Fintech Insider Podcast by 11:FS
00:10:11 · Pranav Sood
[00:10:11] S3: Absolutely, we at Airwallex serve a lot of e commerce businesses. The top end, people like Shein, for example, use our payment acceptance product in order to be able to collect payments around the world. And the process to to return money for refunds is is a is a horribly painful one for everybody involved. Obviously, consumer is the one waiting for their money to come back, but there are also people all the way through the value chain who are sitting wondering how to process that that money. And I think what what Jeremy said is is absolutely spot on, which is the last five or six years have seen three or four really quite significant structural changes in the the landscape around payments. So firstly, you know, during COVID, we saw a massive acceleration of of e commerce and and a migration of, you know, offline to online selling. Secondly, we've seen a huge, you know, proliferation of data of all sorts, you know, through open banking and through a whole bunch of other different avenues. And, you know, there are other things as well when you think about the quality of decision making around credit as well, and the improvements that we've seen as a consequence of of big data and and the models that are now being used to do that. And so in that environment where you've had these three or four structural changes, I completely agree with with what Jeremy said, which is why would we carry on doing something that's predicating on a different paradigm if the world has changed?
00:11:31 · Benjamin Ensor
[00:11:31] S0: Thank you. Kate, what do you think? Why hasn't this been done before? Is it because it hasn't been recognised as a problem? I mean, what?
00:11:42 · Kate Moody
[00:11:42] S2: Well, I loved the point you made Jeremy about, you know, customers maybe just accept that this is how things should be. And I think what I come across in my work all the time, as a research nerd and somebody who speaks to customers all the time, is you quite often get asked by like a bank or someone like that, you know, go do a survey, show me the thing that, you know, 90% of people want. And that's not really where innovation happens. Innovation happens from looking, as you say, for the pain points, for the inefficiencies. Quite often, customers, as you say, might just be used to accepting that, they might not have the perspective to see that there could be something better. I think that's what I found so exciting when I was reading this, is you absolutely agree with everything you outlined in terms of how this is broken, and we see this particularly, you know, again, in the context of the cost of living crisis for people where their budgets are really constrained, actually the delay in a refund hitting their account can be huge. So actually, you know, getting that money back into someone's account faster could be the difference between someone being able to make it to the end of the month to their next salary hitting or not, and having to slip into credit. So yeah, I'm super excited about this. I went down such a rabbit warren of thinking all the ways this could help customers as soon as I started reading about it. So yeah, I'm super excited for you and your team.
00:12:54 · Jeremy Balkin
[00:12:54] S4: Thank you, Kate. If I may just say, one thing that drives the team and it's written on the wall, so to speak is the speed of a payment can change someone's life. And that's what drives us as a team if you think about the end customer. But I would just say one, I think very important point is, whilst this is very clearly a consumer pain point, actually it starts at the merchant level, because really the consumer is like the end of the supply chain on a refund. So they have the least agency of all. The merchant is the one who has the agency and to Ben, think to your sort of inference of the question, why hasn't this been done before is I would argue that merchants have never been more powerful in payments than they are today. I think one of the things we've seen over the last decade is this structural shift of power in payments and payment acceptance from issuers to merchants. And I think that is one of the greatest stories that is yet to be fully told. And so if you think about where we are now in 2023, almost 2024, the power is with the merchants and merchants should start using the power, I would argue, in many more ways they have. That's in part how we purposefully designed this to put the hands in the power of the merchant to be able to get, dare I say more of their fair share as it comes to how e commerce works. And therefore the end user ultimately benefits through the consumer, through a faster payment with choice, with certainty, but that ultimately benefits the merchant too by giving the merchant competition of how they wanna issue a refund versus the status quo, any more than the consumer gets an alternative to the status quo. So I think that merchant piece structurally is very important to understand. And also why I think this has never been done or tried before in a meaningful way, because I think that the circumstances are completely different. The merchant has more power than ever, and we wanna help them to use that in way that helps their consumers ultimately as well as themselves. Is that
00:14:52 · Benjamin Ensor
[00:14:52] S0: part of why you didn't try to do this at JP Morgan? Because I was struck how you described JP Morgan as I think you said the greatest firm in the world, right? Is there something here that couldn't have been done by JP Morgan? Because obviously JP Morgan has sort of embraced FinTech more than many established banks. Clearly Jamie Dimon and others understand the potential of FinTech at least. Was this something that couldn't really be done by a bank?
00:15:18 · Jeremy Balkin
[00:15:18] S4: You know, I no longer speak for or on behalf of JP Morgan. Obviously, But I will say that, you know, I had a pretty big day job to say the least there. That was pretty full on and leaving that was the hardest decision of my life. I don't understate the importance and the meaningfulness of serving a firm like JP Morgan. I'm a better professional because of my time there. I've learned more because of my time there. But the reality is that JP Morgan is the most systemically important financial institution and bank on earth. Banks business models are fundamentally different from forget TodayPay, just generally speaking FinTechs in over themselves. I think the role of banks to sort of take a slight step to the side, the role of banks are incredibly important to help FinTechs or payment companies or technology companies like ourselves in different ways than their core business model. That's why I think it's such a complimentary alliance and partnership that the roles, the banks like JP Morgan have played with many others. So it's not really a fair question to say, why couldn't this have been done there? It couldn't have been because it'd be a completely anathema and completely different to the core business of what the firm does and what we're trying to do. And hopefully one day we'll be really successful in. So I think that's just one important sort of distinction there. But I think at the end of the day, you have to also look at the structural, why does this problem exist? Like who benefits from the problem? And I think inefficiencies in payments any more than the speed, like who benefits from a slow payment? Well, in many cases they are the play, that's one of the reasons one has to look at the structure of this problem. And if you think about the role of a bank, by nature, a bank business model is to hold deposits. And so the longer one holds a deposit, more interest and investment income the bank or the financial institution accrues rightly so that's their business model. So it's not a case of, it would just simply have been impossible to do. Suffice it to say my personal situation, I told my colleagues that there was some personal risk in my life that I wanted to take. There was a few ideas that I wanted to pursue. This is just one of them. And the time was right, I was 39 years old, two young kids.