Benevolent Disruptors
00:21:13 · Chris Corbishley
[00:21:13] S0: think some of these single product players are effectively backing themselves into a corner? I mean, you know, we've seen well, we're gonna see more with the Stripe IPO filings at some point, but they've been hiring we've on a bit of a hiring spree, including members of of our investment universe, who have given a bit of intel in terms of, you know, something like 90% is just is payments. And the target by h two next year, which is very ambitious, is to take that more to 60% payments, 40% other value add services, such trapped capital, crypto, anti fraud, etcetera. But in a way, their core business really is so dependent on on this this payments of structure. Similarly with Ramp, it's still very much a corporate cards player, which is in in strong antithesis to an Airwallex. And do you think these folks have kind of backed themselves into a corner by not diversifying fast enough?
00:22:01 · Jack Zhang
[00:22:01] S1: I think the the benefit of these guys playing the AI in The US as the largest market. Right? So that the market is good enough. You see, if you become the largest sort of leader in that category in such a, you know, the biggest market in the world, that you could build a very big business in the market, which is what, you know, Ramp and Stripe are able to do. I think, obviously, you know, I think Stripe is much, much bigger scale at this stage. And they also build amazing brand in the developer ecosystem, which is, you know, a very, very strong moat, right? Where, let's see, the other player have less of a moat. But if you're looking at folks in Europe, right? So there's a lot of these vertical FinTech player kind of try to do the same and then never actually achieving the same outcome. Is because the market is smaller and the complexity is higher that, you know, Europe is not one market, it's like 2,030 markets, right? So it's very different to do the corporate card and spend management in Germany versus France versus, you know, where we're sitting Greece or The Nordics or the spend of the world, right? So there's so many complexity from a local sort of ERP and ecosystem and then, you know, on the integration standpoint, so many sort of different rules there. And, you know, if you wanted to do banking, you have to get French RBN for French business, and you need German RBN for German businesses. So I think that you kind of have to thinking long term and thinking about doing a lot more difficult things in like the Europe or the APACs of the market where the market is very sort of segregated. And that is the past that Airwallex True is that because we don't have the luxury of going on one bet in one sort of big vertical in a very big market. So that's why we took a different path. And now we're kind of big enough and have enough scale to go after multiple products in multiple markets at the same time. Right? So now we're kind of targeting to getting a million customers by 2030, making about 20,000 sort of revenue per customer. If we achieve that successfully, by 2030, that's a $20,000,000,000 top line company. Right? So it's extremely ambitious goal to to achieve.
00:24:11 · Chris Corbishley
[00:24:11] S0: Mhmm. And then before finishing off on the more personal element of your journey, which is always, I think, what's fascinating for most, I I did want to touch on two things you mentioned. One is is Agensic and AI kind of versions of fintech and global payments, and whether that does indeed come from the existing challenges that have emerged in the last five, ten years, or if you're terrified that there's a whole new wave of AI fintechs waiting on in the eaves. But related to that and to your point about this kind of concentration, do you feel like the way that the Airwallex story has unfolded has meant that you've been able to do more good than other players by being a global business, by focusing on corridors that are notoriously hard to reach? Do you think you've had more impact than than, say, a Stripe, than a sort of more generic payments kind of corporate cards player, for example?
00:24:58 · Jack Zhang
[00:24:58] S1: I think organic payments and stablecoin are probably the two biggest topic in the sort of fintech world of the last couple of years. Right? So I think if you're looking at stablecoin, I think the biggest challenge is regulation and compliance, right? So, and also there's an economy scale from a liquidity and some market efficiency sort of perspective, but the biggest sort of barrier was still compliance and regulation. And it's a sort of a basket of mix of good players and bad players. And it's very hard for people and general public to differentiate the difference. And I think that's creating even extra complexity for the industry. And by thinking like a first principle, does it make sense for everything to move 20 fourseven in real time and it's very cost efficiently. That, of course, doesn't make a lot of sense. But the question is, you know, you can't really just carve out something to say, hey, that is real time. That is, you know, frictionless. You know, just talking about moving money on chain. And that is, you know, I think that is the narrative that a lot of these crypto native guys sort of created. It's almost like a bit of a de saving, you know, from a public point of view. Right? But you need to think about and also a lot there's a lot of ideologies saying, hey, the world should just move it on chain. But but guys, you know, the, you know, the world is like, still have a lot of country, you know, like, it's still cash. Right? I mean, there's we've been trying to do cashless for the last fifty years and we still haven't able to do so. Just think about when the world gonna move to on chain a 100%. I mean, of course, you can have audiology, but you also need to, as a founder or entrepreneur, you have to think about the reality of where we're sitting today. You know, there's $7,000,000,000,000 or more processing on the FX market a day and on the SWIFT network as well. So the thing about in ten years' time, can 10% of that seven or eight or even $10,000,000,000,000 a day move into on chain, right? And that'd be a pretty good situation, right? That's like trillion dollar a day. It's massive already. And even you do achieve that, you still have the vast majority, 90%, which is still fiat. And how do you kind of connecting that kind of stablecoin or the on chain world to the fiat world?
00:27:17 · Jack Zhang
How do you do instant on ramp and off ramp to really kind of delivering the value of stablecoin to the physical world, integrating with the kind of the ACH or the fast payment, the MPPs, the PayNow, the FPS around the world, right? All these OPICs or UPR, right? But none of these systems are connected yet, so that there's still a lot of fundamental issues to be solved around compliance, connectivity to the physical world. And I think there's a lot of white space to go after and Airwallex are preparing to kind of solve all these issues I was talking about. And on organic payment, I think it's more of a So one thing is obviously you need to have an uplift to the current sort of Visa, Mastercard, so the card network to kind of cater in these agents that now handling that payment information or a tokenized card or whatever that form is. But I think coming to like first principle that I feel the world needs more wallet. So I think wallet is a much secure store value facility to allow not only human to make payment, but also human to delegating agent to auctioning your wallet. And then when a certain limit gets reached, then you can get human to do remote authorization. Wallet is a much easier way to be regulated and also a lot more secure than in the tokenization itself to to kind of carry the future of Virginic payments. And you can I'm kind of putting both FIA and Stablecoin in this wallet and to allow this sort of different wallet system to community together through Stablecoin essentially become a currency of universal wallet. And that's kind of the future I imagine how, you know, organic payment is going to evolve. Essentially, you will have agents sitting on sort of a regulated wallet infrastructure, so started sort of to making payments to other agents or or issue like one time token as card or just simply sending from like one wallet to another through stablecoin, which is essentially becoming a universal currency between how different wallet and agent kind of communicate each other.
00:29:18 · Chris Corbishley, Jack Zhang
[00:29:18] S0: Mhmm. Yeah. It's interesting that wallet is still the unit of, as you say, the the store of value to enable that with with limits. [00:29:24] S1: And more importantly, there's a very mature regulatory framework around wallets, you know, the e money regulation around the world, then that the fintechs can just piggyback on. I don't fundamentally believe that you can just having agent operating payment instruments, having store value and, you know, without worrying about the deregulation, without worrying about fraud, without worrying about security. [00:29:49] S0: I agree. I think if anything, that's why we haven't seen that sudden innovation in fintech the way that we've seen it in other verticals. Does take time. Needs time. [00:29:57] S1: Yeah. Because you need to take the pause of max resistance to don't everything properly because we are operating in highly regulated environment and you could do a 100% of that crypto native way. But that's why the limitation, right? So until stablecoin, there's no real world use case of crypto. It's largely stated as a sort of speculative financial instrument and it doesn't really do much good for the world where you kind of have to thinking about how to deliver the benefit of stablecoin to the real world, which is, you know, into interacting with fiat, interacting with the current payment rails. And that's where, I think, where Airwallex is gonna be investing on to fix all these issues.