‘The Beginning of AI’ and Embedded Finance: In Conversation With Visa at the Dubai FinTech Summit
Earlier this month, The Fintech Times attended the second edition of the Dubai FinTech Summit, to catch all of the emerging industry trends across the Middle East.
During the two day event in Dubai, we sat down with Vanessa Colella, global head of innovation and digital partnerships at Visa, to get her takes on some of the biggest topics currently gripping the world of finance.
As a global leader in payments, Visa covers a wide range of regions – and sees a wide range of differing approaches and use cases across the world. Colella explained how the aims of some of the biggest tech firms can differ to smaller fintech firms.
“The big tech players and global tech platforms that we’ve worked with often innovate around new technologies, new business models or just new sectors that they want to get into. These firms tend to drive a fair bit of their innovation from economies where payments infrastructure is fairly mature.
“Whereas in the fintech space, those kinds of innovations tend to be driven from economies where, for at least a decent part of the population, the payments infrastructure might be a little bit more brittle or inaccessible to people.
“So that’s one example, we’ve got innovation being driven by companies that are investing $40billion a year in R&D of a particular flavour and we’ve got other innovation that’s coming bootstrapped from the fintech community, to solve different problems. I think much of that stems from the characteristics of the infrastructure, the various markets, where you see very different patterns.”
The power of embedded finance
Embedded finance is one term that has generated a significant amount of interest and excitement across the fintech industry for a number of years. Colella discussed why she believes this hype is justified and how embedding payments could positively impact the global economy.
“There’s a $1.7trillion gap between goods that are flowing around the world and liquidity in the supply chain. So if you think about that, that means that some suppliers are having to wait to get paid. If you’re a big, important supplier, you’re going to be able to say, I get paid on Tuesdays.
“If you’re a little long tail, you’re gonna have to wait through that whole process and until I can get paid, because I don’t have the clout to set the terms. This results in a significant part of the world’s economy is actually being financed by the smallest and the long tail of global supply chains, which is totally counter intuitive.
“Those are not the businesses that can afford to finance everything. So what if we can embed payments all the way through the supply chain and logistics? And what have you can use that to shrink that $1.7trillion gap, and then lift that burden off of the long tail suppliers. Then you’d see its growth and increased GDP in many places around the world.”
Leveraging AI across all operations
As various industries continue to leverage artificial intelligence (AI) to streamline different processes and solve a number of pain points across all aspects of their operations, the financial sector has also bought into the technology.
In fact, AI has become the buzzword of not only the last year, but arguably the last three years at least. But Visa has been utilising the tech since long before then.
“We’ve been using AI for 30 years,” Colella explained. “We use it to tackle investment fraud. We’ve used machine learning to tune our models. Last year, Visa blocked more than $40billion worth of fraud, and $27billion the year before.
“So there’s a long practice of using cutting edge technology to make sure that we’re keeping ecosystems safe and sound. At Visa, we think not just about risk and fraud, but about loyalty, about hyper personalised shopping experiences about a different kind of customer care, different kinds of client service that’s empowered by AI.
“I think this is just the beginning for AI. Now, we are still early on generative and even the researchers are still discovering stuff. That that tells you how early we are with the tech, but I think the tech is only one part of it.
“We always have to look at what’s the new technology. What’s the new behaviour of people and what kind of industry structure gets laid down? We are still early in all three of those.”
Is Dubai leading the AI charge?
Dubai has established itself as one of the most exciting emerging regions for finance and is quickly becoming a global fintech hub. In fact, Dubai has seen a surge in fintech investment in recent years, with total fintech funding reaching $2.3billion in 2023 alone.
Colella explained how the region has become a trailblazer: “I do think, since we’re sitting here in Dubai, that it’s quite interesting what the UAE has done in terms of appointing the First Minister of AI in 2017 – well before the current fascination about what AI can do.
“Anytime you’ve got new types of behaviour and new infrastructure, no one can just flip a switch and solve a use case. No startup is an overnight success – on average, it takes about seven years.
“This region is quite interesting for not just the capital investments, but the foresight around what the government is going to need to do, how the region is going to attract talent, how it is going to set up the conditions needed for lots of different kinds of thinkers to thrive?
“I think that’s something that’s important with generative AI in particular, because of the costs associated with it, the work being done is very concentrated.
“We’re used to living in a world for the past several decades, where technology was fairly distributed. At the beginning of the internet, there were only a few service providers, but that became very accessible with lots of developers. The cost of generative AI, means that, right now, the work is very concentrated amongst really only a handful of players.
“The kind of work that’s happening here and in other places around the world, putting out some of those models as open source, and enabling people to develop, is a really positive development of what’s happening here.”
