Fintech Insider Podcast by 11:FS
00:16:33 · Pranav Sood
[00:16:33] S3: Well, you know what? We actually grew exponentially during those two years. And so to the extent we saw an impact in The UK and and Europe during that period, it was actually here's a business that's growing, you know, massively in the Asian region. That gives us the ability to invest, it gives us brilliant investors that have come on board during that period. And it gives us a whole bunch of customers who are looking to, you know, expand their businesses around the world and use our infrastructure everywhere. And so I don't think we saw a negative impact at all. I do think part of that is because the book of business that we have is actually quite broad, and covers a number of sectors, some of whom were more negatively impacted and others of whom were more positively impacted during that period. So for example, we do a lot in ecommerce. So as I mentioned, we work with businesses like Shein, know, GOAT, the sneakers marketplace, you know, plus plus plus. And everybody, I think, will know that during that couple of years, e comm businesses were massively benefited, because people moved to shopping online, people, you know, didn't have necessarily the ability to go and go in store and do things. And so that part of our book grew massively, Perhaps you during that time, some of the more travel businesses were a little bit slower. So you look at AQantas, for example, of course, during that period, they were doing a little bit less business than they are now. So you get that balancing effect across an entire portfolio of businesses where some benefit from a particular moment in the macroeconomic situation and others have a countervailing impact. So I think net net, it was a period of huge growth for us. And actually coming out of it, you know, even where we have seen perhaps a slightly slower growth in the e comm sector globally, we've seen a whole bunch of other sectors who have picked up and, you know, continue to power our our growth and expansion.
00:18:26 · David Barton-Grimley
[00:18:26] S2: And is there anything you you would say that, you know, fintechs or financial institutions in the European market can almost learn from some of the challenges and growth that you have faced in in APAC amidst the extremely strict lockdowns, remote teams, etcetera, etcetera?
00:18:46 · Pranav Sood
[00:18:46] S3: So I think one of the things that's been most interesting for me joining Airwallex is that I've come from... I came from GoCardless. I spent nearly five years at GoCardless. GoCardless is also a global business, but it's a much more UK and Western European oriented business. And so, you know, GoCardless, our leadership group was mostly in London. The decision making was mostly in London. To the extent that we had folks around the world, they tended to be go to market satellites rather than, you know, full offices and full regional regional hubs. We, as Airwallex, are a very distributed company. And so when you look at our exec team, I sit in London, I have a colleague who sits in San Francisco, we have folks in Melbourne, we have folks in Singapore, we have folks in Hong Kong. And so we operate in a very distributed way. And that operating model has enabled us to be pretty lean, but also pretty agile when it comes to adapting to the situations that the business faces. And I think that's one thing that I think is quite different from many of the European businesses that I see where mostly their exec teams and their leadership groups sit within a single office or a couple of offices at most. At most, they're probably one or two time zones apart. And so obviously, that has some big benefits in the sense that you have that togetherness, you have that ability to hang out with one another. But I think it may also detract from your ability to be really local and build really local businesses around the world. And for me, I have the benefit of having, obviously, lots of go to market folks in EMEA, but also a legal team, a finance team, a people team, a compliance team. We have engineers in Amsterdam. We have operations people as well. And so with that, I can try and build something which is a truly localized business for the needs of the customers that I'm trying to serve. And so I think that's maybe just one thing that that, you know, that we do slightly differently, which I think helps us to to try and take a slightly more local approach.
00:20:47 · David Barton-Grimley
[00:20:47] S2: That's really interesting. It feels like the idea of the HQ is changing completely and you're driving efficiencies through the distributed model as opposed to the traditional way of looking at it, which would be efficiencies through centralized model. But as you say, you cannot have a local and a global business, you know, that particular way. So you have to have some capabilities within market. You were touching earlier on when we were talking about the pandemic about, you know, the growth of e commerce and how, certain sectors were growing and certain sectors were shrinking, it'd be good to talk a little bit about customer expectations and how you see that trajectory of growth and where some of those behaviors might be changing over the next few years based on what you're seeing in EMEA and also in APAC.
00:21:32 · Pranav Sood
[00:21:32] S3: Yeah. So I think when I look at the adoption of the kinds of products that we offer, so we're a cloud based service fundamentally, which is enabling digital money movement around the world. I think about the long term adoption curve of a product like that. And I think we're now getting past the bit of initial early adopters. So you always have an initial phase where people are kind of dipping their toe in the water and starting to try and understand what this new, you know, category or this new product can offer. And during that initial phase, the nature of the game is a lot more exploratory. So you're trying to to learn, you're trying to figure out what's going on. And customers are in the process of educating themselves about what's possible rather than necessarily being at the point of maturity where they can really deep dive into what the best could be rather than what the minimum could be. So when I think about that evolution curve, I think we're coming out of the initial adoption period. I don't think we're yet at mass adoption, so I think we're a long way away from the kind of full potential of what this industry could be. But we're entering a phase now where customers are more and more educated about what good could look like. And so, we certainly see this now. Our customers are now more and more attuned to, okay, but not just how are you sending money to this market, but which rails are you using? Are you using Fedwire or ACH in The US, for example? You know, they're also asking questions, you know, who are your partner banks? You know, where is my money? And particularly in, you know, in light of things like SVB, people are increasingly asking, you know, who are you safeguarding with in The UK and EU, for example. People want transparency and clarity on costs. So, you know, you and I will both know this, but one of the reasons why the payments industry has managed to sustain such healthy margins over a long period of time is the fact that cross border costs are often not shown very transparently. And so people don't know how much it costs them to move money from point a to point b. I think our customers and customers in general are increasingly aware of that. And so they're looking for that transparency and clarity about what can this, what is this actually going to cost me?
00:23:36 · Pranav Sood, David Barton-Grimley
What could this save me if I were to move away from my current situation? And so that's my general feeling, which is that now customers are getting more and more sophisticated when it comes to the capabilities of cross border money movement businesses and kind of financial services in general. They're asking those one level down questions, which, you know, for us, we're always happy to answer because we feel our superpower is actually that infrastructure layer. And our superpower is is the fact that, know, The US, for example, we have five different sponsor banks or partner banks that we're partnering with. And so we have that redundancy, we have that depth of feature set. But I think some of the the businesses who exist maybe one level up in the in the value chain will find that more and more difficult because they won't necessarily have the substance behind the the style. [00:24:24] S2: And what would you say are some of the things that Airwallex, I mean, you were touching it on it already actually, is doing to match that maturity because, you know, you guys have been building out your stack very recently, right? It's in the last couple of years really that the growth has exploded the way it has. So you may well be right on the forefront of matching some of these new behaviors, in fact, generating some of these behaviors yourselves.