Vish Sowani, Vice President, Global Innovation & Strategic Partnerships, Visa Interview

Vish Sowani, Vice President, Global Innovation & Strategic Partnerships, Visa Interview

You recently announced a fintech program at Money 20/20, what has changed in your approach to fintechs?

I will speak about Europe primarily. The main thing that has changed is that a year ago, we did not have a clear focus on how we help fintechs to succeed. Now, now we are a 100 percent-focused on how Visa helps fintechs to succeed. We achieved this through a number of things. The most important is that our CEO Charlotte Hogg has made this one of the top priorities in the European region. Without that, it wouldn’t happen.

Last December, I was asked how we can build out a program that makes Visa easier, more friendly, faster, quicker to work with Fintechs. From that time to today, we have made noticeable progress. Most importantly, we have a team now, of fourty people around around Europe. All of them are dedicated to Fintech, on top of their regular responsibility. They love it and it’s exciting. And I’m lucky that we have that kind of support. Today for example, if you are a young Fintech and you want to go to Poland or come to Turkey or go to France, I have somebody in each market that can hold your hand and tell you the local market practices, what is the best way to enter, how it can be helped etc.

And the results have started to show. Last year, we had a handful of fintechs working with us. Now, we have more than 200 that we’re talking to and we already got 21 that have signed with Visa. Out of the 26-27 we work with 21 have come to Visa. And that’s an increasing trend and I’m pretty sure we’ll keep that happening. So it’s very positive. What’s also starting to happen, which is really satisfying for all of us, is that the program we built in Europe is now being looked at globally by Visa to see how they can duplicate that in Asia Pacific, in CEMEA, in Latin America and even in the US, where Visa comes from.

What has been your progress since this announcement?

A lot, as I mentioned! We are seeing every Fintech that wants to do something and in terms of issuance in the market. Especially after Charlotte Hogg announced in Money20/20, that has really made the ecosystem of payments aware that Visa is actually interested, that it is keen to do business and that we are set up in terms of people, in terms of resources, infrastructure to engage and work with Fintechs. So it’s been a real accelerator. As I mentioned, we have 200 plus prospect companies we are working with from less than five last year.

How does Visa collaborate with fintechs?

In a variety of ways. As Visa, we think of ourselves as an operating system. So Visa is a commerce O/S, just as you have in your mobile phone O/S, Apple iOS or Android. We have an underlying platform that allows payments to be made between two people that don’t know each other, with complete trust. And our task is to open that system up for Fintechs to be able to access it in an easy fashion, in an efficient fashion, and in a fashion where we don’t create additional burden on them. So what we are doing for Fintechs particularly, is to make it very simple to enter Visa and to work with us in the first couple of years. For instance, we take away all the cost of working with Visa in the first year or two, and make it easy to work with us when they are young. And when they grow, we share with them the prosperity that they bring. But in the beginning, we make sure that they have our support without having a cost.

Are fintechs new competition for the banks? And how does Visa interact with both sides?

We don’t look it as a “both sides”. I think it is the same side. Fintechs are going to be some of the banks of the future, or they may become partners with existing banking customers, or they may get acquired by some of them or they may become players that address segments of the population or of the payment space which the banks either do not want to do or are not geared up to be working so.
Fintechs for example can make acceptance much easier for really small payments. For example, you want to eat a lovely baklava in the street market. But it’s a small price and cards are not accepted there,it’s only cash most of the time. What the Fintechs will help to do, is to make that acceptance possible by making it cheaper, easier for banks. The problem is banks are already big and it’s costly to set anything up. And it doesn’t make sense when you look at the full picture. Over time, we see these complementing each other. Visa is not in the business to choose who wins or who loses. We want to make sure that the payments ecosystem is enabled for anybody who wants to use it and we make it easier for them to use. That is the ambition.

You have recently announced partnerships with important players such as Klarna or Revolut. Any other such partnerships in your pipeline for the near future?

A lot! Some of the more public ones that were announced are Solaris Bank, or the investment we made in a company called Behalf, or the acquisition of Fraedom in New Zealand. There is a lot happening, and as I have mentioned, we are working on some 200 prospects, most of whom we hope will come to the market with Visa. I’m pretty confident that in the next one year we see lots more announcements, not just one or two. In fact I just had a call from my colleague in Paris saying an exciting young company has just decided to come to Visa.

What is your approach to fintechs and what are the key criteria you consider when you invest into a fintech?

We look at it as a spectrum. The main intention is always how we enable VisaNet, our payments platform, to be easily accessible to anybody who wants to use it. The investment we make in a company is really only to emphasize that. It could be because we want to learn more about a technology, it could be a particular market niche that we want to help grow and then we are making commitment to. So take Klarna, which was point of sales financing, we said this is something that we would like to use and a technology we could bring to others. Solaris Bank for example is an issuer processor. They connect Visa to various issuers. And we see value in bringing those to market. But the primary aim is always to give access to VisaNet in an easy, simple, straightforward fashion, and to make it as frictionless as possible, to make it as cost effective for Fintechs with zero cost in the beginning and to make it easy to use for them.

PSD2 has provided a favorable landscape for fintechs. What impact do you think this will have on consumers?

Very positive, I think. If you look at the philosophy behind PSD2, it’s about consumer choice. Consumers should be able to choose who sees their data, and they should be able to choose who initiates a transaction. That’s two things that PSD2 allows: one is access to account information and the other is payment initiation. With PSD2, the consumer has the choice to say: “I like this Fintech, I will let them have my data”. And they can then let them have the data without any extra cost. That opens up innovation. And what we do behind that is to make sure that VisaNet is available for that innovation. So that’s I think a really positive cycle: it drives consumer choice and that can only be good.

What is Visa’s role in developing payment technologies?

We are on the center of that actually. As I mentioned, Visa means trust. And security is absolutely fundamental.

For instance, you went to Venice in Italy and you walked into a shop, you bought a coffee or a meal. And you gave the merchant this little plastic card. Based on that plastic, they gave you the meal, you ate and you walked away. Impossible, when you think about it. You know that trust layer is what Visa creates. But there are very few people that you trust that way. That is the layer that we want leverage and make sure the people can use that as easily, as efficiently as possible. That’s the underlying philosophy.

As the use of cash decreases and consumers can do their payments using their smart phones and wearables, what other innovations are next?

I wish I knew! We expect commerce to change more in the next five years than it has changed last fifty years. For example, when I wanted to buy music in the old days, I would go to a shop where they have records, LPs and I would buy buy whatever was available. The store would have maybe 500 records or 300 records and that was it. Nowadays, I sit in my house or I sit in my hotel in Turkey and I look at Spotify or iTunes, and I listen to anything in the world, instantly on my phone or on my tablet. I can buy and I can listen to whichever I want. That is what I call the expectation economy. That is where the change happens. And what Visa wants to do is to make sure that we are the trusted intermediary in between the parties for making the payment experience as invisible as possible. So payments should just happen, as long as you have a Visa credential, be it a card or a digital token. You should not have to think about “so how do I pay this?” You want music, you listen to music, and you know that the right amount will be taken from your card. You can’t be overcharged. If you have a problem you’ll get it back. If it went to a wrong merchant, you have recalls etc. That is fascinating.

Let me add that we are completely agnostic on payment forms and we don’t favor one form of payment over another, whether it’s over a mobile, over a car, over online etc. In our Innovation Center in London, we have a virtual reality headset, which shows a store. You can look at an object and then just blink. It will buy that object for you. It’s so easy! What we do as Visa, is to make sure that we will stay prepared to be able to service that need. Which technology becomes more accessible, which technology becomes easier to use, which technology customers love, all of these will depend on the market, on geography, on time, on what you are trying to do. Ultimately, we think everything will become mobile, whether through a phone, or through some other form. However consumers still want to go to the store, they still want to see something. And our job is to make sure any technology is supported by Visa. So we are agnostic to the form factor.

What is Visa’s approach to blockchain?

I mentioned that we look at all technologies that can make payments either more efficient or quicker or more frictionless. Blockchain is a technology we are looking in actively. We are running a pilot using blockchain for a business-to-business payment, which we call “Business Connect”. Blockchain remains an interesting technology and we are looking at distributed ledger applications, alongside with other emerging technologies such as AI and machine learning. We will continue looking for innovative ways to help us process payments effectively and produce more analytical insights