#42 – RegTalks with Rachel Whelan, Deutsche Bank

Transcript

Claus: Hello and welcome to RegTalks, the show where we unpack how regulation and technology are reshaping financial services in Asia and beyond. I’m your host, Claus Christensen, CEO and co-founder of Know Your Customer. We’re coming to you from the Money 20/20 Asia show floor in vibrant Bangkok, and today we’re diving into the engine room of global commerce: corporate payments and real-time cash management. My guest is Rachel Whelan, Managing Director at Deutsche Bank, where she serves as APAC & MEA Head of Corporate Cash Management and Global Head of Payments & Transactional FX. From London to Singapore, Rachel has spent 26 years helping multinationals move money across the globe faster, safer, and smarter. Whether that’s building 24/7 payment rails, rolling out instant settlement e-commerce solutions, or partnering with fintechs to take payments securely.to the next stage of evolution.

Thanks so much, Rachel, for coming on with our podcast.

Rachel: Thanks, Claus, thanks for the invite. Really happy to be here.

Claus: Great. You have over 26+ years of experience and lead the corporate cash management business across Asia-Pacific, Middle East, and Africa. Huge area, huge job, and payments in TFX product management globally. Excellent. Can you share a bit about your journey? How did you get into this and what does your role entail, especially when managing cash management across 18 very diverse and highly regulated markets?

Rachel: Yes, definitely. As we were just talking about, my journey, I suppose, began from a very small village in County Waterford, in Ireland, to where I am now sitting in Singapore. And, I suppose the ownership and mandate that I have within Deutsche Bank, did I ever foresee it? No, never. I didn’t even know really what a big bank looked like besides a retail bank in my early days.

So, the journey did take me, , I was in the investment bank back in London, and I took a bit of a career break after a few years with Deutsche Bank and then ended up with Deutsche Bank back in Singapore. I think that’s when I kind of first, in  2011 when I got really introduced to the payments.. It was interesting because I was sitting in the investment bank, literally going, “Our payments team is changing some payment processes; we need to know what’s going on.” That was kind of the premise.

Then subsequently got involved and moved into the corporate bank. That’s where I got my first introduction to even product management, which is now, like, the TFX product was my first product I took on. I owned it in APAC for about four years; I was the APAC head under the transactional FX product, and then  took on the global role. That’s where I really got into the payments and cross-currency payments.

I think now, a number of years forward,   I took on the payments role for Deutsche Bank, I had  said at the time, if you had asked me a number years ago would I have taken on payments as a product, because cross-currency payments and FX that’s interesting and that’s constantly changed and I’ve owned that product, and I will never give that product up because it’s one of my babies. But then, in the current situation of payments, I never foresaw that. So when I took on the global payments role four years ago, that was something I never thought I would do.

And now I would say payments are sexy. But definitely, they’re complex. Coming from the investment bank, complex derivatives, contracts, and structured deals, there’s so much risk and so much complexity. Payments have just as much complexity.

Now, are foundational in terms of what they mean in terms of our clients and ultimately the payments requirements of our clients is that foundational part of helping them do business and supporting them globally. So that then, added with my cash management remit in as you said  18 now diverse countries, which I took on that role in the last three years, fits nicely as two linked things in terms of cash business, key to our clients is payments and TFX asks and they’re managing their risk globally from a cross-currency perspective is key to them. For me they sit nicely.

Earlier again, I also see, from a senior female perspective in our organisation, this is a big remit to have. It’s very important, but I think it also helps to show that you can come from that small village, in Ireland and grow up to be who I am. So, yeah, it’s exciting, and as I said, payments are  very exciting, but yes, a very complex space also to be in.

Claus: Yeah, I guess that comprehensive journey mirrors the increasing complexity of payments, that in turn mirror the increasing complexities of the world of trading and commerce.

Claus: Oh, absolutely.

Claus Yeah. When you started, it wasn’t probably all that complex.

Claus: No, no, no. As it is today.

Rachel: Exactly. And if you sit now and think, did I really know what was going on in the rest of the world? And when I sit now, absolutely. My nieces and nephews know everything that’s going on in the world. I think the world has become way smaller,  but also very complex in relation to what’s going on.

The current situation, where one person’s agenda can change, puts things on a total flip in relation to what you planned yesterday, which is very different from today. I think that’s what our clients are really dealing with on a real-time basis now. Supply chains—we don’t know what they will look like tomorrow.

So, I think COVID was an interesting one because that changed tstuff. We had two years we had to re-baseline. After COVID, I was in Singapore. It was a good choice to be there. We kind of all forgot about it, but after that, we had to re-baseline what was the world  then.

And now even we are  talking on Monday in our management meeting, even this first month, kind of what happened in the first quarter of this year, is going to be very different from what happens in the second quarter of this year. So we’re going to have to re-baseline again, I think that’s why banks like ourselves are here, and I think that’s where we say from a Deutsche Bank perspective, we have a very strong presence in APAC.

We do have people on the ground who know local markets, and we have a really good regional presence with lots of expertise  across all of our products and, of course, across all of the  clients’ needs. I think that’s a key thing for me—when we are doing this,? What are we trying to solve for? What is the client need?

Because I think that’s the other challenge we have; there’s also a lot of new tech and new innovation that, yes, technically we can do. We have really clever people  they can build anything. But  do we need to? And why do we need to? So that’s why you also have to go back and ask those questions, and that’s where our clients need us.

Claus: It’s kind of a Steve Jobs approach—to have that client journey in mind when you start yeah

Rachel: Yeah yeah, and we do. so the way we build this kind of product. That’s, for me, I think the best benefit of my job being the cash business head. I get to meet our clients and I get to talk to them. Yes, I’m there to support them in terms of their wider business needs, but then I can also talk about what they are trying to do.

And I can extrapolate that quite quickly into what I need to be thinking about in terms of what products we’re providing and how we’re providing to them in the future as well.

Claus: On a professional basis, like just me, the journey in my case from Hamburg and Germany, through Ireland, through Hong Kong—this background of switching cultures and going through different things actually keeps us on our toes.

And it instils a certain flexibility that’s probably extremely useful. At least, months now, in this year, these quarters  that are upcoming things have changed and dropped to change again.

Rachel: No, absolutely. My early days I think in London were very, very different. Different, you know, sitting on the investment bank side of things. It was a different kind of complexity.

Sitting in APAC for 18 years, I have no reason to leave, it’s a great place to be. It’s a great place to live. But in terms of the learning that you can get from this speed of change that’s being driven in the markets in APAC, and that complexity, you know, those restricted natures of the currencies that we’ve always  dealt with, but the complexity across the markets—yes, we’re not one currency.

So there is loads of learning. We advocate for people coming out and spending some time in this region. You get very resilient because it is constant change. I think this latest one, I think people are struggling to model it a little bit, that risk, but otherwise, it is another event that we have to help deal with and help our clients to understand.

And I think that’s where us staying resilient as a trusted partner is very important.

Claus: And especially being here in Bangkok and looking at the local scene, there’s a ton of interesting payment options and payment systems coming up hereto have the blobe head here in Asia rather than in Europe or America. Absolutely makes sense. I remember my astonishment at how far ahead they were in 2015. I believe I was, yeah, just when we found KYCI was in Shanghai and a friendly company was sharing offices there for a little coworking arrangement. We went out for lunch, and one person paid, and they all paid them back through wechat pay.

In 2015, I didn’t know something like that. We didn’t have it in Europe. We are only catching up there, like with Revolut or the faster payment systems that kind of side works well. But yeah, it’s catching up. It’s only fitting to be here in Asia where things happen.

Rachel:  No, absolutely. So, in this example, I pretty much use the learnings of what is happening in India to also drive how we’re building our whole instant payment rails. I have been traveling in and out of India for a number of years, and the last time I was back after COVID it was totally changed. And again, going back to the reason to do  : the regulator really wanted to, it’s about banking the unbanked, and ultimately supporting that financial inclusion, which was a big agenda.

You can see it was the real reason to do and push forward by the regulators. So that was a really good example. But then also, they’re quite innovative, and the regulators does hold a good hand in keeping the market secure, which is also very important.

Claus: Like I’m deviating a bit from the questions  i have hear as we are chatting and we should do that, this is the next thing we have is india. I don’t have experience there at all. I’ve done a lot of countries here in Asia and Europe, but not India so much. So India is probably very interesting in terms of levelling the playing field for less banked or disadvantaged populations. Do you see that happening through technology, through your involvement there, with SMEs and small businesses?

Rachel: Oh, absolutely. So, like, I think in the last conversation I had with a client over there was about small business loans, so they had been able to disperse those instantly to small business stores and  small retail loans, had been able to real time disbursement. . So actually setting up a whole structure that has a distribution model through platforms. They get KYCd on the platforms, and then you ultimately can sign up straight away, and the funds are disbursed over instant rails in real time, so the person has it.

And like even things like some of the capabilities that we built over the years in relation to how we integrated the instant payment rails—this is where you go to the b2c type of model, while we’re not a retail bank, we are a retail banking operation in India. But I don’t pwn that piece of business but generally; we’re not a retail bank in APAC. So for us to be able to see how it’s impacting the end consumer, like  you were asking, we have definitely been working with our corporate clients in terms of how they differentiate how they work with their end clients.

One example is when oil prices went considerably up we were helping a corporate client, who owns a large taxi company or large mobility companies, to disburse the actual funds that these drivers were getting paid in real time so that they could go around the corner and fill back up again. Yeah, of course. And then take their next journey. So this is literally real, tangible outcomes of the usage of instant payments and connectivity.

Claus: Well, I I firmly believe that the technology that we’re introducing here does help to equalize playing field there to a degree as far as we can and not even make it even harder to catch up. Anyway, let’s let’s get back to a couple of questions here. The whole cross border payments is interesting. So Deutsche Bank is a major player in corporate payments globally. How’s the bank driving innovation in cross border payments, cash management, particularly in Asia? You already mentioned one there with India. Is there any new solutions or initiatives that are interesting to learn about?

Rachel: scheme rails..

So that starts to help. That becomes an alternative for cross-border, cross-currency requirements.

Rachel: But I would say, in the interim, because this is not ready, what we’ve been doing, is connecting for our clients when they have clients wanting to do business in another market. They need to collect onshore in another market. They want to ensure their consumers will be able to pay in their local currency.

We all feel comfortable paying in our own local currency. So that collection into local currency becomes complex for that client because they need those funds back to actually pay the merchant seller. That seller needs it in a different currency.

And those are not easy setups in APAC because you need documentation; you have to prove the payment and stuff like this. So we ultimately have built solutions, bringing together multiple parts of our product capabilities and we’ve joined them together in an end to end integrated solution for clients where that becomes near instant.

And that’s how it’s been described by clients because we’ve been able to collect, from a regulatory compliance perspective locally, what documentation do you need and digitise some of that. We brought that all together. We then apply the FX and then move the money offshore and allow it to be paid out to their merchant

Claus: Do you know anything about the history of why Deutsche Bank has grown so much? Because I originally left Germany 20 years ago. I banked with Deutsche Bank and I still have a Deutsche Bank account. Of course, I knew them as the prominent business bank in Germany and also retail

But this business is huge here. How did they decide to do that over here?

Rachel: So, I think it’s a multiple of things. For me, what I’ve been involved in since those years when I took on the cross-border product, my FX4Cash, it’s called TFX, cross-currency product, one of the first things we did was to bring that in-house. What I mean is we have a joint venture across our markets business and corporate bank businesses, and we bring the FX and cross-currency requirements together.

And obviously, the actual need is for cross-currency payments that our clients need to make. We rolled that out across APAC, and I think the foundations is building consistent products in the markets, these products are in all markets. We have a really strong cash management presence.

And again, we don’t have loads of branches in every country, but we then use our local partners and we work with our local partners to help us do that, local collection and last mile elements of it. And we bring that combination of having a very strong cash management presence, a very strong FX presence in market which are two of the very key capabilities you need  to do some of this business.

And now we are also focusing on our liquidity side of the business, which is something we were a little bit slower to bring to market. But now we have a really strong liquidity offering when we brought them all together.

I think also the change in how you approach and work with clientsClients don’t want to you to go and sell one product This is not a retail exchange, and we’re not just transacting a cup of coffee; it’s something where you have to build a solution with the different capabilities.

And that’s where we are now strong. This use case is our USP, where we have teams that really get in and talk to clients, whiteboard with clients, understand exactly their needs.. Because not every client is the same, and every client does it differently.

So we are able to get that intel, and then we can take the different capabilities and we plug them together. That foundation is off the same technology stack that we built the FX product offering on, which is why I talked about that first because that is the foundation that we build that end to end workflow solution capability to.

Claus: On a meta level, to me, that sounds like you build a very strong reputation. You build a package of products. It sounds like a counterargument to the idea that was floating around a long time ago when virtual banks came out with the whole open banking concept—that all the functions that were currently in one house, one bank, would be distributed to different entities because they didn’t really have an advantage.

Obviously, it’s better to have these things combined.

Rachel: Yeah, no, no, no. And again, even now with our next stage, I think we’re building out our capabilities. We’re on a journey around building out  our payment transforming basically our whole payment  legacy cash technology.

And, even as part of that, this whole concept of microservices and these are what they are, these are the capabilities. They’re the things to  take instead of that big bank in a box, you’re now able to take those different services and Actually, join them together.

Claus: You’re describing it. It’s like a foreign IT person, like, “Yeah, very good.”

Rachel: Oh, no, so my IT payments person that owns our new payment system works that with us, as we’re building out our payment landscape. Yes, he does tell me that I’m quite a tech-savvy business person, so I like to understand it.

For me, it’s very important to understand the technology. Again, as I said, you can build anything, but should we? The business overlay and the client need overlay are very important in that dialogue. But then also knowing what we’re building and making sure that the technology is safe and sound—that’s a key need for our clients.

Claus: The person having all that does need to be the bridge between the tech and the business world.

Claus: Yeah, absolutely. We don’t have that much time left, so let’s go to some other questions. Obviously for us, it’s always one thing. I had a talk here during this event  was about fraud which is fascinating and fast changing at this time, and I remember last year there was this incident where a Hong Kong finance chief was tied to wire 200 million Hong Kong dollars over—literally incredible.

So fraud prevention must be a big concern payments world and cash management Are there any interesting tools and partnerships that deutsche bank is doing in that area?

Rachel: I think we’ve got multiple conversations going on. But in terms of, I’ll even start thinking about the question—like we are seeing a lot of fraud in cheques . Even taking it away from using new tech, we are already trying to stop paper transactions, whether it’s manual payments or cheques because that’s where you’re seeing some of this.

So the simplest starts using some of the technologies. That’s kind of where we’re trying to help our clients go on onto platforms. So then we have fraud detection capabilities in the platforms, in the first instance in the channels. The minute you have to hand information off between people, that starts to have its own possibilities of fraud.

But then we are using our own technology and our own data. And I think this is a key; we have now built  a central payment data store, that we’ve been building up to get all of our payments and data in one place, and we’ve been that using that also to identify trends.

And the other piece is we’re working with a lot of providers now on building out the pre-validation capability. So that element of fail fast, making sure the transaction is safe before it even gets into the pipe. I think that for me is very key for payments, and you do now see with instant payments regulations in Europe is pushing the need for validation of payee, so I think it has to be

Claus: ten second rule

Rachel: Exactly. So the ten-second rule. But the ten-second rule actually conflicts with that because if you want to do it in 10 seconds, then you’re pushing the boundary on it being secure and safe. Yes. Because you can’t do all the checks and balances in 10 seconds. So you then kind of have to do checks and balances upfront, and then you basically have to give a network, which is the ten-second ecosystem of the Instant Payment Network, to say, now you are safe, secure parties that can actually participate on the network. So you can now participate in instant payment as a payment product because we clash secure counterparties and secure originators or payers or counterparties.

I think that is an interesting one, too. And I think that’s where the validation of payee and confirmation of payee capability and technology we’re working on, andwe’ve been building that out, and that’s one of the areas that we’re focusing on. And we’ll build it further as part of the regulations as well.

There are a number of different parties in different markets, including the likes of SWIFT, including emaps, ECB, the regulators providing that directly with other banks taking that information as well and sharing that information so that we can get a good guy or good girl, you know, score check or good score check on the counterparties involved in transactions.

Claus: Very smart. I like the idea of having this data combined in-house and having your own tools. Because when I prepared for this talk about fraud, I came to a few conclusions about what you should do to improve in that area, but you already hit two. One of the main issues is that large organisations often operate in silos, and everyone only sees one slice of the elephant and therefore never gets what’s happening.

And the other issue is that criminals like to deploy nightly while we wait for quarterly change management. If you can do things in your own organisation without going through long processes, that’s the goal.

Rachel: Now we do use robotics and stuff like that. Once you can do the multiple hits or multiple identifications, then person goes on  good guys, you know what I mean? Automatically. And that is because I think we saw it, definitely, I think when there was the Ukraine war hat’s where we  definitely sanctions went mad. Nobody knew what SWIFT was. Now my family know what SWIFT is, it was quite funny, but not funny, you know? But now lists get changed on a much more regular basis.

So therefore, you also need to be updating those good guy list? and start getting into the instant payments and we need to be doing it as real-time as possible.

Claus: One thing, since we’re in the vendor space, we are no longer a startup; we’re 10 years in the business. How do you work with fintechs and small organisations? We’ve seen banks partner with fintechs to enhance services, of course. How is that going for Deutsche Bank? Or do you just build everything in-house?

Rachel: So, to be honest, this is the transition I think if I go back to, especially from a product side of it, the FX product the cross currency product I’ve owned for a few years that was all built in-house. It was a really great product  you could turn around new capabilities very quickly. Then I looked at the payments that I took on the payments side of things I took on four years ago. It’s all vendors, outsourced and that’s definitely what we’re changing.

So we’re building all of our new payment technology and our payment network in-house. .

Claus Which doesn’t mean you don’t use tools

No, no, no, exactly But going back to the comment around services, now I can use microservices—from fintechs for the right needs.

Going back to the validation piece, these are then embedded into our processing. So I keep the key kind of intellectual property in relation to the end to end payment, the data, and I bring it all together so that the lineage of the transaction I can see from the point of entry, through the client sending me the payment, how it’s processed, through our systems, how I can provide updates about where that transaction is.

And then also going out into the clearing side of it—the last mile connections. There’s no real differentiation there. With that one, we’re definitely using partners for, and for me, that’s key; they keep me updated with the local regulations and stuff we all have to do that.

Claus: We haven’t even discussed regulations, but we can’t really come to that anymore because it’s almost time. A couple of quick questions. Any future trends and strategy? What’s on the horizon for you?

Rachel: At the moment, I think we are really looking at, again, the nexus with global instant. And again, as he instant rails open up for the one-leg out concept where we can actually do—

Claus: Pre-validated, pre—

Rachel: —pre validate and to actually send, say, euros into India converted, put euros on  an instant rail, and then the UPI. So we’re looking at all of that.

24/7 is another one that we’re spending a lot of time with our clients on. Again, it’s always driven by what we are looking at, very driven by the client demand, but also staying very close to what’s going on in the market. So I think they’re two of the key ones. How can I roll out the instant rails, at the moment we’re rolling out our PIXs rails in Brazil, and multiple other rails.

The challenge is doing this innovation while the regulations keep changing. So, like there are a lot of ISO regulations which is great because they will benefit us and our clients in the long run, having standard protocols, and then data and again it will benefit fraud and other kinds of security elements of the end to end flow.

Generally, what we try to get is the two-for-one, where we have a regulatory change that we also try to innovate some of our capabilities at the same time. I think payments are going to be embedded everywhere, paid by link, paid by QR code, point of sale. All of us are using cards. We’re using our phones globally, globally connected . Exactly, exactly, exactly. In a secure, stable way for our clients. And for ourselves, we want to make sure that what we’re doing is safe as well.

But yes, there’s so much going on. It’s a very exciting space to be in with so much going on.

Claus: We’ll help on the fraud multi-side. So last question. I ask all my guests this: if you woke up tomorrow with sweeping powers to regulate globally, what would be your first action?

Rachel: Yeah, I did think about this, and again, I am sitting in payments, I know how complex it is. I think that would be a big challenge to take on. So I’m not naive enough to necessary think that I could solve that even if I’m a global regulator

But the one for me that’s key at the moment is regulating and governing the use of AI and new emerging technology, ensuring it’s ethical and for business or client benefit, ensuring that it is being utilised for the right reasons, and I think that’s very key.

We’ve seen this pace of change with tech; it’s just accelerating and now I feel this is moving too quickly. So we need some really young, clever kids who are coming new into this and want to make sure the world they live in is safe and secure for people.

I would like to make sure that happens , because I do think there are absolute benefits, and we can all benefit from it. But as you said, the Zoom call that had a personal impersonated—it’s scary.

Claus: Anyway, it’s a great world that’s opening up, and we should control some aspects of it. That’s a great point. Rachel, this has been so much fun. Actually, this was the podcast out of my 50 or so where we went off script the most. Love it.

Rachel: Yeah, no, we had a set of questions. I don’t think we followed them much. This has been very, very lovely. Thank you, and I look forward to working together.

Claus: Thank you for listening to this episode of RegTalks. My name is Claus Christensen, and I’m the CEO and co-founder of award winning RegTech provider, Know Your Customer.

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