Key takeaways:
- Capturing the major shift in user experience expectations of consumers and small-to-medium businesses when it comes to cross-border payments post-Covid.
- How do fintechs help banks retain customers as convenience, price, and speed become a deciding factor in banking needs?
- How banks and fintechs should view product development to retain and attract customers in a recession.
John Adams (00:09):
Okay, great, thank you. Good morning. I'm John Adams for American Banker and we are going to discuss how fintech and bank partnerships can bring innovation to international payments. I thought we would start just by introduce ourselves and discuss your role at your company.
Mary Ann Francis (00:31):
Hi, Mary Ann Francis, IBM Consulting, Global Payments and Strategic Initiatives.
Saema Somalya (00:40):
Saema Somalya. I'm the Executive Vice President for Legal and Risk at REM at Remitly.
Ryan Zagone (00:46):
Hi everyone. I'm Ryan Zagone. I lead Payment Partnerships at Wise. I was previously with the American Bankers Association and I've seen a lot of familiar faces this week from some work I did on the steering committee at the Federal Reserve for the faster payments initiative that mapped out the Fed now, which is finally coming to life. It's good to reconnect with folks.
John Adams (01:07):
Okay, well this is open panel. Anybody feel free to ask questions at any time to just raise your hand and we'll find you with the microphone. Now, the relationships we discussed has come up several times this week that relationships between banks and fintechs have changed dramatically over the past couple of years. They were traditionally seen as rivals, although that's changing is the needs of consumers and small business change, rapid digitization of commerce has played a role in that. And those changes in transaction processing have played a role. I was wondering how do each of you define partnership or collaboration there? There's a lot of different ways if that can happen, it can look a lot different. How do you define it and how is it important as you try to develop new technology and tap new innovation?
Mary Ann Francis (02:00):
Okay, they're looking. So I also work with strategic alliances to try and partner where you know, don't have the capability. So my philosophy to the market is build by partner. So sometimes you want to build it. Those days are getting thinner because of the time and the investment that it takes. Sometimes we buy the partner because it becomes such a synergistic relationship. They might as well be part of our ecosystem, but most of the time it's partner. So when I look for a partner, it's to do something I need to do. I don't want to build it and they already exist, so why would I try to build something that that's already building, that's been in development and is running. It also has a lot to do with what the functionality is. So if you look across, again, this vast payments ecosystem, I need partners for liquidity. I have six partners for liquidity management as an example. Some of them focus on some things better than the other. Geos are very important. Not every partner works in every geo. So I'm not the slightest bit shy about trying to find the smallest fintech or the largest provider if they can augment what I need without having me have to invest and build it myself.
Saema Somalya (03:17):
Yeah, maybe I'll just start with a little context about Remitly business for those who may not be familiar. So we are a global remittance company and we move about, I think in 2022 we moved about 30 billion across 170 countries and about 4,300 corridors. And we primarily support person to person payments from the developed world to the developing world. And so we use banks obviously in a variety of ways and I think a couple of non traditional. I think when we think of fintech partnerships we think of a very specific thing. But obviously in our overall payments flow we're using banks in multi-layered ways. So obviously for our sources of liquidity and funding, but also very importantly in our distribution network because our recipients on the receive side and the developing world very heavily need disbursement in cash. And so we have over 4 billion, we reach about 4 billion bank accounts globally.
(04:22)
And so our local payment partners are actually the primary focus of our bank partnership model because the faster we get to them, the faster our customers get payout. And then of course there's the more traditional understanding of fintech partnerships with banks. And there we find just to dive into it, that those tend to be very challenging for a business like ours getting I think better and better, but they tend to be very challenging because of the compliance model. Our core customer is typically an immigrant or a migrant worker of some kind. And so they have potentially their primary documentation in a foreign country. And for US banks, their compliance models tend to be even the ones that are looking to partner heavily with fintechs, we find that their compliance models tend to be very heavily focused on US citizen compliance models. So KYC is really set up for that.
(05:26)
And so we have to invest quite a bit of time and energy before their compliance oversight model is going to be able to absorb our business. And so investing in that takes enough time that we developed our own MTL licenses and our own methodology. So there we tend to move our primary transaction flow without too much reliance on bank partners where we find more value and acceleration is where we're trying new things. And there that partnership ends up being a lot more fruitful and we're optimistic about the future. I mean, I think this will be an interesting conversation, but I think the treasury just put out its de-risking memo and has I think is going to be encouraging more and more regulatory oversight models to include more capacity and more understanding of the need to broaden compliance oversight to include a broader array of customers who are considered traditionally high risk by US banks. So I think we're excited about that. So with that, let me pause and turn it over to you.
Ryan Zagone (06:43):
Cool. Yeah. So from Wise's perspective, Wise's an international payments service. We're 11 years old and we started initially as direct to retail customers. Over the past five years we've expanded to do business transfers as well. We have 16 million customers, we're onboarding around a hundred thousand each week. That growth has been driven by a focus on user experience. So there's two core things we offer in our product that generally attract our customers. It's instant payments. So half of our volume settles instantly, which is funds in the recipient's account in under 20 seconds. Compare that to Swift, which is usually in the couple days, it becomes a much faster experience. And the second core component of our user experiences guaranteed delivery amount. So we guarantee the amount in the foreign currency down to the cent. So it's highly adopted for use cases around paying invoices, payroll, employee reimbursements, things were the payment type needs certainty.
(07:49)
So our growth that's been driven around this user experience, speed guaranteed delivery amount, certainty from a bank partnership perspective, we view that over the past about four years, banks have started approaching wise as traditionally we have been a supplement or a competitor to banks. Banks have started to approach us to say, Hey, we're seeing that we're losing customers to you, we're thinking around how do we enable new use cases or retain and defend our customer base more instead of competing with you, how do we embed your user experience directly within our service? So we've become a partner to a number of financial institutions globally. We have 60 partners that we're embedded in today, taking our user experience and embedding it directly within their own product. The core of those offerings are around user experience, like having a supplement to wires. So you can offer instant international payments, you can offer a guaranteed delivery amount, and then second to reduce operational cost given the payments or it's all, it's a digital interface, there's no manual operations or process to it.
(08:55)
You can reduce your operational overhead while providing a better user experience. A couple of our core partners on the retail side, Urban Capital One, were integrated into Google in Google Wallet as the international provider and Stanford Federal Credit Union Credit Union here in California in Silicon Valley, it's like mostly tech workers sending money back home. So very retail focused there. And on the business side this past year we've become like the defacto choice in the small business sector. We've integrated with Mercury Ramp, Brex and BlueVine, a powering international transfers, so a number of fintechs that are in the small business space looking to provide an enhanced international payment experience.
John Adams (09:41):
Now, I'm frequently told that one of the goals of technology in this specific area cross border payments is to remove the number of in intermediaries between point A and point B, that there's always, there's several steps where somebody handles part of the process and extracts a fee and adds time for doing so. What are some of the ways that you try to smooth that out or circumvent that?
Ryan Zagone (10:08):
From the wisest side, the platform we've built, instead of going through a correspondent banking system, there's lots of links in the chain. We've integrated into the domestic rails in over 80 countries, so we've integrated into the equivalent of an ACH or an RTP in those countries. So we collect funds over the domestic rail in the sending country here in the US we pay out from our account over the domestic rail in the receiving country. So it's just two domestic transfers that we coordinate together and it brings this domestic payment experience to an international transfer. It's fast, it's guaranteed a guaranteed delivery amount, you're certain on the fees. So you could think of us as we've woven together lot over 80 different domestic payment rails into just one platform.
Saema Somalya (10:51):
Yeah, I think for our use case, because so many of our customers have cash pickup needs as well as a variety of a depository needs, we really focus on a similar outcome for our customers, which is speed. And we have an express option where over 90% settle within an hour. And so we really have to focus there on delaying our compliance models and we really focus on having as the minimizing the number of compliance reviews. So we do a really robust compliance review within our network and then we try to integrate directly with our bank partners to make sure that they get the oversight that they need to be able to clear those payments quickly. We do operate over the traditional rails and are really excited about the potential linking of real-time payment systems across the cross border central bank systems.
Mary Ann Francis (11:52):
And difference here is that IBM is neither a fintech nor a bank. And so we rely very heavily not just on our technology, but on the technology of others to partner and be able to deliver those. So to the model that Ryan referenced, the partners I seek helped me in that go. And so through APIs and some technology we have on our platform, I make sure I have a partner that can send the money in a real time manner within the end geo of the, and again, I'm much more commercial than retail, so I focus on B2B more than I do on the retail consumer space. So when they need to make payments cross border, we try to find the right partner that's already embedded with those rails following that regulatory environment and then connect between us and our customer. We connect ourselves to that particular partner depending on, and again, the commercial ecosystem's huge.
(12:50)
You have front middle, you have back. So does the customer want a portal and a website? Does the customer want to connect to ERPs for payables and receivables for liquidity management? Do they want to use blockchain or emerging technologies? Do they want to serve P2P to their customer base? And then you get down into the core functions of the backend where it's cards and the DDA accounts and all of those core functions that sit in the back. And then you have to ultimately go out to the gateways. So you have to be able to handle any gateway in the format of that gateway. Obviously ISO being a big one, so when I look at the entire ecosystem of partners that we have, I try to fit them into each of those categories and then figure out the geo that I need to have them in so that you can bypass as much of these still painful. I mean we said yesterday I think was right, 40 50% of checks written are because of business. They're still writing a lot of commercial checks, but they're seeking ways to be able to do it in a more real time digital manner. So we just look for the partners that fit into those different categories in the ecosystem.
John Adams (14:05):
We've spoken a lot this week about instant settlement, realtime payment rails. There's one soon to be two in this country, and Beverly, dozens of others in other countries. They seem to be mostly focused on domestic uses. How can they fit in with cross-border payments and what kind of work needs to be done to make instant settlement interoperable in different nations?
Mary Ann Francis (14:34):
The thing that there's a lot of talk about realtime, right? And then there's different definitions. So you have realtime, instant, same day, faster, immediate, those are five different terms we all use ubiquitously. I think the perfect definition is 24 by seven by 365. I think that's what everybody's trying to achieve in real time. But it seems to be being done intra country. We were talking in prior Singapore and India announced this huge cross border real time, yay in February, but it's bilateral. They can talk to each other. That's nice, but it's a bilateral and you have to have an account in order for the money to move. So the schemes are all being developed with the right intent. We're just doing it vastly different all over the place. And the sovereignty of the nation, the UAE just did a whole, if anybody knows what Swishes and the Nordics, it's mobile, you do everything in a one technology setting and the UAE just emulated that as well.
(15:33)
The central bank just said, okay, across the uae we're going to set that up. You can get away with that in some of those smaller domains. And then the other thing I find interesting in all of our world, but real time is I'll speak for the US and this particular case because we will never mandate stuff that the rest of the world will mandate faster. Payments started in 2008 in the uk. NPP was a result of a mandate. G3 was the result of a mandate PICS was the result of a mandate that does, everybody thinks the US is behind because we don't, and we're not necessarily very collaborative because we have 10,000 banks, whereas these other countries, Canada and others really have four or five major banks. They can collaborate a little bit more on stuff like centralized services. So it's just interesting that everybody's trying to achieve the right end state, but we're all just doing it vastly differently and under different rules.
Ryan Zagone (16:31):
I think what if I was a bank, the thing I'd be thinking around as RTP and FED now come online, the customer expectation is shifting to instant. They know instant at the domestic level and they're expecting instant for all their payments. When that goes into a cross-border payment, that's a really tough consumer expectation to meet. It's very hard to build that in-house, if not impossible. And that's where I think the cross-border partnership play between fintechs and banks comes into play much more. More like squarely. It's like fintechs, Remitly and Wise, we've been in the business of integrating into these domestic rails overseas to offer instant payout. So that capability, it took Wise 10 years to do that. So it's not a fast process, but that's where you can as a bank, think around a partnership to meet what's a rapidly changing customer expectation, looking for instant looking for domestic payment experience even though it's an international wire.
Saema Somalya (17:37):
And I think maybe what I could add is in this particular context, real-time payments, I mean you can do a real-time payment right now, it's about accepting credit risk and accepting compliance risk. So if you're a high net worth individual and you've got a very clean compliance model, anyone in this room could probably get an instant payment sent to India in a matter of seconds. Once you move out of a particular segment, those credit risks and those compliance risks become the key blockers. And so what we're really looking at Remitly at is how can real-time payments really work for people with non-traditional or non mass affluent profiles from a credit risk perspective and from a compliance perspective. And that's where I think we really are focused on honing in on the multiple different initiatives that are happening across realtime payments globally to see where that efficiency is going to come from.
(18:39)
There are obviously the G20 is very focused on cross border payments efficiency. There's initiatives happening with, as Maryanne was talking about bilateral relationships, but ultimately those are not going to be that efficient from a compliance model until they're integrated multilaterally. How many compliance models are you going to run inside of a company? Now, companies like Wise and Remitly, we have sort of invested in that pretty heavily and we will continue to build that out. But if I'm being completely objective, I would say for a financial ecosystem, it's not the healthiest thing for innovation. You want to see more and more like multilateralism in that real time payments network to create those efficiencies, particularly for underbanked or included populations who right now are very heavily burdened in their ability to send payments in real time.
John Adams (19:44):
We've discussed small businesses a lot this week. What are small businesses looking for in this area in terms of boosting and improving cross-border payments? What are they looking to do and what are some of the ways that the technology and the products that you guys are developing or working on, how can that lean into some of the small business needs and challenges, particularly as they look internationally for suppliers and for customers?
Ryan Zagone (20:14):
Small businesses core to a wise, particularly since Covid sparked what we saw a dramatic shift in the way small businesses were thinking around payments. Traditionally a small business up all the way to mid-market would just do everything through their bank, including international. Whereas the retail customers have long used fintechs and apps and MoneyGram and Western Union and a lot of other services. Covid saw small businesses begin to act like retail customers. They're much more willing to look at other providers, particularly non-banks to facilitate their international transfers. So our growth during Wise's own growth, our small business volumes been going about 60% quarter over quarter. The past are since Covid, that has been driven by those two factors that I talked about earlier around certainty, guaranteed delivery amount for invoice payments and low cost, low cost and speed. The use cases we've seen for small business come up have been really tied to a more mobile workforce.
(21:19)
So hiring contractors overseas or your existing employees in the US moving overseas, you're needing to make payroll employee reimbursements and small dollar vendor payments much more frequently now than you have in the past. And those, all three of those use cases are difficult to impossible to do via an international wire. Or if you need payroll to be made down to the scent, you need an employee reimbursement down to the cent. You can't be guessing about what you're sending or what will be received after all the fees are taken out along the way. So we've seen a lot of growth in that small business sector driven by the ability to guarantee the delivery amount and deliver that payment with certainty. So the speed, a lot of our partnerships have been driven around, I mentioned a couple of others, Brex, Ramp, Mercury, BlueVine, and of the dominant players in that small business space giving a lot of competition to banks for that small business customer.
(22:16)
So a lot of our conversations today with banks focus around how do you defend and retain your small business customer to keep them at your bank as opposed to them starting to branch off and split volume across multiple providers or leave the bank entirely to go to some of these other services and looking to defend that customer by user experience. So offering supplemental cross border payment services, it looks very similar to the trend that you're seeing in domestic where you have ACH, same DACH, Zelle, RTP, Fed Now you're having a number of different options for your domestic payment, domestic payments, the same trend is out in cross-border or it's no longer just international wires as a sufficient option, you need to have multiple options that have different capabilities. So we're seeing that broad trend play out, but the small business sector being very affected by this, driven by different need from their our use cases.
Mary Ann Francis (23:17):
Again, I want to emphasize we're not a bank or a fintech, and so I rely in the background on fintechs and banks to be able to help us, whether it's a large or a small customer. One of the interesting approaches that we've seen really take off is so when we go to a customer to help them move their money cross border or domestically and they talk about how expensive the bank is to do wire transfers or the delays in the others is we just say give it to us. So we'll bring the bank to the table, will bring the fintech to the table and the other, when we say give it to us, the cloud has become a huge approach to delivering some of these technologies. And so now you're actually telling the business large or small, I'll put it in the cloud, you don't have any system capacity issues anymore.
(24:04)
You don't have anything sitting on your floor will, all you have to do is pay by the drink and then you have a menu of items. You want it to be a wire. Do you want it to be an ach, like somebody still wants a check on the other end and what currency do you want it delivered in? So from a multicurrency and MultiOption availability, we just sort of front the bank, front a bank and depending on the world and how global that bank is or we front the fintech and the service that we're actually delivering to the corporate is something they would not normally be able to get from just a financial institution or just a fintech. So we've kind of blended the world to be able to say, just tell us what you need. We have this deep pool of partners across the entire ecosystem and just give it to us and then you don't have to worry about it anymore. Free up money for them and they can then spend that money to do innovation. And this is true of small banks, not just corporates. Credit unions and small banks are very desperate to be able to keep up with regulation and the new things. It's very expensive to join Zelle, it's very expensive. So we can offer those in a group manner. And so sometimes it's just about finding a partner that can bring you an entire ecosystem at once and not just necessarily always trying to one off everything, let somebody else do that for you.
Saema Somalya (25:25):
Yeah, I mean primarily our business is primarily focused on person to person payments, but I spent five years at a bank as the deputy general counsel prior to coming here, and so I think probably everyone's familiar with the fact that SMB is a very broad space. And where do you define what is an smb? Right, so we have within our ecosystem naturally a variety of people sending person to person payments who are also running sole proprietorships or very small businesses that have a cross border component and whether that's a clothing boutique in Pakistan that's trying to sell clothes to folks in the US in the UK as a solo proprietorship or somebody who's running a travel agency in Argentina and trying to take payments from US tourists who are coming in every now and then they show up on our system. And what we hear from them over and over again is the focus on transaction cost and transaction size.
(26:28)
And so if you're on the larger end of what we would consider in SMB, banks are still a really great option. You're paying a big wire transfer fee, but it's sending a huge amount. So it ends up being not that huge of a part of your overall transaction size and you get some of the stability and credit security that you get with being with a bank. If you are taking a lot of small payments across borders, that banking system, the wire transfer fees and all of the transaction cost that comes with onboarding with a bank is an enormous amount of friction that can erase their profit margin completely. And so for that smaller end of the ecosystem using a platform, we see a huge amount of appetite from that end of the spectrum to say, wow, our model similar to Wise gives a very set, very clear disclosure exactly what you're going to get at the end. And so that coupled with the lower fee on a transaction basis is enormously valuable. So I think that's been our biggest learning is finding a way to meet that need and that demand and really focusing in on the individual transaction costs for a higher volume, lower transaction size center.
John Adams (27:52):
A lot of, I think the focus, a lot of what your firms look to is to improve financial inclusion, to reach underserved markets. What are some of the new tools, some of the new strategies that are emerging to help with that goal?
Ryan Zagone (28:12):
I think what SEMA just mentioned around the enabling efficiently, the ability to do low value transfers is really important piece of bringing in financial inclusion, particularly within a bank we haven't seen most of the wire processes at a big bank are typically were designed for large value transfers and to work that model down to small value transfers is very difficult. Where the platforms that you see from a fintech perspective and wise, we were typically designed for low value transfers like enabling low value transfers efficiently. That's very easy to scale up as a business model to do high value transfers. So it's approaching the payment value size from different processes and that I think that's fundamentally the difference in how a traditional international platform at a bank is built versus what you'd see at a fintech. We were designed for small value payments that can go up in size. It's very difficult from a bank perspective to start from a product only designed for large value and try to force it down into a small value efficiently.
Saema Somalya (29:21):
From our perspective, I think what I can add to that, which I agree with wholeheartedly is our focus has really been in on the KYC model. And so traditional financial institutions are really focused around onboarding customers with a very narrow set of documentation standards and actually the rules allow a much broader set of identity verification exercises, but typically in the United States, the KYC systems are not built to accommodate those. And so we really invest very heavily on taking alternative forms of documentation that are legitimate in the eyes of the government and various regulatory authorities and using those to onboard customers onto our ecosystem and then building out really robust compliance frameworks and oversight methodologies so that they will continue to pass successfully all the regulatory exams from the state money transmission authorities from fintech and all of the other regulators that oversee these types of transactions.
(30:30)
I think in terms of really broadening inclusion, that is probably the most important thing that as an ecosystem we can all do is really invest in broadening those compliance frameworks. And banks in particular can also invest in, I think broadening out their compliance oversight frameworks for those types of models. That is hard work and requires I think a higher level of regulatory engagement than you need for a mass affluent customer. And it requires I think a lot of deep thought around risk management and risk appetite and what types of controls can reasonably be built out to maintain fidelity to the type of risk appetite that you want to have as an organization. So I think that's always going to be the bread and butter and as we see more and more innovation around things like biometrics, biometrics are like a double-edged sword. They have all kinds of DEI and civil rights implications that are very, very important to our customers who are largely non-white and not necessarily super trusting of government agencies, but they have efficiencies in terms of people that are maybe thin file when it comes to the United States, but maybe very thick file in their countries of origin.
(31:56)
So I think that's something that we watch really carefully and are really excited about. And then the third part of it is obviously as we get more and more multilateral integration, we see more and more opportunities for integration of compliance frameworks AC on a cross border basis, and at the risk of sounding like a broken record, the more we can do that, the more we can serve people globally and the more we can serve them quickly. I think something like 70% of transaction delays in a cross in the cross border payment system happen in the local distribution channels. So your KYC onboard and move somebody's payment almost in instantaneously to maybe an Indian bank and then the Indian bank has to do its own compliance review and that's where the delays typically happen.
Ryan Zagone (32:46):
I find from the financial inclusion perspective, it's not just because we're all good people, which I trust we are it. I can also translate to good business with our work with Stanford Federal Credit Union. We've been live with them for over a year. Their Wise transfers are generally smaller in value than their traditional wires, but their Wise transfers now outnumber wires by 15 to one. So they've seen a large expansion in their customer adoption and customer use of volume that wasn't going through them previously that they've been able to bring back into the bank and enable more. So when you look at, there was a report from Mackenzie that came out late last year, retail specific to retail customers. Retail customers who send international payments carry a four times a 4x cash balance in their bank account and are typically doing two and a half x card spend. Then customers that don't do international transfers. So to be able to pull and retain that retail customer in the bank and deepen your share of wallet with them translates to increased business. I look at it from my heart about financial inclusion, but there's also an equal place of, this also translates to business sense.
John Adams (34:09):
In the subject of biometrics. I was wondering if there was other, not emerging technology but rapidly changing technology that you find interesting in this area, whether it be blockchain, even AI, is there anything that you're looking at that could make processing cross-border payments even more efficient? Moving ahead?
Mary Ann Francis (34:30):
Interestingly, quantum is the new hot topic for us, and it's not just the quantum computing, it's the ability to use it for the analytics. And so the double-edged sword of technology like quantum is it takes traditional transactions and does it at the speed of light without getting really technical on it. But it's also increasingly from a security perspective, a concern and should be in the banking and financial services space because the block, the quantum computing can break the immutability of the blockchain. And so from a security perspective, files that financial institutions are sending anywhere can be unencrypted using quantum. So that's the better be paying attention to its security side of it because of if somebody's looking for files, payment files that are going cross border or domestic, they can take that file. And right now in today's world, because the, it's not quite to the commercial level, they can store that file for up to two or three years and when they finally broke the encryption, they can then access that file.
(35:35)
So it's got a huge impact on how we can move money in a go forward basis. The good news is there's an upside to it, the ability to use it for analytics. So the Australian government just signed a multi hundred million dollar effort to use quantum for identity. The Cleveland Clinic just used signed on to use Quantum to do patient diagnostics. And then very interesting is the Bank of Canada just signed on for Quantum. They're using it to recalibrate all of their financial transactions for liquidity management. So they're figuring out how to hold which transactions and release which transactions that increase their cash flow and their liquidity management during the day. So those kinds of tools really help look at how we manage cash flow and cash positions, but at the same time, quantum it, it's now in Congress as a review item for banks to be much more aware and sensitive of payment files is what those quantum computing bad guys are after. And so while it will help speed up and it's a huge piece of technology, there better be somebody in your shop preferably or IT side that's taking a look at how it can impact how you handle your transactions. Hopefully somebody in the line of business sides looking to see what the product opportunities are with them. Did I just terrify everybody? I'm very sorry.
Saema Somalya (36:58):
That was very inspiring. And what I would say is we follow our customer use cases, right? Because our recipient, our recipients are really the focus for why our senders are sending. And so what we find is primarily for person to person payments. Many of our recipients are in low infrastructure environments. There isn't a ton of, many of these recipients are in places where there may not be a bank for hundreds of miles actually. And so what that leads us to is the same exact methodology and frameworks of thinking that we were seeing 20 or 30 or 40 years ago when people leapfrog from pages to cell phones, it's still the cellphone. I mean that's still what we see the Indian government and many other developing country governments really investing in is the fact that everybody's got a cell phone in their hand and getting as much leverage as you can out of that. And so UPI and India is something that we integrate into a variety of mobile wallets, but also with UPI and what we find is customers want to be able to the extent that people are moving off cash, the fastest growing methodology in India's UPI, the adoption rates are through the roof. And so that's probably an area where it's like the more you invest, the more you invest because that is what people are using around the world to the extent that they're moving off of hard currency in their hand.
Ryan Zagone (38:31):
From Wise's perspective, we don't use blockchain or crypto or magic internet money of any kind. We've found the ability to do instant payments is very effective through just integrating directly into existing payment rails. So it's just connect weaving together all these payment systems into one platform. I get pitched blockchain and crypto every day, but we haven't gone down that route. We've been pretty effective enabling instant payments through traditional tech where from our perspective, how it works and the risk are known. So we have much more certainty in adopting that type of platform approach than leveraging new tech. Where I am interested right now is around the chat GPT world, particularly for a risk engine. So we have a risk engine that assigns a risk score on each individual user and transfer. We look at around 80 different variables per transfer to determine if this is out of scope for this customer's traditional behavior through us.
(39:36)
Is it transfer at a different time, a different amount, a different currency, and we assign risk scores for likelihood of fraud on that. There's a lot of data. It's an in-house machine learning tool. We've built that. I'm interested in how AI and chat GPT can begin to improve the machine learning capabilities of risk models. I think that will help both on the domestic and the international side, Zelle fraud being on the domestic side of area of attention. International fraud is also an area of attention for everyone. I think there's some really interesting things to come from applying that AI tech to these risk models to sort out and identify fraud.
John Adams (40:22):
We have a couple of minutes for questions. Is anybody in the audience has a question they they'd like to ask? Poor things. I think somebody middle. We're going to bring them. Yeah, our microphone's on the way.
Audience 1 (40:38):
Well firstly thanks. Great session. My questions are in the context of accounts payable B2B payments. Two questions. First one is, at what transaction value does Wise get less cost effective than wire? And two, how does WISE fundamentally differ from NEM, let's say?
Ryan Zagone (41:01):
What was the second question? How does Wise difference from NEM? Oh, NEM, yeah. Yeah, cool. On the Wise side with NEM, NEM'S another provider in the space that's doing international transfers, connecting payment rails. From what I know of them, they're fairly new. They're a new company out of Singapore. So that's kind of the extent that I know of NEM is like a new company in the space building international connections. The first question was limits, account payable. Oh, what size? Yeah, I'm sorry. So for the account payable transfers, we do, well, we have a cap at 1.3 million per transfer on a case by case basis. We'll go up to 5 million during market hours. That's particularly for our business customers that are sending large amounts for, given that they're, we are just one intermediary, there's just one intermediary and a wise transfer. It's just Wise. We collect the funds in the sending country, we pay out the funds in the receiving country.
(42:09)
There's no other intermediaries. They're taking a cut of a transfer like you would see during a traditional international payment. So what that means is there's fewer entities taking cost or taking fees along the way. Our fee, generally it's around 60 basis points. Compare that to a traditional bank or an international transfer, it's around 3% or 300 basis points. So we're coming in significantly cheaper than what you'd see with from a retail transfer. If you're making a transfer up up around a million, typically get a fee around 1% for a commercial payment. Still at wise, you're coming in almost 45% cheaper than that. So there is a significant cost advantage of using some of these non-bank players versus what you'd see from a traditional bank.
John Adams (42:59):
Good. Thank you. I think we have another.
Audience 2 (43:06):
Thank you. Good morning. Just curious about Swift knowing that they built some of the real-time payment structures domestically, I think four or five years ago they introduced Swift GPI to try and streamline international. Is that something that the evolution of GPI to be more efficient and faster and more connected using domestic led real-time payment networks in country, is that an opportunity for your companies or is it potentially something that you're watching as an in bank embedded network competitor or will you leverage it to reduce cost for your transfers?
Saema Somalya (43:48):
Yeah, that's fine. Yeah, I mean how about I answer and then that is absolutely something that we do monitor. It's so far not been that impactful and I think because they're primarily focused on the banking ecosystem, we would expect the benefits of that to be somewhat layered.
Ryan Zagone (44:16):
So from Wisen side, our core focus is delivering user experience and we're pretty tech agnostic. It's like whatever payment rail will get us the better user experience, we'll integrate it. So we're integrated, we're Swift Direct participant in Swift today. We have integrated enabled, so for it's used heavily amongst our US business customers that are sending US dollars overseas to pay an invoice so that you're not able to pay that over an instant rail because it doesn't support USD outside of the us. So we do see Swift as a compliment. They're one of the rails we've integrated in. It's not a competitor to us, but a core feature we've enabled particularly for business customers for if you don't know, allows a Swift transfer to have traceability. So you can see where the funds are through delivery if the receiving bank has enabled. So we have enabled that portion of our transfers do go to banks that our GPI enabled. So we do pass that delivery confirmation back to our senders.
John Adams (45:18):
Okay. Well I think we are at time. I want to thank you for joining us today. It was a great panel. Thank you very much for participating and thank you everybody for attending.