Exclusive Q&A with Silicon Valley Bank’s Reetika Grewal, Head of Payments Strategy and Solutions
Reetika Grewal is the Head of Payments Strategy and Solutions at Silicon Valley Bank (SVB). Headquartered in Santa Clara, CA, SVB banks the world’s most innovative companies. With $36 billion in assets and more than 1,800 employees, the Bank provides commercial, international and private banking through locations worldwide. SVB clients include 50% of all venture capital-backed technology and life science/healthcare companies in the U.S. and 64% of venture capital-backed companies with an IPO in 2014. Reetika regularly speaks on the evolving payments ecosystem. Here she answers questions that she most often receives.
How do you look at all the disruption in the banking and payments ecosystem?
We consider disruption our friend. Payments and financial technology (fintech) historically have been more incremental compared to other sectors in bringing innovations to market. But this sector is evolving…and fast. Payments are now key to a seamless consumer experience in a digital world and we consider this a ripe opportunity.
At Silicon Valley Bank, we bet on innovation. What does that mean? Along with companies in many other technology sectors, we serve clients and engage partners who are focused on disrupting payments and fintech. The entire payments ecosystem will benefit from the most innovative solutions that make commerce easier and faster for both consumers and merchants.
Where in banking are you seeing the largest amount of disruption? And what has been your role?
There are new lending opportunities and credit alternatives appearing like never before, as technology removes a lot of the friction in transactional banking. Our goal is to help our innovation-minded companies succeed.
Banking, and by extension payments, is a heavily regulated space and very hard for startups to navigate. We have teamed up with MasterCard to create an accelerator program, Commerce Innovated.
For each class, we select three to six promising young companies innovating across the commerce space. We leverage our knowledge of payment networks and banking to help them solve problems so they can take their business to the next stage. We’ll be taking applications for our third class of startups in early February 2015.
How will Apple Pay and other mobile wallets impact payments?
I don’t think the card swipe is going to be replaced entirely anytime soon. The promise of electronic payments lies in the trove of data that is collected with each purchase. I don’t just mean how businesses use data to sell us more things, but from the consumer point of view, we all have more power with transparency: We can track our spending, check our balances and be smarter consumers – all in real time.
That is the true value of electronic payments whether it’s Apple Pay or another product. There also is the convenience factor.
A small personal example: The other morning a notification popped up on my phone. My husband had made a purchase at Barnes & Noble on our joint card. It was for a book for my daughter on our holiday shopping list, and now I can cross it off my to-do list. (Beware if you still like to surprise loved ones.)
What drives disruptive technology?
As we’re seeing in the digital economy, necessity remains the mother of invention. So when a student at Harvard wondered why he couldn’t pay his tuition via credit card – and get the 30-day float plus points or miles – he set out to change that.
Early next year, Plastiq, which has been operating in Canada, is bringing its service to the U.S. The idea is to allow consumers to use their cards to pay for larger-ticket items, such as tuition, utilities, rent, cars and taxes, which have until now offered limited card acceptance. The service is free to merchants and Plastiq, an SVB client, collects a small percentage of the charged amount, which the consumer pays for by having the choice to now use their card for these transactions.
From our perspective, there are many problems in the world to solve, efficiencies to gain and diseases to eradicate, which will keep the innovation economy busy indefinitely. Helping these companies launch sustainable businesses means we’ve created new clients for our banking services, which are specifically designed for the world’s most innovative companies.