Episode 9: Anil Goyal, CEO of Corserv

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. 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.

Anil Goyal: Greg, I appreciate you having me on.

Greg Myers: Tell our audience a little bit about yourself, maybe a little personal and professional background, if you don’t mind.

Anil Goyal: Yeah, sure, I grew up in New Delhi, India, and I did my bachelor’s in engineering from Indian Institute of Technology. I came to U.S. 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. After graduation, my first job was at a bank which was actually a monoline credit card issuer. 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 the impact on lending from a credit scoring perspective. 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. Before Corserv, I was heading up the credit card program for Centra’s Bank and that program was outsourced to our previous company. 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.

Greg Myers: Let’s dive into Corserv. So tell us what Corserv does.

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. We work with institutions who want to launch a co-brand program and customize it to integrate to their products. We work with FinTechs who want to embed payment card issuing into their offering through APIs from our infrastructure. You know those are the types of companies we work with. While most of our programs are in the credit card space, we also launch prepaid and debit cards. So, in other words, if you’re looking to issue cards for your customers, you know you would have come to the right place. At Corserv, we were founded in 2009 and all the co-founders worked together at a prior company which was bought by another bank. That bank decided to shut down the office in Atlanta where we were based at that time. So many of us didn’t have plans to move to the Midwest area and we decided to come together again and launch Corserv. So that’s how we got started, and we have today 85 employees, and all of them are U.S. based. We do not have any overseas staff. We’re still hiring, with several open positions. We are profitable and we have over 35 clients and more to be announced soon. We’re majority owned by employees, and we are very passionate about card issuing and we have designed our offerings to suit our clients. We’re also a fully remote environment. In fact, we have employees in 13 different states in the U.S. 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.

Greg Myers: Alright. Well, let’s dive into the topic of card issuing, and obviously you’ve had quite the career in it. So, can you give us a quick history about card issuing?

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. Maybe you could only use the card or for that specific merchant who gave you credit. 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. I think that was probably in the 1950s. In 1960s Bank of America introduced Bankard of America, which was later spun off to become Visa, and that was the first revolving debt credit card which means you didn’t have to pay your bill in full. It was the buy now, pay later. And that’s how we have credit cards where you can either pay now, you can pay later and spread the payments out. So that’s at the stage for card issuing, mostly in the credit card area. So, credit card issuing has been around for decades and the acceptance, the usage and the technology of course has changed substantially. So just to give you a little bit of perspective, you have two sides in the transaction for cards. There is a merchant side where the merchant works with their bank and their point-of-sale provider to accept credit cards. So that side is called the acquiring side. And then you have the cardholder side, where the issuing bank enables, features and works with the cardholders to use the card. That’s the issuing side. So, we work on the issuing side of the business. There is a message that connects the two sides. In the 1980s there was an international messaging standard that was introduced called the ISO 8583, and it’s still in use today. 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. You know whether it’s approved or declined for that transaction. So, all of this happens fairly quickly. It is required to happen within seven seconds, but of course happens much sooner in most cases. So, from that standpoint, if you think about, you know historically for several decades the basic messaging hasn’t changed. But if you look at the controls, you know that can be possible. 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. 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 high-end rewards card with $50,00 credit line. 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. So, really, depending upon who your customer is, that’s the umbrella of credit cards, but you can really tweak the features and functionality based on what their needs are.

Greg Myers: You sort of mentioned this, but you know what are the technologies today. And then how much and how different is that than, say, five or 10 years ago?

Anil Goyal: Yeah, the technology landscape is really ripe with new ideas, but in my view, much of that enablement is because of APIs. And so APIs, really let us enhance the customer experience, and 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. As say, for example, a fintech client of ours would want to block a card on their app and they could just send us an API request to do so. If a purchasing card administrator for a company wants to issue a virtual card with spend controls for a specific payments to a vendor, and they would, basically the portal would send us an API request to enable that. 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. All of our systems have API first foundation. You asked about how it has changed In the past. The integration was very difficult 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. And then I would say further beyond APIs, there are of course some table stake capabilities and technologies, such as security and reliability that is very important in the payment business how your infrastructure is designed and how that is deployed. Who has permissions? How are you automating all of that? Are you storing the data? You know, for example, all of our sensitive data in our systems is tokenized. So I think it is of course become much easier with the newer technologies and the hardware to be able to bring up a program. But what goes on behind the scenes? From an infrastructure setup perspective, it’s fairly still fairly complex. But we make it easy to enable it through APIs, which is when you can try to customize the card program for the needs of the customer.

Greg Myers: So you were talking about the APIs and what a difference it’s made. So, I assume that using that technology has accelerated the timeframe in order to go from an idea to a launched card program. I would assume that has accelerated that timeframe exponentially.

Anil Goyal: Certainly. 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. The feature functionality, you know, is much richer. So definitely. 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.

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. So, what are your thoughts on that trend.

Anil Goyal: If you think about credit cards industry, it’s a highly concentrated industry among a few large players. Within the U.S., 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. But if you look at the card market share, 80% of the market share is still owned by the top 10 credit card issuers so very highly concentrated, and in fact, 99% of the institutions don’t even have a card program of their own. And there are good reasons for that. Chief among them are the expense and the expertise needed to launch a card program. The initial investment to launch a card, a credit card program. 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. But to your point, that has really changed. With new technologies and with the offerings such as what Corserv 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. 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. So, this is really what excites us. 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.

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?

Anil Goyal: When most people think about credit cards they think of consumer credit cards. We see a big trend in B2B payments. 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. So, credit cards, particularly virtual cards, really make it very easy to track payments, to reconcile automatically, to integrate with the AP/AR systems. 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. I mean there are also other factors like payment friction that you have in disputes. It’s much easier in a credit card environment. 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. 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.

Greg Myers: What do you think all of these trends, what do they mean to the economy as a whole?

Anil Goyal: Yeah, I mean, payments infrastructure is really very hard and this is what we do. We build infrastructure, but payment enablement doesn’t have to be hard. We try to make it easy for our customers to use the payment infrastructure and make it easy for them. But if you think about a general economy from a B2B payment perspective, that has significant implications. Financial health of the businesses could improve because the cost of payment processing is cheaper and faster for them. The working capital, working cash flows, could be optimized. If you think about digitization of payments and automation, it could allow the employees to really focus more on their core capabilities rather than having to spend time on ancillary activities like payments.

Greg Myers: Right, that makes a lot of sense. 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. So, there’s so many of these trends that are coming together. But what does it look like when you kind of get the crystal ball out and look out five to seven years from now? You know what do you think that starts to look like?

Anil Goyal: Yeah, we’ve used the word card, a card issuing, and really card is nothing but an account number which is embossed on a card. But it doesn’t have to be on a card, right. As long as you provision that account to a device, whether it’s a mobile device, whether it’s a bracelet, whether it’s a ring or any other, you don’t have to have a physical card. So we see that card issuing is really going to evolve to having, you know, that account number enabled, whether it’s mobile enablement or being able to use it through other means. You’re just using that account to manage the credit and the payment space. And then I would also say the customer experience is going to continue to evolve for if you think of Gen Z, they want to do everything on the phone in a self-service environment, and so more and more features and mobile enablement will become richer on the mobile side and the customer experiences would be more self-service rather than calling a call center. 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 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. So, we think virtual card acceptance and usage is going to continue to increase as well. 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 personalized marketing, whether it’s in customer service areas. 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 it has to be highly secure. 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.

Greg Myers: Yeah Well, let’s take all this that we’ve talked about and circle back to Corserv. What are all these trends mean to you guys there at Corserv?

Anil Goyal: Yeah, I mean we are fortunate to have employees who are passionate about this business. 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. 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. 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. 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.

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. I think it’s interesting. One of the takeaways is for me is thinking about the word card, like you said. 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. So, I think that’s kind of a takeaway for me to think about. But we’ve covered a lot of ground so far. Is there anything else that you’d like to add before we wrap up the show?

Anil Goyal: No, you had some really good questions, Greg. I thoroughly enjoyed it, and thanks for taking the time to talk to me.

00:02:08 – About Anil Goyal

00:03:52 – About Corserv

00:06:01 – Quick History of Card Issuing

00:10:16 – Technologies in Card Issuing

00:13:53 – Fintech Leveraging Card Issuing

00:17:47 – Impact of Trends on the Economy

00:19:01 – Future of Card Issuing