Talking Business feat. Airwallex’s Jack Zhang

Join Airwallex CEO and Founder, Jack Zhang , in a dynamic discussion with BBC News presenter Ben Thompson .

In this insightful interview, Jack dives into how Airwallex is revolutionizing global payments and banking services with its cutting-edge, secure platform. Deep dive into the demise of cash and the challenges of navigating international regulations. Plus, find out more about the pivotal role digital payments play in enhancing fraud prevention in the age of AI.

📢 Notice: This video content is currently only available to viewers in the UK. For those in other regions, we’ve provided a full transcript below for you to stay informed.

Ben Thompson: Jack Zhang, good to have you on the program and talk to me first of all about what you do. What is Airwallex?

Jack Zhang: We're providing banking and payment services like bank accounts globally, moving money around the world, and also the entire financial software suite to help you run your business.

You're not alone in offering services like that. It's a really competitive market. Everyone wants a slice of that pie. Why are you any different?

Jack: We build our business as an infrastructure-first business. We build alternative infrastructure to the SWIFT system, which was built in the 1970s so we're able to lower the cost by more than 90% compared to the traditional SWIFT or correspondent banking system when you transfer money globally.

Jack, a few weeks ago, much of the world's travel infrastructure, other systems went down in that Microsoft, CrowdStrike outage. What impact did it have on a company like yours?

Jack: First of all, most of our laptops are not running on the Windows system, so we use Mac internally. For our customers that interact with our system, we run on Google Cloud, so we didn't have any issues, but because we are a card-issuer interacting with Visa, MasterCard as well, we did see some minor issues on the scheme side, so it had a slight impact on our customers. I wouldn't say it's a huge amount of impact, and that shows the benefit of using a technology stack that is the latest.

And does an outage like that Crowdstrike problem underline the difficulty of relying on systems that are digital only? So if people are making a payment through your platform, they would worry that the payment may not get there if there is a repeat of something similar. You know, are there backup plans? What's the resilience strategy here?

Jack: We generally have cloud infrastructure so that when one cloud has gone down, we have another cluster, backup that should be able to run straight away. So that kind of gives you the security of no downtime. So our uptime is actually more than 99.99 percent. Then, we have a multi cloud infrastructure so that, say, when Google Cloud went down, we had a backup cloud sitting on other cloud services that can potentially help our customer continue to run their business.

Is every country developing at the same pace when it comes to this adoption of tech in the financial sphere? And I wonder, you know, if you look at large parts of Africa, they utterly bypass credit cards and plastic cards altogether and went straight to digital payments. If you go to China, digital payments really do rule. And I wonder where in the world has adopted and fallen in love with digital payments more than others?

Jack: I think there are some countries that have really done well on the real-time payment system. For example, the UK launched FAST payment a long time ago, and that's running 24/7. Australia, for example, launched NPP, which is a real time payment system, a couple years ago. Still people are gradually adopting it, but countries like India have UPI, and Brazil has PIX, and those systems have really penetrated more than 90% of the population very quickly, which is much cheaper and real-time. And these sorts of domestic innovations, unfortunately, haven't been leveraged by the traditional SWIFT system.

What Airwallex has done is connect this real-time domestic payment system to a global cloud, so any people around the world, any businesses wanting to transact globally, can leverage this latest digital payments innovation in various markets around the world.

Also, as innovation improves, so too do the criminals, the fraudsters that want a piece of that action too. And we've also seen things like payment systems used for international diplomacy. I'm thinking of Russia, for example, locked out of that SWIFT system, given what's going on in Ukraine. What difficulties does that pose for you as a business trying to comply with international rules and sanctions and also keeping an eye on the fraudsters?

Jack: I think the AML and sanctions are a lot easier than the fraud. So from a sanctions point of view, it's quite easy for us to block transactions coming out of Russia or making payments to Russia...

Is that just a blanket ban where you say "We will not do that"?

Jack: Pretty much. From a Russia point of view, we're not making or taking any payments in and out of Russia. And there's some more complexity around the Baltic area, because some people try to get around the rules by setting up shell entities in the Baltic area. And, you know, we have more complicated rules around that.

So in general, like the rules, sanctions are sort of black and white. But when it comes to fraud, it's a lot more tricky, especially with the takeoff of AI, I think it's just going to get even more difficult to prevent. And we spend, you know, in Airwallex, we have over 100 engineers working on our fraud and AML system and KYC system. So that kind of gives you an idea of how much of a resource we deploy to protect our customers from these fraud incidents.

And I suppose the final question - is this the end of cash? Is cash dead?

Jack: I do feel cash will gradually disappear in the next decade.

In the next decade? So that's not long...

Jack: I mean, it depends on the market. I think in some of the markets in Africa, maybe some of the smaller, underdeveloped countries, there'll still be cash around. But in terms of the major digital economies, I don't see why people will continue to use cash, especially as more and more fintechs start to innovate in different areas of the financial services and everything is kind of moving to digital in that sense. So I believe that cash will gradually disappear. 

Jack Zhang, Co-Founder and Chief Executive of Airwallex, it's good to have you on the program this week. Thank you.

Thanks Ben!