Winning Payment Strategies for High-Opportunity Industries

TRANSCRIPT

Scott Hamilton
Scott, welcome to today’s funextra Research Webinar, winning payment strategies for high opportunity industries. I’m Scott Hamilton, contributing editor for finextra, and I’m here to lead a conversation on that topic and some related questions. We welcome also a fantastic group of experts to our panel, thought leaders from the payments and compliance world, though, before we jump further into the topic, a couple of housekeeping announcements. First, please ask questions, and we will do all we can to answer as many as we can during the session. You’ll also have a chance to weigh in on poll questions at three points during our conversation today, so please take the opportunity to share your thoughts at those times. Also at the end of today’s webinar, all attendees will receive a copy of a special interview courtesy of our sponsor, rapid with one of our panelists, Dr Stiltner reamer, founding member of smart banking AI. It’ll cover a range of topics and recommendations surrounding Gen AI applications and recent advancements in the financial services field. Today we’ll be talking about sectors of the business world that were for many financial institutions once unspeakable seriously, some of the high opportunity industries we’ll be discussing among our panelists and you our audience, were once and in many cases, or some cases still are considered business non grata by many traditional financial services providers around the globe. And as the financial and E commerce worlds have changed. So have what people like to do with their time and their money. But what hasn’t changed is they like to win money, prestige, honor, or in the case of payment providers and financial services and other sorts of companies who partner with such providers, they want to win and keep their business relationships along this new frontier, clients, customers, users, players, however you define them, they want and expect their money to be remitted, exchanged, refunded and credited to their accounts, fast to be put into play doing whatever they want to do with it, online or in person, in a game of chance or skill, or maybe, maybe while traveling for pleasure, or perhaps even To seek healing, or just to ensure their funds or payouts are safe, easily accessible, and earning interest in their own or in other currency Now, previously off limits or simply undesirable, fields of business and entertainment are rising up on the radar of innovative payments providers. They see the opportunities, recognize the risks and they’re determined to address both for a growing base of companies and their higher expectation clients. How are they doing this? Through better ideas and smarter ways of processing payments, through innovative practices and tools like AI to bring greater speed, intelligence and simplicity before, during and after the transaction, ancillary services that add value, like accounts and FX offerings. These are the types of things we’re going to be exploring, along with the initials KYC, KYB, AML and a number of others you’ve heard of all these other three and four letter codes that surround traditional banking, security and protection practices, many of which are overdue for upgrades. Can two goals, flexibility, choice and enhanced client experience and security, protection and prevention of fraud go hand in hand to power and connect individual needs and systems successfully in this new world of high opportunity business, payments and banking. Well, those are the some of the questions we’re going to ask our panelists. David Rosa, General Manager of FX, wallets and payouts for rapid Dr Stiltner reamer, Managing Director and Partner financial institutions globally, lead for bcgx and Dr Stephon Berry, General Counsel at financial institutions of Malta Association, David, let’s start things off with you. Tell us about these high opportunity industries and why you believe they’re very misunderstood. Share with our audience. A bit more about our landscape. What are we talking about? What types of industries? Who are these industries, who could be our clients, and what makes these industries different, and why is there so much opportunity in serving them? Yet many traditional banking and payment providers, providers miss these opportunities. Sure.

David Rosa
Thanks, Scott. So perhaps I can start with the online gaming industry, which I think has got a fair stigma attached to it, and definitely there’s a fair amount of allergy let’s call it this way, by traditional financial service providers in servicing this industry. And when you double click on the industry, you’ll find that at one end of the spectrum, you have what is known as games of skill. So let’s think about, say, eSports, where you have virtual Formula One, and of course, games like leagues of legend with the much younger, digitally savvy type of audience. And at the other end of the spectrum, you have what’s known as games of luck, where you find online gambling, for example. And let’s face it, historically, this is an area which has been tainted with bad actors, right? So clearly, a lot more stigma attached to it. And between, somewhere in between the games. Skill and games of luck, you have the financial speculation. Let’s call it as such, with what are known as CFDs, contracts for differences, which allow a very efficient, very digital way of speculating on on financial variables. Now, where the big gap, or the biggest gap is, is at the you know, games of luck, particularly end of the spectrum where there’s not a lot of realization or an unwillingness to realize that these industries are really actually very heavily regulated these days, especially gambling and CFDs. And you got to ask yourself, why this regulation has really come in. So clearly, on the one hand, bad things have happened, but on the other, which is really under our nose, but not so realized, is that, think about last time we watched a soccer football match, and what sponsors did you actually see there, or a major car race or a major team that you support? Increasingly, in case you haven’t noticed, you will see that gambling, online, gambling, brands online, you know, CFD, kind of providers, have become household names. And how’s that happen? And the reason why this has happened, particularly so in Europe, I think, is because governments, for the better or the worse, have realized that they can raise a fair amount of tax revenue in effectively legitimizing these industries with a fair amount of regulation, because there are increasingly growing budget deficits. So the macro picture has really been driving this. And again, these have become household names, you know, regulated industries, and yet the traditional financial service providers are still allergic to going after this industry, and we, in terms of the FinTech disruptors, see this as a very, very big opportunity, also, because, as I mentioned, this is typically, not always, but typically very digitally savvy, digitally native kind of consumers behind these industries, and so are very aligned with the type of service we provide.

Scott Hamilton
Thank you for kicking it off that way. Sina Dr reamer, you’ve shared that your passion somewhere near the intersection of AI and data science and also risk and compliance. You know, David alluded to the fact these are very regulated industries. But where you are and where you describe you are some very valuable and important places to be in the world of commerce. Are they in conflict with this, providing payment services quickly and with less less friction? Because on a basic level, for now, we’re talking about Uncommon Ground between traditional payments practices, KYC, KYV, onboarding on ongoing compliance and protections required. But how can a payments provider move beyond these standardized rails, you know, the standard issue for these emerging industries and there, as David just mentioned, their heightened client, client expectations for faster, better, stronger banking?

Dr. Stiene Riemer
Yeah, I think that’s a very, very important topic actually, to really go deep into and have the right solutions at hand. Of course, these are traditionally high risk industries. I mean, in the classical world of banking, a lot of those industries immediately fall through the cracks and have to go to various specialized processes. I think by like using the combination of data and different machine learning and AI technologies, we have the opportunity to assess on a very granular basis, what are actually the risks associated with that specific merchant, for example, or with that specific type of business. And then we can take very granular decision. What’s very important, of course, is having a risk framework in place and thinking about components like KYB sanctions having approaches in place to really assess this on an ongoing basis, but then also in parallel, do the same, of course, on the fraud side, which is another topic on the fin crime area that potentially comes in and also requires heightened security. And all of that, of course, at speed, because, like, that’s one of the key components here that, like our authorization rates are quick, that we potentially have a very efficient chargeback solutions. And all of this can be in a very powerful way, enabled if we use all the data and technology that is out there, but it’s something that we very effectively have to do to really be able to serve those businesses well and gain the opportunity.

Scott Hamilton
Thank you. Thanks for taking on that compliance side. And you know we’re all we’re going to be going back and forth amongst these various topics as we go. Stefan, Dr Barry, from your experience and your current viewpoint, explain how these high opportunity industries that we’re talking about can and really should be served. We know that payment providers, as we’ve heard, need to be prepared to tackle those specific needs, both the clients needs and the specific needs of serving them. But you know much better than we’re doing it right now, because if we don’t, someone else will, if we’re if we’re a bank, we have to be aware that this is a these are high opportunity industries. So talk about how who some of these companies might be. You know, I. David alluded to them. But what are sort of the industry sectors where we’ll find these opportunities, and why now? And regarding that landscape, we’ve got geographic differences to talk about too, don’t we?

Dr. Stefan-John Berry
Yeah, good morning or good afternoon. Starting with your first point. Who are these companies? I would like to go back few years now, well with more than a decade or two to start off with your second part, the second part of your question, why now? Strictly speaking, e Commerce has been around for well over 20 years now, more or less give and take, but there have been changes over the past years. So if you ask me why now, I would say we’re post covid, and covid taught everyone a very good lesson, that everything can be done, or almost everything can be done online. So online has been boosted thanks to covid. We are more mobile, definitely, especially in the past 10 years we’ve been more mobile also, because we have smartphones, not just phones. And I would attribute the third column to migration. People are on the move. We’re moving from one continent to another, from one country to another. It’s happening all the time. We’re not stuck in one country. Migration has been at a peak for the past three, four years now, especially, once again, post covid. So all these factors all contribute to the why now, why things are happening and why payments, especially is being boosted as it is. Once again, as I keep saying from time to time, payments is the denominator financial service all other financial services and all other services, all other industries depend on payments. If there’s no payments and payment is not facilitated, all else stops. It stalls. So that’s that explains the why now and how the industries we mentioned, and David mentioned, obviously gambling, and we also have the gaming now industry, but then we can also go a bit further. We could also mention, for example, travel. We could also mention entertainment in the larger context, we could also mention healthcare, and that’s also something which we’re starting to see at healthcare. At healthcare tourism, for example, is something which is state sponsored nowadays. It’s not just commercial. It’s not just purely a few people getting together and organizing healthcare tourism. It’s state sponsored. Obviously, I’m not going to mention which states, but we do have, and we do see, from time to time, countries sponsoring the healthcare system. So I would say there isn’t any limit. I mean, we can’t have an exhaustive list of which industries and which sectors they all. They all are attractive. They all could be hit by payments. They all are relevant to payments. So I wouldn’t limit myself to a short list anything and everything kind of can, can be relevant in this particular context, the geography. The geography is very important. I mean, why geography hits us as payment providers, as PSPs at different levels. It hits us in terms of the regulation, the law, which laws apply here or elsewhere. So geography hits us on regulation. Geography hits us on competition. Who are your competitors? Who are your markets? So once again, markets is also important. The economies of scale. If you’re operating in a small country, then obviously you’re limited. If you’re operating in a wider jurisdiction, then obviously there are the economies of scale, and you can scale up. So geography, again, hits us. There, innovation, technology, once again, what is accessible to me here and now that’s also determined by geography. Also talent, a simple thing, just HR, your people talent. You could be in a particular jurisdiction where there isn’t enough talent. So you have a problem. You need to outsource. You need to somehow source people elsewhere. So I would say geography is very much important in how we operate, where we operate, at, what level we want to operate, and how we want to scale up, or perhaps even scale down. But probably, presumably, all of us want to scale up and be more profitable. So geography does have a bearing, even though we’re talking about payments, which is too many people, it’s something which is online, it’s happening, it’s there, it’s technology, yes, but the geography is still very present. Once again, linking back to what we already said, the regulation. Regulation is and still remains important. We’re talking payments. I would say that payments is 65% technology, but the remaining percentage is law. So yes, it’s dominated by technology, but we still have a very important component, which is law and regulation.

Scott Hamilton
Thank you. Stefan David, we’re going to go ahead and go to our next poll in a minute here. But. Thoughts you might our first poll thoughts you might add to Stefan’s and stiltners points and then, what actually does serving these these gamers, these travelers, these healthcare tourists, actually mean when you’re talking doing it as frictionlessly as possible. How can you scale these multi industry efforts? Because you know, they are different. Each one’s different. How can a payments provider add value to maybe an occasional transaction and lots of questions for you, but maybe you can just tackle them as you will. Where do accounts and FX come into play for these types of industries, these high growth companies?

David Rosa
So first of all, I have to say, I really like the way that we set up the panel in terms of the different skills at the different angles that are going to be very much important ingredients in this overall discussion. So from my end, there’s going to be two, you know, dimensions, primarily, that I’m going to be talking about and to address all these points that that you mentioned, Scott in a nutshell, on the one side. So one of the two dimensions is this instant gratification that you really are striving as a service provider in the financial services to deliver to the ultimate user, and the younger the audience, the more digitally Savage is, the more it is expected. So I’m going to say nothing new here, because the same pain point has been prevailing now for years, but we are all really looking at this has been the North Star, which is the WhatsApp type of experience that you type a message, it’s instantly delivered. You can see it’s been delivered. You can see is being read, and you can see the other person typing back to you, right? So this kind of experience, in many ways, especially for non practitioners in finance, that’s what you expect. But the reality, when you look under the hood, it is not at all incompatible with that kind of experience. So using the most modern rails, using the most cross border rails, we talked about geography, Stiltner mentioned how important it is that you have a transient type of audience. These days, for sure, the multiple different high risk, high opportunity industries are, you know, multi jurisdiction, let people this way, right? To be truly global is a really, really ambitious thing, especially now that it’s very heavily regulated, but definitely multi jurisdictional. So it is no longer only your typical banking rails Swift is the typical example that has been used. It has improved a lot. Let’s make no mistake, but the foundation having that correspondent somewhere along the line, maybe even multiple correspondent banks, slows things down, because the same oversight, the same governance, the same monitoring, is being done multiple times. So it’s completely inefficient, right? So having instant type of Rails is very important. The great news there is that the local dimension, there are over 60 jurisdictions around the world now have real time payment rails in the banking sector. So Stiltner, a global network of these real time payment networks is a table stakes these days. The other thing that’s very interesting, and I’m staying in the world of fiat money here, we can talk about others if you are interested. But in the world of fiat money, I think the card schemes have really given a run for their money to interestingly, their main partners, which are the banking sector. So you can move money via card rails, the Visa MasterCard networks really offer you instant cross border, cross currency payments, both to take payments in, but also to make payments out these days, and those are very important building blocks to offer this instant gratification. So that’s one side. The Other Side, very quickly, is, how do you minimize the friction that you have to have at some point because you are regulated, you’re dealing with regulated industries, and you are, of course, looking to eradicate the bad app, the bad apples, right? So all the governance, all the transaction monitoring, and of course, at the very beginning, the onboarding of all these clients, how do you make this very digital, very instant, and yet comply with the regulations and go after this eradication of the bad players? And this is where I think we have a very interesting discussion where it’s been a buzzword. But I cannot stress enough that the word AI is extremely, and I mean extremely relevant to this industry, right, finance in general, particularly in the in the in the FinTech sector, if you are not enabled by AI in your business, you miss the boat that the trains left the station right, you need to really invest enormously. And what I mean is not only say on, you know, identity verification. There are beautiful services there that use computer vision, for example, to, you know, triangulate data points on documents and see whether it’s a real or fake. That’s fantastic, but it is one of many steps in terms of doing the due diligence on, you know, an individual, maybe the individual is behind the company. So now these days, it’s all about the end to end, where you automate the process and leverage AI to really scale, because you need to right. Like volumes are enormous, the opportunity is enormous, and it’s truly global. So maybe I stopped here. I hope that the. Given quite a bit of flavor to your questions.

Scott Hamilton
No outstanding. It was a kind of tough questions. There’s a lot packed in, but I know we’re going to be talking about it. We put our first poll up on screen for now. What’s the number one challenge your company faces? Is it reaching new customers, scaling those global payments, supporting local payment methods, such as we’ve talked about supporting global currencies, you know, cross cross border and then, or is it market volatility? Feel free to weigh in here. We appreciate it. And seeing it, we are right up your alley right now regarding what David just talked about, any further comments regarding his or Stefan’s points and how AI could perhaps bridge some of these transaction performance issues we’ve talked about, you know, the pacing gaps, the slowing down, the friction, especially as these payments needs really shift into high gear for all these industries we’re talking about and various use cases, where does AI fit into? We had a question from the audience, kind of along this line, where does AI fit into? AML, know your bank, know your customer, and identifying the patterns, the problematic issues, the ones that traditional, you know, banking partners, definitely know about their methods, but maybe they don’t. They can’t see it as well, because things are moving differently than they have in the past. Maybe address that?

Dr. Stiene Riemer
Yeah, a couple of points in that direction, I think, first of all, on the whole AML side and the transaction monitoring piece, AI is being like super powerful by leveraging all the different payment structures and payment behaviors to immediately give you warnings. And I think here, we can really make a step change, moving away from only traditional red flag repositories with certain rules in but we really use all the different payment data, have the models, contextualizing it, identifying the anomalies, and that really in real time, providing the indicators so that we can go about it and go after I think there is a couple of additional application areas. And of course, times always as the essence, like when we talk about payments and the way that we do our work, I think there is on the one hand side, obviously everything around outside of AML, but like around transaction fraud, being able to assess in real time without latency, I think one very important area in that direction here, especially for this type of segment that we talk about, Are authorization rates. So advanced transaction monitoring doesn’t only help to filter out fraud and prevent chargebacks, but it can really drive revenue for online merchants, especially like these high opportunity merchants that we are talking about, because I think here we are prone to heavy authorization declines by issuing banks, and we see here players investing heavily in very advanced transaction monitoring engines that work with, like, really sophisticated payment setups, so that we are way better and can significantly improve those authorization rates. I think there is potentially a whole nother topic around chargebacks, which, from my perspective, is another area this is a bit outside of the direct risk in terms of, like, AML fraud type of components, but the whole chargeback topics, which I think becomes more and more relevant for all merchants, but and a good chargeback solution is really a must have, especially in those high opportunity areas that we are talking about here. And this is something where a lot is like, where there is still a lot of providers still struggling. And I think here bringing this in, that can be a true differentiator, especially also considering some of the liability shifts that are happening, for example, with PSD three and all of that. So there is a lot of the technology that can be used to really improve significant business problems and actually provide an opportunity. And what I would love to talk a lot about the AI and like how the models are being built behind I think it’s really not for the sake of the shiny AI and the tool. It’s really to address those core business questions at hand and really improving them significantly. And I think he’s really also one of the advantages on the payment side. We have so rich real time data, and we can directly use it with all the models at hand, and thereby really generate new opportunities here.

Scott Hamilton
Thank you. Sina, yeah, it’s one of the things that I was struck by when, when David was just speaking, was that I’ve been in the corporate payment space for quite a long time, and you didn’t even talk about cards at all back in the day. I mean, cards only became part of things when you were talking about corporate card programs. And then lately, more lately, last you know, maybe a decade or less than a decade, virtual card programs and things like that. But now cards, as you say, really offer an interesting rail that nobody probably ever thought about back in those days where everyone was sending things via Swift, via wire transfer and so forth, maybe low value clearing systems, Stefan, anything to add to your other panel, your fellow panelists, points of view and your thoughts on competitiveness and differentiation, you know how? How anybody’s going to be able to play here? How will it play out in this new marketplace? So. Gambling, gaming, travel, you know, and I know you have some strong beliefs about how open banking will play a role in all of this, as we get our poll results up in a moment here, if you could address those things, what are some of the what you know? How will open banking impact all of these things that we’ve heard from Tina and David, thank you.

Dr. Stefan-John Berry
Okay, so let me just first pick up on the poll, the previous poll, when it comes to challenges, earlier on, we mentioned Geography. Geography is definitely a challenge, and you a PSP could have control over geography depending on where it wants to go in terms of its company, same business model, the business model itself could be a challenge, so that is also something to bear in mind. But then there are also what I would call externalities, the customer experience, the customer behavior. Nowadays we live in a society where we have a zero customer so we need to also to be aware of the trends with regards to customers. Even though those trends are cut off way away from what we are doing, but they do have a bearing also on on business, on on generic business, and also when it comes to PSPs, especially new PSPs, and those wanting to start off with an entity investment, how an entity wants to kick off, what Capital it has behind it, what investors it has behind it. So those are in terms of challenges, which perhaps we wouldn’t have on our poll. But there are also challenges for a payment service provider mentioning AI I subscribe to what my fellow colleagues have said, Yes, perfect. What I would add is AI especially from a European perspective. We do have the law. The law is out, it’s published, it’s enforced. It’s the first relevant date, I would say, is February, and February is not so far away. We’re just a few months away from February, and that is the first relevant date. I know that there are companies who are starting to think about it. I know there are others who are already doing something about it, but I also know that many others are just sitting back and hoping it will go away. It will not go away. So with AI, and I’ll stop here on AI, with AI, you need to do something about it. And AI happens not just with the geeks down the corridor in the little room. It happens, front office, middle office, back office. Everyone is doing AI in his own respective units. So this is something that, perhaps, from an educational point of view, we still need to achieve. So before we have the law, we need to educate. And that’s the starting point with AI, back to your questions. Scott, competition and differentiation. Competition can happen on different levels, also in what technology you are adopting. That in itself could be a make or a break when it comes to competition on what you’re going to deliver, what you’re going to offer to your customers, to your business partner, even business partners, who you choose as your business partner. That could also be a factor in competition as well. And the third one, your customer base, who is going to be your customer base? Where are you going to focus? That in itself, is also a factor when it comes to competition, in differentiating. I mean, if ESPs are looking at different markets, your customers can be regulated, unregulated. Once again, there’s the element of geography involved in that as well. So differentiation depends on what you want to offer, who you want to offer, but I would say that perhaps the most prosperous at this moment in time are those who are focusing on particular markets not being too generic. I mean, we do have the two generic ones, which are the very big ones, but others need to be more focused. Need to, I would say, strategize what they want and how they want to do it in terms of frauds. And I will open here in terms of not just fraud, but also fin crying. So most of us, if you’re a PSP, you’re also concerned with anti money laundering, you you’re also concerned with combating of terrorism, proliferation, financing. So there’s a whole list. Fraud is important. It is important also because of chargebacks and many other things, including Yes, including also internal fraud that is also an issue, even though might not mention it too much. So fraud needs to be addressed. It needs to be addressed nowadays by technology. So you need to have the technology by design and in builds in order to properly address fraud. It’s no longer a question of having 200 employees focusing just on anti fraud, you also need to have the right technology in place, and there are technologies which do help. So here is literally the word FinTech comes into play when it comes to addressing fraud and also other financial crimes. The other point. And open banking, global banking is Europeans tend to think that open banking is something invented by them or coined by them. It is not, unfortunately, it’s something which sprang to attention in 2018 because of PSD two. It was around already in a number of jurisdictions. We’re moving, or we hope to be moving from open banking to open finance and eventually to mature on third stage, which is open economy. Some member states, if you look at the European member states, some of them are still doodling around on open banking. So we’re still not there on stage one, let alone stage two and stage three, open banking. The idea is that there is data, and data is key. So payments is related to data, and they go hand in hand. Likewise, it’s the realization to sort of poke a little bit at credit institutions, at banks. Banks have been sitting on a lot of money, and they do something about it, and they have also been sitting on data, and some of them tend to do nothing about data. So it’s high time that open banking comes along and we start using that data, using that data in the sense of making it available, sharing that data and introducing third parties. Now this is the trick. Third parties could be regulated entities, but they could be non regulated entities, commercial entities. So this is where the magic should be happening. The magic in the sense that if you are to form an alliance with a commercial entity which is much bigger than you are. So we have the regulated entity which is small and the unregulated entity, which is enormous, then you have a bit of a struggle. But the constellation is that usually the commercial entity is much bigger than you are, but also much more equipped in terms of technology. So that is perhaps a consolation, that you are bringing the regulated knowledge into the deal, and they are bringing the technology into the deal. Obviously, you need to check who you doing business with as well. But open banking will change and will continue to develop. We do have also legislation at the European level, which is still in the pipeline, apart from PSD three and PSR one. So data is something we need to talk about much more. We also have new laws we don’t hear much about, like the DATA Act and the data governance act. We don’t tend to talk that much about those in financial services context, or perhaps in other contexts as well, but they need to be roped in, because they do have value here as well.

Scott Hamilton
Thank you. Step on. So interestingly, you and I talked before the webinar that the US is going to play a part in this as well. I mean, what? And what’s, what’s really interesting is how different the conversations have been, but they’re starting to come together. And finally, typical, you know, typical, the US. We don’t notice what’s going on elsewhere in the world. That’s a bit of a shot at the US, but it’s true. The difference now is with all these global companies and global industries, they are facing those geographic questions you have about different regulations, and there, there is a need to bring them all together. If we look at our poll, our audience, clearly, is trying to get new customers. Are trying to reach out to new people. 64% scaling those global payments. 28 so just between those two, that’s it getting bigger and figuring out how to find the right customers around the globe. David, any surprises to you from the poll results, and talk about that need to manage risk. And to your point, you know, these are allergy inducing industries. How do we start serving them, and then also have more innovative practices and systems to protect payments, to protect people, to protect the institution, the AML, we have some questions from the audience about, where can we use AI? We’ve talked a little about that, but just talk about that and what elements absolutely have to be in place for us to achieve positive results within this, both internally and with any partners or just frankly, being out there in this world of different regulations.

David Rosa
All right, so let me. Let me start by trying to at least pick three points that I’m seeing on as a result of the poll, and also some questions that I’ve seen from the audience coming up. I’ll try to address those and then complete all these points that you you touched on. So the the result of the poll, I think, are quite related, Topic number one and Topic number two, right, reaching new customers and scaling global payments. You can also look at it from, okay, well, if you want to reach new customers, you also better be equipped with the methods of payment that your, you know, customers, this audience that you want to reach, want to use, right? You cannot just, you know, force behavior. It doesn’t work very well at all. And so I mentioned before, in the world of Fiat, you know, the you. The real time payment rails, the card schemes. I failed to mention e wallets, which in some jurisdictions, are actually really very prominent and and I’ve seen it in the in the in the questions the audience wants to touch on on stable coins wants to touch on cbdc. So if I may just spend a minute or so on those, I think it’s important. First of all, Stiltner coins. I think timing is really ripe on Stiltner coins, okay, the the it’s not so anecdotal. I think some evidence. I think that’s very clear, in case you have not seen the headline, stripe is a major FinTech player has just announced an acquisition, a substantial acquisition, of a Stiltner provider. You know, just earlier this week. And I think the timing is right, because in case you have not been following the travel rule, which is a major building block of the AML overall, global governance is going to be applicable to Stiltner transactions from January 2025 right? So it’s just around the corner. So in other words, in my opinion, Stiltner is about to go mainstream. It’s already been very popular, but it’s going to be a lot more mainstream. And again, part of the table stake offering, if you will, for cross border transactions. Okay, so I think this is a very important aspect, because Gone are the days where you can only limit your discussion when you’re talking about AML and compliance and all the governance to the world of Fiat? No, I think clearly crypto via stiltners primarily. The rest, in my opinion, is not money. We can debate that if you want, but I think that’s going to be a very, very important development. So let’s include Stiltner The picture. The other one is CBDCs, and it may be very controversial in this, but it is my opinion that CBDCs are going to be a lot more relevant in the world of the BRICs. So in case you have not been reading up, there is BRICS 24 happening in Beijing, of all places, where there is a big, big, big push to basically develop an alternative to the US dollar payment system. Not an easy one, but I think CBDCs, whereby, basically, institutions will be able to have accounts directly or indirectly at their own central bank, and central banks are going to transact with directly with other central banks. Are going to be a very interesting thing, my opinion, is that is going to be basically dividing, or continue to dividing, two big poles effectively. So the Western world, basically, I think in terms of, you know, the non Fiat aspect will develop on the stable coin premise, which is primarily US dollar base. If you, if you look at volumes of Stiltner, US dollar base and the rest, if that is going to get traction, because it’s a big question mark, I think is going to really get a lot of tailwinds from the cbdc space. So super interesting stuff to follow. Very, very fragmented. It makes the world even more fragmented. But again, going back to you know, how do you find, you know, and reach new customers? Well, you know, Stiltner coins may be a way to do it, because, if you are, you know, targeting, for example, entrepreneurs in emerging markets. Well, I wish them good luck to open a bank account, let alone a US dollar bank account that’s going to allow them to invoice any other, you know, a client that they have, which is, you know, par for the course, you typically do use the US dollar to do that. And so Stiltner really comes to solve that major pain point. It is not the cheapest way to move money, by the way, right? People think it’s instant and cheap, but the pricing is not super sharp, but hopefully by becoming a lot more mainstream, it’s going to become more competitive. So that’s, that’s where I wanted to stitch together some of these three points in the in the poll, and the questions, how do we make this all better? And, you know, manage the risk overall, and what is the ingredient? I think the ingredients is having the right mindset, right the regulations keep referring to risk based approach. But I’ve seen very bipolar approaches in general, in any financial institution, maybe a bank or a FinTech, you typically going to have that clash between the business side of things and the compliance side of things. And it’s good friction for the most but most very, very unpleasant, typically. And it’s not very conclusive. And so if you have a very aligned team that understands that, it is very, very important to take into account the downside as well as the upside, and design systems and have end to end processes that are as automated as possible to make it really as self served by any stakeholder, whether it’s Business or compliance, and really have a client centric approach. Because the last thing I was going to say on this is that the real ingredient is the mindset. What do I mean by the right mindset is to be client centric? Very often it’s overlooked that compliance actually is very, very focused on understanding the client from every single angle, right? And actually that helps the business, right? The systems that the compliance are trying to develop is often misunderstood by the business and say this is painful. It doesn’t really help me get business. Actually, if you manage which is a difficult acrobatic act to pull, but if you manage to align everything, then you have a superb risk based approach. I. And really that is, to me, the ultimate ingredient.

Scott Hamilton
Thank you. And I it is almost multipolar how companies have to look at these opportunities, as well as the regulatory issues and constructing compliance to meet it. Stiltner, before we post our next poll, which we will do right as you’re finishing up, anything to add, and then just a couple quick questions for you other disciplines that you see that really need to be upgraded. You know, as payment systems ratchet up this, they really have changed a lot over just the last 20 years. And in context, that’s pretty amazing. You talked in the when we spoke about credit assessment, credit decisions, you know how you have to make them more quickly to keep the bad guys at bay, and any blind spots you see that a typical provider really has to be aware of. And then we’ll go with our next poll.

Dr. Stiene Riemer
Yeah, maybe one quick comment to what Dave just said before. I think this, like moving into this customer centricity, and like having this full view, it also unlocks huge potential, as just described. It’s not only for risk mitigation, but like, if we really manage well, to bring it all together and have very deliberate choice like, what to do and what not to do, like, a very active way of risk management with full transparency. This allows huge business and opportunity build, while we always, like, oftentimes, think on, like, the risk and compliance topics, this is a lot of effort. It provides a huge opportunity, I think, also for us to generate much more business, just just to echo that and just just to highlight what we see in addition, I think, yeah, and then, to your point, what we see a lot at the moment also is topics in terms of, let’s say, capital products really offering more additional capital products as the site of traditional payment products, where, I think, if this is something that we do, and the more we actually grow, having proper credit assessment and risk assessment in the market is something that becomes also more and more relevant here, really from a Credit perspective. Because while, of course, we have payment and we can, like, pre underwrite based on, like, certain payment patterns, we need to be able to assess the risks. And we see already in certain markets, the US clearly being one of them where, like, we start to see spikes in defaults and maxing out on credits. So leveraging also the technology offering those new products, but being able to offer them to the right clients for the right rates in the way that we want to do it, assessing the credit being very structured in our underwriting decisions in a very much the same way as all the other risks that we’ve talked been talking about, and taking very active decisions in terms of how to go there. I think these are like additional very important unlocks.

Scott Hamilton
Thank you very much. Let’s go with our next poll here. It’s the second of three. So stick with us, because you’ll have another chance to weigh in in a moment. But now it’s what’s the biggest risk? Which of the biggest risks you see in your business, data security, fraud compliance, foreign exchange and currency risk, or chargebacks, as we spoke about earlier, and as are an issue in the US. I mean, what possibly will become, what is people become more exposed on the credit side, or actually over indulging, if you will, in credit? Stefan, we’ve talked about the positives and the cautions, and I know you’re very bullish on this. You think you believe that super apps are the wave of the future. Talk a little bit about that, would you and what you see is coming? Or feel free to weigh in on what others have said.

Dr. Stefan-John Berry
Okay, so we mentioned earlier open banking. Now open banking is a coin, and it has two facets. The first facet is the democratization of financial services, and that’s all well and good. So financial services, sometimes some somehow being deconstructed and no longer standing on a high tower and is becoming accessible. The Other Side through the coin is the commercialization of financial services, if you like. Why? Because we as payment providers, and here I’m looking at the PSPS. Here, we need to be the intermediary, the intermediary, which is invisible, if you like, if we’re looking at it all from the customer point of view, the customer, the consumer, the person holding the mobile is not interested in 123, organizations behind the transaction. The customer just wants to see the transaction happening from A to B, the speed, the knowledge, and also the element of control, because the customer has the mobile, and in the mobile, there’s a psychological element of, I have control over a transaction. That is the perspective of consumer. Likewise, that is how eventually our sector will develop. So we need to become as transparent and invisible as possible, because we are just helping the process. We are not a protagonist in the process. We are just providing the technology, providing the platform or providing the. Solution, if you like. So super apps are very much within the sphere and the control of the tech giants, or those who are moving to become tech giants. So the non common so, so purely, rather the commercial world, the non regulated world, we are providing the solution. But obviously that means that also, given the size, we need to plug into them, not vice versa. So if they have a Super App providing many things, from dating to buying retail or buying food or whatever, or travel etc, we need to have the capacity and will obviously to plug in to their app. So we are just part of the process. It’s not going to happen the other way around. And if we just get stubborn and say, No, I want to have it this way, then you are going to become irrelevant, because everyone will go with the flow. If the flow is going that way, then you need to rearrange, reorganize, rewire and retechnologist in that direction. So it’s all very much the process of thinking of payments as a service, and ultimately that is what we are. Just like banking became a service, also payments is becoming a service, and we’re also seeing, especially in Europe, probably also in other jurisdictions, the white labeling. So I am very much even more invisible, because I’m creating a further layer where I’m not being seen as a payment institution, because I’m just offering my solution to someone else, and it’s all screen behind that particular brand. So the more invisible we are, the more we’re progressing towards that direction of open banking and eventually also super apps. But once again, we do have differences, and we mentioned that we have differences between the US and the and the EU and BRICS and all the rest. One thing which stays the same and should be, my opinion, the bridge is technology. Technology is different from all earlier on, I mentioned that there’s technology and there’s law and payments, and technology is bigger than law, and thank goodness for that. Why? Because technology could be the bridge which law is not because, why? Because each jurisdiction wants to pull here and there. When it comes to legislation, we want to look better. We want to look different. Yes, when it comes to CBDCs, we have an issue. We have problems also in the EU, because we want to push it forward. But then we have issues of, there’s there’s an issue with personal data protection on that, for example, and there are issues of controls, and the asset will be more successful, and it is more successful in certain other jurisdictions. But technology is another denominator, if you like, just like payments as a denominator of financial services, technology is the nominator here, and technology will be very similar, if you like, not identical, perhaps, but very similar from one jurisdiction to another. So perhaps in trying to converge, we don’t have to be the same, but we need to converge at one point in converging, technology should be our Savior at this moment in time, not legislation. I would say,

Scott Hamilton
Yeah, I see that. It’s really a balancing act we need to perform on our own level, but be to become part of this ecosystem, things are going to have to be a little bit more homogenized than they are right now. And I know we’re getting there. Looks like the biggest risk we see from our client, our online audience, is fraud risk and compliance risk. Interesting. We’re going in our last few minutes here we’ve got about, I guess, you know, 11 minutes left. I think what we’ll do is just a couple quick thoughts from you, Stiltner, and then David on where has this worked? A couple of quick examples, perhaps, of some high growth industries where this works and where it hasn’t. Stiltner, we’ll start with you and any thoughts on the poll. And then David will will come to you regarding where these high growth industry clients can really get the most bang for their buck with effective payment strategy and the operational protections and any examples you can give Cena you first.

Dr. Stiene Riemer
Yeah, maybe let me briefly start, I think both on fraud and compliance side, obviously, like it’s, it’s a multitude of problem, right? I mean, from fraud, we have fraud with respect to merchant and here we have the challenge of transaction laundering and merchant Buster fraud. And then we have fraud with respect to consumers in the center of like friendly fraud, unauthorized use account takeover and consumer bust out fraud. So there is a whole multitude of different fraud problems that we are actually facing within the industry, we see that these can be addressed really well, if addressed in a very structured way. So first of all, like really differentiating the different types of fraud having a very structured framework, I think, in the way that we discussed before. So what is our apple. Height, how do we want to assess and where do we want to go after so there is always a pre assessment. If I use all the different data components, everything that I have available, I will meet at a conclusion, how likely I have fraud on a merchant side, how likely I’m facing a transaction fraud. And then I have to have a very deliberate steering in terms of, like, how much risk Am I willing to accept, and what risk Am I also not willing to accept? So leveraging the power of the data and the models that in real time, but then also in a very structured way going about it, I think for me, this is one of the core things, really, having this decision power, basically, and framework in the background that tells me where and how to play it basically, and then having the underlying risk assessment and going about this to really deal with it. I think there is a couple of things that also being highlighted where we currently see, for example, on fraud and on the different types of fraud, also the new technologies posing additional risks on the other hand side. So let’s say, with all the Gen AI technology, it becomes significantly easier to fake ingoing documents and like to set up certain accounts. And this is something where I think we also have to make sure that we are not at one point, between us as like more regulated entities and the bad guys out in the world, right? Because, of course, they use the technology, and they use the technology to the fullest degree possible. So we have to make sure that we are able to fight this and approach that in the right way, and of course, in line with what is actually possible. But this is something, I mean, we massively already see in the market that, like, certain types of fraud are massively spiking in the last 12 months, because the bad guys, they simply use the technology, which I think, of course, like we would expect on the compliance side, I think the same also here we face a lot of different challenges on compliance, right on the one hand side, with respect to, like, merchants, sanctions AML, identity swap card schemes, and then, with respect to consumer also on like the sanctions AML. And then, of course, like everything around KYC and Kyp, same approach, having a very structured, deliberate approach, using the data, and then having a framework that tells us, like how risk tolerant and non tolerant we are. We always have to be aware that it comes at a different cost, if I’m wrong, than it comes at fraud, than like having this very clear steering framework and then leveraging the data. I think if those two come together, this is what we see being most successful at the

Scott Hamilton
moment. Thank you, Stiltner, and we’re going to go to our next poll in a minute. David, you saw the results. There probably not a big surprise to you. We’re going to wrap up here in a moment, and maybe we’ll just have a quick comment from you. Here’s the last poll. What’s the most important requirement when working with a payment provider? This plays exactly into what I wanted to talk with you about as the audience answers this poll. David, how can a company, a corporate out there wanting to take advantage of what this opportunity is, whether they’re in that industry, or they want to partner with someone? What can they do to really make it happen? From a positive standpoint, seen it talked a lot about some of the concerns and how we have to address them. Positive side of things real quick, your take, and then we’ll get into his final, final remarks from each of

David Rosa
you, sure. So I think that I want to share actually a learning that I’ve had throughout my career in finance, and having worked both in a banking kind of environment than the entrepreneurial route working in a very large FinTech, it has been quite a realization for me to realize that the market is very fragmented in terms of the service providers that help businesses get the revenues in what is known as the Collect side of the business, right the card acquiring primarily huge with with E commerce that has taken off, and at the other end of the spectrum, the service providers that help, you know, companies pay their costs, right? May they be their suppliers, their employees, maybe even their debt. And so those two parts of the industry are actually almost silos, right? They speak their own language. They have their own skill set. There’s, there’s a whole layer of middlemen as well that really keep it apart and the opportunity for a business that is in a high growth, high opportunity, but also high risk, typically environment is to partner up with a service provider that can serve both sides. Now, of course, I’m biased in saying this, make no mistake. But why am I saying this, and why do I believe in it? Because the service provider actually has the ability to see the full view of actually seeing revenues coming in and costs going out, and therefore understand and manage the risks much, much better. If you’re only seeing one side of the coin, you’re going to slow things down enormously, because you just don’t know what you don’t know. Right? And so I think it’s very, very important to align with that. And of course, that turbocharges the ability of the service provider to serve the clients, because there’s a lot of learning, increasingly automated, as we’ve we’ve mentioned, and you just get better and better at it. And so, you know, this instant gratification that is the North Star that everybody’s going after is a lot more achievable if you’re willing to work with somebody and basically see both sides of the business and work on it together.

Scott Hamilton
Yeah, I mean, I think that’s the key. You got to be with the right people. And if you’re going to be in all these geographies, you have to have the people who know how to operate in these geographies. And your customers are going to be expecting that our final poll results, and then we’re going to get just 30 seconds from each one of you on, on, you know what you think, and it really is, what would you prioritize right now if you were looking for a provider, if you’re making decisions on, on compliance, transforming your system, the key element, targeting, marketing, servicing these emerging industries, whether it’s gaming, gambling, eSports, travel, any other high growth companies, we’ll Start real quick with you. Stiltner, just 30 seconds on what you think.

Dr. Stefan-John Berry
Okay, so I would focus also in terms of risk. First and foremost my business partners, who I’m going to engage business with, who offers what, how good they are, how flexible they are. So first and foremost is third party risk, I would say, from the point of view of technology, technology, I would say, is also very important, what technology you bring on board, the functionalities of it, what is available, the integration of it. Will I have problems with integration? That is a very big issue, very big problem, especially when we’re talking APIs and also apps, for example. So tech is also very top of the list. And then perhaps even more important than all the rest, is where do I want to do business? Relevance of the market? What is present? What is not present? Who is interested in my product, in my service? To what extent, to what degree, what are the limitations to a certain extent, the common line here, or the red line, would be risk management. And this is something which I tend to see absent in many PSPs. Many PSPs, think, okay, we’re not a bank, so we don’t need to do any risk management. We’re small. We don’t do that. It’s wrong nowadays, whatever you’re selling. I mean, even if you’re selling chairs, you need to do proper risk management.

Scott Hamilton
Thank you. Seven, that’s great. And just a reminder rapid we’ll be sending a follow up email linking to stiltner’s insightful interview, where she discusses the very relevant and timely topic of Gen AI and financial institutions. Nice intro to your final thoughts. Stiltner, for like just 30 seconds, what’s the biggest priority right now,

Dr. Stiene Riemer
outside from all the risk topics, really managing fraud compliance that we’ve talked about a lot on the one hand side, finding the right way to integrate the new regulation of how to deal with AI and Gen AI and broaden it across. Secondly, also using those technology for additional business creation. And not only by having the full customer view, as we’ve discussed before, but also, like a lot of you mentioned, identifying new customers, identifying new opportunities to go after. This can also be perfectly done, leveraging AI, really, using the technology to its full extent. I think that will will come a great way,

Scott Hamilton
awesome, awesome. And David, your final remarks before we wrap it up, sure.

David Rosa
Well, we talked a lot about, you know, technology and AI and so I’m going to, you know, take the other side and talk about humans for a second. I think most important is subject matter expertise. And I’m saying this because, in the financial services industry, banks, clearly, are, you know, the main building blocks. They are the members of the club, as in, you know, members of the clearing systems all around the world, primarily. And so, you know, they’re still around. Well, for all the disruption, banks are still around. In my opinion, they will continue to be around, and most especially the truly global ones have been around for over 100 years, and so they’ve been hit by a lot of bullets. They learned a lot of lessons. This is what the new disruptors don’t have. They haven’t been by definition, and thankfully, not for 100 years. We have been around for a lot shorter period of time, and have the technology that’s helping us, but surrounding yourself with colleagues that are like minded, not easy, but have subject matter expertise in this high growth, high risk, high opportunity industries, and really understand how these industries work, so that you can design the models in the right way, so that you can talk to the clients in the right way, is of primary importance. Awesome.

Scott Hamilton
Well, thank you all. To all of you. You made some great points about high opportunity, high risk, but it’s also high growth, and we need to find it. We’re all looking for that in this world, it looks like our audience feels the same way. David Rosa, Dr Stiltner, reamer, Dr Stefan Barry, thank you so much for joining us. Thanks to our audience for joining us. This will be available if you’d like to watch the replay. Lots of data here, lots to unpack. Thanks for coming today. All right. Have a great day. Thank you.