Convenience and control continue to steer payments innovation

News and opinion on finance

Bank of America Merrill Lynch (BAML) became the latest bank to upgrade its mobile banking technology this week, adding fingerprint and facial recognition functionality to its CashPro mobile banking platform.

CashPro, which serves the bank’s commercial, large corporate and business banking clients, allows users to manage their everyday treasury needs on the go.

It is must-have technology for BAML business clients and corporate treasurers who do not only want to see their accounts at work but on a train or a plane, or even as they lie on a beach.

To make it easier to do thíis, while maintaining peace of mind that mobile connections are secure, BAML has embedded an integrated token, freeing users from carrying a physical token to log into the system.

Instead, security is provided by biometric authentication, via its new fingerprint or facial recognition technology – technology everyone with the latest smartphone is familiar with.

The bank says CashPro has more than 475,000 active users, with more than 28,000 payment approvals being made via the platform in Q1, up 188% year on year. That clearly demonstrates high demand for the convenience and control such technology makes possible.


This trend is not only evident in the corporate space. While treasurers demand greater visibility of corporate accounts via platforms such as CashPro, the retail sector is also seeing increasing demand for greater visibility and control.

This comes at the detriment of older systems that used to be seen as indispensable, such as direct debits.

“Direct debit remains a very powerful tool, but the new generation of young adults have a different perspective,” explains Mark Evans, director of payments advisory at HSBC.

Mark Evans, HSBC

“They are enthusiastic adopters of mobile technology and increasingly expect to be able to do things through their mobile phone – ‘there’s an app for that’ – including controlling when and how they choose to pay.” 

Examples of this abound.

In India, the trend was part of a perfect storm in 2016, when the removal of 500 and 1,000 rupee notes to encourage electronic payments coincided with the emergence of technology simplifying and speeding up electronic payments.

HSBC’s SimplyPay app was born, implementing India’s unified payment interface (UPI) platform and using request-for-payment technology to allow large billers to request payment, with customers authorizing them on their phones for instant payment.

What is interesting is what this means for future trends.

“As new payment schemes around the world are implemented and current ones upgraded, request for payment will become a common feature, allowing the India UPI model to repeated elsewhere,” predicts Evans.

And where retail leads, corporates might well follow.

Evans says: “In the past, innovation in payments was driven by corporates. They wanted the new technology today and the retail customer wanted it tomorrow. Now it is the other way around, with innovation being driven in the retail space and influencing the requirements of corporates.”


However, convenience doesn’t always mean an alert on a phone asking for authorization for a payment. Deutsche Bank is working on a pilot project with the International Air Transport Association (IATA) which will see the bank collect customer payments directly from consumer accounts, bypassing card payments.

The scheme, which is due to launch in Q4, is in line with the newly revised EU Payment Services Directive (PSD2) and is designed to save airlines money – around $8 billion a year in payment processing costs and fraud, according to the bank.

A considerable amount of this saving will be generated by saving the airlines the costs associated with credit cards.

It will also mean the airlines receive the money faster, generating substantial working capital and liquidity benefits, says Deutsche, reducing their cost of funding.

And it will improve payments security and transparency, with two-factor authentication providing enhanced fraud protection for IATA and its member airlines.

Those are the benefits to the airlines, but the key to making it work is finding the right incentives to persuade ticket buyers to forgo their cards, paying the cost outright, rather than spreading it out as they would on a credit card. For this, IATA will have to incentivize customers, and this is where the appeal to convenience comes up again.

It might be that financial incentives such as additional air miles prove to be most effective, but there are a number of potential non-financial rewards that could be considered, notes a spokesperson for Deutsche, such as priority check-in, seat upgrades or free refreshments.

This appeal to convenience and comfort could prove a more effective inducement for frequent fliers, the spokesperson adds.

Broader trend

The broader trend is the evolution of how corporates think about payments.

“Payments have traditionally been a business operation, handled by a specific team, but that is changing as technology makes the payments process a by-product of other business activity,” says Evans at HSBC.

“For banks, that means a change of focus to provide new services adjacent to the payment process – things like invoice matching, payment analytics, FX services and advisory.”

This is driving innovation on all sides, as corporates rethink how treasury is positioned within the business, and banks rethink how they can service their clients. Adapting to this change – and, of course, to the growing number of fintechs – has made banks much more comfortable with innovation.

Ad van der Poel,

Ad van der Poel, head of core cash management for GTS EMEA at BAML, says: “Banks generally are better at innovating than they were five or 10 years ago. At BAML, we are happy to explore and try things out even if our clients haven’t always defined the problem they are trying to solve.

“Ultimately, the client will determine whether or not our innovations add value.”

Such a mindset is allowing banks to think about how to upgrade their payments technology in different ways and for different users. It all comes down to who the user is and how their payments can be simplified, or what is going to improve their experience.

Peter Jameson, co-head of product management for GTS EMEA at BAML, adds: “People can be quite abstract when they think about innovation. It’s important to engage with many parts of the bank, to better understand what problems need to be solved and what the outcome should be.

“This helps frame an innovative idea more effectively and give it a greater chance of progressing.”