It’s a very busy time for banks and technology providers. With new payment rails finally gaining ground from traditional transaction methods, everybody’s talking about enriching and improving the efficiency of the customer experience.
Here at the Association for Financial Professionals annual conference in Philadelphia, a surprisingly large group of around 5,000 treasury and payments leaders, fintechs and financial institutions and those who help produce and operate their products and services.
With Money 2020 stealing some of the glimmer in Vegas, the AFP Conference stuck to its roots. Many of its Certified Treasury Professional (CTP) and FP&A members and other participants come here to learn about what’s available, what’s next, and to gain practical insights from industry leaders. And yes, more than a few visionaries too…as multiple best-selling author Adam Grant led the conference’s closing keynote session on Tuesday.
But a search for leaders among the US banking industry, particularly around payments and the latest flavors of real-time and embedded payments capabilities, yields a mix of sensibility and jargon. Treasury professionals are looking for answers, and one bank clearly ‘dialed-in’ to being a one-stop-shop for its clients, large and small, is PNC.
We visited with Sarah Billings, SVP of PNC’s Treasury Services group’s payments, product, operations, and strategy. And International Banking too! “I don’t handle the Trade side though”, she told us in a sit-down on Monday. Billings manages the 160-year-old, $541 billion-asset bank’s entire payments offering to its business clients, supporting enterprises of all sizes.
Billings, an astute and affable industry veteran who, she says, “has always worked in the cash management area” during her career, likes the wide purview her responsibilities provide. “In my team, when we product manage the services, we develop them as well. Because payments never stop…handling operations as well. I always say it’s a very good model, because I can self-solve.”
She has strong opinions on why PNC is one of the major players in US payments, and how they plan to maintain and grow their industry leadership through innovation and a continued focus on finding and providing sensible solutions to the bank's customers. Advanced system capabilities and flexibility to meet customers’ needs “however they want to bank with us” both play big roles in that strategy.
PNC has been expanding its US treasury sales and service teams for the past several years and recently added cross-border remittance services to Mexico and 14 other Latin American countries as part of its acquisition of Spanish bank BBVA’s US operations. This made the Pittsburgh-based PNC the fifth largest financial institution in the US.
Billings feels this is a great addition to the bank’s product portfolio. “We now call that PNC Global Transfers.” When asked to describe any particular challenges or added value PNC can bring to the business, she replied, “it’s putting the best of both worlds together. Under PNC there is different governance…but really just ‘tweaking’ a good business, and it’s very well run.”
Billings says a key to managing all the disparate departments is “we really try to cut down the silos,” said Billings. “Overall, the benefit is thinking cross-rail, cross-payment type…and you’ll see that in our product offerings.”
One way PNC has differentiated their payments offerings from many other US banks is in intelligent routing. Billings explained how this works in practice with their customers: “Send us a file and we’ll do the best-case routing according to your [particular] product hierarchy,” or the various types of payments that a specific customer uses in their day-to-day transactions.
This process works in concert with customers’ own ways of doing business, Billings says. “We think alike…synchronised” with customers and she believes this helpful sorting on their behalf helps PNC stand out from the pack. “It’s also something that brings us more [banking relationships] because our clients aren’t siloing themselves. They just have to get a payment out.”
Billings’s team also plays a part in protecting payment transactions at the bank. “We partner with our fraud experts, engage with them regularly. “From a payment standpoint, the really important thing is that you have real-time scanning […] and that you open yourself up to use all of the tools we have to, to stay ahead of fraudsters.”
PNC handles all sizes of customers needing treasury management products. “We go all the way from small business to middle market and larger” clients, including some governmental entities, though she points out that “the way the [applicable] solutions are tailored is obviously different. So, in the payment space…we could serve a very large fintech with embedded finance, and they can just use our APIs for every single payment type” and still maintain their own client experience on their own platform.
For less sophisticated clients, PNC also has solutions. And they’re a leader among their peers, both above and below them in the US banking hierarchy. “We can help them make use of these new payment types. PNC was first to certify for real-time payments in 2017” and Billings noted that the institution is currently the second largest originator of RTP transactions, with around 10% of all present RTP traffic.
“We have taken a strategic position to punch above our ‘weight class’” as the nation’s fifth largest bank. But it’s all about meeting client needs and not confusing them either. “Well,” she says, “you can just hang up a shingle for a new payment type […] but our clients don’t have the time necessarily to understand [every nuance].” For customers with more specific, complex requirements, she says, the bank is ready to serve them “exactly what they want” in terms of payments functionality.
Supporting consumer choice is very important to the bank, Billlings said, referencing the bank’s ePayment service, which offers a variety of real-time and near real-time options and received Aite Group’s Impact Innovation Award in Cash Management and Payments for Product Development in 2020. With this service, which can be embedded on a business client’s site, Billings says, customers have many secure options on how to be paid. “They can choose to be paid through Zelle, debit card, ACH, even cheques.”
A major focus of this year’s AFP conference is discussing how banks, their customers, and their customers’ customers and suppliers can make the most of the added speed and functionality provided through RTP and ISO20022 standardisation. A long-time challenge for businesses has been finding ways to match up payment and invoice details cleanly and quickly. Many call this lack of coordination of two central elements of doing business together the ‘missing link’ that often slows application of payments between businesses, even if they are executed using the newest RTP rail.
Many companies have complained about the difficulty of applying payments from customers when they don’t include specific details on invoices paid, perhaps in different amounts than expected due to disputes or other reasons. These details may or may not be sent separately via email or electronic file, though one advantage of RTP and ISO20022-formatted transactions is the richness of remittance info that can directly accompany these payments. So, in some cases, companies have questioned the value of speed vs. quality of the overall payment process. Billings says it’s more about having control over timing, which RTP can provide business clients. “It’s pinpointing when you want to pay. It doesn’t have to be before the due date, but you can absolutely [specify the timing] because it’s real-time.”
More benefits of RTP, explained Billings, include reducing confusion among customers. “What’s important is to think about the components of value […] do you want finality of payment? Certain payment types? Do you want confirmation of the payment reaching the beneficiary and not just the bank? If you do (choose the latter option), then RTP is one better than Fedwire.”
And then there are the companies that are doing business outside of traditionally ‘normal’ banking hours. “A lot of clients…are in new types of business models. They’re actively making payments at one o’clock in the morning [after] Friday night.”
It comes down, Billings asserts, to being flexible with payment and reporting functionality to fit customers' needs. “I firmly believe it’s not a ‘one size fits all’ [scenario] like it has been in this business. Is everything going to just go to RTP and none of these payment types will still exist?”
Chuckling, Billings concluded: “We can talk about that when checks are gone and cash is gone”, noting that the present banking environment, with all these emerging options for payments, offers more choice to all, especially with intelligent routing, one key element of PNC’s “special sauce”, she says, and a challenge she and her bank colleagues will continue to tackle with confidence. “I just think that there’s nothing but opportunity […] don’t be scared of it”, adding “This is a transition to new payment types for our customers, and we have to smooth that transition for our clients. That’s what we’re all about.”