For Bank of America’s global transaction services (GTS) business, the Covid-19 pandemic delivered payback on its decade of investment in digital technology. The bank’s GTS business is a hub of investment in new and emerging technologies within the bank – investing more than any other business in its global banking and markets division. Having a roughly $14 billion bank-wide annual global technology and operations budget, $3.5 billion of which is dedicated to new initiatives, certainly helps in this regard.
“The technology around transaction services has become more complex: the end users of this technology are also consumers and their expectations around functionality and ease of use are driven by their technology experience in their personal lives,” observes Matthew Davies, head of global transaction services in Europe, Middle East and Africa and global co-head of corporate sales, GTS at BofA.
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Much of this investment centred on CashPro, the bank’s long-established digital hub. “Over the last three years we took the view that volatility and disruption would become a more constant part of life,” Faiz Ahmad, managing director and head of GTS at BofA, tells Euromoney. “This has been the driving force behind investment in CashPro and the CashPro mobile app – to create a single port of call and source of stability for our clients combined with ease of use.”
The volatility and disruption that Covid caused certainly drove clients to the bank. Digital sign-ins increased by 39% over the year to more than one million; payments approved increased by 54% to $248 billion; and clients used Bank of America’s mobile app to approve $174 billion in payments – more than the total processed by digital wallet Venmo ($159 billion).
“We are deep both vertically – partnering with the smallest to the largest global corporations – and horizontally with our banking coverage and technology and operations partners around the world. We saw an entire year’s worth of deposit growth take place last year in the course of a two-month stretch from March to April. Clients came to us given their trust in us, our global reach and our continued investment in our capabilities through the cycle, knowing they could look to us for long-term partnership,” says Ahmad.
The pandemic accelerated the pace of development on CashPro, with 17 tech upgrades and another 18 releases related to the US Paycheck Protection Program around loan origination and forgiveness taking place in the first quarter of 2021 alone. This was to an already well-regarded product: CashPro was ranked first in digital functionality and digital platform design by Greenwich Associates in its digital rankings earlier this year.
Treasurers continue to centralize activity. Whereas several years ago they may have had between three to five treasury providers, today there is a move towards keeping a majority of flows with one established bank but having the remainder available for new providers.
Davies believes that the flight to quality prompted by Covid has helped the bank in this regard. “Our model of being both a champion bank and challenger bank has been further enforced by the flight to quality during the health crisis. We have maintained our champion role and continue to be added as a challenger,” he says.
Bank of America’s focus on innovation is key to this and it is not afraid of cannibalizing its franchise to drive new payment solutions. An example of this is last year’s launch of a real time cross-border payments solution using digital ledger technology, launched in partnership with a US fintech. The launch client was a financial institution processing a large volume of low-value payments between the US and Mexico, and the bank is now also processing inbound payments from Spain and Poland. Additional outbound capability was due for India in September and Spain by the end of the year.
Our model of being both a champion bank and challenger bank has been further enforced by the flight to quality during the health crisis
Matthew Davies
“A couple of years ago treasurers would have had little interest in paying in real time,” says Davies. “But in the gig economy, companies are looking to compete in this space. For example, there is fierce competition for drivers amongst ride sharing companies, so these organizations need to pay drivers instantly every time they complete a ride. We saw this coming and have been investing heavily in this area.”
For a bank that in 2020 had relationships with 94% of the US Fortune 500 and with 96% of the Global Fortune 500, Bank of America devotes extraordinary resources to remaining at the vanguard of evolution in this hugely competitive and fast-changing business.
“The challenge is to stay ahead and it is not all Covid related. For example, auto manufacturers won’t be selling cars in 10 years’ time, they will be selling services, so we have to be constantly thinking about how to strategically partner with clients in this new environment,” says Davies. And the team has embraced the rapid development of new and different players in the payments space.
“Fintechs often have a unique value proposition. We partner with them and welcome them,” Ahmad emphasizes. “We invest in them if the product is robust enough and lends itself to be folded into the bank’s tech stack.” A good example of this was the acquisition of Axia Technologies in the healthcare payments space during the year.
