 
that the Federal Reserve I mentioned earlier are really driving that. However, that remote work 
environment has really driven the digital infrastructure immensely. And that's why I say it's really just a 
transformation.

Companies that were non-cloud-based are now moving into cloud-based applications. I mean, you think 
about it. If you had an organization who was receiving invoices via paper and their employees are 
working remotely, kind of hard to add those two together without some form of imaging application to 
get those invoices in so that they can process those.

Globally, when we start talking about all of this, it comes back down to the information portability. 
There is an expected $832 billion cloud computing infrastructure investment that is going to occur this 
year. When we start looking at that infrastructure, it's anticipated to increase over 35% year over year 
as we start looking at the future. Now, Kim, obviously that artificial intelligence plays a role in some of 
that cloud computing. How is that going to play a role in the B2B perspective?

You know, organizations have been experimenting with artificial intelligence and machine learning 
solutions in multiple verticals, but really at the top there is our financial Institutions are investing the 
most. They are leveraging our artificial intelligence for fraud and cybersecurity tools, which we 
anticipate will be the largest-growing trend this year in that space. It will assist in detection and 
prevention of fraud and cybersecurity threats by learning and identifying patterns of unusual and 
threatening activity.

Interestingly enough, there's some research to show that banks that adopted artificial intelligence just 
to fight fraud saw an average of a 55% reduction in false positives just this past year. And artificial 
intelligence systems are now able to detect potential delinquency up to 12 months in advance of it 
actually occurring. So I think if we're going to talk artificial intelligence, we need to also talk about 
robotic process automation, where that's going. It essentially is going to be used in spaces where 
manual repetitive tasks are part of the everyday process of companies.

And COVID, not surprisingly, has pushed the RPA, or Robotic Process Automation, further than expected, 
especially in the manufacturing space because the use of bots for repetitive tasks has proven absolutely 
instrumental to smoothing the disruption of workflows because of a dispersed workforce this past year. 
Interesting is that robotic process automation market is expected to grow at a cumulative annual growth 
rate of 31.5% a year between 2020 and 2026. So we are going to see a shift there, absolutely.

But at the bottom-- you know, at the end of the day, the use of artificial intelligence and robotic process 
automation is going to help companies automate operations, reduce customer service personnel, 
reduce really their overall expenses, and allow them the ability to use the data to optimize business 
processes moving forward. So as I think about everything we've just talked about, all the changes that 
have occurred and will continue to occur, John, what do we think is going to happen in the foreseeable 
future? What's next?

Well, Kim, you know, it's interesting in terms of what next. But before I go there, I wanted to piggyback 
on something you were sharing as it relates to robotics process automation. As you think about it, a 
number of companies have started moving toward virtual card transactions. We had a company that 
was receiving those, and one of the big things that is a challenge for them were all the exceptions, at 
about a 5% exception rate.

But if they're getting over 200 transactions a day and those are all being hand-keyed, that created a 
pretty big backlog for them when you start talking about that day-over-day exception rate. They 
leveraged RPA to eliminate all of the what I considered A2B transactions and allowed their staff to focus 
on nothing but the exceptions. And that allowed them to be far and away more efficient because they 
were able to get to those exception transactions in almost a real-time basis on a day in, day out basis as 
well.

So in terms of what's next, wow. The future is bright in terms of where we're going in the digital space. 
There are a number of different avenues that we've talked about associated with it, whether it be on the 
C2B side or on the B2C or B2B space. There are a number of applications that are cloud-based 
transactions as well as cloud-based apps that are coming to the marketplace. We're seeing 
transformation that we've never seen before.

I've been in this business a long time, and I've been talking about killing paper for a number of years, 
and wow. We're finally starting to see the fruition of that. And a lot of that is attributable to our 
customer-driven environment. We, as consumers, certainly want to be able to do the same things that 
we do at home, from a financial transaction standpoint, in our business lives as well.

In unpredictable times, such as what we've had, it drives adoption, and that adoption has been online 
and digital transactions. We're going to continue to see these provide a tremendous amount of new 
investment into the space, new players into the space as well as new opportunities for our customers to 
be able to drive success with their customers. Hey, join us next month as we dive in deeper to the digital 
receivables world, where we'll discuss in-depth how U.S. Bank is meeting the digital vibe. Hey, thanks for 
joining. Talk soon