Transcription:
Paul Davis (00:08):
Okay, thank you everybody for coming and attending our breakout session. Today we're going to look at how to optimize the customer experience in the accounts payable side of things. We've got a couple of really great panelists today. Let me introduce myself first. My name's Paul Davis. I'm with Bank Slate. It's a media platform and also I provide advisory services for things like vetting executive hirings for crisis management, media strategy, things like that. I also have a website called the bank slate.com, which is a new site that looks at emerging trends in the banking and FinTech space as well. We have a newsletter and as well as a podcast. I would love for you guys if you have a moment to go check that out, but you guys are not here to hear me talk. We've got again mentioned two fantastic panelists and I would love for you guys to take a turn and introduce yourself. Give us a sense of what you are doing in this space and just your general assessment of how the banking industry is really doing the performance assessment on how things are going in the area of improving customer experience when it comes to payables. Bridgit, would you like to start us off?
Bridgit Chayt (01:28):
Absolutely. Thank you Paul, and good afternoon everyone. I'm Bridgit Chayt. I get to get up every morning and lead a really creative group of people at Fifth Third Bank who deliver for us on both treasury management and commercial payments, and that includes both our managed service and embedded payments businesses that have a very strong focus over the payables experience overall. Paul asked me to grade ourselves on how we're doing in service in that space, and while I think that the industry in Fifth Third also has come a long way in the customer experience piece of it, I think it was only in the last two years that the religion came around as to supplier experience and the importance to our customers in the payable space as to how well they could treat their suppliers and in turn, lever that for more preferential treatment in a time where supply chains were really challenged.
Allen K. Merrill (02:29):
Yeah, great. And thank you for joining the panel, Bridgit. I'm Allen Merrill. I Head of the Payments Business at Incedo where we work with banks and others helping them to serve their corporate and business customers in the payments area. In particular, we focus on accounts payable services to corporate and business customers, helping them take some of the pain and some of the inefficiency out of the entire accounts payable process. I guess as we work with banks, their customers and those customers, customers or suppliers or payees, we would probably give the banking sector maybe a B plus in terms of how they're meeting the needs, the full set of needs across their account payable customers. Certainly they've come a long way. I mean there's some very good things going on as we know, a lot of pain in this sector. It's a big sector, 30 trillion of business payments in the us but there's been for years inefficiency and high transaction costs and other things you can see here.
(03:56):
And what banks have been doing with the help of Incedo and others is trying to bring an integrated set of solutions that help to reduce manual activities and prove efficiency, reduce costs, reduce payment errors, and just take the aggravation out of what is a very important part of a very important business process, a very important part of any corporate or business customer of a bank. Now while good progress has have been made, we'd probably point to three areas where we think there is room for further improvement or where the needs of corporate and business customers of banks are continuing to demand more kind of addressing of need. And I'll just mention these quickly and we can talk briefly about each one and then I'd love to hear Bridgit's perspectives on this as well. The first is what we call a multi-party integrated multi-party platform. Something that allows a bank, its corporate customer and that customer's suppliers or payees to interact conveniently efficiently.
(05:19):
Select payment methods, report, track payment activity, know where at all times a payment might stand and report payment errors or other issues and resolve those quickly and conveniently. The second area that we think could be reinforced is around supporting the payee, the supplier of a bank's corporate customers, helping them understand what are the payment choices that they have helping to enable those payment methods and to address any of the issues that come up because there are always issues no matter how good the service can be. And then finally something we call advanced analytics, where in particular helping customers understand what is the benefit that is being gained by improving by the bank, helping a corporate customer to improve its payables approach and capability. Is it lower cost, is it less fraud, fewer payment errors or other customer relationship aspects? So these are three areas that we would suggest could benefit from further attention and in the context of a lot of good things going on, a lot of help being provided to customers. And I'll pause there for a moment, Bridgit, get your thoughts.
Paul Davis (07:00):
You've been nodding your head the entire time, so I know you have some really strong thoughts about this.
Bridgit Chayt (07:04):
So Allen, what I like about this is just the elegant fit with jobs to be done product innovation methodology, right? So forever and ever, we've all been focused on money movement, getting it from point A to point B and investing banks have invested so much money in doing that more safely, securely with more intelligence that travels with it or in terms of business rule, but at the end of the day, it was only getting it from A to B and customers have so many other jobs to be done on either side of that payment. And when you can start to mention some of the things that you have brought up here, areas of importance and potential improvement, that's when you're really easing pain and that's when you commoditize the payables business. That's when you get from a bank perspective, your customers kind of moving away from the last page of the RFP that Paul and Allen know so well to say, what is this price point per item moved and create value on top of that. That's what we've done at Fifth Third with managed services. We've really taken that jobs to be done methodology, and I think you've hit on the areas that are really of more value. And I also know that for us, and I think for many banks, if you do what you're saying Allen, and you help improve those supplier relationships, you actually end up gaining more clients for the bank because the suppliers come and seek you out to handle their own.
Allen K. Merrill (08:46):
I like this ecosystem. They say, I want to be more integrated and part of this, and we think about the type of work we do as aimed at the title of this panel, which is improving customer experience, helping customers be happier with the experience of making payments, which is such an integral essential part of their business. Take the pain out, make it easier, improve the experience of the customer. Then also the bank in dealing with the customer and the suppliers in dealing with the customer as well. So we think about this as while there's technology and there's a platform and there's services and solutions, we think about it aimed at improving customer experience.
Paul Davis (09:40):
Well, that's a very good point too. I mean to Allen's point that it's not just one, two, it's a big complex ecosystem that you have to really find and strike a balance between all the participants to make it really exceed expectations in terms of customer experience.
Bridgit Chayt (09:57):
I had a friend who said, these are the things that most of the time as bankers, for those of you bankers in the room where we say, well, this is what makes our business sticky. Not a great word, we still haven't come up with a good one. I go for rooted. But the reality is what if your customers stayed with you? Not because it was sticky, not because it was so hard to switch, but what if they stayed with you because of what Allen's describing, right? Because they're happy, they have a great experience. I mean, I think that would make us all feel better about what we delivered each and every day.
Allen K. Merrill (10:33):
Yeah, that's right.
Paul Davis (10:34):
They're there because they want to be, not because they have to be.
Bridgit Chayt (10:36):
Because it's so hard to leave.
Allen K. Merrill (10:37):
Yes, that's right. And payments is just one of the areas that you are helping your customers with. There are many others, but this is the one where you can make or break that relationship. So you make them happy, they're going to be working with you across other areas as well. So one of these three areas, it's the third one, the reporting, the analytics about payment methods, who's choosing what payment type to receive or to make the volumes of payments, the cost of those payments and so on. All of that's important and I see a lot of work going on related to that. Some of it is involving AI to go through different types of data sources. There is an area there that I think really could benefit from some more pushing some more attention collectively, which is the area of quantifying the value of making account payable improvements.
(11:47):
We all know that taking manual steps out of the process is good. It may reduce labor costs, it speeds up the process and so on. We all know they're making fewer errors, duplicate payments, having to go back and redo things and so on. That's good if we can do that. But how does that impact the bottom line? How do the various cost components of doing accounts payable better optimizing accounts payable? How do the revenue components, how do the customer satisfy? How does that all come together? So if a story is being told and stories do need to be told, banks need to be telling the story to their customers, we are helping you create this value. And I'm just going to jump to one last slide if I may, which has to do with value quantification. We call it. We know that there are operational benefits from addressing the accounts payable process.
(12:52):
There are financial benefits and there are qualitative benefits in terms of the relationship and even employee experience and satisfaction. How is that quantified though and reported as tangible benefit? And this example on the right side of this slide is an example. It's a disguised example of an exercise of going through all of the cost and revenue components and trying to add them up. In this case, a 3.2 billion company that was making a volume of payments of 1.6 billion roughly. And this is again, the numbers will change from scenario to scenario, but then what at the end of the day is their total cost of making all those payments. And as we did the math here, it comes to around $8 million a year. Now that's the starting point. That's the cost. How could we improve that? And in our experience, improvement potential ranges from 15 or 20% all the way up to 35 or 40%. So that 8 million can be dropped to 5 million or 4 million. And the larger the volume, the larger the scale, the more the potential benefit. So this type of exercise, taking this back to the bank customer and saying, look, what we're helping you gain in the way of benefit and bottom line impact, that's got to be good for the overall relationship.
Paul Davis (14:35):
And Bridgit, I'd love to get your thoughts as far as fifth third is concerned. I mean, how are you guys in terms of delivering that message about the underlying value on the customer side?
Bridgit Chayt (14:44):
So it takes the conversation away from the account analysis statement comparison right from I can save you on this fee line to more I can help impact your performance on other lines on the financial statement, which is when you are truly more of an advisor rather than just providing a commodity piece of it. So that's been critical for us as we've gone to market with it. The other is the help in stepping back. We know there are an awful lot of payment rails. We never get rid of any of them. We just add more just layer on and layer on this becomes critical to help your clients step back and look at payables holistically and say, okay, how can you utilize the power of all of these payment rails in a way that makes sense for your business? Have it be flexible enough to be able to meet the needs that you have at a particular time.
(15:44):
And then I think the other piece of data that we've been using that I think comes out in your analytics, which is how do you help your clients through that data make better purchase decisions at the very beginning of the whole payables value chain? Right? That's a great point. You have all of this information around all of those payables. You know what the aggregated spend is with a particular vendor. You can benchmark that with other clients in blind studies with your customers as to what others are spending in that realm. And when you can package that in a way that you can hand it over to your contact at your customer and they can take it into their boss or they can attach it to their own performance review, that's when the chemistry real relationship happens. There's a corporate name on every treasury management agreement that we sign, but the reality is, is we sell into the career of the individual who chose us and each and every day we go to work with them and each and every day is proving ourselves to them. And this is the way you do that.
Allen K. Merrill (16:54):
That's a great point, and we've had some discussions through this morning and even yesterday with both banks and fintech's up here on the stage, and we've talked about some of the differences. Fintech's may be being a little nimbler a little faster, banks being having to be very risk averse and protective, but this is an area where banks can show how nimble they are because they have to deal with very different types of customers and serving those customers requires a nimbleness, a flexibility to do things this way for one customer, a large corporate that wants mainly to pay a certain way, ACH or whatever it might be, or a midsize or smaller customer who might have different circumstances and different preferences. This requires nimbleness and the more nimble the banks are in meeting their customer needs, the more they're going to be improving their customer experience.
Bridgit Chayt (18:01):
The shareholder experience also improves, Paul, from my point of view, when you look at for every dollar of revenue what you gain in operational deposits in a payables offering versus a receivables offering, it is much stronger. So the operating deposit value generation capability of payables business within your organization is really critical to concentration bank status. And I think it's not only in this environment, but for the foreseeable future. Your organizations want to grow deposits and fees faster than loans, and these are offerings that allow you to do that.
Paul Davis (18:45):
Now obviously you guys are talking very clearly about how you quantify the AP optimization side of things when it comes to the customer experience. How are you guys kind of gauging and monitoring your customer's satisfaction levels with the products that you're offering?
Bridgit Chayt (19:03):
So we're introducing some new types of metrics that aren't only around the dreaded SLAs or the productivity measures. They can range anywhere from what that relationship is with the supplier, how they can go back and tell them what they've been able to actually leverage to get either better pricing, better terms, volume discounting, which actually are other things that they're measured by in their organization as well. We also look to other types of loyalty factors that we can see in the behaviors of their supplier list as well. Those types of things that actually help quantify how we're doing and that are really how if a supplier was to fill out a client, a survey, a satisfaction survey for their provider, what are some of the things that they would look to measure?
Allen K. Merrill (20:05):
And those are great initiatives and we also, I'm afraid gauge customer satisfaction by how many nasty emails come in our offshore teams and our onshore teams.
Paul Davis (20:21):
You don't usually get the emails that say at, boy, you guys did a great job, right?
Allen K. Merrill (20:25):
Well, believe it or not, once in a while we get one of those, but it's kind of payment or why is this amount half of what I expected or it's not the payment method I had expressed preference for. There's a lot of that going on and the more of that that goes on, it eventually comes back to the customer of the bank, reflects on them, and then it comes back to reflect on the bank as well. So the more you can kind of smooth that out and reduce that sort of anxiety and that friction, the more customer satisfaction all around.
Paul Davis (21:09):
I want to take a quick break. I'm looking at the time. I want to be cognizant of that. Are there questions from anybody in the audience for our panelists? We've got one right, right here. Do you see her?
Allen K. Merrill (21:24):
If you don't mind, just introduce yourself. Let us know who you are and where you're from.
Sarah Billings (21:30):
Hi, I'm Sarah Billings. I head up payments at PNC.
Bridgit Chayt (21:34):
Hi Sarah it's been a long time.
Sarah Billings (21:36):
I know. I was excited to hear both of you speak I on this exciting topic. So talk a little bit about the benefit of this type of integrated payables service and solution, especially with regard to the environment we're in with fraud because I'll lead the witness. What I'm hearing is that there is a pretty significant use case for products like this simply because of the security of how maybe a vendor database is stored aside from all the other amazing things.
Bridgit Chayt (22:15):
So Sarah, from my perspective, back to that jobs to be done philosophy, you plot out those jobs to be done on either side of the money movement, part of the payable, and you can work with clients and you know exactly where are the points that if the way they're being done in house or manually where the fraud opportunities have inserted themselves and building out managed solutions that help automate or take that on and fewer handoffs then in those jobs to be done that allow for better integrity of the handling of the payment overall. On that, I think the integrated nature of it too, where you're not ingesting several files for each payment rail type is another thing that has reduced fraud in the payable space as well because you can apply those business rules on it.
Allen K. Merrill (23:15):
And Sarah, I apologize, I had a little trouble hearing because of the echo the question. It had something to do with automation and?
Paul Davis (23:24):
Just the fraud handling, the fraud mitigating fraud risk and things that in the system.
Allen K. Merrill (23:28):
And so I agree fully with what Bridgit just said. I would also say that the approval process after the invoice, after the matching, there's an approval process that can really vary from company to company. It could be three levels of improvement of approval required, it could be expedited by emails and so on. Our perspective is that that's an area where mistakes are made. Automation can certainly help that part, the approval aspect and speed things up. And ultimately by speeding things up, not only making everybody happier but actually taking advantage of supplier discounts and other things through faster payments. I'm not sure that was fully on point. I apologize. I know I asked you a question this morning and you mentioned it was hard to hear. You're right, there's a bit of an echo.
Bridgit Chayt (24:37):
The internal fraud reduced because there's not as many handling it. The fact that all documents are traveling with the payable, the invoice through PO to reconcile, it helps also with that. And when you know that it's an automated process within the company not as susceptible to that email from the CEO that comes to the internal person that says, you've got to pay this right now and false victim defraud in that way also.
Paul Davis (25:08):
So you really are striking a great balance between optimizing the customer experience but having the appropriate safeguards in place. Anybody else? It's kind of a little hard to see. So if you do have a question, just.
Bridgit Chayt (25:23):
Do you mind if I just add Yeah, please. Just on the fraud piece and Sarah, tell me if you've also seen the same thing, but back in my retail banking days, if a banking center had a robbery, the stats were that pretty much within 18 months that whole team was going to turn over. It wasn't because they blamed you, it wasn't necessarily because they were upset with the organization. It had just introduced some friction in the relationship in a way that you just didn't have those individuals stay with you. So not too long ago, I did the same thing with customers who experienced fraud in the commercial space and regardless of the hoops that you were going through, the fact that it might've happened in their own environment, in their payables environment, in this case, there's just something that's different about the relationship the next day after the fraud. And what you'll generally see is diminishment then in that relationship. So it's really, it behooves us all to try and be on the front end of it so that you never have to work through that friction.
Allen K. Merrill (26:35):
While we will help a bank client with that upfront validation or their customer with validation of supplier, very important aspect of preventing fraud, there's a dynamic there. In other words, suppliers don't always keep the same address. They don't always keep the same bank account information and ideas. So there's a dynamic of tracking some of that beneficiary information and updating to protect against someone saying, Hey, it's me and I'm at a due bank account. Send the money here.
Paul Davis (27:18):
It's definitely a dynamic environment that you have to keep on top of. Right. I see. We just have a couple more minutes. I'd love for you guys just to kind of close us out, just any thoughts or ideas of where you see this space kind of evolving, the next step, the next phase of things? Allen, you want to start us off?
Allen K. Merrill (27:38):
Well, I'm frankly encouraged because I see a lot of banks really taking along the lines of what Fifth Third is doing, and some of our clients are taking really creative initiatives to get at this. It's not just a, it's sort of a you have to do it kind of thing as in the past it is, let's really do this great, let's do it well and really make our customers happy while protecting them and facilitating their business growth and so on. So I'm encouraged of that, but I do still see pain out there and inefficiency. I think there's further opportunity for banks to get at this and do it collectively do it even better and better.
Bridgit Chayt (28:30):
No, I would agree. I think we all know that if we looked at any bank advertisement, the number of times the word relationship or customer centric is used is like those big jars of M&M and you have to figure out how many are in there. But the reality is that until we're really a solution centric organization, a product centric organization, we won't be able to deliver on customer centric. And if we're not designing our products and our solutions to meet those needs, we can have the friendliest people in the world on the other end of the phone or out in the relationship world, but it doesn't mean that we're creating the most value that we can for our clients. And so I know that it's a little bit turned upside down from what all of our ad materials all say about us, but I do think that you have to be product centric before you can be customer centric.
Paul Davis (29:23):
I mean, sometimes you really just have to take the situation, turn it on its head and look at it through a new lens, don't you?
Bridgit Chayt (29:28):
Exactly.
Paul Davis (29:30):
Yeah. Well again, I appreciate both of you guys sitting in and this is a homecoming for me. I was with American Banker for 16 years at conferences like this, and I'll have to say it's great to be back and I really appreciate you guys sharing your thoughts.
Bridgit Chayt (29:42):
No, thank you for having me.
Allen K. Merrill (29:43):
Thanks very much.
Paul Davis (29:43):
Thanks guys.
Track 4: Improving Customer Experience Through Integrated Payables Optimization
April 12, 2024 10:51 AM
29:54