BofA on Why Customers, Not Technology, Now Drive Financial Innovation
By Justin Estes, Contributor at The Financial Brand
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Executive Summary
- On a recent episode of the Banking Transformed podcast, host Jim Marous spoke with Rich Clow, head of innovation and strategy at Global Payment Solutions for Bank of America, about how traditional banks can balance cutting-edge technology with the trust and security consumers demand.
- Financial innovation is shifting from a technology-first approach to a client-first mindset, prioritizing real-world needs and scalable solutions.
- Embedded finance, real-time payments, and AI are reshaping the industry, but their success depends on trust, security, and clear customer experiences.
- Leading institutions focus on solving meaningful problems, balancing digital convenience with human support, and managing risk through early-stage evaluation.
Tech-First to Client-First Innovation
Q: What has been the biggest change you’ve seen in the financial services industry from your perspective?
Rich Clow: I see the biggest change actually being around listening to our clients (whether they be corporates or consumers because I cover both), having a discipline around experimenting responsibly and ensuring there’s enough value for both sides, that the consumer experience is clear and understandable and that the corporates have right amount of authorizations, if it’s a payment and low fraud.
And then really, making sure that what we’re doing is going to scale. In my experience at Citi and Bank of America in innovation roles, moving the needle by just a little bit isn’t going to help. We need to move the needle significantly and that comes both within our own branded solutions and how we deliver experiences directly to our clients, as well as the way we work across the ecosystem with things like Zelle or now Pays that we’re bringing to market that will be embedded in many other kinds of use cases across banks.
Q: How does Bank of America balance digital-first experiences while maintaining human elements that matter to consumers?
Clow: It’s a great question, Jim. The balance for us is giving clients the option to self-serve, whether that means choosing how to load their card in a wallet, setting up bill pay, or occasionally sending a wire across borders. When you first set up that recipient, you might need a little help.
So, for something like that, we recently redesigned our entire mobile experience around setting up a wire for the first time. And it’s a guided experience, similar to a FinTech, it has a status tracker. We actually use Erica in situations where you’re in the middle of something and can ask a question that puts the context of where you are into the conversation.
Another good example is that we launched the ability to set up an appointment in a financial center four or five years ago. And to us, it helped because there are no cues now; you have the skill of the person, whether you want to discuss a loan or savings for college.
The Embedded Finance Revolution
Q: How do you see embedded finance reshaping the competitive landscape and what opportunities does this create for traditional banks?
Clow: Certainly. So, I always start with embedded finance, which is a payment within an experience that has nothing to do with the payment. And so, as we look at that, through both lenses. We have consumers who may want to use a ride share and have it paid for, or order food and have it delivered right to their front step.
Interestingly, all these innovative firms also need a bank, as the only way to request or settle funds is through a bank or a banking partner. We actually get to see both sides of it.
Q: What role do account-to-account payments and real-time payment rails play in this evolution?
Clow: And what’s going on now, when you think about the evolution of credit and debit, we’ve seen tremendous use, as we’ve gone from cards and point of sale to tokens and wallets. And we’ve gained a ton of benefits.
What I see happening next is where things go with either a top-up type model, like a Starbucks, where you have an account-to-account type debit, or the same as a funding model with a Block or Cash App.
Ultimately, we’re seeing account-to-account solutions emerge globally, with pay by bank solutions also gaining traction. And as we see more and more, the challenge really lies in the customer experience.
Trust as the Foundation of Instant Everything
Q: How is the demand for instant payments changing customer expectations and bank operations behind the scenes?
Clow: Three things frame the client expectations that we’re observing today. The first requirement is that it must be convenient. Number two, it has to be secure, secure both at the time of the transaction.
And then, number three, if the transaction goes wrong, if they don’t get the right shipment, or if it doesn’t get there on time, we always encourage people to talk to that merchant first. However, they need to know that the bank will aid them in helping themselves.
And I don’t think the speed of the transaction or the expectation changes for what role your bank or card company needs to play for you. But I would say that the other side of the coin is that there are a decent number of bad actors who are also trying to speed fraud and move money, making it a little harder to catch them.
Q: What role does trust play in enabling the seamless, automated experiences consumers now expect?
Clow: That could be a podcast in and of itself, but let me give you the short answer here. First and foremost, people often overlook the fact that we’ve invested tremendously in resiliency. Because if you think about it, when you’re down, not only are you letting your client down, you’re probably more vulnerable to people exploiting weaknesses.
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So, we’ve developed resiliency and uptime, as seen in our work with Zelle and many of our online payment solutions are top-notch. The second thing is that you have to have a layered security approach.
Generative AI’s Practical Applications
Q: What role is generative AI playing in payments innovation and where do you see the most significant opportunities and risks?
Clow: Yeah, Jim, the whole push for generative AI in payments is more intellectually interesting to consider than practically. And here’s what I mean: our whole innovation process starts with the client problem we are solving.
I’m often asked about my AI strategy or cloud strategy. And at the end of the day, we have a significant discipline in understanding and validating the problem, ensuring that as we fix the problem, it’s a fit for purpose, it’s going to work for the client and then really scale the heck out of it.
Q: How do you approach AI implementation with a client problem-first mindset?
Clow: Within payments, we’ve seen just a handful of things work really well. One example on the treasury side is as we onboard clients or we scale with clients for receivables, if you think about all of the data that needs to come with a payment, whether it’s a wire, whether it’s an ACH, or a virtual card to reconcile, it really creates complexity for corporates. So, we’ve added intelligence into receivables.
I think the second area that we look at is also more back when you and I were talking about personal financial management in the good old days — with open banking now and access to data, we’re looking to things like we have life plan, where if you’re planning to save for your first home or planning to save for students.
Managing Risk vs. Avoiding Risk
Q: How well is the banking industry doing at managing risk versus simply avoiding risk when it comes to payments innovation?
Clow: So, I think that on the whole, we’re getting better at bringing all of the legal risk and compliance types of questions to the fore at the concept stage of opportunities now, instead of waiting and having someone throw up a red flag or a stop sign.
Q: Can you share an example of how you evaluate new opportunities like buy now, pay later?
Clow: So, I’ll give you an example. I run an innovation routine for small businesses and consumers and we have visited and revisited buy now, pay later as an offering for our products over the last five years.
When we look at that, it could be really great for some of our clients. However, upon closer analysis, we find that only a very small population of our clients today chooses that option. In many cases, they’re credit seekers and oftentimes, they use their debit card to pay back, pay in four, or pay in five.
And we might not be ready to provide that line to that individual. Or we could provide that line, but we wouldn’t collateralize it with a sweatsuit, a pair of sneakers, or a purse. So, we see things differently because we’ve been through every kind of credit cycle.
Career Wisdom and Future Outlook
Q: What advice would you give to someone just starting their career in financial services?
Clow: So, I would tell them two things. One, start in a client-facing role. Really come to understand a client’s needs, how we delight them, when we disappoint them, how we recover and be an advocate for continuous improvement around the client experience.
And then the second thing I’d say is always be curious. Be looking for the next thing, be reading ahead of what your mandatory training says. Experiment at home with your personal devices, using things you might not normally have access to.
As the payments ecosystem continues its rapid evolution, financial institutions that master the balance between innovation and trust, between digital convenience and human touch will emerge as the leaders in this transformed landscape. The key lies not in chasing every new technology, but in maintaining a disciplined focus on solving real client problems at scale.
