Among the things you'll learn:
- Understanding GenAI's role: Learn how Generative AI can revolutionize commerce for SMBs by providing personalized solutions and insights.
- Empowering SMBs: Discover how banks can leverage their BOS to deliver tailored services that meet the unique needs of small businesses.
- Creating seamless experiences: Explore strategies for integrating GenAI to streamline banking processes and enhance customer satisfaction.
Transcription:
John Adams (00:09):
Thank you. Wow. Thank you everybody.
Richard Crone (00:12):
I only paid her $20 to do that.
John Adams (00:16):
I just mentioned that this is, we've looked at some research before just to tee us up and horizon. The publisher of American Banker recently surveyed 127 financial institutional professionals who work for banks between 10 billion and a hundred billion in assets. And they found that familiarity with new forms of AI as a major hurdle to adoption, which is both a challenge and an opportunity given that small businesses rely on community banks, regional banks, and credit unions who are also considering strategies for new forms of artificial intelligence. And what we also found is 97% of respondents on how familiar they were with AI said they were either somewhat familiar with the tech and 74% at some understanding of it, and 26% at no understanding whatsoever. So for banks that want to serve small businesses, gaining an understanding of AI will be the key. So that makes this panel subject very pertinent. I guess a story before we dive in, tell us about your role at GoDaddy and what excites you the most about the small business market?
Kasturi Mudulodu (01:39):
Yeah, thanks for having me. I run the commerce business unit for GoDaddy. Some of you know us as Domains leader. We have over 80 million domains under our management. We also serve over 10% of all websites. But what you may not know are commerce and AI and generative AI capabilities. I'm particularly excited about serving the 20 million customers that we have in a hundred plus countries and helping them with not only digital identity and presence, but also helping them reimagine how they can sell more and save more time and money by leveraging the power of generative ai. And happy to share some of the learnings we've had over the last couple of years.
John Adams (02:33):
Oh, great. Well, thank you, Richard. You've been deeply immersed in the payment space for many years. What about commerce and the small business market has you most intrigued?
Richard Crone (02:48):
Gotcha, John, that's nice of you. Do to ask. Thank you for letting me be on this panel or inviting me on this panel. Small business is the heart and soul of community banks. We have 15 years of longitudinal data in the Chrome Consulting Best Practices benchmark database. I can tell you that from community bank to regional to super regional, more than half of their profits come from serving this segment. But I'd have to say that in the past decade, if not more importantly, the past 36 months, they have missed out on a very important segment of the SMB. And that is the fastest growing segment for SMBs. And that's creators, influencers, micro businesses and sole proprietors. They are starting their journey of creating their business with Casturi. She's the first one that brings them on and if they need payment, she turns it on at the same time. Am I not right?
Kasturi Mudulodu (03:57):
That's absolutely right.
Richard Crone (03:59):
It's absolutely right. And so this is an opportunity for the people in the room that manage a small business portfolio to not only understand how artificial intelligence applies, but how castori is doing that. And when we're consulting to clients, say you got one of four options, you can make this yourself, you can partner, you can partner to purchase or not doing. It is not a growth strategy. And so today, castori requires this new business to have a bank account before they turn on point. They have to have a bank account. Do you have a relationship or a partnership with a bank? You're independent, you're the Switzerland. And so if you're in the audience and you don't have a solution, you should not let this lady leave without understanding her platform and how it can enhance. She's not the only one. There are four people here from PayPal all with bank partnership roles that want to help turn this on. But ignoring this segment is ignoring the fastest growing subsegment of SMBs, which this is growing at 40% compounded annual growth rate. And so today, when they turn on the domain, durio will give them a pay button if they want to embed it into their live stream or short form video or a link to their product catalog. And that isn't a link to a bank. And unless you figure out how to embed payment, you just won't play.
Kasturi Mudulodu (05:41):
Maybe one more thing that I'll add is while we of course serve our own customers, we also have the pleasure of serving some of the biggest fintechs and bank partners. In fact, I have the pleasure of having one of my biggest partners right in front of me. We have Michelle and Steve from Worldpay. We do serve some of the biggest banks in fintechs including Worldpay, Allon, US Bank, and Xi. So well said, we'd love to see how we can be or someone like us can help you in your journey of enabling micro and small businesses.
Richard Crone (06:27):
So to understand how important the market is, I think we need to understand the audience. How many of you today are responsible for onboarding small businesses? Show of hands, how many financial institutions responsible for onboarding? Okay, great. So one or two. And of the ones that are onboarding, how many can do that completely digitally? That is not just harvesting the data at an input point, but actually initiating and opening the account without ever seeing the customer through an app or the website show of hands. Okay. And there is your opportunity, right, is to understand how to do that for a creator, an influencer, or a micro merchant doing it for the first time that starts here. So I'd set the stage with that.
John Adams (07:25):
Yeah, it's great. It's a great commentary and I used to dig deeper on some of the aspects of gen AI and small businesses. What are some of the challenges facing small businesses regarding how they can or should be using these new forms of AI genai or gen AI or other emerging forms of AI?
Kasturi Mudulodu (07:47):
Yeah, I'll share a couple of interesting stats. Since we have the pleasure of serving 20 million customers around the world, we do reach out to them and see what's top of mind for them. Similar to the stats that John you shared, everybody in our audience knows, including the micro merchants, including the small businesses, know and in fact have shared with us over close to 50% of them shared with us that they believe generative AI will help them compete with the larger retailers. However, the same audience, these micro and small business owners have also shared with us that most of them or 80% of them are not confident about how to use gen ai. And they lies the problem. These SMBs, whether it's a pizza shop Michelle went to or a haircutting salon Steve went to, they're passionate about what they do. Technology is not their strong suit and we don't want them to worry about technology.
(08:56):
We want technology including generative AI to just seamlessly work for them and help them streamline what they do and accomplish finding new customers so that they can sell more. And I feel currently it's still not where it needs to be. We are in the early days, early innings of what we can do and in the right world, in the right integrated, seamless, intuitive experience, it'll just fade into the background and help them achieve finding new customers, managing everything under one place. And of course do this not only for SMBs by the way, but also for the financial institutions and the fintechs that are here.
John Adams (09:45):
What are the risks for these small businesses of not getting the strategy right? In other words of either not using gen AI at all or using it for lack of a better term in the wrong way.
Kasturi Mudulodu (09:57):
Yeah, and I'm sure you'll all agree with me when I say that SMBs know that they are missing up on a huge opportunity to be where their customers are. Along the same research, we know that 80% of Gen Z and millennials are now looking up digital identity. It could be them checking out online reviews or checking out their online store by getting a sense for what the offering is, getting a sense for these small businesses brand before they walk into their store to buy. And if you think about it, if just big platforms like Meta have over a billion daily active users and the rest of the platforms like Etsy, eBay, Walmart, all of these social and marketplace have hundreds of millions of consumers. If they are not where the consumers are, they will miss out on that opportunity to truly sell more. And to your point, use the power of generative AI to rethink how they can streamline their operations because for the first time, selling online has become simpler. For the first time, marketing to these hundreds of millions of consumers has become simpler. And quite honestly, this is what is needed to future-proof the SMBs to future-proof their businesses that they're so passionate about some of whom have had these businesses for generations. And the same at a certain level, holds good for all of us for our own businesses.
(11:54):
And maybe another interesting stat given that the consumers have increasingly relying on digital identity of the SMBs, the SMBs have picked up pace on establishing digital identity. Digital identity is having a domain, having a website, being on social, being on marketplaces. About 40% of US SMBs have digital identity, meaning they have a domain or a website and close to 30% actively engage with their customers. What do we mean by actively engage as a SMB? Let's say I am running a photography shop, I'm a professional service and I have a photography shop. Then I can have a website where I take appointments and also provide a code or have my consumers request for a code, not to mention online selling. So we see this is a massive trend and the SMBs are in line with what the consumers need and hence it's upon all of us to meet the SMBs with their demands.
John Adams (13:18):
A lot of businesses are using new forms of AI to improve internal processes. What are some of the early uses that you're seeing in that area?
Kasturi Mudulodu (13:29):
I have a lot of pleasure and happiness in sharing that. We have invested significantly in generative ai. We in fact got named as one of the best, in fact, the best website builder with generative AI. We have had over 3 million SMBs interact with our generative AI capabilities, and over 50% of them engage with our generative AI capabilities. What do I mean by that? All of us product suite is now you can explore them, discover them, and engage with them with generative AI capabilities. And as a concrete example, given that we have over 10% of websites running on us, 50% of the paid subscriptions are now coming through generat AI. So we have seen the first tranche of use cases being adopted by SMBs. Content creation, whether it's for your website, whether it's for a marketing campaign, posting it on social like meta, Facebook, Instagram, these have all seen really good adoption.
(14:54):
The time to publish a site is seconds. And by the way, although these sites are powered by generative ai, every single site is customized for that one, single SME. It's not cookie cutter. And so we've seen really good adoption in these and the folks who have used generative AI capabilities to publish a post on let's say a meta are seeing 30% more impressions and the folks who are using generative AI to create a compelling looking catalog and products for their online store to have the right descriptions, to have the right price point are saying 40% more sales, which are all very compelling numbers.
John Adams (15:45):
What can banks be doing in this market to onboard new customers, whatever. Do you have some tips or some insight in how they can do that?
Kasturi Mudulodu (15:56):
I'll go back to what Richard said as a business as an SMB, when I have a dream, one of the first folks that I go to is my local bank and I go to the local bank to get the capital that I need, and I would love for my local bank, my trusted credit union to help me get started to help me get started with digital identity. We've talked about how creating digital identity should just be a snap, whether it is a website or getting to talk about your service if you're a photographer or getting to talk about the awesome donuts you make or the bagels you make should be instant. All of these, the local credit unions, the local banks, the fintechs don't have to reinvent the wheel, don't need to worry about what are the ABCs of generative AI? How do I make sure it doesn't hallucinate? How do I make sure that it is secure? How do I take care of data privacy considerations you can use and embed, just plug in your payments, your sales, your go-to market by leveraging a company like Goad where the banking operating system, if you will, can be powered by go.
John Adams (17:35):
Well, let's take a look at some live GI examples.
Kasturi Mudulodu (17:40):
Yeah, I would actually love to show a couple of demos, one of which is live. Yeah, if you don't mind. Thank you for that. One of which is currently being built and one of which is very much live with one of our biggest banks and FinTech partners. Can we start with the,
(18:05):
Yes. So the first one, let me give you some context. We have a sales bot and instead of having a sales team engage, we can simply have a AI powered sales bot interact. And this is no longer a conditional workflow. It truly understands and it is natural and it has interactive videos. It could have slides, it could have a calculator to show savings and much more, and it can also guide them through the purchase path and help them through activation if helping them get started to sell at their brick and mortar location is not easy. Now imagine if they want to get started and start selling on a et eBay and their online store, it gets that much harder. And given that these SMBs are so small and you're concerned about investing your sales and activation or support dollars, you can have a intelligent AI powered chatbot.
(19:22):
And by the way, it's charts with chat, but we all know where generative AI is going from an assistant to an advisor to agent tech is where we are all going. So I totally see the modalities extending to not only chat but audio and video, and that's the power of taking generative AI across use cases like sales. We'll also show you a video of as a bank, as a credit union, my brand is everything because the SMB comes to me and trusts their business with my brand. And if you, okay, you've started the video so you can put together your own plans and embed those plans with us powering your banking operating system. And what you will see is your brand can be front and center not only for your in-person solution, but also for the online solution. And you will see that the online and in-person is seamlessly integrated. And this is just a quick demo, but there is so much more that a SMB can and should be doing by showcasing their suite on social media like Etsy, eBay, Walmart, and Amazon as well.
John Adams (20:58):
How do banks respond to small businesses that are looking for an all in one solution, which is to say a solution to domain hosting online sales, brick and mortar point of sale and multiple marketplace integrations?
Kasturi Mudulodu (21:14):
Yeah, John, to your point, if I am a pizza shop or I'm a photographer or I'm excited about starting the new line of baby clothes, what is top of mind for me is what is the best place to have my inventory? Who are the people that I want to work with to source what I need to source and put together my designer? Where similarly, I want to figure out how I get my capital if even as I take care of all of these complex things, if I can reach out to my trusted local bank and with just the flip of a switch, if I can have my digital identity taken care of, if I can have my products be seamlessly shown to hundreds of millions of users that are on social and marketplaces and even as I win them by paying a premium to these places because I'll be paying between 10 to 30% based on the social and marketplace. If I have my own online store, I can build customer loyalty and offer them a way to start coming back to my site and offer it at a much more reasonable price point, saving them money, but also saving the SMB money.
Richard Crone (22:51):
John, how many actual banks and credit unions are in the room? Could you raise your hand? Three, four. Four banks, and I presume they all deal with small business. To put this in perspective, you all get an MID report, right? A merchant identification report. And so GoDaddy owns Point, which is a payment facilitator. They are the merchant of record. PayPal is a payment facilitator. They are the merchant of record. TikTok shop is a pay fact. They are the merchant of record. You don't have to guess at what the transaction volume and TPV total payment volume is of this segment of small business and you should not guess. You need to look at your MID report and see what are the top merchant types for your debit and credit card portfolio for your members and for your customers to see how many are actually doing business on these platforms. You can simply prioritize based on TPV, who you should be doing a deal with. Now, what may not show up and anybody here, what's your top pay fac on your MID report? Yell it out.
(24:37):
You're not looking at 'em. Amazon, what else? Walmart. Walmart, what else in the payback category? What's going to be then one that rises to the top? I it'll be PayPal, 434 million active users, 36 million merchants, right? And so what may not be obvious to you is that what I'm trying to get across is that yes, digital identity, that's another way of saying, yeah, I need a website, but that isn't where the first time micro merchant, sole proprietor entry into business is today. It is a creator. It is an influencer that's setting up on TikTok shop and they're adding even with the cloud over their existence, a hundred thousand, a hundred thousand new creators, sellers per month across all of the social platforms. There's at least 500,000 new creators, influencers and sellers being added per month. This is the single greatest addition of new businesses that we've seen since the advent of the internet.
(26:10):
And to not understand what's coming through from your own bank without looking at your MID, you don't know, it is hard to come up with a payment and embedded payment strategy so that you're there if somebody is showing a live stream or an actual short form video with TikTok shop and you press the payment button, the payment type that comes up on top is PayPal and Venmo and Apple Pay and Affirm, and God forbid if you are willing to do it entering 16 digits, the CVC and the expiration date, which would be the wrong thing to do because as hyper personalized as this segment is, so is the fraud. And so the risk of using anything but a digital wallet in order to accomplish this and serve this market is risky for all parties involved. And there are still thousands of banks and credit unions that don't support the big three digital wallets, apple Pay, Google Pay, and the biggest of them all PayPal and Venmo.
(27:29):
And so if you get anything out of this session is that you need to look and see what the volume is for your customers spending their money with your credit and debit cards and see where they're spending it and see which pay facts they're coming from and figure out a way to play. It may be as simple as remarketing everything that Castori has showed you with a bank brand on top. I don't know. Certainly you need AI to scale this because TikTok isn't opening up these new accounts by somebody walking into a bank branch that's a hundred thousand new accounts per month at TikTok. That's done all through AI driven digital account opening meeting, all the KYC requirements that you have to meet if you onboard a customer. But the thing I want to get across is payment always follows something John, and in the SMB market, it follows setting up your digital presence that Castori has explained.
(28:36):
But if you have a plan for this first time market of creators and influencers where it's kind of the ultimate word of mouth, right? It's product placement gone amuck, it's more than an infomercial, is that people follow these creators and influencers and they buy from them based on trust. And if you are not providing small business banking service to them, you're not because they will be the next Amazon five or 10 years from now. It is how every small business will start. It's how every, what's prior to Gen Z, they aren't going to run a paper route. They aren't going to work at the ice cream shop. They're going to be a creator or an influencer and set up their digital presence and they may be using mom and dad's checking account in order to get started, but you got to figure out how to be there and provide those services in order to get the payment because this is the payments forum and this payment follows a digital presence and this payment follows empowering somebody on TikTok shop or Pinterest or WhatsApp or Facebook or name your favorite social platform. Is that dramatic enough?
Kasturi Mudulodu (29:58):
They can add to what Richard said, and we make it very concrete. See, we have these social influencers, these next generation, next wave of entrepreneurs who are starting on social, who are starting on marketplaces. And while most of the marketplaces and social have figured out that they also want to monetize on payments, there are some that still let you bring your own payments, aka you can be the payments provider for some of them. The way you have to add value is if the first channel, let's say East TikTok or Etsy, it's only a matter of time before that. SMB figures out that it is an extremely expensive channel. They will create a digital identity and website to move their repeat customers offer the more expensive channel to a less expensive channel. Now just imagine the moment you add a second channel, you now have to figure out how you want the price across different channels, how you even want to use keywords and promote those products on different channels. How about fulfillment? How about managing inventory? All of these complex operations can be managed in one place and that's how you add value. And when they are ready to start selling in person, whether it's at an event or a fair, you are there for them. And as they get more successful and add more channels, including a brick and mortar presence, you are right there holding their hands and helping them grow. Not to mention all of the financial services, whether it's capital, faster payouts and so much more that you want to deliver to these customers.
Richard Crone (31:54):
Point well taken Kasturi. There's two sides of this market. There's an issuing side and there's an acquiring side. And for the issuing side, for a bank or a credit union that wants to empower their customer, they have to support a digital wallet. So you have to give up a couple of basis points to Apple in order to be an Apple. Pay nothing for Google Pay nothing for PayPal, nothing for shop pay or toast pay or whatever. But unless you embed your payment credentials in there, you aren't going to earn interchange on their purchase. More importantly, you're going to risk them being subject to fraud. Liz Coffin from Visa and earlier today said that fraud and chargebacks are up 30%. Well, I just told you that this form of commerce is growing by 40%. Is there some alignment between these two? Because three weeks ago, the American banker reported that JP Morgan Chase was eliminating support of Zelle on these platforms.
(33:10):
Meaning if you were asking for a payment as a creator or influencer or micro merchant and it came off of one of these social platforms, they're blocking it. Let me tell you, blocking is not a way to play in a growth market figuring out hyper validated AI driven based verification, and KYC is, and certainly this is a core domain experience of bankers, and this is an opportunity to play, but unless you're aware they're opening up these accounts, you won't, won't be protecting your consumers on the acquiring side. Look, when FIS and Worldpay were one, maybe that would be easier. Maybe the folks at Worldpay can tell you how you can empower an SMB client with this types of acquiring services. If not, you probably have to go to the point of origination and that's when they're setting up their GoDaddy account and that's before they get a GoDaddy payment button, what do you call it?
(34:17):
Pay link, I think a pay link, which is a QR code where they can embed that in their live stream or their short form and take the payment. Let me tell you, they're doing it with a PayPal QR code and the Venmo QR code. They will not be doing it with Zelle and JP Morgan Chase customers. But figuring this out means figuring out how to be a part of this growth market. Otherwise, the SMBs you're going to have, especially the sole proprietors, are going to die. Their fastest growing account type for. Some of our SMB units are deceased accounts, and that's not a growth strategy
John Adams (35:06):
Kasturi, you've told me that when this technology works best as being gen ai, it works best. It is almost in the background where it's unnoticeable. How do you make that happen and what sorts of things are you doing to that end to where it's not something that's necessarily top of mind for the user?
Kasturi Mudulodu (35:27):
Yeah, that's a great question. Let me take an example that we can all relate to when we think of hard problems solved in a very intuitive way. One of the examples that comes to our mind is Uber routing was not easy. Pricing. Search pricing, value-based pricing is not easy. Payments is not easy. We all know that, know it very well. Whether it's the rider or the driver, the entire technology and the complexity of technology just fades into the background delivering amazing experience both to the rider as well as the driver. Now, let's take a few examples and make it real for generative AI and commerce and payments.
(36:20):
If I'm a pizza shop owner, if I truly want to make generative AI seamless just far into the background, it's just helping me sell more and save more time and money. Why don't we think of new modalities? If all of us have our laptops in front of us all day long, what do the SMBs have? What does the pizza shop have in front of them? Our point of sale devices, why can't the pizza shop owner simply talk to point of sale? Why can't they talk to point of sale and why can't point of sale talk back with the pizza owner alerting them, Hey John, you are running low on soft rings. You might want to back order some of those soft rings. How about this?
(37:23):
If Gen AI as an advisor can actually take it up a notch, how about I show a little bell notification? And when you click on it, John, with the wise prompt, you are told that, John, remember there is a big game that is played every year at this time of the year, and last time you didn't have enough pizza. Neither did you have enough staff. You might want to plan for it so that you optimize for your sales. Or how about you have some stock that's just you have some products that are not selling fast enough. How about you create a package pizza and Coke for $5 for something that's not moving as fast with that being an example. So there are so many ideas, and by the way, even today this day and age, it is extremely hard for a pizza shop owner to think about what it would take to create an account on Meta and start talking about this latest or her latest pizza creation on meta. Why is it that hard? Why can't it be a click of a button on the point of sale where they say, yes, I want to start advertising this new pizza there? The possibilities are numerous. Our imagination is limiting what we can do and how we can reimagine commerce for all of the millions of small businesses we all serve.
John Adams (39:09):
We've had a couple of minutes left there. Any questions from the audience?
Richard Crone (39:17):
I got a question for the audience. If they don't answer,
Kasturi Mudulodu (39:18):
There's one question.
Richard Crone (39:19):
Please go ahead.
Audience Member Utsav (39:42):
Check one, two. Hey, great session. Thank you so much. Quick question on, so outside of payments,
Richard Crone (39:50):
And your name is in the company?
Audience Member Utsav (39:53):
Utsav and Kaj, we are building agent workflows for small business lending and want to understand from a lending perspective, because you mentioned capital a couple of times, how can banks credit unions be part of social commerce? Not from a payments perspective, not just from a payments perspective, but also from a lending perspective. Because the first thing that a company does or a small business does is look for access to capital, which is still broken right now. I think the average case,
Richard Crone (40:19):
Yeah, I challenge that premise is the first thing that they look for capital. The 500,000 creators and influencers aren't looking for capital. They aren't looking to go into a bank to start doing this. And so I'd say the one thing I'd leave all the bankers in the room with, how many of you have actually, how many are you on TikTok? One that's not a banker, one in the back. Any other social platform like Instagram or Pinterest. Okay, you're all on it. Here's your homework assignment. I would say TikTok, but you should go on one of 'em. Look at a live stream with an embedded payment key or look at a short form video with a payment key and buy something and capture every screen and dissect it, reverse engineer it. The one I'd really recommend that you do that for is TikTok Shop. That's your homework assignment and just figure out where are the value points being created and where can you play. Now, do the same for GoDaddy. Go set up the site. Set up aside.
Kasturi Mudulodu (41:33):
Reach is on LinkedIn, right? Happy to share more.
Richard Crone (41:36):
Right? But go to GoDaddy and go through that whole process including activating the payment key and getting a pay link and making it work.
Kasturi Mudulodu (41:47):
And by the way, everything you see and everything that of course Richard shared, we believe in an open ecosystem. We built the operating system for the point of sale in Android. So we believe in an open ecosystem, and that is why you can take every single piece of technology that you see on Goad and plug it into your own banks, payments, capital, and many other products. So just please keep that in mind as you explore the capabilities.
Richard Crone (42:19):
Make buyer, partner or partner to purchase. I mean, certainly GoDaddy would love and liquidity event if a bank wanted to put this in front of their offering. But you got to figure this out because ignoring it is not a growth strategy.
Kasturi Mudulodu (42:33):
And maybe one other quick thing, apologies I didn't quite catch your name, irrespective of the use case. I hope we all leave the session knowing that generative AI and AI, we don't have the luxury to ignore where the market is going and whether it is capital, whether it is payments, whether it is commerce, whether it is marketing or anything in between, we should figure out how we start leveraging it to sell to our own customers and then help our customers reach out to their customers.
John Adams (43:11):
Well said. No. Fantastic. Thank you, Kasturi. Thank you, Richard. Thank you, John. Thank you everybody for joining us.