U.S. Bank’s Innovation Focus: E-Commerce, Omnichannel, and Realtime Payments

PREMIUM — Innovation for the sake of problem-solving (rather than for its own sake) is the way U.S. Bank’s Dominic Venturo approaches his role of chief innovation officer.

The bank has a comprehensive outlook on investing and researching emerging technology trends through its innovation team, Venturo said.

The bank approaches its innovation plan by looking for “interesting problems to solve, as opposed to generate the next new idea that may or may not ultimately be profitable,” according to Venturo, who spoke at Deutsche Bank Global Financial Services Conference earlier this week.

For now, the bank is focused on three major areas: consumer payments, omnichannel experiences, and B2B payments, he said. Under payments, Venturo includes e-commerce, merchant acquisition, and P2P payments. By omnichannel, Venturo means the entirety of the customer journey and experience, from customer acquisition to their experience on the mobile app. One example of its innovation efforts is the bank’s use of artificial intelligence to improve its lead conversion to 72%, by offering potential customers specially tailored products and services.

U.S. Bank’s B2B payments focus is perhaps the most interesting, given that the bank was one of the first to become realtime payment ready. Venturo did not specify the details but said the bank was investing heavily in this initiative. On the transaction end of realtime payments, the bank will use the “rich data” gathered through these multi-directional realtime transactions between businesses to offer its customers products and services that “couldn’t be built before,” because of this lack of data. Realtime payments also require a robust fraud and security infrastructure. The innovation team at U.S. Bank, under Venturo’s lead, is working on building a comprehensive system that will be able to look at security “horizontally throughout the entire bank.” While Venturo did not provide a timeline, Bank Innovation previously reported that the early adopters of realtime payments will be fully ready at the earliest by 2019.

U.S. Bank’s innovation team is also concentrating on distributed ledger technology, which they “intentionally refer to as DLT and not blockchain,” Venturo said. In addition to using distributed ledger applications for KYC, identity management, and security, U.S. Bank is looking into the technology’s application to trade finance, like some other banks including HSBC and ING Bank.

The trade finance part of business tends to be paper heavy and “historically resistant to change because of the international components,” Venturo said, but this is an area with a lot of value-add opportunities. Loan syndication, a large loan that consists of multiple lenders, is another area for possible distributed ledger application. The bank already has a few distributed ledger pilots in place, Venturo said.

U.S. Bank intends on achieving its innovation goals through a combination of partnerships and in-house engineering. For its distributed ledger efforts, the bank established an in-house team. For e-commerce and lending initiatives, the bank has partnered with smart terminal provider Poynt and the lending platform Blend AutoGravity. At the heart of this decision to either partner or build in-house is cost efficiency.

“Sometimes a very complicated or expensive solution isn’t the best way to solve the problem,” he said. The goal is start with a “minimum viable product,” to identify the customer problem, he said.

“Start simple, test and iterate and, then build on top of that as opposed to spending all your time, engineers and money on engineering what might not be something that the customer ultimately needed or that was not the problem to be solved in the first place,” Venturo said.

Based in Minneapolis, Minn., U.S. Bank has over $460 billion in assets as of Dec. 31, 2017.

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