How to modernize B2C payments with choice and speed
JAKE BARKER: All right, well, thank you all for joining us today. And good morning or good afternoon, depending on where you are. We're really excited to explore how to modernize business-to-consumer payments. 
My name is Jake Barker, as you heard. I am a Market Readiness Program Manager here at the bank. And joining me today we have Josh Morin from Unum Insurance and Mike Watercott from here at U.S. Bank. I'll turn the time over to you guys and give you a chance to introduce yourselves. Josh, do you want to kick us off? 
JOSH MORIN: Thanks, Jake. And Thanks, everyone, for sharing your lunch break with us. As Jake mentioned, my name is Josh Morin and I'm with Unum. We are a large disability, life, and voluntary benefit insurer based out of Chattanooga, Tennessee. My team and I sit within the Treasury org here at Unum and are responsible for modernizing the payment ecosystem here at Unum, so everything from how we pay out claims and commissions to how do we receive premium payments. Mike. 
MIKE WATERCOTT: Yeah, I'm Mike Watercott. I am a Product Manager on a Faster Payments team here at U.S. Bank within global Treasury management. So the products I work with, in many ways, are helping digitize BTC payments, some of which you'll hear Josh so graciously talk about in a little bit. And yeah, it's an exciting time in the payments that I'm working with as our customers are modernizing payments to consumers. So the same consumers that have come to expect fast and easy payment options for everything now including payments from businesses. So happy to be here. Thanks, Jake. 
JAKE BARKER: All right. So there's a lot that we're going to cover today. And I won't spend really too much time going over, line by line, here. Would encourage you to kind of look through to see what we'll talk about. But do you want to mention really what we're going to ask Josh. 
So we're going to really get an understanding of what your Unum Insurance has done in their endeavor to digitize business-to-consumer payments, what their primary motivations were, the why behind that, how they went about it, really, the nuts and bolts of that, and then, of course, touch on some of the benefits that they received and [INAUDIBLE] have felt from this transition. 
So we'll go ahead and jump right into that. Josh, as we look here, four in five Americans use some form of digital payments in 2021. I don't think that surprises any of us here nor many of those in the audience, I would expect. But what has Unum Insurance done to really address those relating expectations that have shifted given this trend of digital payments? And what does your digitization look like at Unum? 
JOSH MORIN: Yeah, thanks. So we saw those stats as well. And they've been growing. So about three years ago, pre-pandemic, we set out to change the way we paid out claims. And we started with a small segment of our business. But we looked at it and said, we want to offer more digital payment options to our customers. Traditionally, at Unum, we were very much a very heavy check-based and our digital option was an ACH. 
So with those two in mind, which have been out for decades now, it was a how do we bring faster, more secure payments to kind of keep up with these stats here? We also looked at our payment infrastructure. For over a century, Unum's been acquiring companies and just leaving legacy admin systems in place. So with that, each admin system is connected very inefficiently to their own bank partners for their own payment types. And when we looked at that, we knew that we had to upgrade our technology as well. 
JAKE BARKER: So you kind of mentioned some of, I think, the whys that we're going to get into. I think, grossly simplified, maybe there's two different sections. We have the simplified internal process and then the better consumer experience. What was Unum's primary driver initially? And has that evolved over time? 
JOSH MORIN: Yeah. Initially very much started with the customer. Our stated purpose as a company is helping the working world thrive through the last moment. So when a customer is filing a claim, they're in a time of need. They don't want to wait on the phone with someone to give payment information. They want to be paid quickly and move on with their life. 
And so it was definitely a how do we help a customer, in a time of need, be paid quickly, safely, and securely? And then, as we looked into it, there are a ton of benefits with digital payment options. There are so many costs, both time and cost savings, with check payments. 
And so digital adoption, there are a lot of benefits there. Upkeep with checks is expensive. You have escheat processes. You have much higher call volume at the call center, asking, where's my check or can you reissue the check. We have fraud issues. So a lot of back-office issues with checks that we look to streamline as well with digital adoption. 
So to answer your question, those two are big points. First, let's drive customer experience, but then also we wanted to see those benefits from a treasury and finance space as well. 
JAKE BARKER: But I imagine it's really nice to find something that has benefits both to the consumers you're paying or those you're paying as well as to the processes that take place internally. 
JOSH MORIN: It makes it much easier to get approved for funding when you can serve both sides of that. 
JAKE BARKER: Right. So as we think about how you went about that, the nuts and bolts of what payment types did you at Unum prioritize, how did you go about deciding how you would approach that process? 
It definitely starts with the infrastructure. And this is something that my team and I are going to be working on for years to come with those. 20 admin systems isn't something you change overnight. 
So we really wanted to centralize the flow of payments. So instead of each admin system connecting to each bank, we brought in, a few years ago, and implemented a payment transmission hub. So let's build a standard file out of the admin systems and let's just connect to the bank once and streamline that. That gives us visibility. It gives us a lot more control over the payment. So infrastructure was key and something we'll work on for a long time. 
Next was understanding, all right, what payment options did we want to bring? And that's where, in working with Mike and Tim at U.S. Bank, it's like, OK, what digital payment options are growing? What do customers want? Not only what's secure, what is growing. 
And so in December 2020, I think, Mike, we rolled out Zelle, which has been great. And then, most recently, we rolled out RTP. Both have been game changers. I think Zelle is a great complement to ACH when we think about digital payments. There's a pushback with ACH adoption. A lot of times it's around customers not wanting to give us bank accounts and routing numbers. Or they don't know what it is. They don't have a checkbook. 
We have kids that don't know what a checkbook is. Where is my routing number? What is it? Things like that. 
And so having an option where someone just needs to an email address or a phone number and can get paid with that is huge and complementing. And so Zelle has been great over the past year. 
RTP, which we've just gone live with a few months ago, is, to me, a game-changer. So having a payment option that you can send available funds 24/7, 365, is huge. And we don't market it to customers. So a customer doesn't know what an RTP payment is-- they think of it as an ACH-- but they know they're getting paid very quickly. 
And just a quick example-- I know we don't have a lot of time-- so we've been able to bring our time to available funds down by four days for a Friday payment. And as an example, so Friday night, a claim gets approved and goes out. Traditionally, that payment file was out to the bank Friday night, the bank's closed, they're closed on Saturday, they're closed on Sunday. So that ACH gets sent on Monday and the claimant has the funds on Tuesday. Well, with RTP payments, that claim was approved on Friday, it's in their bank account and available Friday evening. 
And so again, I think that's huge for our space. It has a lot of use cases, whether that's bill pay or others. But I think RTP is going to be really big. 
MIKE WATERCOTT: And Josh, like we've said about making it easy for your customers-- and maybe you'll talk a little bit about what you're doing on the Zelle front to kind of prompt your customers or give them that option early-- but also, too, with ACH and RTP, we wouldn't expect a consumer to know what RTP is, but leveraging the tools available where, once you have an account number, you have a routing number, we, the bank, that's kind of our job. Then we can figure out, can we send it RTP or not. 
And to that customer of yours who happens to bank at a bank that accepts RTP, they could care less what it's called, RTP or ACH. It's money that they have available Friday evening. So I appreciate you touching on that. 
JOSH MORIN: And kind of going to that point, when we added RTP, we didn't have to do anything different with U.S. Bank. We just had to tell them, now that bank account or routing number we're sending to you, try to send it as RTP. What, 65% of accounts in the US are RTP-enabled. So try that. If it doesn't work, send it as ACH. So it's not coming back in our system and having to send out another payment. The bank's handling that for us. So yeah, I agree. That's been great. 
[INTERPOSING VOICES] 
JAKE BARKER: Oh, go ahead, Josh. Sorry. 
JOSH MORIN: I mean, answering your question, first was around the infrastructure, next was around what payment options we wanted to provide. And then the last, I think, big update to our system was what are we doing to make sure we have good controls in place and confidence that we're paying the right people with these new instant final digital payments. 
And I know we're going to touch on that in a little bit, but that's where we have implemented an account validation API for checking account numbers and routing numbers. We also implemented a Zelle enrollment API where, again, where, in the background, we are checking that the person we're talking with is already enrolled with Zelle. We're not asking them to go enroll in Zelle, and then we'll pay them. We are checking before they even check out that they're enrolled with Zelle. 
JAKE BARKER: Right. So now I know you touched on them a bit, but what would you say are really the primary benefits that your organization has seen by leveraging these payment types? And then, also, what do you feel are the primary benefits that the consumer has seen, in your experience? 
JOSH MORIN: Yeah, so, I mean, selfishly, being in Treasury, with a lot of manual processes around, again, escheatment, voids and reissues, reconciling issues for these check payments that get sent out all over the place. They're lost, they're reissued. 
There's been a lot of benefits from just reducing a lot of manual processes and automating that. But as a company, our sales team reaches out talking about how great it is that we can now offer-- and they can sell that we offer these faster digital payments. We're not just ACH and check vendors. 
And then just with the new infrastructure and having that one file to the bank, the visibility and issue resolution, so where we're not having to worry about hundreds of files, every night, going different places. It's coming through. 
And again, that's a work in progress as we connect each system. it's not just done overnight. And it's something we'll work on for a long time. But having a visibility of our payments and statuses of payments, reporting off of that, that's been great. 
JAKE BARKER: So Mike, as you consider this, is there any benefits that you feel are worth emphasizing or that you've really seen businesses you've worked with experience besides what we've already heard? 
MIKE WATERCOTT: Yeah, no, I think it's totally fair, Josh, to be selfish. But I think, Josh, you mentioned escheatment. So obviously, any time you're moving away from paper checks, you're eliminating that from your list of problems. 
But yeah, I tend to always default to thinking of it from the customer's perspective, especially in your industry, Josh. I mean, that's the whole reason you have insurance is that when you need funds, you get it fast. And I don't think every industry has that same urgency, but I would challenge everyone to think of it from that same light. So I think bottling that up in a benefit, Jake, what I would call is leveraging payments to build an overall really great customer experience, leveraging payments not just for a payment kind of at the end of a process, but thinking of it all the way through like Unum has and making it as part of the customer's journey overall, not just for the banking part. 
JAKE BARKER: Yeah, so now we want to hear from those of you in the audience. We want to get some feedback from you on terms of what do you see as the main hurdle from utilizing some of these faster payment options. You heard Josh talked about RTP and Zelle. There are other options like push-to-card as well. So what do you see as the main hurdle? So we'll have this up for about 20 to 30 seconds. So I encourage you to answer that. 
And while we wait for that, we'll see what we get as far as responses. But while we wait, Josh, as you and your team really started this process, what did you feel was the main hurdle going into it? And then what are some of the things maybe you expected to be hurdles or challenges that maybe didn't turn out to be? 
JOSH MORIN: Yeah, I think technology challenges is the biggest one. As we've identified, especially in insurance and having these old admin systems, we've spent the last few years just getting the infrastructure in place that can support new payment options where we've been hard-coding how checks and ACHs work in these mainframes. So technology for sure. 
I've been pleasantly surprised that once you get the technology and the infrastructure in place, how easy it is to add new stuff to it. So again, where we have one file to the bank and the banks are adding these new payment options, it's going to be easy now that we've done the work, but the work on the front end was difficult. 
And then customer education, especially in a large organization like we have, educating customers on the benefits and the security of digital payments, you see these articles out there about Zelle fraud and things like that. And so educating customers about how safe these are, especially when we're pushing payments to them and we're validating and verifying in different spaces, the education becomes important to really drive that adoption. 
MIKE WATERCOTT: Yeah, and also, too, as I look at some of these results come in, the technology hurdle, I think it's a little bit dated, but in 2019, AFP did an electronic payment survey and that was number one. They asked folks, what's the main barrier stopping you from adopting electronic payment options? 
The rest of these, spread pretty evenly. But yeah, kind of that irrevocable final payment, like Josh, you mentioned earlier, leveraging tools that, I guess, really are optional but considered best practices. So with ACH and RTP, you're leveraging the AVS, Account Validation Services, so really understanding, is this really indeed the individual I intend to pay. 
I'll mention too there are similar tools with Zelle. So we know that Unum, you're using our Zelle Verify Enrollment feature to just check an email or a mobile number. Is this individual enrolled in the Zelle network or not? And that's great information. 
You can also get back the name. So that would certainly allow our client to, on a DIY basis, do some checking on their own. So I'm trying to pay Jake Barker, but that email looks like it's enrolled to Mike Watercott. That would be a great opportunity to maybe take a second look. 
And then, also, with Zelle, if customers just don't have the ability to do that, we, as the bank, can do that as well. So we can park payments, that payment to Jake but enrolled to Mike, put them in a queue and allow our client to review them before they're released. So there are certainly tools out there. And it's refreshing to hear, Josh, your story with Unum that you're leveraging both of those in your process. 
JAKE BARKER: Yeah. And that's what I wanted to get into now. We've heard a lot of it-- I mean, anything else you would add that you think should be considered in terms of what tools to leverage to help mitigate that fraud with these new payment types, Josh. I know you've mentioned some of the tools, account validation and so forth. 
JOSH MORIN: Yeah. 
JAKE BARKER: Anything else? 
JOSH MORIN: I'll talk about our specific use case with AVS. So the traditional way that we would confirm a customer's bank account and routing number was correct were through prenotes. They take days to get back. Banks don't respond. It's not a quick way to check that. 
So now we've built an enterprise service for account validation that any technology customer of Unum, we can call that service and you're instantly confirming that information. So when a customer is in our environment, ideally in a digital environment, they're putting in their bank account and routing number, it's instantly telling them that's correct or that's not correct or you need to give us new information. 
Where, traditionally, we would take that information, take it for three days, and we may come back to them, then you have to call the customer again. There's another interaction. So being able to instantly confirm that, at least when you're intaking it-- yeah, maybe someone closes an account, months from now, and you've got to do a call, but we should drastically reduce our returns and payments to incorrect accounts. 
And then with the Zelle enrollment API, I'll hit on that one again. So for this segment of our business that we've rolled this out on, as the customer is with us and filing a claim, we're automatically calling that API in the background. And so when they get to check-out and it's, OK, if your claim is approved, how do you-- it says, hey, I noticed you're enrolled with Zelle. Do you want us to just pay you on your Zelle account? The customer is not having to put in their account. They're not having to validate. They're not having to look up whether it is. We've already checked. 
And then it's like the traditional waterfall approach. And then if they don't want Zelle, we'll move on to ACH. And again, validating it's correct. If they really, really want a check, we'll offer them a check. We're still insurance, so we're still sending a lot of checks. But really driving those digital payment options is the first. 
JAKE BARKER: Yeah. Well, and it sounds like each option you've got that tool that helps mitigate the potential fraud there. So we've heard from-- and Josh, thank you for sharing so much with those. We've heard Josh talk about how Unum is leveraging these newer faster payment types within the insurance industry but we obviously know that that's not the only industry where a lot of this applies. So Mike, maybe walk us through some of the other industries that we've seen some of these payment types be utilized and seen some real benefit in those industries. 
MIKE WATERCOTT: Yeah, absolutely. I mean, we've got a couple listed here. Really any instance where you're paying consumers, it's fair game. It's not limited to only what Josh is talking about. It's not limited to the four you see on the screen. 
And I should just make a mention here, you hear Josh talking about leveraging APIs. Just keep in mind, we've got a number of ways to connect our clients to these payments. APIs is obviously one of them. But if you're listening and saying, you know, I don't know if our organization is really ready to dive into APIs, I mean, uploading files, manually entering payments, using APIs or leveraging a product Josh hasn't used by name, but PayChoice, which really acts as a kind of a singular hub to multiple payment types. I just want to make that clear that APIs aren't the only channel. 
But speaking to the slide, a couple where we see a lot of opportunity. The first one is in the auto retailer space. And I think you'll see a poll question here in a moment. I actually, with my wife, just bought a new car two days ago. And just being in the payment space, I'm just thinking, the whole time, I know I'm going to have to get a refund, probably, for these DMV fees. I hope they don't mail me a check. 
So if you're in that situation, just a fun question, up here in the polling section, if you were buying a car and you were owed a couple of bucks for a refund, how would you want it? I'm going to selfishly answer Zelle here because I love Zelle. But obviously a ton of opportunity there in the auto retailer space. 
Health care, patient refunds, high volume, probably-- I'll just make a gamble here, probably pretty check-heavy in the patient refund space. Higher education is, I think, a no-brainer, especially tuition refunds to students. My goodness, over the last two years, probably way more tuition refunds than anyone ever wanted to send. Or maybe paying athletes a per diem when they're traveling for sports. 
And then, finally, here, we have government listed. So kind of opportunity in the municipal government space. So disbursements like unemployment insurance, child or family services, abandoned property. So again, this isn't the short list of the only spaces we feel there's opportunity, it's just, of what we can fit on a slide here for just to get you thinking about other opportunities outside of what Josh has talked about with Unum. 
JAKE BARKER: Well, it looks like the audience all agreed that Zelle is what they would prefer. 
MIKE WATERCOTT: I feel like I've led-- I've influenced the audience by disclosing my choice. 
JAKE BARKER: Maybe so. But we had zero check, which is a good thing. I think we can all relate to that. No one wants a check. So we're coming up to the end. Want to wrap things up, really talk to, maybe, some of the key takeaways that we feel those in the audience should consider. So open that up to Josh, Mike. In your thoughts, what are those key takeaways that those who joined us today should be considering as they [INAUDIBLE]? 
JOSH MORIN: Yeah, so for us-- and I think a lot of business out there-- I start with infrastructure is key, just getting yourself set up to take advantage of these. And then, once you do, it's going to be easy. And you want to set yourself up. There's going to be new things. We want to add digital wallets-- Venmo, PayPal, other things. And once you have that infrastructure set up, it's much easier to do that. 
And then I think multiple payment modalities or payment options is huge for really driving meaningful adoption. A lot of segments of our business have had ACH and check as an option for decades. And they don't see huge conversion to ACH. And as we implement things where you just need an email address or phone number or something where they feel safe, it's going to really eat into that check number. 
MIKE WATERCOTT: Yeah, and I'll just add-- I mentioned this earlier, but my best practice would be, again, just looking at the payment you're offering to consumers as a way to vastly improve the overall journey that your customers go through. 
We know that consumers do not want to check. So using payments as an opportunity to not only meet customer expectations, but hopefully exceed them. And I think, Josh, you sharing your story is a great example of one way to do that. And we thank you for joining us, Josh, to tell that story. 
JAKE BARKER: All right. Well, I would encourage each one of you-- and I think we might have time to get to one question here-- but I would encourage you to, as you consider what you've heard from Josh today, and Mike, really reach out to your treasury management consultant and see how you and your business may be able to incorporate some of these payment types as well with your business-to-consumer payments. And then also, just before we touch on this question, we will have a poll after. So I encourage you guys to respond. We want to make sure we're continually improving what we're putting out. 
So looks like the question we've got here says, what are some best practices regarding automating payments? What have been your pain points in this process? How much of this process has been automated versus manual review? And what has been your experience with reconciliation of transactions and audit trails? So Josh, from your experience, maybe choose one of those that-- 
JOSH MORIN: Yeah, something we're seeing with automation payments is building a standardization across our different systems, where every system is not sending their own formats their own ways, and then we're getting information back. As we've built these standard payment files going in and out and standard responses coming back in, I think that's really helping with having clean data, being able to identify what you need and reduce reconciling items, things like that. 
JAKE BARKER: And then, let's see, what about pain points? We kind of touched a bit on that, but anything you would drove home? 
JOSH MORIN: Pain points-- I think just time. This takes a while. This isn't an overnight change. And having a good partnership to learn what best practices are, what you should be doing, because there's a lot of information out there around payments. and we could go a lot of different ways. And so just being patient. 
MIKE WATERCOTT: Yeah, Josh, you mentioned that 2020 date and I kind of fell off my chair a little bit that it's been that long. And I know we're pretty tight on time. I should mention, in more of an administrative note, that we do have the questions here. We do intend to respond. since we probably won't have time on the call. 
We also received questions through folks who-- through the registration process. So we do intend to respond to all of those if we don't-- well, I already know we're at time, so we won't have time. But I wanted to make that mention there, Jake. 
JAKE BARKER: All right. Thanks, Mike. And thanks again, Josh, Mike, for joining us. Thank you for those in the audience who joined us. And hope you have a good rest of your day. 
MIKE WATERCOTT: Thank you. Thanks, Jake. Thanks, Josh. 
JOSH MORIN: Thank you guys.