The payments landscape is in a dynamic state of flux. There is a great deal of innovation happening around user experience today. Significant growth in mobile payments is just one example of this, making it easier for people to initiate payments on the go. In addition, the work being done around near field communication (NFC) and contactless payments, makes this a very exciting space right now.

Published: 1^st Jun 2012

Biography

Ather Williams is Managing Director and Head of Global Payments in the Global Treasury Solutions group at Bank of America Merrill Lynch. He is based in New York.

In his role, Williams works closely with the Global Treasury Solutions region heads to execute a global strategy for payments product management. Serving both the corporate and commercial lines of business, his responsibilities include end-to-end product and P&L management; new product development and product launches; pricing; all training and marketing for the urgent/high value and non-urgent/low value payments products, banknotes, and the related foreign exchange products.

Williams joined the company in September 2011 and was previously at J.P. Morgan Chase where he held a variety of senior leadership positions including Americas Liquidity Executive, Global Segment Executive and Global Strategy and Corporate Development Executive, all within Treasury and Securities Services. He was most recently Global Product Executive for Investment and Credit Products.

Williams has nearly 20 years of experience working in the financial services industry. In addition to his tenure at J.P. Morgan, Williams has worked in a variety of senior strategic and financial management roles including several years as a management consultant with First Manhattan Consulting Group and in the Financial Institutions practice of AT Kearney.

In 2008, Diversity MBA Magazine named Williams one of the top 100 executive leaders under 50. He holds a BA from Harvard College in Government and a MBA from Harvard Business School

How would you describe the state of global payments today?

The payments landscape is in a dynamic state of flux. There is a great deal of innovation happening around user experience today. Significant growth in mobile payments is just one example of this, making it easier for people to initiate payments on the go. In addition, the work being done around near field communication (NFC) and contactless payments, makes this a very exciting space right now.

It is true that the underlying drivers of payment flows and the various payment mechanisms have not really changed: you initiate a payment because you need to pay a bill, you need to make a transaction at a point of sale, you need to pay another person, businesses need to pay each other and businesses need to transfer funds intracompany. From the value transfer point of view, the five basic mechanisms are still cash, cheque, wire, card and ACH. Nevertheless, change is happening from a regulatory point of view: take Dodd-Frank for example.

This is leading to shifts in the industry infrastructure. As a result, opportunities are being created, either by changing the economics of payments or changing the rules to create different dynamics and different value propositions. Just look at Faster Payments in the UK – we are seeing similar initiatives in Singapore and the Federal Reserve is also pushing for something like this in the US.

From a corporate perspective, international companies are continuing to push for efficiencies in their payment flows. Many are moving away from paper to more electronic means, looking at centralisation structures, payment factories and shared service centres. While electronification may be possible in say 90% of the countries the corporate is operating in, there are still some challenging markets. Take Vietnam for example: a large proportion of the commerce within the country is still carried out with cash. In these cases, it’s very much a ‘back to basics’ approach that is required.

What will be the biggest driver influencing the direction of new payment technology over the next three to five years?

Consumers are one of the largest driving forces in payments. They are pushing a preference for payment choice, and for convenience and control over the process. This has led to developments such as being able to use a credit card in a taxi cab, or paying with your smartphone. Such technological developments will slowly creep into the B2B space. For example, utility companies are beginning to include QR codes on their bills and so on.

Elsewhere, I believe that regulation will continue to be a significant driver. Think about the Durbin amendment – part of the Dodd-Frank Act. This has dramatically changed the landscape in the United States for interchange fees. It took in the region of $50 billion out of the system, which was a real hit for those institutions that largely relied on such fees. Industry players are therefore looking for different ways to make a margin from payments and are updating their business models accordingly, often through pushing technology to work harder. On the back of this, we are seeing closed loop systems become popular, and a drive towards increasing the speed of payments.

Will banks see their ability to influence the direction of future payments technologies erode with the growing strength of players such as PayPal?

We, as bankers, have to be very careful about resting on our laurels. It’s all too easy to think that no one can replace the banks when it comes to payments. Personally though, I still believe that the banks will always be the ‘bricks and mortar’ of the payments industry. Although companies such as PayPal are happy to innovate in the space, they do not want the regulation, compliance and capital requirements that come with being a fully-fledged bank.

How the money actually moves from one account to another is the capital intensive part of the payments business. Banks need to make sure they are not relegated to simply operating in that space. This means being forward thinking and creative and offering more innovative solutions to our clients. What PayPal has effectively done is ‘filled a gap’ in the market by building an easy front end for consumers to make payments and for vendors to receive payments, whilst offering a guarantee. What the banks need to do is to look for similar needs in the market that are not being met by current offerings.

For instance, we are looking across the whole spectrum of payment types from large corporates and commercial banking clients, offering them integrated solutions that include foreign exchange capabilities alongside day-to-day cash requirements.

How would you rate the performance of Bank of America Merrill Lynch up to now, relative to your competitors, at addressing client payment needs?

There are two ways of approaching the global payments market. You can take the local route in a myriad of countries and build up, or you can be global and connect down. We have the benefit of having one global platform that can connect down to the local market, so we can create a consistent experience across all of our markets for our clients. To do this, we partner with ‘best in breed’ local institutions.

One of our greatest strengths to date has been the significant investment in our CashPro channels, creating a ‘best in class’ entry point into our suite of capabilities. We have also been pushing the adoption of ISO standards. Bank of America Merrill Lynch is an early adopter of SWIFT for corporates, so we’ve been very active in helping our clients to standardise and simplify their processes.

We’ve also been expanding our local currency capabilities to ensure we keep up-to-date with client needs. We can currently make payments in 140 currencies across 190 countries. In short, we can make payments virtually anywhere that our clients want to do business.