[00:00:09] Alexandra Ebert: Hello and welcome to the Data Democratization Podcast. I'm Alexandra Ebert, your host and MOSTLY AI's Chief Trust Officer. Today's episode is a very special episode for the Data Democratization Podcast and definitely a premiere. I was invited to record an episode live at Money20/20, which took place in June in Amsterdam earlier this year. There, I had the pleasure to welcome Sulabh Agarwal, Accenture's Global Head of Payments, to discuss the future of payments, the biggest challenges that organizations and banks face when they want to approach this future, and how to overcome them. I would say let us dive right in.
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[00:00:56] Alexandra: A very warm welcome to everybody tuning in now or tuning in later once we're going to air this episode to a special episode of the Data Democratization Podcast because we are recording it live from Money20/20 Europe. I have a special guest with me. Sulabh Agarwal, Accenture's Global Head of Payments, took time out of his very, very busy schedule. He has to be on stage just later today and tomorrow again. Sulabh, thank you so much for being here today with us.
[00:01:22] Sulabh Agarwal: Thank you so much, Alexandra. It's really a pleasure to be here.
[00:01:25] Alexandra: Absolutely. As always, the first question I ask every one of my guests, can you briefly introduce yourself and also share what makes you so passionate about the work you do?
[00:01:34] Sulabh: I'm Sulabh Agarwal. I look after the payments practice globally for Accenture. It's a significant size practice with about 14,000 plus colleagues who are working in payments right from strategy and consulting through to technology, operations, and also what we call Accenture Song, which is more the design side of the business. Payments are happening. Payments are changing so fast; at least, whoever is in payments for the next 10 years, can rest assured that there'll be enough work for people and exciting work. That's what keeps me going, and I'm really excited about the future that we are going to paint for ourselves and for society.
[00:02:28] Alexandra: That sounds indeed like a good reason to be in payments today, and this actually also brings me to my first on-topic question to you, which would be, what's the status quo of the payment industry? I think it's safe to say that the payment landscape is changing. We see consumer spending is changing with the recession. Consumer expectations are different from what they were 10 years ago. What is changing, and what are the factors that you consider to be the most impactful on how payments will be made in, let's say, the near future, the next three to five years?
[00:02:57] Sulabh: As you said, it is one of the most fast-changing industries. Organizations that are now the payments scale-ups didn't exist, a number of them about 10 years back. A lot of them actually came into existence in the last decade and are already 100 billion-dollar companies, and it is fascinating at the speed of change. It's not just new organizations that are coming up with new propositions and changing the market, but also the basic hygiene of the proposition is changing significantly.
We didn't have real-time payments in many markets. Again, 10 years back, we didn't have richer data flowing through our payments pipe, which we can start using, so that's changing. Obviously, technology is having a huge impact on payments, and that's completely not just changing banking and financial services more broadly, but I think payments have been one of the Trojan horses, which is actually being used as the best case for the change, and it's significantly impacting.
[00:04:09] Alexandra: That got me curious. Why is Payments the Trojan horse of testing out new things?
[00:04:14] Sulabh: Somehow, payments are the one thing that establishes a relationship between the consumer and the business or consumer to consumer, and it is very visible. If I do a transaction with you, if I'm buying something from you, if I'm sending money to you, you will have trust involved, you will have experience involved, you will have the overall end-to-end journey, and is it solving the problems I have? There are a lot of things which is in and around payments, and that's where if you get it to work with payments, a lot of the other use cases are a lot easier to solve. I think even the fintechs, if you look at how the fintech started even before the neobank started, some of the payments scales started because that's where actually also there's money to be made. The market was ripe to be disrupted, which is what they did. Lots of reasons.
[00:05:19] Alexandra: Interesting. This also sounds like payments is one of the areas to foster personalization and get more specific, get more in line with what customers today demand.
[00:05:29] Sulabh: It is changing big time. Our experience with payments a few years back was very different to the experience we are having. Of course, it's changing a lot faster in certain markets than in others because, in some markets, it's a gradual change, which has been brought in year after year. In some cases, they have leapfrogged from a state of a cash-based society to a digital society.
If you look at some of the emerging markets like the Asian and the Latin American markets, there the leapfrog has happened significantly. That's where you've got all the digital wallets, you've got a whole set of experiences around super apps and others, which is a lot different to some of the more established markets where over a period of time, whether it's real-time payments, whether it is the wallet experiences which have been introduced, and it's been a more gradual change, which has got us to here. Some of the changes, like having super apps, and others, haven't even come to those markets because the business case for making that changes is probably a lot different.
[00:06:44] Alexandra: I see another stage here is crushing it with loud and dramatic intro music. I hope we can still be heard. I think now they're done with that, so we can continue. Absolutely, and I think even the history of what we have in the global west of having branches, and people still use, at least, for example, in Austria, where I'm coming from, there are still particularly elderly folks who really don't want to live without their local subsidiary and their branch to pay with cash also. If you would pick out your crystal ball quickly, how is the future of payments looking? What do you think will be the fundamental change to what we're used to today in five years' time?
[00:07:23] Sulabh: I think what you started by saying, clearly, there are multiple dimensions to this. That is one, which is the resilience, the security, the whole running of payments as if it didn't exist. I mean, no one would notice payments because it just works. The threat actors are going to continue to work on payments to disrupt it, and the payment service providers have to continue to invest to make sure they're secure, their data is secure, and the service is resilient, even though things may not work as efficiently or may go down sometimes because of various reasons, because the ecosystem is becoming more complex. I think that's the hygiene, and I think that will continue to be there.
The other area which you touched on is personalization, and I think they will weigh the personal payment market for one. You would see that, as I was talking about earlier, the personalization is quite important because that forms the core relationship between the two entities. Now it may be hidden, but it is what is the foundation to enable other experiences to flourish on top of it. This is where payments being frictionless, payments being an enabler of many experiences, and we know it's invisible experiences, but also how the digital wallet is leading the way to create more super apps or basically end-to-end experiences, and that journey will continue and how it will be enabled.
The third thing which is very exciting about payments, and that's probably a slightly longer horizon, is all the disruption and the new things which are coming in from a technological perspective are being worked on in the payment space, whether they are blockchain-related things. We know crypto is talked about, and it may not be successful to all the extent CBDCs are coming, and again, there are the stablecoins. All these instruments have various degrees of success. We've clearly got disruption in terms of payments data being not available and how the AI and Gen AI and other insight driven-
[00:10:02] Alexandra: Can be used on that.
[00:10:03] Sulabh: -can be used on that, and I think that's a fascinating thread in its own right, and as and when ISO 2022, which is essentially rather the name for richer data flowing through payments or along with payments, you would see that there'll be a lot more activity alongside the data flowing through and lots of other innovations. I can keep going, but things, whether they are metaverse or other technologies which, are coming on because there's interaction involved, there's commerce involved. I think payments have a role to play.
[00:10:42] Alexandra: I definitely do see why you say the payments industry is not going to get boring in the next decade; so much coming up here. With your position, I think you also have this unique perspective behind the curtains of so many large financial institutions. I'm curious, are there some challenges that you encounter or that these organizations face over and over again that you regularly encounter? What's the biggest hurdle for them to future proving their payments practice?
[00:11:09] Sulabh: Yes, I think the whole CapEx spending is probably the biggest challenge. What's happening in the payments world is just to keep the rails going is high investment. It is always a high fixed cost business, but significant investment goes in into just making sure that the rails work, they're resilient, they're secure, there's no financial crime going and the lot, and there are enough regulations, which is also-
[00:11:46] Alexandra: A big topic.
[00:11:47] Sulabh: -a big topic and their driving mandatory changes on those rails. What's happening is that a lot of the CapEx is going towards those areas. Whereas if you look at what large financial institutions would like to achieve, with all the other topics we spoke about, digital wallets and others, even moving the technology stack to more cloud-based infrastructure, more nimble, flexible infrastructure, you've got various other technologies and other opportunities we spoke about.
It's about saying, "Well, how do you enable the mandatory change while achieving some of the propositional and other cost-related and flexibility in strategic objectives at the same time is the biggest challenge, and working through that is the art.
[00:12:49] Alexandra: I can imagine. I can imagine. You also mentioned speeds and legacy infrastructure, which, particularly for the more traditional institutions, increasingly becomes a big roadblock. Do you foresee that at one point in time also, all traditional institutions should move more towards cloud-native technologies and infrastructure, or at least getting rid of mainframes and many legacy technologies that still live in banks since I don't know how many decades?
[00:13:17] Sulabh: That is definitely a trend we are seeing. In fact, whether you go to public cloud or not, there's a big debate, and for the right reasons, but at least moving to cloud-native technology is becoming more of the standard across the industry, and everyone's looking to move to that. The advantage is it allows-- initially, if you look at the business cases around moving to cloud-native technology, the stack was focused more on cost reduction. Even if it's not short-term cost reduction, when you actually look at the total cost of ownership, how much change spend goes into just maintaining the legacy infrastructure?
If you look at it from the risk lens, which is you've got a few SMEs left on the old tech, and it's very SME or subject matter expert dependent, you've got various other challenges in terms of not having support. In fact, one of our large central market infrastructure clients was worried about the legacy infrastructure; you can't really have all the security patches because it's so old that people-
[00:14:39] Alexandra: Yes, the limitations.
[00:14:40] Sulabh: -stop patching and supporting the legacy infrastructure and then that in the world where we are moving to, of quantum and whatnot, is going to become even more challenging, especially as I said before, the threat actors will, like to break into the payments infrastructure to disrupt more than any other, so it is basically critical economic function or important business services whichever regulatory name you use. I think it is one of the most important areas where modernization is quite important.
[00:15:20] Alexandra: It sounds like that, but at the same time, also, since you mentioned that the benefits are not always immediate, but the cost, of course, is. I could imagine that this leads to some scenarios where executives are deciding, "Okay, should it be me who is now making this big switch, or do I pass this on to the ones that follow after me and try to make do over my tenure."
[00:15:39] Sulabh: Yes, and I think spending the CapEx wisely is, as we discussed before, is quite important. They're not simple programs; they're definitely not very cheap to transform. This is where the decisions around ownership, around partnerships, around-- there is clearly a trend around payments as a service for the non-scale organizations. Various models are emerging to actually solve the problem around investments.
[00:16:21] Alexandra: Makes sense. We talked about infrastructure, but to make personalization happen on this level that customers expect it today, organizations, of course, need to do a better job in making data accessible. Understanding the customers down to a deeper level. Also, the context in which the current customer is in. What's the status quo in terms of working effectively with data? Sharing data within the organization? Analyzing the data and deriving the insights that make personalization possible?
[00:16:50] Sulabh: I think it's a lot better than a few years back. There's still a journey. If you look at now and what's happening in the market with GenAI on one side of this spectrum, it's fascinating how you can bring all the data sets which are available. Not just within the organization but outside the organization. Tenure data and actually also generate AI, which is a fascinating side, the reality on the other side. With larger organizations, there's lots of data inaccessible in silos in various places. Then, there is a journey where most organizations are on the journey to create lakes of data, to extract data in a format where you can start using it. More and more areas like fraud financial crime are definitely where most organizations have already made huge investments and are looking at better using the data. Then, personalization which is where you were going, is where some of the-- I mean, clearly, there's software and platform clients like the large marketplaces and others actively using a lot more than what the financial institutions are currently doing. There is clearly an opportunity to do more.
[00:18:17] Alexandra: Agreed. Agreed. Did you actually note it on the other side of the spectrum, generative AI is used to make data accessible? This is actually the space where we work so much with insurance organizations and banks, which is heavily regulated industries and more pressed but is not able to access data and have data in silos. This is where synthetic data then is sometimes used to train AI models on it or share it with collaboration partners. We actually have generative AI on both sides of the spectrum.
[00:18:45] Sulabh: Absolutely. I'm so excited about the potential of GenAI. It's got to be done responsibly. We've got to have the right guardrails, and on one side, we've got about 300 use cases that we're already working on with various clients around GenAI, right from operational optimization or automation through to reporting and how you optimize that. Through creating much better processes - the use cases are not a problem. Even from a change delivery perspective. End-to-end change delivery, GenAI is significantly changing how we do consulting and advisory. It is being disrupted. Also, the whole end-to-end change journey, and we're doing lots of activity around that. Yes, if people have not tried ChatGPT, Bard, or a similar GenAI tool, I would say please do. It's fascinating once you try it. We went to Thailand last week on holiday, and I planned my trip using one of those tools. You can help it write poems; you can help it do research for you. There's just so much-
[00:20:18] Alexandra: Yes, definitely.
[00:20:18] Sulabh: -you can do with it.
[00:20:20] Alexandra: Definitely many, many opportunities. Of course, also limitations, and people need to know how to use these tools, but it will change how we work and free up time to focus on other things. You mentioned also change, and change oftentimes is also people topic. How big of an issue do you see it for financial institutions to get people on board with the rapid change that is necessary and that requires them to stop doing things that have worked for the last years or decades?
[00:20:48] Sulabh: Massive. We don't like change as human beings, and the opportunity to actually do things differently is not always embraced by all individuals. Change, including training on the new technologies and repurposing some of the people for the new evolving technologies and needs of the hour through to bringing them on the journey to do things differently, is a massive effort right from top down, working with the leadership and how they make decisions and set the example. Sometimes the easy answer is there is an innovation team right in some corner doing things in a different way. I think till the mentality is that, you will never see a big change throughout the organization. When you have everyone doing things in a different way, that's when the real change happens.
[00:22:01] Alexandra: Absolutely.
[00:22:02] Sulabh: It's all about getting organizations from end to end perspective to do things in a different way.
[00:22:09] Alexandra: I can only fully agree. It's definitely not okay to have innovation live in a department on the periphery of your organization, but something that's responsible for every department. I think here again, this also brings us back to data where I think it was one of the chief data and analytics officers from a large UK bank who said it's also the job of chief data officers to make themselves redundant and they shouldn't be the "High priests" of data, but every team needs to be empowered with data because otherwise, we can't just be fast enough and innovative enough with the data and AI.
[00:22:39] Sulabh: Yes, because we're all making key decisions every day, and how we're enabling our decision-making through use of data and how hands-on we are, or at least accessing the data to be able to make good sound decisions is quite key. Whether you're doing a pricing strategy, or you're doing marketing, or you're doing operations, or whether you're doing-- whatever activity you are doing, or finance or HR, whatever, I think data is quite important. I completely agree that in the future, having the whole organization's data enabled but also using the data in their day-to-day decision-making is quite important for an organization to be successful in the long term.
[00:23:35] Alexandra: Definitely. Summarizing what we discussed so far, there is change, which is inevitable. There are opportunities, there are challenges to be tackled, but my listeners always love to get some tangible insights and also actionable steps. What would you say are the top three actions that payments executives should take, whether they're ready now or at least in the next few weeks and months, to future-proof their payments practice and just strategy?
[00:23:59] Sulabh: I think having a good approach to the capital expenditures is the most important thing because I think that drives the rest of the activity and how you think about spending the CapEx, which is quite significant in most financial services organizations, at least, when it comes to payments. Then there is the second-order question around, well, what does it mean from a customer proposition and personalization, which you were talking about? What does it mean from a cloud-native technology journey? What does it mean about using the new tech and what is coming, and what experimentation they need to think about? Those are some of the things which need to flow from there, but I think the core area is having a clear view as to how you're going to spend your money and create something for the future rather than just optimize and tinker around the edges.
[00:25:00] Alexandra: Makes sense. One last time coming back to also personalization. I know you can't talk about all the amazing projects and journeys that your company, with Accenture, with your customers, but is there one best practice that stands out that you could share in an anonymous firm where an organization used AI and data to do really outstanding personalization in the payment space?
[00:25:22] Sulabh: Yes, there are lots of examples. From a personalization perspective, there's one group we are working with that has got a financial services arm, that's got airlines, that's got health clubs, that's got various other things. The whole idea was, how do you bring it together? How do you create loyalty with the customers? How do you reward the customers in the right way? How do you get them to think about their particular brand in terms of thinking about their everyday life, and how do you get the brand recall to be the place to go for most of their needs?
It's interesting how you think about where you start with the personalization journey and how the digital wallet element of it is core. Which is what payments is all about, and which journeys you prioritize, and how you go to the super app or the more focused app. We are doing lots of engagements in this space. What's happening in Europe is mostly that there's not going to be one super app for every need of a consumer. There'll be an app to say that I want to be the destination for fashion. I want to be the destination for mobility.
I want to be the destination for travel. I want to be the destination for financial or, say, home-buying experience or whatever those are. It's about capturing the important use cases and the journeys for organizations as they're looking to solve customer problems rather than solve for the individual bits, which is more a solution trying to find a problem.
[00:27:10] Alexandra: To understand you correctly, you predict with super apps that we will not see these gigantic super apps where everything that I might want to do with my money would be catered to with one app, which would require quite some collaboration and data sharing, but rather section specific super apps for travel versus mobility, for example.
[00:27:30] Sulabh: It depends on the market. Of course, in certain markets, you've got super apps which are all-encompassing. Of course, those geographies had the advantage of having most of the citizens aligned to their brand and the trust around being the custodians of their identity and then slowly built into the full ecosystem themselves. Whereas, in other geographies where things are more mature, what we found is it's harder to achieve, and there's no one central brand that dominates in such a big way. This is where you will see the association of those brands along certain experiences, and I think that's what we are seeing as emerging or at least what the organizations are looking to do.
[00:28:29] Alexandra: I think that's definitely one factor that we already have so many of these strong brands. Then also just when we look at the regulation side, the privacy laws that we have in Europe and the United States, and the stage of how much data is used, and how challenging it is to even unlock it within your organization, that the necessary cross borders of your organization data sharing might be too big of a hurdle for some of the companies that we have here.
I see that we need to come to a close, so my very last question to you, I love that so many of the Money20/20 sessions that we had in the past one and a half days focused also on driving financial inclusion, fairness, accessibility, and also the potential of open banking and open data sharing, for a positive impact on both society as well as on the environment. What are your thoughts on that, specifically in the context of payments? Is there anything you anticipate to have a great impact on financial services for good, and what needs to change here?
[00:29:25] Sulabh: The potential is massive. You touched on a few things, sustainability being one or ESG. You can use transactions as a vehicle to incentivize good behavior versus not-so-good behavior if you would like. It's about using the data in the appropriate way; like if you know in a basket you've got certain types of products that are less sustainable than those types of products which are more sustainable, you can easily make payments, and transactional data could enable you to support a certain loyalty scheme, or incentivization scheme is probably a better word to say.
Similarly, of course, financial inclusion is a big thing. All the developments which we are seeing in technology and in payments are aligned to enabling better financial inclusion.
Whether you talk about CBDCs, you talk about similar changes when it comes to new propositions that are coming up in the market and even better in certain geographies where identity problem has been solved using singular bank digital ID or other digital ID so that KYC is easier and financial inclusion is made easier on one side of the spectrum, but also making it easier for anonymous financial inclusion. I think it's all happening, and there's just so much more potential.
[00:31:19] Alexandra: I can only agree. Just what we saw here in the last one and a half days definitely gets me optimistic. Also, particularly the space of how we can better understand human behavior. We know that our emotions are what drive us and which oftentimes make it challenging to have sustainable financial decisions. Just using all the insights that financial service providers do have about their customers to, for example, steer women more towards investing, counteracting old age poverty from females closing the gender wealth gap. So many things ahead.
[00:31:49] Sulabh: Also, transactions are the ones that can figure out if there's a problem. I was speaking to someone the other day, and they have built models to identify trafficking and various other things happening around the world. The opportunity is immense.
[00:32:12] Alexandra: Definitely. Definitely. We just got multiple signs that we, unfortunately, need to close. I definitely could have continued talking to you for at least another half an hour. Thank you so much for being with us today. I'm very much looking forward to your session later today on the wallet war in payments.
[00:32:27] Sulabh: Thank you so much, Alexandra.
[00:32:28] Alexandra: Thank you.
[00:32:29] Sulabh: It was a pleasure.
