Global Money Movement, AI, Embedded Finance, and much more – Alan Koenigsberg [Episode #14]

Podcast Intro (00:00:00) – Hello. Welcome to P.I.T. Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments, innovation and technology with the industry’s most innovative thought leaders. Today’s payments are changing and moving around the world faster than ever before, and P.I.T. Exchange gives you the knowledge and insights to keep up. Sit back and relax as we join Currency Research, exchanging ideas with today’s special guest.

Shaun Ferrari (00:00:33) – All right. Hello, everybody. Welcome to the next episode of The P.I.T. Exchange, a podcast by Currency Research. We are thrilled to have you with us today. We are coming to you right before our Kuala Lumpur events, which are going to happen this week. Here in KL, we have the central Bank Payments Conference and the Global Payments Summit, and to kick us off this week and all of our live broadcasts that we’re going to do, we are here with Alan Koenigsberg, from Visa. Alan, thanks for joining us. We’re thrilled to have you here. Alan’s the Global head of large and middle market commercial solutions, at Visa. And, yeah. Thrilled to have you here. Yeah. Thank you for being here.

Alan Koenigsberg (00:01:16) – Thanks for having me. Nice and warm in KL. Yeah. So, just like I like.

Shaun Ferrari (00:01:22) – Did you, have you got an out and about?

Alan Koenigsberg (00:01:23) – Yeah, a little bit around a little bit. It was a busy week and busy last week and in Asia Pacific, but, I’m glad to be here with you all and glad to be here. Yeah.

Shaun Ferrari (00:01:31) – No. It’s nice. It’s nice inside the air conditioning, for sure. Jens and I co-hosted a podcast in, Bangkok a couple of weeks ago at at Money 20/20, and they had us inside a glass booth with no air circulation, and it was very stifling by the end of it. So. So anyway.

Alan Koenigsberg (00:01:47) – Know the pain, I know that, yeah.

Shaun Ferrari (00:01:50) – So so thanks for, thanks for taking some time to to chat with us. Visa and you have been a great supporter of what we’re doing here, and we’re thrilled to have you with us this week. Maybe just before we get into some of the things you’re, you’re working on, are you what type of stuff are you looking forward to? this week. So this is a conference.

Alan Koenigsberg (00:02:09) – You know, when you pair the the central bankers together with really commercial bankers, you get a really nice four days. And when you move around per region, you kick great conversations going, you know, Visa is a connector of commerce. It’s a connector of consumers with merchants all over the world. I’m in the commercial business, and that continues to have a big broad strategy around, again, you know, deepening our relationships with companies and with their financial institutions toward an eye on working capital solutions, digitization, you name it. we’re working on it. It’s probably a topic a little bit less known, being an institution that really is a connector, it gives us an opportunity to come to these kind of events, like some of our, our competitors or even Swift, as a bit of an ambassador, but also a subject matter expert.

Alan Koenigsberg (00:03:01) – You know, the markets are changing dramatically and they’re changing quickly. And we have to keep up with that. And it’s almost breathless when you think about, the rate of change in all segments of our business. And I think it’s powerful to sit down, sort of stop for a couple of days and have those conversations because I think they inform each other. But what we’re thinking, especially the central banker, group, and you get a very nice cross-section and very senior folks that are here.

Shaun Ferrari (00:03:29) – Yeah. How do you I mean, you’re out and about traveling through through various regions all the time. How do you find the kind of the conversations between those different segments of the, of the ecosystem, the central banks, the commercial banks, large market, middle market? I mean, that’s that is who we try to get together at a lot of these events. But aside from that, do you find that there’s a lot of conversation between all the different players out there?

Alan Koenigsberg (00:03:55) – I think it varies. I mean, I think what we try to do or my team and broadly and commercial we really work hard towards is, again, we’re often the connector, like we’re connecting those conversations together, to a means to simplify and electrify and make these processes safer and sounder for the broader ecosystem.

Alan Koenigsberg (00:04:16) – That’s what we’re all about. And that that ends up, you know, driving our business forward. Of course, that’s the means to being, a successful player in there.

Shaun Ferrari (00:04:27) – Yeah. And and in that market, I know you’re you’re focused a lot currently on middle market solutions and and maybe as we we’re going to get into some of what’s kind of really happening in that space. But maybe for the listeners talk a little bit about what that is, what what is middle market when we when we talk about it.

Alan Koenigsberg (00:04:46) – Yes, it’s a good question. I come out of many, many years in corporate and transaction banking. In that model, in banks it’s very simple. You know, you cover corporates and you cover financial institutions or you cover fintechs in the network. You’re our clients, our financial institutions, their sponsors, and often financial technology organizations, again, that are acting in a financial way on behalf of another bank. So when you have a group that’s focused on larger middle market, the question I often get is, are you talking to corporates? But of course we are the banks, the corporates make up a very big important part of the ecosystem.

Alan Koenigsberg (00:05:21) – So studying and making sure we understand the behaviours in these markets helps our core clients, have broader, deeper conversations with companies. You don’t want to turn up at a company and really not understand what they do. I spent many years in that business being a bit of a geek around, wanting to understand, you know, how Michelin made their tyres or and you can I can go on for days about how we really if you understand a company and understand how they do business, then you’ll understand that financial services are accretive to it. Not yet. So that’s our job is to work on the financial side of it. Make sense?

Shaun Ferrari (00:05:59) – Cool. And I know there’s so much going on. I mean, Visa is a huge company, obviously it’s so many, so many different tentacles and different different places of, different aspects of the market. What what kind of things are you really focusing on? Like what’s your what’s your niche in this whole ecosystem?

Alan Koenigsberg (00:06:19) – So I can give you a I wouldn’t describe the well obviously we’re the company, but yeah, we’re a local company.

Alan Koenigsberg (00:06:26) – Everything that we do starts on the street. It starts with a small business, a consumer or a company. And then that builds up from there. So there’s nobody in a global business somewhere sort of shouting out directions to a local market. It’s the other way around. And that, I think, is a recipe for success for, for my organisation, around the world that our matrix of team members were focused on really five things, this year it’s sort of the platform and these are the things that we’re really sticking to and investing in. One is the embedded finance kind of topic. It is something that has been around. It’s not a new term. It’s perhaps it overused term, but it is finally coming to beyond a consumer segment, the small business segment to the mid and large market. We could talk about that. Second is working capital. Working capital is a term that bankers have used or companies use in terms of managing liquidity, managing their work, capital lending. That’s something that, from a business perspective, we can leverage our rails to actually provide.

Alan Koenigsberg (00:07:29) – And we’re doing more and more of that on the commercial side of the house. The next is automation and digitization of the business. We used to call it re-engineering, you know, and back in the day, you know, we have a generational shift going on, and I’d love to explore that a little bit with you. What is most as much technology as an enabler is it is behavioral changes that are happening in the market. You couldn’t complete a conversation without having AI.

Shaun Ferrari (00:07:58) – It a seven minutes into the conversation before mentioning AI.

Alan Koenigsberg (00:08:01) – I said, I get a prize for that. AI and GenAI is a very, very important, again, recipe for success as applied as it, it makes it makes sense for business. Forgive my jet lag.

Shaun Ferrari (00:08:18) – It’s okay.

Alan Koenigsberg (00:08:18) – And of course, it’s money movement and defined that way. I didn’t say payments. I said money movement is really a commercial movement of larger values, of liquidity and money around the world for companies.

Alan Koenigsberg (00:08:31) – That’s something we do more and more of. So, we are here to serve merchants. We’re here to serve their needs. We’re here to serve the corporate needs at all segments. At the same time, companies really react really positively to the fact that we’re really going very, very deep on some of these subjects and then delivering solutions as much as and partners around delivering them.

Shaun Ferrari (00:08:54) – Okay. Yeah. No, I mean, I think I really like that focus in terms of, you know, listening to the market and, and building for the needs that are out there and what and, really trying to service those those clients through these different different channels. So so focusing on kind of the automation and digitization kind of pillar of of the strategy of and looking looking at how that applies to that kind of middle market, segment and things you’re working on there. Just talk a bit about that. Like what what is what are you seeing in that automation space or what are you working on?

Alan Koenigsberg (00:09:28) – So this business traditionally is very siloed.

Alan Koenigsberg (00:09:34) – We have asked companies and. And of course, bankers to really deeply understand how payments are made around the world. I mean, we have companies that learn Swift messaging, they learn ACH formatting. And I could go on and on. They learned card formatting because they had to you know, automation and digitization is really about the optimization of the experience for the end user or the end customer. Companies really don’t have to learn all of this if technology could actually support them making a better decision. Yeah. And that is an embedded finance discussion.

Shaun Ferrari (00:10:11) – I was going to say.

Alan Koenigsberg (00:10:12) – That that we all sort of bleed into each other. Digital currencies are part of this topic too, central bank digital currency. So part of the reason why we’re here this week is to hear and listen to what’s going on. You know, how are interoperability conversations going between because that’s an unlock right for for success.

Shaun Ferrari (00:10:32) – You know, I was as they’re going through that I was at an event last week Payments Canada and Visa gentleman Visa was giving a presentation on kind of the new I forget what it’s called, but the new wallet feature that has kind of all the different, the different interoperable payment methods somebody can pick from and and make it all one kind of seamless.

Alan Koenigsberg (00:10:53) – We’ve made some very big announcements in, in the, in recent days around providing those kinds of credentials so you can have multiple visa credentials and not have the plastic with you or the that particular phone with you actually enable a payment to be made. That is that breaks down those silos, right? It breaks down those barriers. So it makes the a frictionless experience for a consumer. And that begins to move up that market with up the chain to companies, and their clients as well.

Shaun Ferrari (00:11:25) – Yeah. And you mentioned it was kind of there was a behavioral aspect to this, whether it was generational or what have you. But yeah.

Alan Koenigsberg (00:11:31) – So by next year, by 2025. 70% of our workforce around the world are going to be Millennials and Gen Z. I mean, just think about that for a minute. And we have a lot of folks moving out of the market and from Gen X and otherwise would be all young people and beyond Gen Z, generation as well. But 70% are leaders of countries, treasurers, CEOs of companies all emerging.

Alan Koenigsberg (00:12:02) – You know, in, in this space. So. Most of them grew up in a fully digital world, and I always sort of make the joke. I was in the eighth grade when I got a phone in my room. You know, so I mean, I my, my view is a little bit different. However, I get it, we get it. You know, the last generation got it to the best they could with the technology and tools that they had. A digital generation of people is not going to tolerate these kind of manual processes that support semi digital infrastructures. So you’re seeing a lot of moves being made towards making these investments because they’re making them, you know, they look at a process like oh why is it so complicated? It doesn’t need to be. We can run a safe and sound clearing system or otherwise by providing tech of today’s nature, not designing it in yesterday’s kind of a vision. And that’s what I’m mentioned at the top, which was why has silos when you can actually create an environment or experience that talks to performance.

Alan Koenigsberg (00:13:05) – And in the payments world, what’s the performance you want out of the payment? Do you want, is it timing? Is it rebook ability? It’s a data payloads I can go on and on. Could I mention the type of payment it is or did I? Did I mention that? Did you care? Right? You know, the last time you closed property or had stock, you know, cashed in, did you ask buck clearing system that was going to be, you know, no, of course you didn’t, because you don’t need to. You asked probably how much the trade was going to be and how how that works. But you don’t need to know all that information, but you need to know is you know where it is. It’s secure, it’s safe. And of course, who you’re doing business with.

Shaun Ferrari (00:13:44) – Yeah, yeah. No pressure. so in doing that and using the, the new automation and the new tools out there, let’s just talk about the AI piece of it. .

Shaun Ferrari (00:13:55) – Now, I mean, how how much does I play into what we just talked about? in terms of disabling all of it?

Alan Koenigsberg (00:14:02) – I find it interesting, you know, that maybe last July in our is there were people talking about it, but it was in sort of a mass market kind of, conversation. You kick it up in the morning and go to breakfast without hearing, seeing, reading or experiencing, artificial intelligence, doing something, whether it’s experimental or otherwise in your whatever your business life or your personal life, we spend a lot of time thinking about, how artificial intelligence actually will be accretive to the business. But if you really think about it, we’ve been in the high business for at least 35 years. It wasn’t called that then. As we know, we predictive decision making, analyzing patterns, understanding how to protect corporates and consumers alike is a core part of our business. Running a safe and sound business at six nines, by the way. And that takes on a lot of investment and a lot of organizational energy to execute against.

Alan Koenigsberg (00:15:05) – That’s important. That makes for a an experience, that will drive investments in the future.

Shaun Ferrari (00:15:15) – Yeah. And I think. You know, there’s so many, facets of where AI plays into into this. Do you think I mean, you mentioned the predictive nature of it, and I know there’s obviously the fraud angles and that sort of thing, but, what about the the generative AI pieces of of what’s happening?

Alan Koenigsberg (00:15:37) – Well, we have a hundred, over 100 million in generative AI venture investments. Look at initiatives going on at the same time, looking at the next generation of companies that are focused on providing these services, not necessarily in the AI business, but supported by AI, you could look across the landscape, whether it’s JP Morgan or Goldman Sachs, that are leveraging newer technologies. and it’s interesting some companies being criticized for not being fast enough, which we’ve read about in the last couple of days. Some actually may be, you know, using it to the extent that it may be overdoing it, but I think this is all good.

Alan Koenigsberg (00:16:13) – There’s a spirit of experimentation going on. I know in my own, you know, world in terms of like the tools that I leverage. You know, I had the opportunity. Visa’s been a great partner with Microsoft and we use all their tools. And so recently, you know, with copilot and you know, which is you know, it helps basically do anything you want within the Microsoft ecosystem from reading decks for you and commenting on them. It still takes analysis and human intervention, but it will literally do a lot of things that were, if you look back on it and say, this is pretty mundane, you know, like I have a 60 page deck I have to read and then I have to take notes, and then I have to sort of synthesize something for maybe your manager or a client, when probably 70% of it could be done with an AI feature tacked on. That’s powerful. That is, that leaves and I speak for myself. That leaves me open time in the diary to do something for a client.

Alan Koenigsberg (00:17:14) – And so you think about that and you just continue to push that forward. You’re going to see a lot of what we call automation, but the retirement of tasks that were just not value added. Yeah, every part of the ecosystem will be impacted by it from banking to retail. And you can go on and on. I’ve seen, you know, retailers now working on helping decisioning online. So the next generation of retailing is what what do they call it. Click and mortar click it. Yeah.

Shaun Ferrari (00:17:44) – Yeah.

Alan Koenigsberg (00:17:45) – So that involves a lot of AI to help. Get a consumer to make a decision. And then you take that consumer or a small business or a corporate into an environment where embedded finance plays a big role. So that’s like another way that these pair very, very well. Now we could talk about AI all day that yeah that is finance really directly connected to it. And in your consumer life you can go on we’re talking about what a particular star alliance you know charter airline. And you’d go on to their website and you can probably advantage yourself as a consumer or hey, corporate of 5 or 6 different services, from buying your airline tickets to insuring yourself to buying merchandise, whatever those things are, are all taking place in the non-financial platform seamlessly for you, hopefully seamlessly for you.

Shaun Ferrari (00:18:36) – Ideally, yeah.

Alan Koenigsberg (00:18:37) – When you start moving upmarket into mid to large, you know, companies, the kinds of controls and the tech that sat behind them often prevented these kinds of embedded finance. So like embedding our selves into our, you know, recently we announced a partnership with SAP Italia, who was a wholly owned subsidiary of them, to embed our credentials into their broader ecosystem, their whole ecosystem, whether it’s on prem, off prem, off cloud, off, you know. And regardless of the the instance of it, which often was a major barrier even to a single company that may be on 3 or 4 different hostesses of that ERP, you begin to break down the silos and break down those barriers to bring the credential where it needs to be, and those journeys change. Yeah. So the journey needs to intersect with that financial services opportunity in order to make the, the customer, relevant or their experience relevant.

Shaun Ferrari (00:19:45) – Yeah. I mean, that makes a lot of sense. And I think there’s the piece that that really resonates to on the kind of blending that embedded finance and the AI piece together.

Shaun Ferrari (00:19:56) – You mentioned it before, and we were kind of talking about, you know, the consumer doesn’t care how it how, what rails it’s moving on, what type of payment is. They just want the payment to happen efficiently, safely. You know, relative to some cost constraint they might have on their head on how much they want the transaction to cost or what have you..

Alan Koenigsberg (00:20:20) – Well, what you are really doing is you’re looking at. I talked about the tyre company. Yeah. Focus on the customer, focus on the product, focus on their experience and work backwards. And you’ll you’ll advantage yourself, your company as a network and really understanding where that journey is evolving to, you know, and where it’s going to intersect with a financial services or a payment opportunity that when you understand that and can actually predict where it’s going to be, you create immense value and you actually create a lot less expense, and you create a lot more opportunity for that company to serve their customer, which I mentioned earlier. But if you don’t, so they’re going to be some journeys that don’t happen.

SAlan Koenigsberg (00:21:08) – You’ve got to be continually working and experimenting. So part of our embedded bias journey in mid to large market is we have the ending of the story isn’t written, the journey is ongoing. So how do we actually work through that? Well, we are working through it with multiple layers of company. Think about your own company and what you do, and think about all the different offices within the organization that are doing different kinds of tasks and the different financial. And credentialed test that they have from using a commercial card to paying rent, if you will. They’re all being done different ways. I’m not suggesting that we tell them, tell you how to make you know how to make your payments. No, it’s the opposite. We’re looking and saying, okay, there are 11 different intersection points. Let’s make it easier. Yeah. And those companies are going to demand those things from their financial institutions. In the near future. Yeah.

Shaun Ferrari (00:22:04) – Yeah, absolutely. you know, we’re I know we’re not going to taco spend a whole lot of time in this discussion anyway, talking about kind of the, the global money movement and that sort of stuff.

Shaun Ferrari (00:22:14) – But I do wonder, you know, as we talk about making these different types of payments, you know, how much complexity does a cross-border aspect add to the the payment that’s going on now that with with more and more companies being global and, and money having to cross borders.

Alan Koenigsberg (00:22:33) – But I’m going to be one of your panels this week. It’s going to hopefully be a lively conversation around one of these topics. And I’ll tell you, you know, cross-border payments are being consumerist before your eyes. So that plays into this generational aspect, a technology aspect. You see RGP systems, and then you have sort of the, the live noise around it. Right? This the you watch change happen. But you also watched the fact that commerce continues to grow. That the opportunities continue to grow. The pie keeps getting bigger. There are more transactions than there were before because that you’re enabling a more frictionless experience. So if you think about and even to the extent I want to get to work in capital two, I think it’s important, you know, conversation for companies.

Alan Koenigsberg (00:23:32) – Because that’s what treasurers think about. That’s what CFOs think about. If you could release the energy from the working capital, make it easier for them, less expensive for them, to use those funds and more effective ways for that company. That’s a winning recipe as well. Yeah.

Shaun Ferrari (00:23:48) – So with working capital in particular, as you’re getting there, what’s kind of the, and you’re right. I mean, freeing up that that capital to to use in other ways and, and so forth is critically important. Right, to a lot of companies and a lot of treasurers or?

Alan Koenigsberg (00:24:04) – And let me talk about it from a traditional banking perspective. Yeah. This is not a new topic, you know. But we went through almost a decade of zero negatives, very low interest rates in many, many markets. We saw and that’s generational too, generations of bankers and folks out there that when rates started to rise, it wasn’t normal to them, but to maybe a sort of sort of old fogies that have been out there for a while.

Alan Koenigsberg (00:24:34) – We expected that that wouldn’t be the way life would be forever. Right? So, cost of funds increased. And then you see the linkages, then you really see the linkages between them and the struggles that companies have. Working capital is a very good example. In an environment where the interest rates were so low, what happens? if you have a company that has to face their investors and analysts every quarter, and there’s so much cash sitting on their balance sheet, you’re going to get the question, how do you put that money to work? Put the money to work? Well, if your money in the bank is going to attract negative interest rates, you have to find alternative ways to do business financially, so early, paying discounts, other working capital kinds of mechanisms were put into play more aggressively to provide suppliers a better source of capital or earlier source of capital. I also see this as a paradigm shift as well, that a buyer and supplier relationship should be harmonized around a healthy ecosystem for them, not necessarily financially driven, but driven by a healthy supply chain, physical supply chain, and more and more, you talk to treasurers of mid to large size companies that don’t even have a financial conversation with me.

Alan Koenigsberg (00:25:53) – They’re talking about how a large, you know large company or large enterprise company, and the consumer products business is, effectively providing coaching to their supply chain because they want those companies to wake up every day and be there. And we’ve learned that type of the lesson learned out of the financial crisis, where you began to worry about her these events and say companies couldn’t afford to be in business any longer. And so that’s a big part of as we as the markets changed again and the interest rates rose significantly and faster. How do you actually provide services around it? And there’s a whole panoply of things that we do, including leveraging these at its rails to be able to provide those services. That leads us into really, how do you how do you approach that? You just don’t walk into a company, you know, or a bank and say, were working capital business. You have to specialize. We have done specialization and learned a lot in markets around agriculture, around fleet and mobility solutions and others around the world.

Alan Koenigsberg (00:27:01) – Getting deep, getting really specific. Here’s another point I made earlier around really understanding these companies, understanding the specialty businesses that they’re in in a category. So you can unlock not only working capital, but efficiencies and automation and AI and all the rest of it for a company, for a bank, for their for their clients, easily and in an efficient way.

Shaun Ferrari (00:27:23) – So it all does really fit together. All of these, all these pillars that are in these segments that we’re talking about do well. I create one story or one one journey if you, if you will, for a customer.

Alan Koenigsberg (00:27:36) – In a journey without an end. I mean, I’ve been saying. You never really get to the end of it. There’s no nirvana. But you can you can sort of cast your Northstar and say, you want to provide these kinds of solutions that we know are not, homogenized, that they’re very specific. That’s what companies want. That’s what you want. Yeah. You know, it’s just a consumer.

Alan Koenigsberg (00:28:00) – You want a personalized, bespoke experience for you and that you can get that. You can get that. But behind the scenes it is being delivered at scale. And I think that’s the important part. You want to provide these solutions, at an efficient cost so that companies can actually make that kind of difference. Let me pivot. If I were in the act to cross-border payment, a huge part of it is cross-border companies do business cross-border today more than they ever have in time. You know, in terms of trade, in terms of payments, etc.. So delivering those kinds of experiences by Visa globally is something we’ve been doing from the beginning of visa right on our rails, truly cross-border and in real time. But there’s different use cases. And so you have to again look back on like, what does a company need? if you’re going to pay a supplier on the 60th day and the payment is going to be delivered by a real time payment infrastructure, does that supplier care on the 61st day that they’re getting paid? Probably not.

Alan Koenigsberg (00:29:09) – Right. But if they’re being paid on day 20 through a working capital solution, as delivered another way, say on a card rail, it’s or virtual card rail, if you will. It’s very powerful because of the DPO benefits on the front end. And so they can get their money early, they can begin to they don’t have to go out to the market and borrow. And that buyer gets a huge advantage out of as well. Yeah. Yeah. So that that in itself sort of tells the story of how the chain links together, for companies, to focus on what they do. And we can focus on delivering that value through the financial institutions, and they can do what they do best. Yeah.

Shaun Ferrari (00:29:53) – Amazing. Well, I think that covered a lot of topics, but the range of what a lot of things are working on and Visa’s thinking about, is there a final kind of thought, that you would want to share with with folks before we sign off for the day?

Alan Koenigsberg (00:30:08) – I think from a, from our, from my perspective, I’m looking forward to this week.

Alan Koenigsberg (00:30:13) – I’m looking for spending time with our clients and central bankers and and really listening more than talking about what is important to them. I am especially, you know, grateful to our clients for their partnership. Whether they’re are merchant clients on that one side of the equation or a banking financial institution, clients on the other, very, very open and very, very adroit at listening as well to their customers. And so we’re just focused on moving the business forward and in the best and most efficient way we can. And at the same time, providing it in a way that is unique and hopefully, forward thinking, and has a lot of value. So thank you.

Shaun Ferrari (00:31:00) – Awesome. No, thanks for coming. Great conversation. looking forward to seeing you around the rest of this week and hearing a lot of the good conversations. All right. Well, thanks all of you for listening. I hope you enjoyed the episode this week. We will be back with you a couple other times this week as we find some, some more, thought leaders to talk about, to talk with, while we’re here in Kuala Lumpur.

Shaun Ferrari (00:31:23) – So thanks for listening. like subscribe, follow, do all that stuff you do to podcasts at your favorite podcast platform, and we look forward to talking with you again soon. Thanks.

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