Transcript

Julia: Hello, my name is Julia Streets and welcome to the podcast series, StreetsTalksTo. In each episode, I interview leaders from some of the most influential firms, bodies and initiatives in the financial services industry. We explore what’s at the very forefront of innovation and change. We think about the challenges facing clients and also the industry at large, and we uncover the opportunities that exist both today and as we look ahead. We hope you enjoy the series, which you can find on all good podcast channels. All the episodes are listed are on our website streetsconsulting.com, and you can find those episodes also using #StreetsTalksTo, and thank you for listening and welcome to StreetsTalksTo Volante.

Volante Technologies is a global provider of cloud payments and financial messaging solutions all designed to accelerate digital transformation. Volante serves as a trusted partner to more than 100 banks, financial institutions, market infrastructures, clearing houses, and corporate treasuries in more than 35 countries. The company’s solutions and services process millions of transactions and trillions in value every day, powering four of the top five corporate banks and 40% of all US commercial bank deposits.

Joining us today, it is a pleasure to welcome Vijay Oddiraju who is their CEO. A lifelong entrepreneur, he co-founded Volante in 2001, when he saw a market opportunity for technology which could accelerate automation and innovation in financial services. As CEO, Vijay leads with a clear vision: “To think big, remember to give something back, and never shy away from risk.” Today he is also joined by Rachel Hunt, VP of Growth Marketing. Rachel is responsible for Volante’s global go-to-market growth, through the development of compelling customer-centric value propositions. Her background includes leading real-time payments marketing for ACI. She also headed IDC’s EMEA financial services practice and managed the global marketing for Temenos. 

I know this is going to be a fantastic combination and a fantastic conversation. Vijay, welcome.

Vijay: It’s wonderful to be here on the show and it’s my pleasure.

Julia: And Rachel, it’s great to have you on the show.  

Rachel: Thank you so much Julia, it’s lovely to be here.

Julia: I’m really looking forward to this because payments are of its time. When you think about the profound impact of coronavirus on both business, but also even further into the general public around the world, I’m really curious to know, and to hear your thoughts, about what the payments industry can do to meet the changing needs of our post-COVID world. Vijay, can I come to you first of all?

Vijay: Right from there, the customer behaviour, the experience of the customer, experience of an employee going to the office, they’re part of the society or how we are meeting the individuals, or even the changes that are happening every day of our life. I keep saying “everything has become digital now.” I don’t need to carry my wallet in my pocket. Now all I carry is my smartphone. Wherever I go, I make a digital payment, even without going anywhere, I can do a digital payment from wherever I am. If I can get a QR code or whatever it is, or even phone numbers, I can just make payments worldwide. Amazing changes that happened during the pandemic and afterwards as well.

An interesting fact is, the International Monetary Fund mentioned that the global economy has shrunk by 4.4% in 2020, which is worse than the The Great Depression, but the important thing is, while that is happening or while that has happened, payments volumes have increased substantially and the payments are going through, like e-payments and digital payments, wire transfers. For example, US wire, ACH, the volumes have gone so high that they have never seen that kind of volume before. In SWIFT, for example, the volumes in 2021 are much higher than pre-pandemic in 2019.

Everywhere you see the transaction volumes have gone up so much in the payments world. The challenge I would say is for the financial institutions or the payment providers on how they ensure that they’ve done well, and also they’re prepared to do a lot more as they go forward. They will do a lot of things, like who needs payment, when they need it, can you provide in a manner that they get it in a proper time fashion and in the way in which they want. I think as we go forward, access to the capital and in a timely fashion is going to be very critical. As citizens of this globe, I guess, we all have to really help each other in achieving that, whether you are a vendor, whether you’re a bank, whether you’re a financial institution. There are so many individuals in the world who are unbanked. There are so many people who are unemployed, so many businesses are struggling. So, we need to get all of them to be inclusive and make them very comfortable that we are all in this together and see what part we can play to make their lives much more comfortable.

Julia: It’s important isn’t it, because we talk about financial inclusion and we talk about the democratisation of financial services and being able to extend that capability and reach. Thank you for not only painting a picture about how the world has shifted and the specificity of that shift, but also thinking about what the future looks like in being able to extend those services even further. Rachel, can I bring you in here? I would really love to ask you, when you hear those challenges and those concerns, what it is you’re doing to help address them.

Rachel: Yes it’s a really good point, Julia, and probably want to emphasise the fact that the industry has dealt with the challenges of the pandemic with incredible resilience. I think we have to acknowledge that fact and not underestimate how much the importance of the payment systems and keeping the economy going has been fundamental. As Vijay has said, we’ve seen digital adoption accelerate forward three years ahead. I think McKinsey did a recent survey on that. So, there’s an incredible mega trend that is happening and there’s a couple of building blocks, I think, to make sure that we’re successful going forward.

You mentioned, what are we doing as an industry, I would say, to make sure that financial inclusion follows that mega trend of digital payments adoption. There are a couple of things that are already in place. I think the importance was that it was an accelerator of a trend that was already happening. If you think about the Open Banking phenomena, for example, which is opening up the ecosystem to payment providers outside of the traditional players, like the banking institutions, or the payment services providers, opening up to the FinTech industry, certainly in Europe, that has an incredible benefit, because we’re not going to be successful in digital payments on our own. It’s going to take a village to build on that success and make sure that we take all of the stakeholders together; the banks, the FinTechs, the PSPs, but also the corporates and governments.

I think one of the big questions, whether we’re looking at Europe, AsiaPac, or the US, is how are the individual regulators and governments going to ensure that we have strong financial inclusion, with regulation like Open Banking in Europe? But there’s also another fundamental part as well, is that we’re moving to real-time. Personally, I haven’t used cash in about 15 years, so I’ve been a complete digital early adopter, I would say. It’s more for security reasons that I don’t like having cash in my pocket. But I also work with a charity that is for elderly people, so I was, very conscious of the fact that when the pandemic happened, trying to do online payments for people who didn’t have internet, who didn’t have a mobile device, it was challenging.

But one thing that is important with real-time payments is that you can actually include people who are underbanked, who don’t have cards. So, access to cards is not a right for everyone, it’s a privilege and you have a bank account and a bank account that offers you a card. Real-time payments, as we’ve seen in India or in Asia, are not card-based. It can be provided over a phone, and most people around the world have got a phone, at least a feature phone, if it’s not a smartphone. So, real-time payments I think are really important as part of the industry adoption.

Then linked to Open Banking is obviously, APIs and having standardised APIs, so we can do the connectivity between that ecosystem. We mentioned it’s going to take a village, we also need to have standardised APIs so that everybody can make payments and be part of that ecosystem.

Julia: It’s really important, isn’t it? Because there, we’ve talked about some of the driving changes, the key industry drivers that are going to accelerate and amplify and extend the capability as well. But also, I think one thing that’s really fascinating at the moment, is that some of those infrastructure players, you talked about policy regulation, and Vijay, I know that you’ve been thinking a lot about central banks and digital currencies, and certainly there’s an enormous amount of discussion about it. Would love to bring your thoughts in here about the role of CBDCs.

Vijay: I think it’s a really important point. CBDCs, as they’re called, central bank digital currencies, have the ability to democratise the funds without the downside speculation about the risks involved in those things. We have seen so much happening and before we go into that actually, look at the banks, how they have to look at these things. Most of the banks, all the financial institutions, all the payment service providers have legacy systems and they need to be prepared for these changes and they need to create infrastructures to support those.

If they don’t do it, new players, the finTech providers are going to do it, so it’s a challenge for them. The banks have to really look beyond just what they can do today, but they have to be listening to and working closely with the central banks and see how they can work together. Some of the countries have already jumped into it and some of the banks have jumped into it. For example, the Bahamas have already introduced their digital currency. Their CBDC has included this new thing, to combine all this on the small islands they have, and in Cambodia, for example, they have done a wonderful job and have created additional currency. The Bank of England is talking to so many banks, retailers, and members in the public, to decide on what the policy should be.

The list goes on, JPMC has started a stable coin one year. Then there is so much happening in those areas but the main important thing is are you – meaning as a financial institution or a payment service provider – are you making all the efforts to support that change that’s going to happen? Do you have the current infrastructure or the modernisation initiatives in your bank to support those things? And are you working with other partners who can provide you with those facilities?

It’s going to be three things. One is it has to be digital native. It has to be modernised and support cryptocurrencies. If you look at the spectrum of things that are happening, legacy infrastructures are not going to be able to support them. So you need to, as a bank or as a service provider, you need to think about it a lot more differently and be ready for those things. Working with the policy makers and being a part of that whole ecosystem is very, very important for every one of us. As a vendor, we are also working closely with some of them, including the banks, to see how we can make sure that we can support our bank, our customers, make it ready for them, so that that’ll be easy for them to transition or support those new types of currencies when and if they come.

Julia: What I love about the conversation so far is we’ve really been talking at the highest macro level about some of the drivers and some of the challenges that the industry as a whole is facing. We’ve brought it back down to some really key areas, Open Banking, instant real-time payments, microservices and APIs, as you were describing Rachel. Then we’ve also thought about it from an infrastructure perspective, how payments are done. So, real examples, Vijay, you were talking there about the Bahamas, you were talking about Cambodia and also, the US, two programs that are going on at the moment.

When I started the introduction, I talked about Volante’s role, what you do, and the fact that you are powering four of the top five corporate banks, 40% of all US commercial bank deposits, 70% of worldwide card traffic. Also, those in the industry will know that underneath all of this, as we have been alluding to, is the need for standardisation. So the initiative around ISO 20022 and the payments messages as well. I guess my next question is where do you fit in? What do you do that actually empowers the industry and also helps your customers address these enormous challenges?

Rachel: That’s a really good question. We get involved in so many parts of the payments value chain, but one of the key things that we do with our customers is help them to manage all of this change. As you mentioned, we’ve not just got the pandemic, we’ve got regulation, we’ve got innovation, thousands of new methods of payments that you have to onboard. And all of these things will have an impact on your payment services. I mean, traditionally payments hadn’t changed much in the past 40 years and in the past decade, we’re just going through a huge cycle of innovation.

One of the first things that we do, and especially with regards to ISO 20022, is help the banks modernise their payment systems. ISO 20022 is a great benefit in terms of standardisation, in terms of enriched data, but it has an impact on pretty much every single system that you have within the bank and in particular, payments.

One of the big challenges is managing the long tail of ISO 20022 migration, because we have international payments, which are touched upon obviously with SWIFT and the CBPR+ ISO 20022 migration. But we also have domestic ISO 20022 migration projects, whether it’s in the US, or in the UK, or indeed across Europe and AsiaPac.

Managing all of this migration and also the different little flavours of ISO 20022, because we talk about standardisation, but of course, in our industry we like to have our regional flavours as well and our local flavours. So, that unified ISO 20022 migration is a big part of the projects that we’ve been doing, but that’s not the only thing. We’re also moving, as we mentioned, to a broader payment ecosystem, increasingly going towards the cloud. It’s not just a deployment method, it’s a fundamental change in the way that you do your business and there’s several ways of looking at it.  At Volante we pride ourselves on being a cloud native, ISO 20022 native solution. We’ve helped some of the largest corporate banks enable their own banking-as-a-service journey, opening up to their non-core business by onboarding partners into their payments solutions and ecosystem., But we also offer our smaller, mid-sized banks a path towards innovation with our payments-as-a-service solution with the same VolPay technology, but within our own software as-a-service environment. All of these things just really isolate the rest of the business from change. There’s low risk – you don’t have to do all the rip and replace, you really have something that is standardised, unified, modern, and you can take on all of the new payment methods first, for example, like real-time, and migrate your existing payments rails over.

Julia: When people talk about migrating systems and payments rails, I mean, this is absolutely the conversation of the day, isn’t it? Well, how do you transform? Thank you for laying out, not only the technical detail around ISO 20022, and you mentioned about the SWIFT migration, but also at the highest level it is about digital transformation and how you achieve that, and without compromising risk along the way, which of course is everybody’s big question, which is how do I transform without impacting? Because there, we’re talking about the ability to put a card into an ATM, make a payment, whether that’s a corporate payment or a personal payment, and that can never be compromised. I mean, imagine the impact on populations, if they cannot get access to cash or indeed any kind of payment in whatever form as well. It’s so important, isn’t it?

So, I’m going to ask a question. It’s a slightly odd one, but it is intended to be. I always ask all senior executives who come on the show about their favourite piece of regulation or policy. So, I’m really keen to hear from you both about what is the piece you’re paying attention to most right now? Rachel, I’m coming to you, first of all.

Rachel: This must be the oddest question I’ve ever heard. It’s not a usual thing to ask what your favourite piece of regulation is, but it’s a great question. We mentioned Open Banking, so the Payment Services Directive in Europe, that was quite a fundamental change. Not everybody regulates, the US is usually light touch and is driven by the market. But certainly in Europe, just having the Payment Services Directive has created a momentum. But generally also, I like the regulations that look at onboarding the rest of the population and the examples of countries like India or Singapore, are really quite interesting in the regulation they’ve put in place.

Julia: Vijay, can I ask you the same question? We were talking there about financial inclusion, CBDCs, is there a piece of governance or regulation that you’re paying particular attention to right now?

Vijay: CBDCs definitely, and I’m especially interested in what the US is going to do about it. Because as Rachel mentioned, the US generally doesn’t regulate much, especially on the Open Banking side and all that, it’s taking a lot more time, but I think the two programs the US is running, I’m very interested in knowing what they’re going to do about that. In the US, with digital currencies, once a policy is made, I think there’ll be a huge shift in the payment industry. So, I’m looking forward to learning more about that, that’s exciting for me.

In India and Singapore, as Rachel mentioned, there are a lot of things that they’re doing which are very good, especially in terms of financial inclusion. I recently went to a market – kind of a flea market – where everybody has a QR code there. All you do is just make a payment using the code – it’s so easy and nobody’s taking cash. I think pretty much the entire world can close their mint machines as we go forward. So, that’s my prediction as we go forward. Then hopefully, all these digital currencies will take over completely.

Julia: Wonderful. Well, you heard it here first. These are the predictions of Vijay, I love it. Listen, I hope everybody’s enjoying the conversation as much as I am. This is StreetsTalksTo, StreetsTalksTo Volante and of course, you can find the episodes on our website, streetsconsulting.com and search for us using the hashtag #StreetsTalksTo.

I can’t believe how time disappears on a podcast, it’s amazing, isn’t it? But I’m really keen now to think about what does the road ahead hold and what you’re particularly thinking about as you look ahead, and also what advice are you giving clients as they plan ahead as well? Vijay, you’ve made some bold predictions there – what are you thinking about as you look at the pathway ahead?

Vijay: The thing is, the payments role is changing, that’s for sure. Everybody knows it. This is brought in part by the advent of new breeds of payments, or businesses. We talk about digital native or cryptocurrencies. So, there is a need for new types of payment services. When we talk to clients, or when I talk to CIOs, do they have the right infrastructure? It’s very difficult to have foolproof future protection, but do you have some open architectures, or strategic stack, which can support all these things? Then also thinking about not just introducing new products to the consumers, but also that their services should be more customer-centric and there should be more value-added services they need to add. But for all that to happen, it has to be cost effective and it should be resilient, it should be scalable, but the bank should be able to do business anywhere in the world and in a quicker fashion.

The cloud will give you that advantage to these financial institutions and then the cost will go down. The cost of getting new services added will be much cheaper. All these things are being discussed with lots of our customers, especially the tier one banks. They’re very receptive to this. And again, we have to be pragmatic, nothing changes overnight. So, it does take time, but the thinking is in the right place, everybody is watching out for these things and they’re investing in the right places. Again, not to brag about it, but they’re also looking at Volante as a good strategy partner for the long term.

Julia: Wonderful. I have to say it’s been a fantastic conversation. We’ve covered an enormous amount in a really short period of time, for some of the high level industry drivers that affect people, both on a personal basis, but also on a corporate basis. We’ve talked about regulation policy, we’ve also talked about some of the industry dynamics that will empower change, as well as some of the technical ways of addressing that change, both in terms of infrastructures, but also how they can be delivered in the cloud as well, and to get into some of the detail, even around ISO 20022. Personally, I’m always delighted when ISO 20022 comes up in conversation. It’s been a joy. Thank you both so much for joining us. Rachel, thank you very much for your time.

Rachel: Thank you, Julia. It’s been a pleasure. Thanks for inviting us.

Julia: Pleasure and Vijay, thank you for all your thoughts.

Vijay: Thank you very much, really enjoyed the conversation.

Julia: To everybody who’s listening. If you’re wondering how to get in touch with the guests and indeed Volante Technologies, you can go to the website www.volantetech.com. Find them on Twitter, @VolanteTech and of course, on LinkedIn as well. I’m Julia Streets, you’ve been listening to me talking to Volante Technologies and tune in again for some future episodes. Thanks for listening.

Kieron: This episode of StreetsTalksTo was produced by me, Kieron Yates, on behalf of Streets Consulting Limited. Streets Consulting is a business development, marketing, communications consultancy that’s focused on helping Fintechs from the smallest startup companies to some of the world’s largest global organisations. Everybody’s trying to innovate and everybody’s trying to grow. You can find this episode on Streetsconsulting.com and using the hashtag #StreetsTalksTo. We can be found on LinkedIn and on Twitter at @StreetsConsult. Thanks for listening.