#27: The Latest in Cross-Border Payments with Finzly's Karuna Kathir

Speaker A: Hey everybody and welcome to the Pay CLT Payments Hub podcast sponsored by Endava. I am your host Scott Harkey and this is the podcast that takes a deep dive on topics from our Pay CLT speaker series and adds additional industry perspective to explore the topic further. Hey everybody and welcome to today's Pay CLT conversation. We're excited today to have Karuna from Finsley here who's going to talk a little bit about some of the great things going on over at Finsley and we're going to talk about international uh, money movement and all kinds of things. So first off Finsley has been a longtime friend of the Pay CLT family. I know Bouchon's been a contributor quite a few times to all kinds of different forums we've been in. So we're always really grateful for that. Uh, but why don't we start by getting a little bit of background about you Karuna. Tell us how you came into the role at Finsley, kind of what you're, what you're looking after and what your day to day job is uh, and help the audience learn a little bit more about you.

Speaker B: Hey Scott, thank um, you first of all thank you for having me here and uh, to all your audience, um m happy to be here and talk about cross border, talk about Finsley and myself as well. I'm Karuna Khadar, been with Finsley for about three plus years. Um has been personally um a roller coaster for me. It's been fun um, journey so far. Um, I've been in the payments industry or banking industry for about 12 years um 12 plus years now. Various roles in terms of product consulting, sales. I've done quite a few of uh different roles um in the industry itself. And then um on a tangent I went and created a food tech startup. Um learned quite a bit, not successful but learned quite a bit through that experience. And then um, I got it got connected with Bouchon through um, um some connects, uh, common friends and things like that. We started talking, talking about what we could do um and then it happened that uh, he was looking for someone to come in and help him in what he was doing at that time. So I joined Finsley about three plus years. Um, I currently manage uh sales, I'm ahead of sales, um the revenue operations within uh Finsley. Scott.

Speaker A: Awesome, awesome. We have similar roles. A big part of what I do at Endava is looking after our go to market and sales and marketing and a bunch of functions of that. One of the interesting things about that type of role And I wanted to ask you about is um, I think a lot of it's about how you position what you do as a company to the market in a way that ideally you're creating demand for what you guys do. So you're probably the perfect person to ask this question. But what does Finsley do? What is the picture? What is the way you talk about it when you go out and you're talking to potential customers about the problems that you solve or what it is that you guys do?

Speaker B: Yeah, it's interesting. You're talking about kind of creating the market. Right? So Finsley is also in a unique position where we are recreating a market.

Speaker A: Right?

Speaker B: So payments industry, you know, has been there for ages now, right. It's not something new. And uh, there are, there are giants out there in terms of, who have done this for 30, 40 years and there are platforms that are older. Right. Um, but Finflee is fairly new to the market. So we're about 12 years old old. Um, we started on the FX space and then expanded into domestic market. Um, but we're recreating the domestic payments market or the money movement market because um, of the unique offering that we do. So it's an interesting job that I have, like you said Scott, which is to go and kind of give that view or um, I don't want to say the word educate but more in terms of give that view to um, all our customers that um, um, there is a new way of doing money movement.

Speaker A: Right.

Speaker B: Um, so from that perspective it's been interesting but at the outset, Finsley, um, six years back we started building a money movement platform, um, um, based off of our cross border payments that we had. Um, and it's a unique platform in the sense it's a single platform for all kinds of money movements.

Speaker A: Right?

Speaker B: Ach, wires, fx, instant payments. Right. All of them put in one. Which means it simplifies m the operation for um, um, for um, all our bankers and for the customers. So that's essentially what we do today. Um, Scott.

Speaker A: And, and in terms of growth and cross border kind of more specifically, I know now that's just a portion of what you guys do, but how, how do you give us a read of the market for that? Is that a growing business not just for Finsley, but in the market in general? Um, is it fairly steady? Like what does the market outlook look like when it comes to money movement in particular?

Speaker B: Cross border, um, specifically cross border money movement is always growing. Right. If you look at um, the last uh, few years And Fed uh, does a lot of study on money movement. Money movement in general has been growing, especially the digital payments realm has been growing. ACH is growing like um, 12 to 16% CAGR year over year. And um, the same with wires. Now with instant payments coming in, you're going to see a lot more payments switch to digital. Right. Um, different forms of payments. You're going to see that constantly evolving and constantly growing. Uh, but specifically cross border um, grew phenomenally after 2020. Right. Um, during the uh, Covid period, uh, started kind of uh, scaling very high.

Speaker A: Right.

Speaker B: Today we do like $7.5 trillion a day in terms of um, FX trading.

Speaker A: And why do you think that is? What do you think was about COVID or the lockdowns or whatever what drove an increase? And it's not natural or it's not a natural thought for me to think that Covid and lockdowns necessarily drive increased international money movement. So what do you think it was about it that drove that? Or what, what use cases or scenarios got additional volume in them?

Speaker B: Um, I think it's just a natural progression of globalization. So our, our supply chains are all distributed all over. So companies are working with different, uh, different entities in different countries to source raw materials, are essentially supply uh, finished products. Um, that's essentially what we're seeing. And the availability of um, better ways to transact is also increasing um, the amount of transaction that we do. Right. Because it wasn't easy 10 years back to do cross border payments. And today with money service bureaus or even banks providing better customer experience, you're seeing um, the amount of channels available to make these transactions uh, become much simpler, much easier accessible for a lot of the companies. Um, the companies have also opened up to globalization and they're sourcing materials in different places. I don't necessarily think that Covid was a reason but um, um it's just globalization that's happening over a period of time and um, was actually happening over a period of time. And Covid essentially saw drop. And right after Covid things started picking up in terms of uh, global transactions. And that's one of the reasons um, um, for the uptick in terms of cross border payments.

Speaker A: Yeah. So maybe the broader digitization of things. Right. Of payments and all kinds of commerce combined with that pause and then kind of unleashing of like all right now everybody's transacting again. All this kind of goods and services are flowing again, kind uh, of kickstarted things back off. Um, that makes a lot of sense when we think About Cross border. And again I'm always happy for you to make it broader than cross Border. Right. If I ask it about cross border and there's a broader money movement answer here, then certainly add that too. Um, but I guess what are some of them trying to give the listeners a sense of the Finsley product and kind of what you guys do, the problems you solve. What are some of those problems that traditionally have been, or uh, use cases or whatever that have traditionally been really hard for organizations that you guys kind of specialize in or you help enable and make a lot easier?

Speaker B: Yeah, it is interesting because the reason Bhushan started um, um, Finsley 12 um, years back, right, he was part of a traditional FX correspondent bank kind of an organization where he was managing the fx, um, ah, tech stack. Um, and that was the time when it was not easy for regional banks to provide this service directly.

Speaker A: Right?

Speaker B: So it was always the correspondent banks who could get a very expensive platform to manage all kinds of um, um, cross border payments. Um, and you also needed skill sets, right? You needed specific skill sets of people who understood, um, cross border payments and foreign currency transactions, forward swaps and all of that, position management, uh, to handle this. So most of the regional banks essentially threw it over the wall to larger correspondent banks to process the payments. They were not getting a great service at the end of the day, which means their customers were also not getting a great service at the end of the day.

Speaker A: Right?

Speaker B: So there was a large uh, set of uh, uh, businesses and corporates who were getting subpar service, uh, because of the number of endpoints that you had to cross through before you can send a payment.

Speaker A: Right?

Speaker B: That's the origin of Finsley. Uh, it was then known as swap stack. But um, when Bhushan started he said, okay, why not give them a better system to provide this service? Right? Um, so from there on we've not looked back, right? Everything that we do is about reforming the market. We get in and saying how can bankers provide a better service and how can banks provide better products to their customers and how can customers use this better? A simple example is earlier it was always manual, right? Um, somebody called up the back office at your regional bank and then they went to the uh, correspondent bank who would give you an exchange rate and you're doing all of this manually over phone or emails and things like that. So when we started we said we will not do that, right? We needed a sticky experience. So we create a customer experience where the customer can look for a rate, which is a live rate Accept a rate, right? And then submit a payment. Um, this actually reduces the risk all across the value chain, right? Because the banks are giving you a live rate. It's not a static rate, it's a live rate which is the current market rate. They're picking up the current market rate to provide this, right? Starting from there, some unique services like multi currency accounts, right? You're a larger business um, and you continue to do um, a lot of um, transactions, right? Um, with one country you're buying and selling currencies. Uh, there's a reason not to bring that money back into this ecosystem, right? You can keep it there and save money from um, exchange losses, right? Things like that. So we have picked up different such use cases that helps both the bankers provide better service but also the customers get uh, a better service out of this platform. Scott.

Speaker A: So when I hear that, one of the things I think of, you can tell me if this is a valid comparison or not. But um, I think of like the experience that Wise, you know, previously transfer wise provides and it feels like what you guys are doing is enabling banks to provide a similar type experience or others. I don't know, maybe that's a question. Who are your customers at the end of the day? Who are you providing these services to build these experiences?

Speaker B: Very good question. We generally provide the services to the bank so the banks can actually provide this to their customers, right? So we are like enablers for the bank. Um Scott. But in general the question around uh some of these fintechs, that's what the banks are competing against, right? So if you look at like Wise or convera or other services that the money service bureaus that are available, they're providing a great customer experience, right? But you have to take money from your bank and then go through these money service bureaus to make this payment. Um, the reason customers are happy is two reasons. One is the experience is great through them, the fintech experience is great. The second is they're also providing very competitive exchange rates. Um, and if you go through a correspondent bank and if you're throwing it over the wall, the banks were not able to compete at that level, which is the problem that inherently existed. And the second problem was the experience itself. When you start creating friction for your customers, the customers are generally going to uh, go towards uh, where there's less friction. And these uh, fintechs provided a much better experience. Friction free process. And that's exactly what we are solving for this process. When we started the fx we automated the process, we embedded um, uh Cross border payment experience within the existing bank portal. So you didn't have to go outside of the bank portal to do anything and you could look for live rates and things like that. So you can get much um, more competitive rates equivalent to what you're getting with these fintechs. So now um, banks have a platform with which they can compete with not just the correspondent banks but also these fintechs and that's how to fight.

Speaker A: I'm 100% with you there. I think that's a really sweet spot for innovation. I uh, think often the fintechs get a lot of the attention and focus and no doubt a lot of them build really great user experiences and products. But maybe it's my past background working at banks, but I'm always an advocate for, I think the banks are in the best position to offer these financial services. They often just need help with the experience in a way that creates parity or at least feature parity with what some of the fintechs are doing. So I think orienting around, enabling the banks to provide that or whatever entity to provide that, I think it's a really smart way to go to market

Speaker B: just to add like what you said, as a corporate customer, if I get the same service from the bank, I will stick to the bank providing the service service because I know my money is here. It's more secure than going to a fintech. So it's just giving them that support uh, to the banks so they can essentially deliver the same kind of experience, equivalent experience for their customers.

Speaker A: Absolutely, yeah. I totally agree. Well one of the other things that I know Finsley has been really active around has been the uh, onboarding around real time payments. So Both RTP and FedNow. I know you guys were really early uh, and integrating into the networks and providing that as part of the services. What does that journey been like? Is it just another rail? Uh, is it harder because they're so early and there's still a lot of discovery happening? Maybe tell us a little bit about that experience.

Speaker B: So the interesting piece about instant payments is those are simpler rails. Scott. Right. Um, they're just credit payments. Right. It's not as complex as wires or ach. You have different set code types of payment types and things like that. There's just one payment type and few messaging types. Right. So you can just send a credit transfer out. So it's a really simpler rail, it's a more secure rail in terms of how it works. But the criticality here is they are instant payments. Right. So the transaction has to happen within a few seconds or within minutes. Right? Um, and that's where the complexity starts. Right? Um, are, um, bank systems capable of handling that? Um, things like that is becoming the critical piece. Add to that now it's just not one rail. There are two different instant payment rails that adds a little bit more complexity. So when Finsley started off five years back, we said we will not build one payment system. We will not build something like some, a payment system for wires, a payment system for ach. We said we will build a money movement platform, a real time money movement platform that can take any rail. So when we started designing this, that was our first principles design, right? Saying okay, we should never go back to that old approach of doing system and rail wise because none of our customers care about it. Right. As a end user all I want is money transferred to Scott within a time frame. Right. I uh, don't necessarily care whether it's going through achy as RTP or FedNow. I just need the money transferred. Um, unfortunately, because the payment systems have grown over a period of time, everybody had silos, right? Um, the traditional legacy providers uh, started building silos and when they were building, they were building it for batch processing systems. Right? The real time was not a concept then. So they're building this for uh, batch processing systems. And that's why M, when Finsley came in, we transformed this market and we said we're going to build ah, a real time money movement platform that can take any rail. Um, that's helping a lot of our customers because it's one system for all Rails. So the complexity is reducing and even on the customer experience, your customers can now say I want to pick the cheapest rail or I want to pick the fastest rail. Not having to choose a specific uh, specific rail. The journey has been interesting. Uh, we've not struggled because we built a real time payment so far. Um, Scott. So, um, it's been a phenomenal journey. We went live on day one with FedNow. Um, and we also provide um, world's unique API, which is one API for all payment trails.

Speaker A: Right?

Speaker B: Um, imagine a bank going to their customers and saying hey, just use this API. It doesn't matter whether you're doing ach, wires or RTP or even FX payment. It's just one API to connect to. Um, the key for us is going towards platform generated payments. Uh, Scott and I keep talking about this with some of the banks. So there was an era uh, of web banking to mobile banking. Now we're moving to this API banking World where um, more than users generating payments platforms are going to generate payments, your ERP system is going to generate payments, your fintech platforms are going to generate payments, E commerce platforms are going to generate payments on behalf of users. Right, but platforms generate payments. That's what you need to be ready for in the near future.

Speaker A: Yeah, totally agree. And I think that's the way I think about it as well is you know we as a business have payments as a vertical uh, that we put a lot of focus on and a lot of the work there has been with payment companies and the big push now is in actually a lot more activity is happening in non payment companies embedding payments than there is in the payment companies themselves. I mean they continue to do their thing but like a lot of the net, new uh, kind of scenarios, user experiences, use cases are being built out in the non payment companies as they further embed payments. And um, my advice to banks is always like don't you want to be part of that? Right? Why would you let others take that market from you? You want to have those APIs, you want to use the relationships you already have with these corporates and with these ERPs and all these players and you be the kind of provider of the underlying infrastructure that can help facilitate that payment. So um, and I get that what you guys do is provide the software to help facilitate that for the bank.

Speaker B: Um, just to finish that thought, Scott Bhushan talks about this, right? That payments are getting embedded in your life, right? So you go buy things, right? Payment is to accomplish certain things, um, physical activity that we're doing in our life, right? I, I want to buy milk and I want to make a payment for, for that, right? Or I want to buy something from an online platform, I want to pay something for it, right? Or I'm part of a um, um fintech platform where I'm like getting uh, wages earned right through a payday system and I'm getting, getting that money, you know. Right. So um, payments are getting embedded in life cycle. Um, and banks should be able to provide those APIs so you can embed the payment. Because today's generation is all about how can I use money, right? Um, so that's essentially what banks needs to be ready for. Otherwise the fintechs like PayPal, Venmo, CashApp, there are enough of them that are taking away that slice of transaction, right. Um, at that point of engagement. So banks should, should scale up and have platforms like this, have APIs like this to kind of bring that back within the Four walls of the bank. That's what we help with.

Speaker A: Awesome. Well, I think that's actually a really good place to stop today, Karuna. So thank you for the conversation. Um, that wraps up this week's new show, the Payco2 Payments Hub podcast. I, uh, want to thank you for being here. Tell us where people can find out more about what Finsley is doing.

Speaker B: Yeah, thank you for having me as well, Scott, and good talking to you. And I know we've been part of this whole group. Um, you can definitely go to finsleet.com you'll be able to, um, see what Finsleet does. You can also go to our handle on LinkedIn and we, um, create a lot of content material on LinkedIn as well. You can reach out to me, uh, corona.qadarinsley.com um, or you can go through the contact Us page on our website as well. So you get a lot of content on our website. Finsley.com Scott Great.

Speaker A: Well, thanks again for all the insight. Um, thank you all for listening. If you've liked what you've heard, please subscribe to the podcast. Don't forget to leave us a review. It does help us to know what content you really like and help suggest the show as we go. So thank you, everybody, and see you next time.

Speaker C: Hey, Pay CLT listeners. It's Nick Williams, the producer of the Pay CLT Payments Hub podcast, sponsored by Endava, alongside the phenomenal production crew of Nate Deacon and Chris Webster. This episode may be over, but check out the episode notes for further exploration of the resources mentioned. We'd like to thank Endava for their generous support and thank you for listening today.