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Welcome to The Payment Expert weekly podcast, brought to you by SBC Media. Each week we analyse the news driving the global payments industry forward; the innovation, the infrastructure, and everything that has to happen to make it all possible.
Louis (00:00.738)
Hello and welcome back to the Payment Expert Podcast, your source for the latest news, insights and analysis on the payments industry. I'm Lewis Thompson, as always, a news editor here at Payment Expert. And today I'm delighted to have with me Sulab, who's the Managing Director and Global Head of Payments at Accenture. Sulab, thank you very much for joining us today.
Sulabh Agarwal (00:25.116)
It's a pleasure, Lewis, to be here.
Louis (00:27.704)
Thank you. I mean, you've just got back from Cybos, I believe. I'm assuming a very, very busy week for you. I know the whole week was sort of badged about, you know, AI driven finance was probably one of the one of the key themes. was that what you sort heard on the ground? Unfortunately I didn't have a chance to to go this year, so I I'll use you as my summariser, I guess, for for for the event.
Sulabh Agarwal (00:53.428)
The way I will summarize it is, I mean, there was a lot of AI, but if there were three sections, would say, I would say most of the conversations are focused on first would be risk and resilience, which includes cyber risk, various other risks coming up because of frontier because of agent because of quantum, etc, etc. And everyone is worried about them.
There's a of vulnerabilities in the infrastructure where they are identified, people are looking to patch them, build for new next generation resilient infrastructure. I think that's one theme that is quite constant and I would say is the hygiene for most of the industry. AI and agents were...
all over the place, right? Like most conversations would not be complete without a mention of AI. Clearly, AI from the perspective of certain use cases like the enterprise use cases, as well as more, you know, customer-facing use cases were tested and in some cases proven.
in production by a number of institutions. So you have to say the AI is here. I think the other area where almost all the large institutions are doing a lot of work to feed the AI's data. So essentially sorting the data out, sorting the data products out, then the whole context and semantic layer was big discussion as to how to get that right.
There was, especially in the panel I was on, transaction foundation models and SLMs came into picture and organizations are getting lot of benefit from creating the right model mix, feeding into clearly the end use cases and the agents themselves. So that, I would say, would be the second bucket. And finally, I would say tokenization, the whole.
Sulabh Agarwal (03:06.608)
around stable coins, tokenized deposits, digital currencies, etc. was quite topical. I Pontus had just gone live last week so it was very topical and clearly an indication of how everyone is investing quite a lot in that space.
Louis (03:29.643)
Yeah, they are the big themes, shall we say, that seem to dominate the industry at the minute. also I I know it was was it a soft launch for your new report, Money in Motion where value flows? tell us a bit about that. I mean, what was the question that you and and Accenture set set out to to answer with it? And had did anything you here maybe change your framing or does it kind of correlate to to what
the data you found that's sort of informed your report.
Sulabh Agarwal (04:02.644)
So yeah, the report is called Money in Motion, Where Value Flows, and we interviewed 205 banking execs and about 230 corporate treasury leaders from a number of different industries. And we wanted to identify where banks are investing versus where corporates are investing, as well as what they actually need.
And I think what the clearly came out is that the bank's investment are leading the...
investment when it comes to the new things, especially areas like we discussed AI as well as digital currencies, probably because of the fact that the banks are creating the proposition to then be utilized by corporates. But at the same time, when you actually dig deeper into the corporate side and ask them questions around their needs and their expectations, it starts to align with where the banks invest.
investments were. Did that reinforce it? it was, mean, clearly, yes. There was so much activity in terms of where the banks are focused on both in terms of agenting as well as tokenization. mean, almost every organization is trying to do something.
probably it is the stage before, it's where everyone is designing the iPhone and then the apps and the actual use cases for the corporates will follow, which is where I think you will see a lot of corporate take up.
Louis (05:51.769)
Mm-hmm. So do you think maybe obviously the the building work's happening now? I mean, as you mentioned with tokenized deposits, stable coins. what do you think really is I guess what's what's working now or what will work the soonest to kind of impl for implementation? Obviously, whether it's sort of development scaling up and that there are a lot of pilots and and you hear even on the regulatory side, certain sandboxes, how far do you think
Sulabh Agarwal (05:57.63)
Yeah.
Louis (06:20.61)
Things need to travel before we start to see that I guess real corporate adoption.
Sulabh Agarwal (06:26.408)
Yeah, I mean, we're seeing a number of initiatives really coming to fruition or becoming real. And if I were to divide them into, again, a few buckets, think you would say there are the more wholesale capital market use cases, right, where money is being used to actually exchange capital market assets with our bond securities and others.
That's where we are seeing big usage of wholesale CBDC. So this is where the Pontus go live clearly has an impact. And also some of the work that the banks are coming together to do with Agoda will be quite topical and really help accelerate that. The reason this is also growing.
and has big promises because the asset side here, whether they are securities or bonds, there's tokenization initiatives on the other side of the fence as well. And that's what I would say is a big focus area. Then you look at more the cross border side of activity. And this is where I think stable coins are playing a big.
we are seeing especially for those geographies which are outside the G7s where you know you're trying to get to the exotic locations or exotic currencies. Stable coins are getting a lot of traction in terms of being the destination for you know USDC USDT or other forms of stable coins for the cross border payments. I think what one realization I had while I was outside.
is that when you look at the end-to-end cost of a payment, a cross-border payment made through stablecoins versus the regular swift traffic, because of the last mile liquidity availability, which is quite hard and expensive in those locations, actually the cost is more or less the same or in some cases greater than what
Sulabh Agarwal (08:44.212)
Swiftrail cross border payments is I was reassured by a number of people that it is only going to come down as more and more players come in to provide the last mile liquidity so I think there's more work to be done and and lastly central bank digital currencies I mean from a retail perspective digital euro we can clearly see the momentum and still very very early days in terms of
cases. I would say we can see the early shoots but a long way to go before it is universally accepted and used.
Louis (09:26.43)
Yeah, it's an interesting point. obviously you mentioned Swift and I guess routing funds suit through different, you know, jurisdictions, different markets. and perhaps in as autum automation picks up, you know, money may be starting to sort of pick its own route through through certain markets for cost efficiency reasons, or what have you. Does that change, I guess, that the the function of money movement where I I kind of i it matters maybe more who
made the routing decision rather than who issued it in that sense, does it change the relationship?
Sulabh Agarwal (10:04.084)
I don't think it has fully come into existence yet, right? The whole routing decisions using the agents. mean, there more and more agents coming into play, right? You look at the finance systems like SAP and Oracle, all of them have got agents like Jewel as well as the...
they own AI suite, look at Koopa which is a procurement system so you're seeing we're seeing more and more agents coming into being like SAP is talking about 200 agents that they will have in the core layer I think they've already launched about 50 of them. I mean the research said that 88 % of the banks believe that
they could own the search and recommendation agent layer.
They believe that the LLMs will own the search and recommendation agent of only a few of them, 37 of them believe that banks will own that layer. Your point is right that as these agents become more more sophisticated, they will start to select based on the conditions provided to them, the cheapest, the fastest, the...
the surest way to make the transaction happen, which may force whether, you know, at the back end is a corporate card used to make the payment versus is it going through the P rail? So is it using RTGS or is it using Swift from a cross border perspective? So like all these things will start to come into play. And of course, when you add the stable coins and other
Sulabh Agarwal (12:03.134)
as well becoming more prevalent. We don't think it's there yet, but it is fast coming.
Louis (12:10.227)
Mm, sure. I mean I I can see obviously in you know, I I guess the Treasury side you know, AgenTic has its clear use case, but maybe if you're just you know, a banking customer, you've got a current account, it w what's it looking like in the future? I mean, what does an agent do perhaps at a a standing order or or if there's an app and you've got instant faster money and you just, you know, click a few buttons? Is there does the benefits outweigh the extra friction for a user of just
Pressing some some buttons.
Sulabh Agarwal (12:40.18)
Yeah, I mean the benefits are significant right as a user if I want to buy something say I I say I want to buy a pair of shoes I like when they are at 50 % sale
and you know.
know the brand, know the size, I know the shape, I know the exact model I want. And I know that I'm looking for price and I'm waiting for it to happen. And I've instructed clearly an agent to buy it when the price reaches that. I think that's a straightforward use case, which you can see lots of value, right? And similarly then, if it is a more complicated use case where I've got multiple things that I'm purchasing.
within this whole ecosystem, whether I say, well, I want to book a holiday which needs to have these characteristics. I need to fly long distance. I want to go to a place which has got a beach. I want to go live in a place which is close to say, vegan, vegetarian restaurants. I want to do shopping more than I want to...
see cinema and if I give more complicated instructions to the agent, agent can look to optimize between them. Now this is my commerce needs or the overall needs as a consumer which I think for most consumers is going to be the front and center as to why they are using agents. Now behind the scene you can also see that the agent which is buying
Sulabh Agarwal (14:32.372)
things and interacting with the consumer then triggers certain payments instructions on the back end and then the merchant who is providing that agent to the consumer may say well I need to optimize my cost behind the scene. So the merchant can then take and train the agent to say well I want to buy the know the supplies from the cheapest route I want to have the cheapest
logistics or I may have again payment choices at the back end which means I want to use immediacy of delivery, immediacy of settlement, cash flow constraints, would like a certain payment method which gives me immediate settlement and that's beneficial even though it may cost more or a merchant that believes
something else is more important to them. Maybe it's the settlement is not that important, but it is the cost of the transaction itself. Let me choose RTP. So it will really depend on what the needs are and how the agent is going to act and behave for both the consumer and the merchant or the corporate involved in this case.
And there are similar use cases when it comes to treasury, if I'm doing my banking services, and different people will have different needs which they can give the context to the agent to certain actions. Am I, did I answer your question?
Louis (16:14.589)
Hmm. Yeah. Yes, yeah. I I suppose it it poses another question which maybe is a bit more difficult to answer, which is if obviously you know, the agent has has a use for the the person, you know, making the purchases, but it's also provided to them by the merchant. So if an agent did anything wrong,
Where does the liability lie? I guess you can always say, well, the the user has to, you know, make sure the agent is doing it right. But maybe the user would say, Well, that agent was provided to me by the merchant and it's not done XYZ. I mean, I guess there is another argument where, you know, as these models improve and you mentioned those those transaction those financial foundation transaction models, sorry, they are sort of I guess the hallucinations, etc. are kind of
Sulabh Agarwal (16:43.54)
Yeah.
Sulabh Agarwal (16:51.257)
well as the levels improve and de-vention.
Louis (17:05.815)
coming down as as the technology advances, but I guess it's still a a a a point of law or legislation that maybe needs to to come in or an understanding of where the agent sits within that and the liability for that.
Sulabh Agarwal (17:21.886)
Yeah, I mean, I always say like some of the more traditional schemes, like let's take for example, the card schemes, the 200, 300 page rule books have been developed over, you know, like years and decades. Like those rule books are quite sophisticated in terms of both, you know, liability, the rules associated with it, as well as all the exceptions handling which need to happen.
This space is still emerging. You're seeing a number of players trying to define those rules, also like in the cards world, Visa, Mastercard, Amex are all very, very active in...
in defining KYA like I mean we did some work with Swift which we showed the prototype in Cyboss on Wednesday where you know cross border payments are initiated.
using an agent, there's corporate A agent, corporate B agent, and the banks involved. So in that scenario, who does the KYA, how does the delegated authority work, how does interoperability work, and we created a prototype which hopefully SWIFT will take forward and create a rule book around it. So I think these things are emerging. And we would...
see a lot more activity. mean, certain geographies like, you know, India, where they had UPI already in place for core payments, they had something called, they have something called UPI Circle for delegated authority, which was used for use cases like if I want to give my little child my UPI access to make a payment, but I don't want to limit their, I want to
Sulabh Agarwal (19:18.93)
delegate the authority, but also limit the amount of money they can spend. that was UPI Circle, which is being used even in agents context. And then they're creating this new layer called UAP, which is again,
the agent, authorize the agent, whether they're, and then the delegated authority, the interoperability as well as the KYA, the know your agent capability together, I think brings the right solution for the customer and be able to hold different people liable.
I think we are as an industry working through it in various use cases.
Louis (20:06.091)
Yeah, it's an exciting time and everyone's, yeah, s slowly getting there, with it. I'll I'll ask one more question, Sula, which is obviously you've touched upon tokenized deposits and that looks like I guess the bank's, you know, answer to, you know, future money movement and it's w what that they're working towards. At the minute,
Sulabh Agarwal (20:12.508)
I'll ask one more question.
Louis (20:28.211)
I guess the conversations you maybe have what's stopping them? They're all developing new systems around it. Is is it the core systems or the old model still still making money, or is it somewhere i in the middle of this trans transition to to tokenized deposits?
Sulabh Agarwal (20:47.342)
I think everyone is exploring it. As I said, it needs the ecosystem for the whole thing to work end end. Like if only one side, meaning the bank, were to...
networks are not ready, the merchants are not ready, the other banks, the corporates, the treasurers are not ready. It doesn't work, right? Because it needs to be end to end and some of the points which you mentioned around, you know, the rule book, the liabilities, the exception handling and other orchestration is still, you know, in the process of development. Now, your other point, whether it is
the current infrastructure that is slowing them down. You can say so that some of the agentic world clearly creates more challenges from an infrastructure perspective, right? Because you're expecting increased volume, for example, right? One of the...
unintended consequences or the consequences of lots of agents flying around doing various things is your peak and trough in terms of transaction volume or activity volume will go up and down quite quickly and that creates a challenge of resilience in terms of the current infrastructure. Then you're talking about
some of these agents working alongside the current infrastructure. So interoperability is the other area which needs to be worked through within an organization because what you don't want of course there's the layer where the customer or the client's intent is being translated into the context in the right way but then how do you operate it in the world outside in real time when
Sulabh Agarwal (22:55.699)
you you are still dealing with a number of batch systems which may not get updated in real time always. So like there is, and this is the same challenge on the corporate side, right? When number of corporates are not ready for real time agentic world, the things are moving around quite quickly. lots to do.
Louis (23:17.175)
Lots to do and I'm sure we'll get there and I'm sure you'll be at the forefront, Suleb, helping the ecosystem and the industry on its way. Thank you very much for joining us today. That is unfortunately all we have time for. If you've been listening or watching and you're not already subscribed to the Payment Expert Podcast, make sure to subscribe wherever you do get your podcasts with plenty more insight and analysis coming over the weeks and months ahead.
And for the latest news, as it happens, you can head over to paymentexpert.com. We'll see you all next time.