U.S. Bancorp (NYSE:USB) U.S. Bancorp at the Deutsche Bank Global Financial Services Conference May 28, 2019 10:15 AM ET
Shailesh Kotwal - Vice Chairman of Payment Services
Conference Call Participants
Matt O'Connor - Deutsche Bank
Okay, thanks. We’re ready to get started. Up next we have U.S. Bank. And joining us from USB is Shailesh Kotwal, Vice Chair and Head of Payment Services at USB. As many of you know, the payments business is a differentiator at USB versus many of its peers and includes several businesses within that segment, Retail Payments, Merchant Acquiring, Corporate Government Payments.
So Shailesh is going to present some slides here for about 10, 15 minutes and then we'll go to fireside chat and any questions from the audience. So Shailesh, welcome.
Thank you. Thanks Matt and good morning everybody. Let's get started here. So before I begin, let me remind you that any forward-looking statements made here today are subject to risk and uncertainty. And I'd point you to slide number two here for more information on this topic. As you know U.S. Bank is the sixth largest commercial bank in the U.S., we are with our recent announcement of extension into the Charlotte market, we now have our retail footprint expanding into 26 different states in the U.S.
In the middle there, we have our corporate and commercial banking as well as wealth management services which have a national scope. And then we have our fund services business as well as our corporate trust business along with Merchant Services that I'll be speaking about later today. All of those businesses operate here domestically as well as internationally, North America and Europe I should say.
Jumping into Payment Services, we’re just under 30%, about 29% of to U.S. Bank’s total net revenues come from Payment Services, we represent about 11% of average loans but represent about 60% of U.S. Bank’s fee based revenues. Our businesses break the payments businesses break down into three compartments which is where I'll be spending most of the time today.
The largest of the three business is our Retail Issuing Business, RPS is how we reference it internally, RPS represents about 65% of our business followed by Merchant Acquiring Services, that’s about 25% of the business and the remaining 10% is our Corporate Payments Business. RPS is the largest business also because it is the largest contributor of net interest revenue within payment services. The other two businesses are predominantly fee based revenues. So I'll now walk you through some of the details of each of the businesses in terms of what we do and how we do it.
Starting with the largest business, RPS, we issue cards on Visa, MasterCard as well as American Express, so all three of the major networks. We have exceptional distribution in this business, we obviously distribute our products through the 3,000 branches that U.S. Bank has in addition, we also have distribution over our web platforms as well as our mobile channels. We also have a fairly focused co-brand strategy, we enjoy the benefits of partnering with household names like Fidelity, REI as well as Harley-Davidson.
We also have partnerships through other financial institutions and frankly this is one of the best kept secrets of this business. We enjoy partnering with 1400 different financial institutions who we serve on a turnkey basis. This really is a differentiator. One out of six banks in the U.S. do business with us in this program or put another way 17 of the top 100 institutions is who we do business with.
Together these 1400 financial institutions represent about 15,000 branches, so pretty substantial physical distribution that we have. We offer a comprehensive set of services to these financial institutions. Think of this as a one stop shop starting from product design to marketing to offering state-of-the-art technological solutions. I'll get to that in a minute. We also provide risk management to this business, fraud management collection. So it's a soup to nuts solution to these financial institutions offering a major product category to service their customers.
Speaking about the advantage in this business, we have one platform that we use to service this business. So think of this as a house, a pretty large house actually with individual rooms that represent each of the financial institutions that we would do business with. But the difference here is each room has its own entry and exit point. So we get the benefit of a singular platform and yet we’re able to distinguish and serve distinctly each of these financial institutions that we have. We have robust programs essentially they are pick and choose. Many of the marketing platforms are on a self-serve basis, so highly efficient way to service these financial institutions.
It's also worth noting that although we are the largest provider of services in this particular category, there is substantial room for us to grow in this business. Oftentimes our competition really is where some of these issuers may think about doing bringing this business in-house for whatever reason they might think strategically that might be benefiting them.
Otherwise, that’s the only time when we might lose a deal is where a particular financial institution might choose to bring that program in-house and typically that happens with some of the largest of these financial institutions that we do business with. So it's a great advantage that we have uniquely placed in the space. The next one is our global merchant acquiring business, this is the business as I said also operates internationally. We selectively participate in a handful of verticals here where we believe we can bring material value to our customers.
The chosen verticals that we operate in are airlines, hospitality and healthcare also service a number of financial institutions where we provide merchant acquiring services to their customers through their platforms. In these three verticals that I've talked about, airlines is an example we do business with over 100 different airlines. In the Hospitality segment, some of the best known hotel chains both here as well as internationally are our customers as well as the global leading boutique, resort operators are also our customers.
Again we have a unique platform, through this singular operating platform we can process over 100 different currencies operating in over 25 different markets, so pretty substantial reach. The third piece that is important in this business is integrated software solutions. And for those of you that may not be familiar with that terminology this is where we would provide our services integrated into software vendors. So think about software solutions that businesses might use to manage their inventory or their payroll or their accounting software.
We would integrate our solution with these software vendors, go to market with them to sell to their customers. In this area, Athena Health would be the best example I can give you where we’ve integrated our solutions making that platform one of the best in the healthcare industry making them and also leading provider in the healthcare market. The third smallest piece of our business but one of the fastest growing is our Corporate Payments business. Think of this as a B2B business in our world. We service both businesses as well as governments and frankly in this space, we are at the forefront of the accounts payable automation push that is going on and accelerating in the marketplace.
We service, we issue both purchasing cards as well as more traditional T&E cards both in physical plastic form but also virtual cards. And this virtual card that is increasingly getting gaining momentum because customers are recognizing and frankly they're demanding services that are not just a transactional element which is what the traditional physical form of plastic might do but integrating these services and their accounts payable platform that provides them better controls, better safety and security over their accounts payable processes.
We also offer or operate two closed loop networks that you may or may not be familiar with. So I'm going to spend a little bit of time detailing this. The first one is our freight payments business where we service shippers both government as well as businesses that want to take advantage of a more secure integrated payment capability that we also do supply chain financing in here. So it's an integrated offering that we offer to shippers.
Typically our customers in here will be large box retailers or packaged goods manufacturers as well as auto manufacturers. Last year alone, we offered these services to 5,500 different carriers in this market. The next one also a closed loop network known as Voyager that we operate on an end-to-end basis. And Voyager is now accepted in this country at over 320,000 different locations both fueling as well as maintenance solutions. We’re also the number one provider in this face to the U.S. government across all three products, cards as well as freight and fleet solutions.
We also renewed one of our largest contracts the GSA that was a 10-year contract just renewed at the end of last year, it is now a 13-year contract. I'm delighted to let you know that not only we retained 100% of the business, we were also able to gain share over this 13-year renewal that we are going to enjoy in the coming years. We also serviced roughly half of the state governments in the space and service nearly 200 of the Fortune 500 companies, so pretty substantial reach in the space.
So as you will see on this page, we are a scale player and a leadership position across a multitude of the segments that we serve in. So generally speaking, we’re very thoughtful about the business we choose to pursue and generally shy away from chasing volume for the sake of volume. Let me touch a little bit on our strategy and it was down to three things drive to digital, expanding our reach both in terms of products as well as distribution and then leveraging all of the assets of the fifth largest bank in this country.
I'll speak to all three of these in the coming pages here. The first one up driving to digital now all of you I'm sure are quite familiar with the demands that that customers put in terms of capabilities from a digital convenience and control standpoint. So I'm just going to give you a few examples that bring to light not only the fact that we are investing in these digital capabilities but frankly digital capabilities are only as good as the utilization on how well these are being embraced by our customers.
So the first one is a few years back, we emphasized the need to expand our digital reach from an account origination standpoint, so back in 2015 just about 24% of our account originations came through digital channels. That number just last year averaged about 40% just under 40%. So pretty substantial growth in terms of expanding our digital distribution in the Card business.
Also things like location based services, we were the first to launch this that provides safety and security to our customers along with augmented digital travel notifications that customers can provide. We launched this service middle of last year already over 50% of our customers are availing themselves off this really easy to use functionality through our new app.
You’re quite familiar with the three mobile pays. We were the first to launch and launching ahead of our competition gives us a leg-up. We’re continuing to see substantial year-over-year growth in mobile pay transactions throughout our customer base and we'll continue to invest in these channels because customers are demanding this, we'll make sure that we stay pace with the change in this area. The second place is in the B2B category whether it is on the merchant side or on corporate payments side, I'll give you a couple of examples here.
So sometime back we partnered up with Amadeus which is a world leader in B2B wallet payments essentially helping operators in the travel space. So we partner with them to digitize the payments functionality that operates in the travel agencies where travel agencies are making payments either to airlines, to hotels or other tour operators. That business is about $200 billion of annual spend largely paper based. So teaming up with best-in-class FinTech player like Amadeus providing our technical solutions to them to super simplify that process is the way forward in making sure that we stay a step ahead in this digital revolution.
The second one is a newly launched Expense Wizard, I’m really excited about this because this is a great example where we're bringing multitudes of technologies together whether it’s Chatbot or Artificial Intelligence that ensures that we take the pain out of everyday process. Many of us carry corporate cards but there's a very large segment of what I call infrequent corporate travelers.
They don't have access to corporate cards and typically doesn't resort to usage of personal credit cards and then dealing with receipts et cetera. This particular product that we have partnered with again one of the best-in-class FinTech players called Chrome River where that we can push credit card credentials to that infrequent traveler and that person can just take that phone and then go to wherever they want to use that particular card.
But not only that, it comes with the advantage of the corporate function can load in their corporate policies. And so they know that the card will only be used for authorized purposes and where they want to have that particular product being used not only that’s the back end process which I know many people hate about submitting claims is all fully automated where the underlying artificial intelligence will look through the receipts et cetera and automatically file claims and we know that those will already be within corporate policy.
So it substantially improves the experience for these customers. The next area is expanding our reach. And as I said both from a distribution standpoint as well as from a product set standpoint you know the acquisitions we made over the years some of the large ones, you might be familiar with like Fidelity or Auto Club.
But we also do a number of smaller acquisitions through our Elon partnerships that allow us access to great customer basis. We also acquired capabilities where it made sense. We acquired entities like ETF that expands our reach into hospitalities as well as municipalities and brings us great functionality enhancing our omni-commerce capability in the merchant space. We are also investing heavily in integrated commerce where as I mentioned earlier on, we’re integrating our offerings with software vendors and go to market together with them and that's already producing substantial benefit.
We’re seeing a 30% increase in volume through that channel. On products again we are investing in the capabilities that we have. We've added substantial strength in developing Forex, one of the outcomes of that is a material enhancement to our omni-commerce gateway called Converged and pretty soon, we will be taking bringing this Converged platform to our European operations. I mentioned earlier about the partnership we have with Chrome River. Again that's a substantial market, $150 billion annual spend market. That's the infrequent traveler that is largely paper based environment today.
So we think that we'll be able to take advantage of moving that to a more simplified user experience, you’re also familiar with the acquisition of CenPOS that we did end of last year. Again it embeds best-in-class B2B capabilities, integrating those capabilities with ERP vendors where we think there's material benefit to come in the years ahead of us. This is something that I want to make sure we spend a little time on.
We are the fifth largest bank in this country and we have the ability to bring all of our products together with banking products and frankly many of the single acquiring competitors that we have will not be able to service the customers the same way we do by bringing all of the assets of U.S. Bank to bear providing our customers with more holistic integrated solutions. Let me give you a couple of examples. Recently, we co-created a renewed business card. This is not the typical business card that you're familiar with that typically has been focused along traditional expenditure categories such as travel and entertainment.
This is a business card designed by business owners for business owners and we are seeing almost twice as much lift in spend in this category as we would see in a typical B2B card. This is targeted at the larger end of the SMB market particularly around companies that are construction companies or small manufacturers or people that are in the transportation business. They have significant needs material cardable spend that has traditionally not been approached by traditional T&E card players. So we’re quite excited about the launch of this particular product.
Another few examples here leveraging U.S. Bank. Frankly, we are moving beyond payments as the way I would like you to think, we have a substantial presence in the payment space as I've been talking about but also bringing all of the assets and capabilities of the U.S. Bank both from a capability standpoint but also from a customer standpoint both small business as well as consumer customers.
In the accelerated money movements phase, you might be hearing the terminology real time payments. That is exactly what it sounds like. It is instantaneous and it's 24/7 and we are first to market. We are teaming up with our global treasury management on our wholesale bank to bring a combined holistic solution whether our customers looking for cash flow management through traditional mechanics or a virtual card that we have or taking advantage of new rails to real time and frankly in this real time space, it is not the ability to process the transaction which many will be able to do is the ability to leverage the underlying data that stands to be transformational going forward.
It not only helps simplify back-end processes like account reconciliation but it can go many steps forward like inventory management as an example by leveraging that underlying data. And we’re good at it because we've been doing, using this data capability on merchant acquiring space for a long time and now we can team up with treasury management to bring similar solutions to our corporate customers both big as well as small and medium size.
Recently, we launched along with the clearing house, we were the first to get this particular send and receive capability. So think about disbursements where an insurance company might want to send payments to their customers. We're leveraging real time payments that that payment can be made almost instantaneously to their customers, we can now make these payments throughout the entire network with all banks that are now hooked up with the clearinghouse and many more are yet are slated to come.
Payables automation, the next one down on the page here and this is where as I talked about earlier on, we’re trying to bring these world that up until now were distinct silos whether it was merchant acquiring or corporate payments or purchasing cards or virtual cards or treasury management all of these were independent product lines that were largely sold independently.
Customers are demanding much more and they’re looking for ways to better manage their cash flow. They're looking for better ways to bring data, so that they can simplify their backend solutions and we are well-placed to provide these services to our customers. We have deep experience in payments, we have deep experience in banking.
We have these great network assets that I talked about earlier on, we have data. We know how to leverage that. We have digital capabilities across U.S. Bank and we can bring all of those assets and capabilities for the benefit of our customers. We are very focused on this space. We have invested and will continue to invest well to make sure that we are bringing these capabilities in a holistic way for our markets. So on a broad basis, I'd like you to think about three things as advantage in this space. Our technology including the platforms that I just talked about, they are absolutely the best-in-class.
Second one is our ability to leverage data for a multitude of purposes which is going to be ever more increasing in importance to our customers as well as a full array of banking products second week we can bring to bear whether it is a merchant or a small business owner that is looking for broad based solutions for their benefit.
So we have a strong position as I said in many of the verticals that we choose to participate in, we operate both in consumer as well as small and medium sized businesses with a full set of products and services, partnering and integrating with a full array of banking products. In many ways, we are leading this revolution in digital payments and we'll continue to invest across all of the segments whether it's B2B or B2C or C2B or frankly C2C person-to-person payments, all of those categories or capabilities that we already have and we’ll continue to invest in this to grow rapidly and gain share.
So let me stop there and I'll be happy to take questions.
Q - Matt O'Connor
I’m going to start here with a bunch. So sit down and catch your breath. So thanks for going through the businesses and some high level as well.
I do want to go through some businesses, I touched on some of the things that you commented on but just from a high level perspective to start, I'm often asked is it good that you're part of a bank. I'm sure there are some pros and cons but I think I know your answers could be on a net basis but maybe talk about some of the pros and cons because it might be a little bit challenging when you try to partner up in the credit card side with financial institutions. Certainly some opportunities in other areas but maybe you could address that concern that's out there some times?
Yes, I think it's a definite advantage. And we’re now beginning to see more and more customers recognizing the importance of moving away from silo based independent services and products that most of the customers were looking to buy whether it was a small merchant or medium or large corporations. Our ability to sell, let me just give you few examples. When we go to market and sit across Treasurer of a large or medium sized business, it is one conversation that we are having about their cash flow or their borrowing needs or integrating their payables or automating some of these backend processes, leveraging the data that will ride and rides on these real time rails.
So increasingly what we are finding is customers are recognizing the benefits of an integrated offering versus an independent silo based offering that might have been beneficial four, five, six years ago. People are looking to broad based activities and that is where being part of a larger financial institution is our advantage that we can bring to our customers.
Do you think you can invest at the level that you need a couple of years ago or a few years ago, you get a ramp up or begin to ramp up in the merchant acquiring business. So it seems like from that perspective you certainly did. But I'll maybe layer on the firm overall has operating leverage targets that are out there, the revenue growth environment overall is slowing a bit for the banks. Can you still invest to the level that you need?
Yes, I think so. I mean we have demonstrated that we can and we will where we see opportunities. We are not afraid of making investments. We need to have what we demand of ourselves is making sure that there's a clear pathway that we see a way to leverage whether it's new technology a couple of the examples that I gave where we can bring differentiated activities where our customers can immediately see yes there is a benefit in the product or the capability that we are bringing to market.
It's not only the investment that we made in our merchant acquiring and we're seeing the benefits of that already but even our CPS program, we've invested heavily to rewin this material contract that we have with the government. So we will invest in our own capabilities where we see a need in opportunity. We've also demonstrated that where we see a simpler path by either partnering or buying entities, we will do that too. But it needs to fit inside where we see strategically our advantages are, what our customers are looking for and making sure that we don't create these individual silo based activities because the world is moving to a place where they’re looking for broad based holistic solutions that needs to fit within our overall architecture of what solutions we’re looking to put forward.
So you announced the firm announced the new Chief Digital Officer maybe you could talk a bit about what that role is and how it integrates with your unit?
Yes, it’s a pretty straightforward concept. As you will hear more and more of our activities are digital in nature and we are a firm believer that we need to make sure that our approach is holistic that our platforms remain singular where appropriate. And so what has been happening up until now is many of these investments were championed through the individual product silo, creating the Chief Digital Officer allows us to look horizontally across these activities that we’re looking to do and make sure that one plus one equals the proverbial three.
That's the basic idea here which is leveraging the investments that we’re making to benefit a broader swath of our customer bases versus what might have happened addressing one or two areas. So this will allow us to look much more horizontally across all of our businesses and make sure that the investments that we’re making,
A, they are appropriate, but more so take fraud as an example, fraud occurs in branches, fraud occurs in our digital properties, fraud occurs in payments activities and so customer identification is a thread that runs through all of our activities. Great example where having a Chief Digital Officer will allow us to leverage that investment more broadly across the bank franchise.
So just before we move into some of the individual businesses. If we look at the segments combined, what do you think a reasonable long-term growth rate is?
I think of this as a kind of mid single-digits organic growth rate platform. We believe that that is doable. In addition to that where we see opportunities we will obviously look to augment that with inorganic activities whether it is in the Elon franchise where I've demonstrated here, I spoke about a number of activities, number of acquisitions we have done both medium as well as small. So mid single-digits augmented by inorganic activity.
And that will be revenue at the mid single-digit?
So in the banking space, we're obsessed with operating leverage in space here, we are focused on growing revenues. Do you focus on the operating leverage against that mid single-digits or you can get mid single-digits that that generates pretty good net income growth?
I think little of both is how I would characterize it. Again the advantage of operating within a larger franchise is we can move investment dollars around where necessary which also means making the investments that are required and necessary where we see the opportunity. So it actually works to our favor operating within a larger franchise. We obviously we think of ourselves as a disciplined player. We generally don't chase volume, it's very easy to chase volume in the payment space. We look at ensuring that that volume comes with appropriate returns and adequate economics for the benefit of our shareholders.
So looking at the retail payments business, you're obviously big but there are some bigger players?
It’s also a big market.
It is and it’s gone little more fragmented, I feel like maybe 10, 15 years ago has more bank peers able to get back into credit card. But do you feel like you can compete with the few bigger players right in front of you?
I think so and it comes down to how we want to play in this market. As I said, yes there are some bigger players but it also is a very, very large market. There's plenty of room for adequate players to play and we are at scale. We are number five or number six depending on what measure do you use. But we also play little differently. We generally do not chase very large co-brand partnerships. Our partnership focus is very focused and making sure that we have got the right capabilities and operate in a space where there is appropriate economics to share with our partners while maintaining adequate returns for ourselves but also Elon is a great example where we are the market leader in that space. Very rarely do we bump up against
credible competitors in that space.
Often time, when we lose the deal which is rare. Typically the deal is lost not to a competitor but where a larger player might bring that issuing business in-house because they might see some benefits given where the economic cycles might be. So there are different ways to play in this market beyond looking at these large co-brand partnership which seems to be where much of the fight is at the top end of the market.
Would you consider yourself national, obviously you've got the branch footprint that's not national in many markets though, the financial institution relationship might essentially give you a national presence. But how do you view yourself in that?
We are actually national in that space in a different way. We obviously we issue credit cards through the 26 state footprint that we have or we will have the addition of Charlotte. But as you mentioned, our co-brand partners that we have today they are national in nature, our Elon partnerships 15,000 branches, 1400 financial institutions. That's massive reach throughout this country.
Switching to asset quality, any signs of cracks and any concern that the Tax Cuts last year might have helped consumers. So if we fast forward kind of six, 12 months from now maybe we'll see more cracks or fill?
There's nothing that we've seen in our portfolio that would give even the remotest sense of credit concerns. We have often talked about sort of we managed to the four-percentish net credit loss rate and that's been stable at that level for some time. There's nothing in the underlying trends that we see that would cause any concern.
And I probably think I know the answer to this question but USB has been one of the most conservative lenders for a very long period of time. It's a very high quality credit card book but a temptation to go down spectrum a little bit or you in just a small percentage of subprime or non-prime?
Not really, I mean we don't see that as our space. That concept in my mind that requires a very different business model. It's we are quite comfortable with the business model that we have. We know we’re able to generate the kind of growth rate that we are satisfied with. So there isn't a need that we feel either of our own or frankly the kind of partnerships that we pursue. Oftentimes people go down that path either unknowingly or unwillingly because their partners want to go down that path and so we’re quite picky about who we want to partner with, so that we can stay within the credit spectrum that we're comfortable with.
In merchant acquiring, this is probably the segment within your group that are most asked, do you have the scale and we've seen the bigger players get even bigger and maybe there's less focus on operating leverage there than say at your firm. So do you have the scale there and is the answer that you have to scale in the verticals and the areas that you want. And we need to
think about it more from that perspective versus the aggregate?
Well, yes is the short answer in terms of do we have scale. We are still yes, there have been some merchants but the ranking hasn't changed. We are still number five in the merchant acquiring space and we feel like we've got scale. But more importantly, we have substantial scale in the verticals that we operate in. And so we’re able to bring quality product to the segment that that we're choosing to serve and whether it's airlines or hospitality or the ever more important healthcare segment. We’re quite satisfied with the skill that we have there.
And if I remember correctly, I think it was two and a half years ago we met in Minneapolis and you were talking about the healthcare effort there and reducing the paper and it's a big opportunity and I think it was the early stages maybe give an update on how that's going and frame how big healthcare is versus the other two?
It is going, growing, going and growing very well. We believe that that is where some of our focus in verticals really shines. It's a complicated payments process. And I've shared this in other forums as well. Think about our experience when we go to a healthcare provider that one transaction could be there's a co-pay oftentimes that is on the spot in the Doctor's office. Then there is an insurance bill that the doctor has to go collect from an insurance provider. The insurance provider may or may not give 100% of what their share is.
Oftentimes the Doctor has to come back and say well you still owe us $22 for whatever services that were provided a month ago. So it's a very complicated cycle that that these healthcare providers whether it's Doctors, dentists, hospitals have to provide. It's partnering with entities that help these offices manage that revenue cycle is where we come in. Healthcare is a growing business in this country just giving the demographics in our country. And the inefficiencies that exist in that market make it really ripe for somebody like us to come and participate.
So we’ve been very satisfied with the progress that we have seen along with the work that we’re doing with the partners that we participated in.
I want to ask about the government business. But it was question to the audience, raise your hand or get your mike, I have been monopolizing it here.
Hi, have you talked about the TAM for any of the verticals in which you're operating?
Generally we don't share TAMs in that market. The couple of TAMs that I've talked about is this Expense Wizard that we launched that's substantial about a $150 billion infrequent traveler market that is ready for disruption in our mind or the partnership that I talked about with Amadeus again $200 odd billion, very paper based, very complicated labor intensive processes but we generally don't talk about TAMs in the other verticals.
The Department of Defense contracts you talked about 13-year renewal there and increasing business with the government. There's also some kind of margin pressure. I think initially that came from that, how long does it take to break even on a contract like that or in general if you can make it?
So we are making money on that contract, while we are more than adequately returning over our hurdle rates in this renewed contract and we'll lap the margin over 12 month period. So I think it's a temporary blip that we see in that space for a very, very important customer that we have very demanding customer they have allowed us to also, that allows us to invest in this core platform that then in turn helps multitudes of our customers. So there are lots of advantages in that contract.
The investment that we did, not only because of the importance of that particular customer but the benefits to the platform which then translates across the footprint that we have in that space.
And you said about the service half of the State governments. Does that align with the retail presence or is that not a major factor?
Mostly but we typically work again with our corporate and wholesale bank where we also have great, great business with both state and local governments. And so we partner up with them to go and serve where we have an entry either through our CPS products and here's another important element that would be worth stressing on. If you turn the clock back five, seven, eight years ago typically wholesale would lead the relationship and then a payments business would follow.
Increasingly, we are seeing where a CPS product might be the first product into that relationship. We might go together with our treasury management folks into that conversation but typically they might say yes, we can see the immediate benefit or need for a payments product and then the wholesale product might follow. So that would be the case with the state governments as well.
Okay, well we’re out of time. Well, Shailesh thank you very much.
Thank you, Matt.