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Before the Transaction Series: Anil Goyal, CEO of Corserv | Episode 251 · Leaders In Payments

• 0:06
  Speaker 1: This special series of the Leaders in Payments podcast, titled Be Solid, is brought to you in collaboration with NMI, the fully integrated payment solution built to scale.
• 0:17
  Speaker 1: In this six-part series, we'll take a look at what has to happen before the transaction, as well as business processes and tools that can help your business, whether you're an ISO, isv, payback or bank.
• 0:30
  Speaker 1: We'll also take a look at the latest trends in the digitization of cash and card issuing as they ultimately drive money movement In a world full of squares and stripes, be Solid.
• 0:44
  Anil Goyal: If you think about credit cards industry, it's a highly concentrated industry among a few large players.
• 0:51
  Anil Goyal: In the US, you have 4,000 banks, you have 4,000 credit unions and probably as many fintechs who might want to integrate cards into their programs.
• 1:01
  Anil Goyal: But if you look at the card market share, 80% of the market share is still owned by the top 10 credit card issuers.
• 1:15
  Greg Myers: That was Anil Goyal, the CEO of Corsair.
• 1:17
  Greg Myers: He is my special guest on this episode, episode 251 of the Leaders in Payments podcast, and I'm your host, Greg Myers.
• 1:24
  Greg Myers: As we continue our deep dive into the Be Solid campaign brought to you by NMI, Anil and I discuss card issuing.
• 1:31
  Greg Myers: Anil provides a brief history of card issuing as well as discusses some of the key trends, including the use of APIs, the use of cards for B2B payments and virtual cards.
• 1:41
  Greg Myers: We also talk about Corsair and what makes them unique in the marketplace.
• 1:45
  Greg Myers: We've got a great episode ahead, so let's get started.
• 1:48
  Greg Myers: Hi, Anil, and welcome to this episode of the Leaders in Payments podcast, where we're looking at all the things that have to happen before a transaction.
• 2:01
  Greg Myers: Obviously, issuing cards is one of those things, so we're going to dive deep into that today, so welcome to the show, Thank you.
• 2:06
  Anil Goyal: Greg, I appreciate you having me on.
• 2:09
  Greg Myers: Tell our audience a little bit about yourself, maybe a little personal and professional background, if you don't mind.
• 2:13
  Anil Goyal: Yeah, sure, I grew up in New Delhi, india, and I did my bachelor's in engineering from Indian Institute of Technology.
• 2:22
  Anil Goyal: I came to US in 1989, and thereafter I joined the graduate studies at Rensselaer, better known as RPI, in upstate New York, and I completed my master's and PhD in math, optimization and decision sciences.
• 2:41
  Anil Goyal: After graduation, my first job was at a bank which was actually a monoline credit card issuer.
• 2:46
  Anil Goyal: My first role was to create a custom credit scoring model which really helped me understand what goes into credit scoring and how important it is and impact on lending from a credit scoring perspective.
• 3:01
  Anil Goyal: And then I joined in management consulting area, mostly working with credit card issuers as well, such as American Express, in strategy and optimization, being a financial services industry for about three decades and have worked at some of the major credit card issuers, including Citibank and Bank of America along the way.
• 3:21
  Anil Goyal: Before course, I was heading up the credit card program for Centra's Bank and that program was outsourced to our previous company.
• 3:31
  Anil Goyal: Over the years I've worked in multiple departments, such as risk marketing, pricing, overall program management, and it really helped me appreciate the dependencies across the different areas and how complex card issuing can be and that it takes the team to do it well.
• 3:52
  Greg Myers: Let's dive into Corserv.
• 3:54
  Greg Myers: So tell us what Corserv does.
• 3:57
  Anil Goyal: Yeah, at Corserv, our mission is to make payment card issuing easy for our clients, and so we work with financial institutions such as banks and credit unions.
• 4:09
  Anil Goyal: We work with institutions who want to launch a co-brand program and customize it to integrate to their products.
• 4:18
  Anil Goyal: We work with FinTechs who want to embed payment card issuing into their offering through APIs from our infrastructure.
• 4:29
  Anil Goyal: You know those are the types of companies we work with.
• 4:32
  Anil Goyal: While most of our programs are in the credit card space, we also launch prepaid and debit cards.
• 4:39
  Anil Goyal: So, in other words, if you're looking to issue cards for your customers, you know you would have come to the right place.
• 4:46
  Anil Goyal: At Corsair, we were founded in 2009 and all the co-founders worked together at a prior company which was bought by another bank.
• 4:59
  Anil Goyal: That bank decided to shut down the office in Atlanta where we were based at that time.
• 5:04
  Anil Goyal: So many of us didn't have plans to move to the Midwest area and we decided to come together again and launch Corsair.
• 5:12
  Anil Goyal: So that's how we got started, and we have today 85 employees, and all of them are US based.
• 5:20
  Anil Goyal: We do not have any overseas staff.
• 5:23
  Anil Goyal: We're still hiring, with several open positions.
• 5:26
  Anil Goyal: We are profitable and we have over 35 clients and more to be announced soon Majority owned by employees, and we are very passionate about card issuing and we have designed our offerings to suit our clients.
• 5:43
  Anil Goyal: We're also a fully remote environment.
• 5:47
  Anil Goyal: In fact, we have employees in 13 different states in the US and when we got started in 2009, coming to the office was optional for most employees, so we set ourselves up well in this new age.
• 6:01
  Greg Myers: Alright.
• 6:01
  Greg Myers: Well, let's dive into the topic of card issuing, and obviously you've had quite the career in it.
• 6:08
  Greg Myers: So can you give us a quick history about card issuing?
• 6:12
  Anil Goyal: Yeah sure, Before we had general purpose cards that can be used anywhere, there were department store cards that could go back to 1920s or 30s.
• 6:22
  Anil Goyal: Maybe you could only use the card or for that specific merchant who gave you credit.
• 6:30
  Anil Goyal: Then Diners Club launched a charge card which could be accepted at many travel and restaurants, which is sort of a precursor to a more of a general purpose charge card.
• 6:42
  Anil Goyal: I think that was probably in the 1950s.
• 6:46
  Anil Goyal: In 1960s Bank of America introduced Bank of America, which was later spun off to become Visa, and that it was the first revolving debt credit card which means you didn't have to pay your bill in full.
• 7:03
  Anil Goyal: It was the buy now, pay later.
• 7:05
  Anil Goyal: And that's how we have credit cards where you can either pay now, you can pay later and spread the payments out.
• 7:13
  Anil Goyal: So that's at the stage for card issuing, mostly in credit card area.
• 7:18
  Anil Goyal: So credit card issuing has been around for decades and the acceptance, the usage and the technology of course has changed substantially.
• 7:29
  Anil Goyal: So just to give you a little bit of perspective, you have two sides in the transaction for cards.
• 7:36
  Anil Goyal: There is a merchant side where the merchant works with their bank and their point of sale provider to accept credit cards.
• 7:46
  Anil Goyal: So that side is called the acquiring side.
• 7:49
  Anil Goyal: And then you have the card holder side, where the issuing bank enables, features and works with the card holders to use the card.
• 7:59
  Anil Goyal: That's the issuing side.
• 8:01
  Anil Goyal: So we work on the issuing side of the business.
• 8:04
  Anil Goyal: There is a message that connects the two sides.
• 8:08
  Anil Goyal: In the 1980s there was an international messaging standard that was introduced called the ISO 8583, and it's still in use today.
• 8:17
  Anil Goyal: And so when you use the card at the merchant, the merchant captures the information and sends that ISO message request to the card network, whether it's Visa, mastercard, american Express, discover and then the network routes it, based on the first six or eight digits of the card, to the appropriate processor for the issuer and then a decision is rendered.
• 8:44
  Anil Goyal: You know whether it's approved or declined for that transaction.
• 8:47
  Anil Goyal: So all of this happens fairly quickly.
• 8:50
  Anil Goyal: You know required to happen within seven seconds, but of course happens much sooner in most cases.
• 8:55
  Anil Goyal: So from that standpoint, if you think about, you know historically for several decades the basic messaging hasn't changed.
• 9:05
  Anil Goyal: But if you look at the controls, you know that can be possible.
• 9:09
  Anil Goyal: The product features, the strategies, the marketing, the user experience, mobile enablement, you know all of that has changed substantially and there's a lot more customization now possible with all these new technologies and capabilities, based on who your target customer is.
• 9:31
  Anil Goyal: So, for example, you know the strategies, the process, the risk might be very different for, let's say, a $500 secured card If you look at a, you know, a high end rewards card with 50,000 credit line.
• 9:47
  Anil Goyal: That might have a totally different strategy and user experience Versus even you know there is a purchasing card which could be, you know, let's say, a $10 million line of credit for a company, for a large corporation, and so that would have, you know, a whole set of new capabilities as well.
• 10:04
  Anil Goyal: So, really, depending upon who your customer is, you know that's the umbrella of credit cards, but you can really tweak the features and functionality based on what their needs are.
• 10:16
  Greg Myers: You sort of mentioned this, but you know what are the technologies today.
• 10:20
  Greg Myers: And then how much and how different is that than, say, five or 10 years ago?
• 10:24
  Anil Goyal: Yeah, you know, the technology landscape is really ripe with new ideas, but in my view, much of that enablement is because of APIs.
• 10:34
  Anil Goyal: And so APIs, really, you know, let us enhance the customer experience, and you know, whether it's our mobile app or our client's mobile app, all of the functions and services that are offered for customer experience, or call center experience, or program administrator, all of those are managed through APIs, and you know a couple of examples I'd give you.
• 11:00
  Anil Goyal: As say, for example, a fintech client of ours would want to block a card on their app and they could just, you know, send us an API request to do so.
• 11:09
  Anil Goyal: If a purchasing card administrator for a company wants to issue a virtual card with spend controls, you know, for a specific payments to a vendor, and they would, basically the portal would send us an API request to enable that.
• 11:27
  Anil Goyal: So the beauty of all the APIs is that the underlying modern technology could vary among the systems and the integration is really through the data exchange or the API calls, and so that really, I think, enables a lot more innovation and customization.
• 11:46
  Anil Goyal: All of our systems, you know, have API first foundation.
• 11:50
  Anil Goyal: You know.
• 11:52
  Anil Goyal: You asked about how it has changed In the past.
• 11:54
  Anil Goyal: The integration was very difficult, you know, because even actually in the major card players and processing processors still use legacy mainframe technology but doesn't really lend itself very well to API integration.
• 12:11
  Anil Goyal: And then I would say further you know, beyond APIs, there are of course some table stake capabilities and technologies, such as, you know, security and reliability that is very important in the payment business how your infrastructure is designed and how that is deployed.
• 12:29
  Anil Goyal: Who has permissions?
• 12:31
  Anil Goyal: You know.
• 12:31
  Anil Goyal: How are you automating all of that?
• 12:34
  Anil Goyal: Are you storing the data?
• 12:35
  Anil Goyal: You know, for example, all of our sensitive data in our systems is tokenized.
• 12:40
  Anil Goyal: So, you know, I think it is of course become much easier with the newer you know technologies and the hardware to be able to bring up a program.
• 12:52
  Anil Goyal: But what goes on behind the scenes?
• 12:54
  Anil Goyal: From an infrastructure setup perspective, it's fairly still fairly complex.
• 12:59
  Anil Goyal: But we make it easy, you know, to enable it through APIs, which is when you can try to customize the card program for the needs of the customer.
• 13:10
  Greg Myers: So you were talking about the APIs and what a difference it's made.
• 13:13
  Greg Myers: So I assume that using that technology has accelerated the timeframe in order to go from an idea to a launched card program.
• 13:24
  Greg Myers: I would assume that has accelerated that timeframe exponentially.
• 13:28
  Anil Goyal: Certainly.
• 13:28
  Anil Goyal: Yeah, I mean not just the timeframe, but you think about the expense, the investments that's required and the capabilities that you can use.
• 13:37
  Anil Goyal: The feature functionality, you know, is much richer.
• 13:41
  Anil Goyal: So definitely.
• 13:42
  Anil Goyal: All of these APIs have enabled us to be able to launch the card programs much quicker and much more cost effectively as well for our customers.
• 13:53
  Greg Myers: And you know it seems to be a trend with and you mentioned it some of your customers are FinTechs, but there's a lot of FinTechs and payments companies whichever word you want to use for them that are launching these card programs.
• 14:04
  Greg Myers: So you know what are your thoughts on that trend.
• 14:08
  Anil Goyal: If you think about credit cards industry, it's a highly concentrated industry among a few large players.
• 14:17
  Anil Goyal: Within the US, you have 4,000 banks, you have 4,000 credit unions and probably as many fintechs who might want to integrate cards into their programs.
• 14:28
  Anil Goyal: But if you look at the card market share, 80% of the market share is still owned by the top 10 credit card issuers Very highly concentrated, and in fact, 99% of the institutions don't even have a card program of their own.
• 14:45
  Anil Goyal: And there are good reasons for that.
• 14:47
  Anil Goyal: Chief among them are the expense and the expertise needed to launch a card program.
• 14:53
  Anil Goyal: The initial investment to launch a card, a credit card program.
• 14:57
  Anil Goyal: It could be in millions if you really build from scratch, and it requires expertise in at least a dozen disciplines looking at fraud, marketing, risk compliance, settlement and so forth and so really doesn't make sense to build something from scratch for anyone unless they're going to build a huge volume.
• 15:19
  Anil Goyal: But to your point, that has really changed.
• 15:22
  Anil Goyal: With new technologies and with the offerings such as what Coursera provides, it is relatively inexpensive now to launch a card program and in fact, some of our customers have achieved profitability within one month of launching the card program.
• 15:38
  Anil Goyal: So most of those customers that we have would really never have even thought of launching their own card program if we didn't have a technology similar to what we have today.
• 15:49
  Anil Goyal: So this is really what excites us.
• 15:52
  Anil Goyal: We see a huge opportunity to level the playing field, if you will, whether it's for FinTechs, for brands, for banks to offer credit cards to their customers, and we try to make it easy and profitable for them to do so.
• 16:07
  Greg Myers: So, beyond the trend of FinTechs and payments companies launching their own programs, what are some of the other current key trends in the card issuing today?
• 16:16
  Anil Goyal: When most people think about credit cards they think of consumer credit cards.
• 16:21
  Anil Goyal: We see a big trend in B2B payments.
• 16:25
  Anil Goyal: There is a significant growth opportunity over the coming years in commercial cards, and so these are cards issued to a company, maybe even to larger corporations, for making payments to their suppliers, and much of that payment still happens through ACH, through checks, even wires in many cases.
• 16:47
  Anil Goyal: So credit cards, particularly virtual cards, really make it very easy to track payments, to reconcile automatically, to integrate with the APAR systems.
• 17:00
  Anil Goyal: This is the trend that really accelerated during COVID when employees couldn't reach offices or they weren't available to reconcile, and so we see that this trend is going to really continue and the industry is largely under-penetrated.
• 17:17
  Anil Goyal: I mean there are also other factors like payment friction that you have in disputes.
• 17:23
  Anil Goyal: It's much easier in a credit card environment.
• 17:26
  Anil Goyal: The fraud is almost non-existent in a virtual card space where the controls are really tight to who can receive those payments and how much.
• 17:34
  Anil Goyal: So we see B2B payments on commercial cards to have a significant opportunity for us and we've made large investments in our technology to offer full-featured commercial cards.
• 17:48
  Greg Myers: What do you think all of these trends, what do they mean to the economy as a whole?
• 17:54
  Anil Goyal: Yeah, I mean, you know payments infrastructure is really very hard and this is what we do.
• 18:00
  Anil Goyal: We build infrastructure, but payment enablement doesn't have to be hard.
• 18:06
  Anil Goyal: You know we try to make it easy for our customers to use the payment infrastructure and make it easy for them.
• 18:13
  Anil Goyal: But if you think about a general economy, you know, from a B2B payment perspective, that has significant implications.
• 18:21
  Anil Goyal: Financial health of the businesses could improve because the cost of payment processing is cheaper and faster for them.
• 18:28
  Anil Goyal: The working capital, working cash flows, could be optimized.
• 18:34
  Anil Goyal: If you think about digitization of payments and automation, it could allow the employees, you know, really focus more on their core capabilities.
• 18:44
  Anil Goyal: You know then having to spend time on ancillary activities like payments.
• 18:49
  Greg Myers: Right, that makes a lot of sense.
• 18:50
  Greg Myers: It just seems like all of this like is converging at the same time with the ability to do, like you said, the virtual cards for the B2B world.
• 18:59
  Greg Myers: So there's so many of these trends that are coming together.
• 19:01
  Greg Myers: But what does it look like when you kind of get the crystal ball out and look out five to seven years from now?
• 19:07
  Greg Myers: You know what do you think that starts to look like?
• 19:10
  Anil Goyal: Yeah, you know, we've used the word card, a card issuing, and really card is nothing but an account number which is embossed on a card.
• 19:19
  Anil Goyal: But it doesn't have to be, you know, on a card, right.
• 19:22
  Anil Goyal: As long as you provision that account to a device, whether it's a mobile device, whether it's, you know, a bracelet, whether it's a ring or any other, you don't have to have a physical card.
• 19:34
  Anil Goyal: So, you know, we see that card issuing is really going to evolve to having, you know, that account number enabled, whether it's mobile enablement or, you know, being able to use it through other means.
• 19:47
  Anil Goyal: You're just using that account to manage, you know, the credit, you know and the payment space.
• 19:53
  Anil Goyal: And then I would also say the customer experience is going to continue to evolve, you know, for if you think of Gen Z, they want to do everything on the phone, you know, in a self-service environment, and so more and more features and mobile enablement, you know, will become richer on the mobile side and the customer experiences would be more self-service rather than calling a call center.
• 20:21
  Anil Goyal: We talked about virtual cards and whether it's for businesses, for consumers, we think that the usage will continue to increase for virtual cards, you know, because it's got a lot of advantages and I mentioned fraud as one and reconciliation, and even for a consumer to use virtual card to add a service, a subscription service, which they can easily delete later on from a virtual card perspective.
• 20:46
  Anil Goyal: So we think virtual card acceptance and usage is going to continue to increase as well.
• 20:51
  Anil Goyal: And then, of course, you have artificial intelligence that we think could impact in multiple areas, whether it's in analytics, whether it's in, you know, personalized marketing, whether it's in customer service areas.
• 21:04
  Anil Goyal: You know many of the AI systems that we hear about today are trained on internet-based information, but when you talk about the payment space, you know it has to be highly secure.
• 21:16
  Anil Goyal: I believe that when we have AI systems more efficient, which can be trained on proprietary knowledge and proprietary data that is internal to the company, that would be a game changer as well.
• 21:30
  Greg Myers: Yeah Well, let's take all this that we've talked about and circle back to Corsair.
• 21:35
  Greg Myers: What are all these trends mean to you guys there at Corsair?
• 21:39
  Anil Goyal: Yeah, I mean we are fortunate to have employees who are passionate about this business.
• 21:44
  Anil Goyal: When I talked about payment infrastructure building, that requires a lot of disciplines and the knowledge and expertise in that we are really focused on and delighting our clients and making it easy for them.
• 21:59
  Anil Goyal: Technology is definitely a key differentiator for us, but I would also add that expertise and experience that our folks bring to the table also stands as a part.
• 22:11
  Anil Goyal: Whether it's a mid-sized bank, a large regional bank, a brand or a fintech, we are here to see how we can help them.
• 22:19
  Anil Goyal: But we're always learning and monitoring the trends and addressing our client needs and we'll continue to innovate and really looking forward to growing.
• 22:28
  Greg Myers: Okay, well, I know we've covered a lot of ground so far, obviously about the company and a little about your background and, obviously, the trends in card issuing.
• 22:37
  Greg Myers: I think it's interesting.
• 22:38
  Greg Myers: One of the takeaways is for me is thinking about the word card, like you said.
• 22:43
  Greg Myers: I mean, at what point does a card not need to be a card at all and it's issuing and virtual issuing instead of virtual card issuing.
• 22:53
  Greg Myers: So I think that's kind of a takeaway for me to think about.
• 22:56
  Greg Myers: But we've covered a lot of ground so far.
• 22:58
  Greg Myers: Is there anything else that you'd like to add before we wrap up the show?
• 23:01
  Anil Goyal: No, you had some really good questions, greg.
• 23:04
  Anil Goyal: I thoroughly enjoyed it, and thanks for taking the time to talk to me.
• 23:08
  Greg Myers: Absolutely so.
• 23:09
  Greg Myers: Thank you for being on the show today.
• 23:10
  Greg Myers: I know your time is very valuable, so I really appreciate you being here.
• 23:13
  Greg Myers: Appreciate it, and to all you listeners out there, I thank you for your time as well, and until the next story.
• 23:20
  Speaker 1: Thank you for listening to this episode in our special series Be Solid, brought to you by NMI, the fully integrated payment solution built to scale.
• 23:29
  Speaker 1: For more information on what happens in payments before the transaction and this episode, please visit nmicom.
• 23:37
  Speaker 1: Forward slash resources, forward slash podcasts.
• 23:40
  Speaker 1: And remember, in a world full of squares and stripes, be solid.