EXCLUSIVE – After its recent partnership with digital product Innovation Company Stuzo, Bank of America’s merchant services business is laying the foundation for an innovation lab.

“It [the partnership] helps us have a conversation with our merchants about their overarching goals,” Michael Roberts, chief marketing and digital strategy officer of Bank of America Merchant Services told Bank Innovation. “It gives us an outline of product possibilities based on those goals. And is also the beginning of a laboratory so we can co-create capabilities to meet those goals.”

Founded after a joint venture with First Data in 2009, Bank of America Merchant Services (BAMS) authorizes and settles transactions of its merchants.

More recently at the fintech conference Money 20/20 in Las Vegas, BAMS, along with Stuzo, demoed a concept store. This “store of the future,” as it was referred to, had no checking lanes and no cashiers.

The store is just the beginning, Roberts said.

“The conversation is definitely changing,” he said. “It has switched from just security and cost of acceptance to a balance of cost of acceptance, security and customer experience. Customer experience has become key.”

In terms of area of focus, Roberts declined to divulge any new products in the pipeline. However, he outlined authentication as a major area of interest. One example he is provided is using biometric authentication for purchasing something like cigarettes, alcohol, or pharmacy prescriptions.

Another important aspect in the authentication and security conversation is getting rid of “putting aside pointless authentication mechanisms,” he said. Roberts cited Mastercard’s recent announcement that it was nixing signatures for POS transaction as a perfect example.

Contactless payment is another area of interest for BAMS, Roberts said.

“Eighteen months from now contactless will be the norm,” he said, “We are at a point now where the technology is in place and the costs are lower. Right now the technology and level of integration that is possible makes it a reality.”

In order to deliver products and capabilities in these various areas of interest, BAMS is on the hunt for partnerships.

“We have another partnership coming up in the coming weeks,” Roberts said, adding that he cannot disclose further details. “But we are looking for partnerships with both big and small players.”

There will be a melding of different industries, he explained and partnerships is the way to allow banks to meet the needs to their customers when it comes to experience and efficiency.

Founded in 2007, Stuzo is based in Philadelphia. The company uses machine learning, AI bots, virtual reality and IoT in designing and consulting on products for its customers. Their clients include Facebook, Mastercard, Sunoco and P&G among others.