0:06

Welcome to Breaking Banks The number

0:08

one Global Fund Take radio show

0:10

and podcast. I'm Breaking and I'm

0:13

Jason Hendricks. Every week since Two

0:15

thousand and Thirteen be explored, the

0:17

personalities, start ups, innovators in industry

0:20

players driving disruption in financial services

0:22

from incumbents to unicorns and from

0:24

cutting edge technology to the people

0:27

using it to help create a

0:29

more innovative, inclusive and healthy financial

0:32

future. I've Gp Nichols and this

0:34

is Breaking Banks. Welcome.

0:41

My going to get into this

0:43

says subjective embedded banking. It's definitely

0:45

an area that's It's very hot

0:48

right now. I'm. Certainly.

0:51

When. We look at the world

0:53

of thin tech. And.

0:55

Indeed, what is happening in the

0:58

space? As a

1:00

lot of talk about how we

1:02

adapt to this sort of Ai

1:04

world as well which is going

1:07

to really be heavily. Involved

1:10

in this sort of ability to

1:12

execute on embedded banking. But. It's

1:14

more than that. It also is

1:16

about. Your. Ability to extend the

1:19

core. We're going to talk about Sidecar

1:21

cause I'm going to talk about. How.

1:25

Banking as a service in the

1:27

embedded world will work. This is

1:29

a topic that I've been riding

1:31

on obviously for number of years.

1:33

but let me introduce a Bouchard

1:36

to you boucher and render cherry.

1:38

Is that A? I hope that's

1:40

how am pronouncing it correctly. Boucher.

1:43

Is is is that bet You're

1:45

right, You're say you the set.

1:47

The founder and Ceo of Findlay,

1:49

you pioneered this money movement systems

1:51

you founded obviously Finns the In

1:53

in Twenty Twelve a bad for

1:55

those that aren't familiar with your

1:57

work of be a see you.

2:00

Numerous say industry innovation awards.

2:02

You're a board member of

2:04

the Fast The Payments Council, which

2:06

is really critical for the way

2:08

we see embedded banking and developing

2:11

around wallet positions. And.

2:13

That prick prior to your foundation

2:15

of Fins the he served in

2:17

a lead a business leadership position

2:19

at Wells Fargo where you many

2:22

since international banking. so I'm a.

2:24

Fish. On M we will talk

2:26

about so. Seen.

2:29

As obviously we go through,

2:31

but before we get into

2:33

the main discussion around the

2:35

embedded banking and. Peace.

2:38

Maybe just give us a few comments

2:41

in terms of findlay in the work

2:43

that you guys are doing. And

2:46

how your hobby your coins Today And then we

2:48

can jump into the topic. So

2:50

thank you Bread and bad Really great

2:53

Have been here in your are close

2:55

to breaking banks and is one of

2:57

the podcast a really low and it's

3:00

lot of features state get information about

3:02

banking on so and I am a

3:04

big fan of figured your work as

3:07

a bad so angry to be a

3:09

predicated. On. So

3:11

I've been secretly their. Family.

3:14

When even when platform say for look

3:16

at the banking study. Not

3:18

they're really behind in terms of

3:21

innovation. Or is funding to compete

3:23

with the modern frantic players and lot

3:25

of banks in terms of the capabilities

3:27

and be held banks in terms of.

3:30

Overcoming. Those limitations but did

3:32

battle and bought a platform. So what

3:34

we're doing is we're have you can

3:36

feed money movement platform. Is

3:39

Builds feature. Realtime

3:41

Connected, Embedded. For

3:44

the M M Hundred economy so they

3:46

can body bypass that legacy platform and

3:48

we have a direct connection with difficult

3:50

to so clearinghouse as swift so that

3:52

feeds into again. And sleep

3:54

is the and when he moment that father

3:56

to bank. In addition to that, we recently

3:58

launched a Com Galaxy. What's

4:00

your accounts and packing a system

4:02

is another additional capabilities. So in

4:05

a week big we can be

4:07

seen as Sienna Next Generation. Bank.

4:10

Modernisation that fox have a family focused

4:12

on know or money movement, everything later

4:14

the money would give blood I'm gonna

4:16

get. She did define the side tackled

4:18

pay center in and little while and

4:20

I definitely want to talk about the

4:22

virtual account stuff because that's very important

4:24

component of not only is it important

4:26

for embedded banking, the way we think

4:28

about the ability to spin up accounts

4:30

in real time, but still so very

4:32

important for what we think of as

4:35

the agency model which is where this

4:37

is gonna lead to. So. For

4:40

those said that a joining us. Maybe

4:42

we can start with the definition. Of.

4:45

What embedded banking are embedded finances.

4:48

So if someone asks you to

4:50

define that boucher me, how would

4:52

you define embedded banking? So

4:55

I would say Amber Banking is a

4:57

license banking. Come in on.

5:00

As. You always say banking some good

5:02

happen in the branches is not going

5:04

to happen in the only chance So.

5:07

If you look at the evolution of the

5:09

banking started with the idiom missions that the

5:11

very first time people move. And.

5:13

I did not go to. Have

5:15

to have a good counter to

5:17

the castle Aren't next? You know

5:20

you start having. He. Checked

5:22

spate of further. You. How

5:24

only banking and then movie making out

5:26

but every time you got your back

5:29

to the banking clan section. But.

5:31

Embedded banking is banking comes to you to

5:33

the place where you need making. This.

5:35

I have been. A great example is Wilbur. In.

5:38

A. Mixed.

5:44

Up you take your banking services and

5:47

m but as part of the lifestyle.

5:49

That people are sleeping bag so that's

5:52

that's all about him. but it banking

5:54

So that Azzoni of cases like and

5:56

basically banking is totally invisible export of

5:58

your lifestyle instead of. The in

6:00

banking happening on the only channels

6:03

and a defenseless so so I.

6:07

Thought. So am. I

6:09

don't I think that's a good the

6:12

definition As I said I am as

6:14

a place holder. Who

6:16

are? I would say that

6:19

in terms of tactical examples

6:21

for embedded banking. I.

6:23

Think it is stripping the core utility

6:26

of the bank. Sir. In

6:28

In Rates How. Far. Was

6:30

the culprit as well. But it is no segue.

6:32

retail banking, The. Or the ability

6:34

to safely stored value right is

6:36

a core functions the ability to

6:38

safely move money is a cool

6:40

fan since and the ability to

6:42

access credit. And said that's

6:45

really how we think about

6:47

providing banking utility today. The

6:49

difference in the embedded banking

6:51

world is that that those

6:53

three core pieces of utility

6:55

our extended to the customer

6:57

when and where they need

6:59

it. So instead of walking

7:02

to grocery store. Finding.

7:04

Out you don't have enough cash. To

7:07

complete your grocery shopping when you're at

7:09

the checkout and you've presented your debit

7:11

card and it's decline because your mortgage

7:13

payment has come out or your salary

7:15

has any the account. In

7:17

an embedded financing world, when you

7:19

walked into that grocery store, You're

7:23

given options to to access

7:25

credit to allow you to

7:27

buy groceries. Instead of you

7:30

say ah no, well you need a credit

7:32

card, come down the bank and apply for

7:34

that and maybe if not too risky, we

7:36

can solve that problem for you with a

7:39

piece of plastic which reconsider in the mail

7:41

instead in the embedded banking. Well when looking

7:43

to solve that problem in the moments where

7:45

you need it, Need. The solution

7:47

In Real Time. And so this is

7:50

why. Real Time. Money Movement. Real Time.

7:52

That so account opening and all of

7:54

those sorts of things. Ah, material for.

7:57

Bicyclists, Oscar. We

8:00

can I ask you guys serve

8:02

to give us your thoughts on

8:04

way you think embedded banking's it

8:07

scene and let's use. This is

8:09

a bit of a baseline for

8:11

our conversation today. But I'd

8:13

also like to compare how you think

8:15

we'd gone in this discussion. With.

8:18

Eats M Initial Pauline question Megan

8:20

A: present you guys now So

8:22

let's throw a Bathurst Polling Question.

8:25

And the question. Goes.

8:29

Like this. One. Amount

8:31

of influence will Embedded Banking have

8:33

on financial services over the next

8:35

three to five years. Very

8:39

big influence, some in phones

8:41

little or no influence. And

8:43

but of banking is right now

8:46

with assembly not through the banks.

8:48

It is happening outside the banks

8:50

to predicts. While. We're gonna

8:52

talk about that just in a moment. That

8:55

you're absolutely right? Am. So.

8:57

Had of we go let's see what

8:59

the results. Ah good. very big influence

9:01

some in phone so change parts of

9:03

the industry or it's so let's see

9:06

if we can convince you that. It's.

9:08

Probably get a be in the

9:10

former category. Very big influence rather

9:13

than some influence. But

9:15

I'm I'm. I'm. Positive that

9:18

the risk the results are pretty good

9:20

for that Paul I think it shows

9:22

people are thinking about embedded banking at

9:24

least. So thank you for rapid dissipating

9:26

in that's now. Let me. Let

9:30

me just sit the baseline. he

9:32

had bush on you. He made

9:34

a comment about. This. Is where

9:36

it's happening, is happening in the syntax. And

9:39

the we've got some. We've got

9:41

some fairly strong evidence to suggest that's

9:43

the case. So let me give you

9:46

some of the highlight numbers at the

9:48

moment. So what we know

9:50

for example is revolution just

9:52

top to forty million customers.

9:56

And. They're often getting compared with hates

9:58

his B C at the moment. Hsbc

10:00

has thirty nine million customers for

10:02

for the retail practice, so that's

10:04

something that you wouldn't You wouldn't

10:06

have thought that he or a

10:08

top twenty bank in the world.

10:11

In. Terms of side by side comparison

10:13

could be comparable to someone like where

10:16

the. But. In terms of

10:18

customer numbers and growth, that's something

10:20

we can see in the Uk

10:22

market. These arguments that the Uk and

10:24

intensity came market with the challenges said

10:27

that the big four banks in the

10:29

Uk have given up around twenty five

10:31

percent market share. These challenges as

10:33

primary bank accounts of the the last

10:36

ten years, that's a big deal. But

10:38

when we look at the top twenty

10:40

syntax in the world today. This.

10:43

Is the top twenty banks? We

10:45

see that the top twenty syntax which

10:48

include. Mobile operators like

10:50

hourly pay and there and

10:52

paid see him in India

10:54

represent about three point eight

10:57

three point nine billion in

10:59

sumus and the top twenty

11:01

banks. Retail banks in the

11:04

world represent about two point

11:06

seven billion customers. So.

11:08

It's not even close even if

11:10

we looking just it. Purely custom

11:12

and numbers an ear. The Finn

11:15

now gonna significantly more significant more

11:17

influence down a day to day

11:19

basis. and a lot of this

11:21

is because of the embedded nature.

11:23

When we look at paid him

11:25

we look at alley pay, we'd

11:27

set pay and so forth. We.

11:30

Really talking about the fact that.

11:33

The. Bank Account in functions in

11:35

many of these jurisdictions as move

11:37

from a debit card to wallet

11:39

now and we're starting to see

11:42

the wallet is a prime rib

11:44

vehicle for this embedded banking experience

11:46

now. And. We're saying

11:49

that play out with these they spin tix

11:51

submission. Let me ask you a question. You

11:56

know we don't hear. Nick.

12:00

Rebel. The. We. Don't hear and

12:02

boat and while I am Biden stepped

12:04

aside as see any about when she

12:06

was see I am you know we

12:08

don't he had David Dallas is the

12:11

Ceo of them as New Bank and

12:13

of Latin America which is the largest

12:15

bank in Latin America by pretty much

12:17

any metric. Now we don't hear them

12:19

typically talk about they call banking system.

12:22

That. Will often talk about that. expect.

12:25

So how does this syntax?

12:28

And all the technology requirements

12:30

of embedded banking differently from

12:32

a traditional but. I

12:35

think you know your doctor. very important

12:38

aspect of. The. Weird

12:40

frontex or unveil with banks are.

12:43

You. Know you will give you Asked a

12:45

Off to speed on all of us. We

12:47

all have bank accounts. But we

12:50

still have so many different dick. Van

12:53

Dyke options in automobile live. In.

12:55

A fiasco. A We're having those

12:57

apps mainly because we didn't have

13:00

those solutions. From. From or

13:02

max. If my bankroll, it's all

13:04

those capabilities observing that I have no need

13:06

to go on. Any that

13:08

applications from in any other providers.

13:12

It will use or what Are you being

13:14

more successful than it just bc. Eight

13:17

in I believe. it's mainly because they are

13:19

able to connect with the customs. They're able

13:21

to meet the needs. Of the

13:23

way the customers are looking for. Whereas.

13:27

The. Traditional banks they can do to operate. To

13:29

say we're here to the a deposit account

13:31

kids alone if you want up my case

13:33

of fame he to so you you want

13:35

to make a payment So I have a

13:37

lot of conversations and bank executives. If.

13:39

I asked them what sort of reality, where

13:41

do need help them used to hang do

13:43

to change the system from. Enough,

13:45

I'm just something else. Like. You

13:47

know they don't talk about. And he

13:49

what kind of value they need to bring

13:52

to the customers. They a beard is this

13:54

use case that we want to solve? How

13:56

can we do that one so you know

13:58

it's is I think. I want

14:00

them. That's mainly because. They.

14:02

Spent eighty percent of the budget

14:05

in just keeping up been updated.

14:07

Legacy payment systems are cost us.

14:10

And. That leaves them very to

14:12

confined to focus on the next

14:15

generation technologists. An exemption. Capabilities A

14:17

You feel if you see. Why?

14:20

We have so much up innovations

14:22

happening in the emerging markets like

14:24

Brazil, India, and Philippines and other

14:26

countries but not in the ass.

14:31

Systems. Analyst.

14:37

Smackdown and produce Hydrogen and

14:39

that's what out of protection

14:41

of those legacy am. Relationships

14:44

and legacy infrastructure, You know? Look at

14:46

Ice Bucket said now. adoption in the

14:48

United States compared with U P I

14:50

N optional picks Pay adoption in Brazil,

14:52

will you be I in India And

14:54

yet the Us is really lagging on

14:56

things like real time payments, pets. A

14:58

lot of you could argue a lot

15:00

of that comes from sort of. The.

15:03

Fact that we don't have a syntax chadha

15:05

in the United States A When I went

15:07

I would I would think I would agree

15:10

to some extent, but I think it's also

15:12

mainly because. He. Has has

15:14

a very sophisticated. Integrated,

15:16

been degraded systems like almost all

15:18

the banks. the culprits they in

15:20

there was some pot of automation

15:22

boot from the your be systems

15:24

to the banks and to a

15:26

lot of legacy process of building.

15:29

Whereas. The for look at India Brazil

15:31

it's a totally new emerging economy is

15:33

easier for them to start with something

15:36

new or of them in of changes

15:38

in our. Voices. That

15:40

is the case. It. Is important

15:42

for for the inner established economies

15:44

to will be a real time

15:47

payments which is in a happening

15:49

slowly and steadily but the speed

15:51

is not. Enough is

15:54

not something. The beach beach I think

15:56

that swear. At the concept of

15:58

the real time being but it economy. In

16:03

on him. He. It Let's

16:05

say I'm your bank. I'm banking and

16:07

insurance company. And. The insurance

16:09

company wants to be Lynch's blinds

16:11

in real time. Some. I'd

16:13

have an automated process because in a you're

16:16

fighting and climb I want to have some

16:18

yeah I know what are some automated mission

16:20

that makes the decisions of is a claim

16:22

valid or not and then I want to

16:25

make a applauded decision and then I want

16:27

to payment to be out in real time.

16:30

So. You apply for a transplant in

16:32

the amount. Of

16:34

money to. Also.

16:40

Thank. Have been approved by on his

16:42

behalf right? Yeah they did as soon

16:44

as they approved. So in a lot

16:46

and I've since they walk rebellious we

16:48

had the banks to start thinking about

16:51

the Fisher thing we don't We don't

16:53

try to displace any of the system.

16:55

of course you have a display them

16:57

by in a way keeping the banks

16:59

towards the future but I would vote

17:01

is still in our is this because

17:04

the banks to embrace the preacher but

17:06

this time backing platform so betweens and

17:08

an Fps given to the insurance. Company

17:10

that they can connect to the bank

17:12

said he and I wanted this was

17:15

the payment is out instantly right? So

17:17

that's a feature. Thought.

17:20

So I want to talk about how

17:22

to become a digital says bank because.

17:25

When we look at. At

17:30

when when we look. At

17:34

the Teacher owls banking as

17:36

it stands and some of

17:38

the things you're describing. Then.

17:41

It really does take quite

17:43

a different approach culturally. You.

17:46

Know M to being a bag

17:48

Know ends. When we look at

17:50

the data I mention this: three

17:52

point eight billion in tech uses

17:54

Vs Am in other two point

17:56

Am seven Am A for the

17:58

mainstream banks but. There's some

18:00

other data I didn't share his yet

18:02

witches and this has come from my

18:05

new book the brand say gone tomorrow

18:07

am were when when we look at

18:09

the data we've say we say of

18:11

the last five years that these finn

18:14

take bank's an insect. Wallets have grown

18:16

at two hundred percent in terms of

18:18

customer growth. And and

18:20

that's really down to their ability

18:23

to acquire customers digitally at scale.

18:25

That's a really important things for

18:27

the biggest banks in the world

18:29

they've gone. it's free percent the

18:31

customer isis is not even close.

18:33

And then for revenue perspective, The

18:37

last five years compound annual growth rate

18:39

for at the big banks has been

18:41

about fifteen percent revenue growth year on

18:43

year, and it's forty five percent. For.

18:47

The insect challenges and the and

18:49

the wallet ecosystems. so this is

18:51

this a very important hard numbers

18:53

to look at if you wanna

18:55

be if you eat. When we

18:57

look at the trend, all of

18:59

the fastest growing financial institutions or

19:01

digital direct buyers. And. So

19:03

if you wanna be digital first.

19:06

You'd. Have to play by the rules

19:08

of these new players, not of the

19:10

rules of a traditional bank which is

19:12

where it gets a bit tricky. Right

19:15

Because the At. It

19:17

You know? How do we not

19:19

be a bank and convert to

19:21

being a technology company like these

19:23

digital players? Sex talk about the

19:25

leadership. Of these digital

19:28

first organizations. Am. These

19:31

funds had players What? What are

19:33

they do differently as in or

19:35

how would you identify them as

19:37

a digital first organization? This is

19:39

say someone like in a Jp

19:41

Morgan, Chase or Hsbc. So.

19:44

Different that may affect must have

19:46

different things acknowledged. Leadership. Is.

19:49

Coming from. The technology companies

19:51

like. google. Amazon

19:53

and Or and want an introductory

19:56

base because. When. They come and

19:58

look at the the to. The

20:00

stag. They don't know the in

20:02

a little look at just the he in a

20:04

way to the red. We start from the for

20:06

example as you have it any node own book

20:09

right where Elon musk when he started. The

20:12

Spacex successful launch a rocket and

20:14

isn't a not. I'm not going

20:16

to. Take. What?

20:18

Nasa has built. And. Then

20:20

just add incumbent of capabilities. but I'm

20:23

good looking. As if the at

20:25

the very first might I want to use

20:27

the latest technologies available today. and

20:29

then busier rocket launch of launch of

20:31

right. And because of that he was

20:33

able to do that up at one end up the cost.

20:36

So. If it takes that,

20:38

I'm executive in the same thing and we

20:40

did the same thing at Weekly Us On

20:42

when we started looking at fame and modernisation.

20:45

We didn't look at what is available

20:47

today and is hop can be improved

20:49

that but instead. We look, we

20:52

looked at the payments episode payments should

20:54

be. Let me give you an example.

20:57

Ah, you know it Today.

20:59

Engine into payment would. You.

21:01

Send a payment out. Of

21:04

a model. Or the want to cast a

21:06

payment. Except to separate accounts you want

21:08

to you know you want to return that again.

21:11

It's a three different that a cop so that

21:13

are. In on the ability

21:15

to put payment action. He. Said

21:18

different different historical transaction you

21:20

dislike. In a you

21:22

have a something from Amazon. And then

21:24

you want to return it. It's going to

21:26

be like in to get silly get back to amazon. Night.

21:29

So you you dislike having two different interests

21:31

but instead to in a what Amazon uses.

21:34

He. Had a product you would have done it

21:36

just that products he says that are dead So

21:38

we wanted to bring that experience in the payment.

21:41

It is only one that got all the time

21:43

road the journey. With. Are disrupted

21:45

or an untested moment A lot

21:47

He does the same payment a

21:49

car so that's the first assembled

21:51

spent. Most of

21:54

the frontex they think from that perspective

21:56

Paypal. how do I make my customer?

21:58

Tony? You're right they

22:00

that they start from there and then hey

22:03

what do we need to do to make

22:05

that happen in of can any of the

22:07

legacy players and meet that one Than said

22:09

it's not something they look for. will consult

22:11

a problem. And. Then in oh that's

22:13

so bad if if nobody can solve the

22:16

problem they start building it themselves. So that's

22:18

why in a couple of syntax of the

22:20

banks in in the Uk they have but

22:22

that won't put platform it is amazing. Make.

22:25

So no idea about yeah you

22:27

got a well I mean same

22:29

Miss Lee am. you know best

22:31

styling does that? See now have

22:33

their own M cause they sell

22:35

to others. I

22:37

can't remember the name of it if

22:40

is it's anyone can remember in the

22:42

chat did smoked sausage machine or some

22:44

me as something them to sounds philly

22:46

generic like that but I am. I

22:48

don't have been in front of me

22:50

but to that point that you talking

22:52

about. In. In terms of

22:54

sort of the technology layer. When.

22:57

You talk to these

22:59

Ibd technology. And. Syntax

23:02

by his. And you ask

23:04

them about something? Well what if you need to

23:06

see him in. A in this

23:08

is digital first thinking in instead of a

23:10

nutshell, T S is when I spoke spoke

23:12

with Henry much as the Cia oh it

23:14

that way bank which is the largest challenge

23:16

a bank in the world for example and

23:18

I said what are you say to people

23:20

when they say but sometimes you really need

23:23

to speak to a human. And

23:25

he was like it's easy need to

23:27

speak to a human at we Bank.

23:29

It's a design salvia, Right?

23:33

Because we should have worked out how

23:35

to fix that problem for you in

23:37

an automated sessions. With that you speaking

23:39

do a human so it's very interesting.

23:42

different mindset, isn't it? In the digital

23:44

first embedded world you're looking at solving

23:46

the problem. When. It presents

23:48

itself for a customer in

23:50

real time without a human

23:52

involved autonomously. Or magically if

23:55

she wants. You know they exist in the

23:57

moment, solving that problem and that you know

23:59

when you. That thinking about that it

24:01

requires you to think about. Your.

24:03

Bank. As a service

24:05

embedded in the customers lies. Beings.

24:09

The habit as be turned on a

24:11

point to solve a problem in paired

24:14

with. Will. Will will stop what you doing.

24:16

Stop. Looking at buying that house?

24:19

And when you come and see whether you can

24:21

afford a mortgage, Spam will let you go back

24:23

and by the house instead of just saying. You.

24:25

Know it's gonna be am.

24:28

It's a it's an experience design problems

24:31

of how to deliver home financing in

24:33

real time. Rights. As a

24:35

very different I mean that.

24:39

That's the thing thinking. And.

24:41

Or if it's not the bank the rate

24:43

in the we're not thinking that are the

24:45

products and await want to go to the

24:48

customers but instead looking from customers perspective what

24:50

they want, what challenges the how. And.

24:52

What kind of problems I want to solve? do

24:54

they do? They would have to all mean for

24:56

into the Us. Than. I am going to

24:58

solve the problem so. That. Is that

25:01

is absolutely the way the future

25:03

is should me. This

25:06

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our laps banking on.

25:35

Let's. Talk about. In terms

25:38

of had been in banking services. And.

25:41

I'm in a especially what

25:43

we're seeing globally. Picks.

25:46

pay and and and in this

25:48

to some extent gets to some

25:50

of the comments i'm saying he

25:52

picks pay is the fastest growing

25:54

up payments network in the world

25:56

today with almost a hundred percent

25:58

adult adoption in in Brazil.

26:00

We look like exporting that to other

26:02

countries in Latin America. UPI

26:05

is obviously now one

26:08

of the largest payments networks in the

26:10

world. By 2027, it's

26:12

estimated that 80% of all retail commerce

26:15

will go across the UPI rails. This

26:18

is what's happening offshore.

26:21

Talk about the trend for

26:24

real-time payments and what

26:26

you're seeing outside of the United States

26:28

right now with real-time payments. Yes,

26:32

real-time payments has

26:34

been a great success in

26:37

markets like India, Brazil, the

26:39

emerging economies. But

26:42

if you look at the UK, the UK

26:44

launched the real-time payment in

26:46

much earlier than the US. But

26:48

the adoption rate has been still

26:50

slow. That's the developed

26:52

market. The

26:55

primary reason is

26:57

that the banks and

27:00

the commerce, I would say the

27:02

commerce, is very established. There

27:05

has been a lot of investment that has been made in

27:08

doing those payments. Even though it's not real-time, I

27:11

can still make the

27:13

payment in my ERP system and

27:16

have my ERP system send a payment

27:18

to my bank. Then

27:20

bank can still process that in both

27:23

and then send another

27:25

way back to the ERP system

27:27

saying that out of sound loss

27:30

and payments that you sent, this 70 payments

27:33

failed. Then ERP system takes

27:35

that out and then fixes

27:38

it and then makes that presentation to

27:40

the decision makers and the treasury. Then

27:43

they do whatever is needed to be done. The

27:46

important thing here is the

27:49

corporate systems in the developed

27:51

economies and the banking system, the

27:53

developed economies, they are very tightly

27:56

integrated And a huge investment

27:58

has been already made. Now.

28:02

What do you know? The bank C I

28:04

go review real time payment suicide So like

28:06

a C H payroll systems all of this

28:08

kind of a sort of locked in new

28:10

right so know. Everybody.

28:13

In this the ecosystem have to think about

28:15

a no no, it's not efficient for me

28:18

to send the A and then I'm house.

28:20

Too many people in my to say department.

28:23

And. Finance Department dealing with this country

28:25

is misuse. Dealing with the missed payments

28:27

or Britain's how can a all automated

28:29

one automatically to the F B I

28:31

is because. It's.

28:35

The. Finance controllers and banks have

28:37

is reconciliation. Because. They

28:39

I sent Santos and payments but I don't

28:42

see Santos and payments posted in here which

28:44

one did miss and then I have to

28:46

have deployed people to go through that bomb.

28:49

But in on the concept of which will

28:51

upon solves that problem they'd for example. Are

28:54

going up in today. The

28:56

got great has a bank account with the bank.

28:59

And. One account that like all the

29:01

transactions, wasn't used the same A cop.

29:03

Although. Some doesn't Payments I made right? Okay,

29:08

so. Much

29:10

does is. It it was the

29:12

culprit. The fleet of what you're looking for.

29:14

Every one of the. Customer.

29:17

Or every one of the. Of. The

29:19

waiters and you. Knew. You.

29:22

Would in a famous estimate he and Buddhists I'm

29:24

you. I want you to make the payment to

29:26

this module account so that I know who's making

29:28

the payments. In I I didn't have

29:30

to deal with any other countries. Me says. And.

29:32

When you when you bundle bundle up

29:34

with the real time payments. I

29:38

kept payments and real time and I can make the

29:40

payment and pay it back. So. With

29:42

really more of the a real time connected

29:44

economy as they say that. What

29:46

What becomes more obvious is. The.

29:49

Com was becomes more interconnected in

29:51

real time. With. No friction

29:53

off this in the limitations that

29:56

we have today. Which. Is

29:58

that accompanies me Shoes and a missing Bateman

30:00

The Non Stop. Because and the end of

30:02

the point. So many human resources and this

30:04

becomes more and more automated. So that is

30:06

a bad you know is this kind of.

30:10

In of you you need to have the

30:12

roads said built first. But. How

30:14

he a good and infrastructure good

30:16

the of transportation system. Now. We

30:19

have the roads which is it can say

30:21

about the be fed know navi need other

30:23

the ecosystem spill really the gas stations we

30:25

need the convenience stores we need the you

30:27

noticed how the area so. That

30:29

is being built and now I think

30:31

I would say in the next to

30:33

the yes will be very critical and

30:36

a bank shouldn't start taking action today

30:38

to be ready for that cable. That

30:40

is because if you don't I mean

30:42

that the i mean I joked about

30:44

said now that should be cold said

30:46

later in the United States. Has

30:49

of adoptions and a now I'm I don't

30:51

want to upset a one on the cold

30:53

but M A in A did the. It.

30:56

We talk about third. The. Technology

30:59

Am Legacy.

31:03

You know that that that we have

31:05

to sort of get our though with

31:07

payments like I see a H Networks

31:09

and the check check some in had

31:11

checked sites and all of us the

31:13

things stamps and he knows who as

31:15

crazy because like it's it's over seventy

31:17

five percent of although the world sex

31:19

or written in the United States today

31:21

says not necessarily healthy stealthy seeing if

31:23

you want to change paths to to

31:26

look at adoption of real time payments

31:28

the costs of implementing as as a

31:30

few of the com and as of

31:32

said the cost of implementing said now

31:34

I'm very expensive. Imperative to

31:36

what we see for the costs

31:38

of implementing U P I N

31:40

in India, for example, Or.

31:43

Pick space in Brazil. So.

31:46

Why? Why is it that is so

31:48

much more expensive to do said now

31:50

real time payments in the Us. Then.

31:53

We seen in these other examples of so.

31:56

Green. That's primarily the cost of living. Eight I

31:58

mean, elect know? the cost

32:01

of building a platform in

32:03

the US is much higher than building a

32:06

platform in India or other developing countries because

32:08

of the cost of labor and also like

32:10

you know. But

32:14

is it an engineering issue? Like

32:17

is FedNow over engineered compared

32:19

with UPI? I don't think

32:22

so. I don't think so. I think

32:24

when FedNow, when

32:27

FedNow is launched right, it

32:29

is very important that we launch it with

32:31

no failures right because you know if UPI

32:33

goes down, how many people in the world

32:36

knows UPI is down. But

32:39

if FedNow goes down or FedWire

32:41

goes down, it's the big news

32:43

in the whole world right. It's

32:45

everybody already so that gives an

32:47

extra responsibility for Fed to make

32:49

sure the stem is rock solid

32:51

and stable and there's absolutely no

32:53

failure. So you know I

32:55

think I would say I'm very

32:58

happily surprised that they met those

33:00

goals, they met those dates and

33:03

you know they delivered as

33:05

promised in fact they delivered

33:07

earlier than they promised. But I think

33:09

you know I agree with that you know

33:12

when they should have started, maybe they

33:14

should have started like 10-15 years ago

33:16

but whenever they did. I

33:18

think I mean that is also but you

33:21

know I mean I look at Brazil

33:24

and Brazil has made incredible progress

33:26

with PixPay very quickly. I'd

33:29

be interested, I don't

33:32

think the complexity of integration

33:34

of PixPay into banking systems

33:36

in Brazil is any less

33:38

or more complicated than what it is in

33:40

the US. I do accept that the labor

33:43

costs and the capital costs

33:45

for doing that might be cheaper. But

33:49

there also needs to be incentives

33:51

for shifting to this real-time payments

33:53

infrastructure. So one of the things

33:56

we've seen in India and in

33:59

Brazil is the central bank's willingness to

34:01

say, we're

34:03

going to move to this and you have to adopt it, just

34:06

as you would with Basel III standards

34:09

and so forth. There's a reluctance to

34:11

do that in the United States because

34:13

of the state versus federal situations and

34:18

things like that. So maybe that's part of

34:20

it. Maybe it's just banks feel like, if

34:22

there was enough banks doing it, maybe the

34:24

costs of implementing FedNow might come down. But

34:27

I mean, this is a really interesting

34:29

question with what's happening

34:31

in India and Brazil, what

34:34

does that mean for the interchange business? There's

34:38

a lot of intakes are relying on interchange.

34:40

I think that's, I'm

34:42

very disappointed with

34:45

the way the

34:47

whole money innovation has happened, right?

34:50

Coming back to, let me come back to

34:53

this one. But if you look

34:55

at the adoption of

34:57

speed at India-Brazil, two

34:59

reasons it accelerated. One is the

35:02

mandate from the government because there's only

35:04

one agency that was running

35:06

their entire show and they mandated, people listened to

35:08

that. And another one

35:10

is COVID. Because of COVID, people

35:12

migrated to all its digital payments

35:15

because nobody wanted to touch the

35:17

cash because people got COVID,

35:20

taking money from somebody else, right? Nobody wanted to

35:22

pass that. It was a transmission vector. Yes.

35:25

In fact, my dad got COVID because

35:27

of taking money from for a donation

35:30

that he was for a charity. He

35:32

was running. So people

35:34

really didn't want to touch any

35:37

money. They wanted to do everything

35:39

real time, right? So I'm coming

35:41

to the interchange and all

35:43

that thing that's going on. So

35:46

if you look at the innovation, like

35:49

what we have done was, God is

35:52

the biggest innovation that happened

35:54

like 20 plus years ago. That

35:56

was a really, really good one

35:58

because- A car. much and I have

36:01

been offering credit. It's a 1960s technology like

36:03

the Magg you

36:13

still issuing debit cards to your customers? And

36:16

they're like, of course. And I was

36:18

like, 1970s tech in a 21st century

36:21

world, all of the fastest growing payments

36:23

tech is wallets now, right? Like we

36:25

expect that next year, 55% of all

36:28

retail commerce transactions globally will be done

36:30

by mobile wallet and 30% by

36:32

plastic. So this is

36:34

the thing is like if you say to

36:36

a bank where you should be migrating

36:40

off plastic cards to wallet, most bankers

36:42

would say, hey, we're not ready for

36:44

that. We're not even close, but you

36:47

can't do embedded banking in a plastic card.

36:50

So you're going to have to at some

36:52

point shift to wallet ecosystem. Now you can

36:54

share in Apple's wallet

36:56

ecosystem or Google's wallet ecosystem

36:59

or Alipay or WeChat if

37:01

you're in China, in PayTia

37:03

if you're in India. So

37:06

there are existing things available, but

37:08

this really comes back to what's

37:10

the motivation in doing this because

37:12

we talked about the cost side

37:15

of embedded banking with FedNow

37:17

and the payment side. But

37:19

what is the revenue opportunity

37:22

for banks in

37:24

terms of embedded finance? What

37:26

would you say in the short term? Is it just deposit

37:29

capture? Is it credit access? I think

37:31

it is the, you know, there are different different aspects

37:33

of it, right? So I want to kind of touch

37:35

upon the card scenarios

37:39

where, you know, if when you look at

37:41

the cards, like, you know, the interchange fees

37:43

is the biggest reason why

37:46

innovation has not happened in the bank

37:48

beyond those cards. Right? Because there is

37:50

not enough incentive and for the banks

37:52

to do anything outside of that one. And

37:55

a great, there was a great opportunity for

37:57

Apple to disrupt that one. But

38:00

what they did was they just stuck that same card

38:03

again within that wallet, right? You

38:06

know, if Apple has created

38:08

a wallet network, that would

38:10

have been a phenomenal transformation.

38:15

But that's still, like, you know, I lose

38:17

my card, that's a fraud, that

38:19

is lost and anybody can use it.

38:22

And the card network, what they were

38:24

actually doing is, you

38:27

go to Walmart, you pay the card, you

38:29

pay my card and the responsibility of the

38:31

fraud is with the Walmart because

38:33

Walmart has to check, this is Brett Kinghead,

38:36

do I see your name? And

38:38

then it is my responsibility to make sure- Right,

38:40

but in a real-time payments scenario, you're not doing

38:42

that because you're

38:44

instead like

38:48

borrowing the KYC from other infrastructure,

38:50

right? Like in this case- That's

38:52

correct. The payments rails, right? Right, so I

38:55

think with respect to the money, revenue

38:57

opportunities for the banks, it

39:00

is all about convenience, right? Hey, you know,

39:02

I'm going to work with this, for example,

39:04

let's take this insurance company. I'm

39:06

going to give them virtual account capabilities, I'm going to

39:08

give them ability for them to

39:11

send real-time payments, ability for them to

39:13

accept real-time payments. Then I'm going to

39:15

generate revenue because I'm making it easier

39:17

for them to do reconciliation, to

39:19

receive the payments, to make the payments because

39:22

it's a lot of convenience factor. So,

39:24

you know, I make money by the

39:27

number of virtual accounts I allow them to create.

39:29

I make money by the number of payments I

39:31

allow them to create. You know,

39:33

every business needs a virtual account

39:35

capabilities, maybe, right? Because every business

39:37

has customers and they have their

39:39

reconciliation needs. So, you know, you

39:42

need to have connection with NetSuite, you

39:44

need to have connection with my Kenbooks

39:46

and every other capabilities. Now you take

39:48

your bank and plug it into those

39:51

ERP systems. So

39:53

that way, you know, if I'm a

39:55

business, I want to launch, I can open an

39:57

account directly from my ERP system. To

39:59

My Bank. I think it's not

40:01

transacting against are doing every business personal

40:03

patient's family system through with the bank

40:06

to the a be I. Saw.

40:08

Putting on an unlimited number, living with

40:10

Indo, putting on a new employee All

40:12

of that he could generate sir. Yeah.

40:15

You don't have to do application forms

40:17

things I that could happen in no

40:19

time, Law that sets know like in

40:22

in the instances a payroll and things

40:24

like that. That's fairly obvious. but let's

40:26

set list. Let's ask this next step

40:28

how question to the audience And so

40:30

this is our second Paul Question Will

40:32

get your thoughts on this, particularly with

40:34

so he embedded better embedded Banking and

40:36

whether it's a revenue opportunity for the

40:38

banks? So do you think embedded banking

40:40

is a revenue opportunity. Answer

40:43

that and then we're going to talk

40:45

about some examples. Of. Revenue

40:48

Pitching d in in embedded finance

40:51

today that were saying that sat

40:53

there so. We're. Going aunts

40:55

and says is Paul was some some

40:57

abuse cases hopefully. When.

41:00

We talking about this? This.

41:02

Opportunity for embedded banking.

41:04

A. Revenue. Am.

41:06

One of the obvious up it's India's as

41:09

a deposit taking. Or. Deposit

41:11

Acquisition. Video.

41:13

So forty four? Absolutely. Since

41:15

and lads and other say

41:18

it's incremental sex. sixty seventy

41:20

two percent say yes. In.

41:22

A basic great. so let's

41:24

take a couple of quick

41:26

example. So on the deposit

41:28

side we have a really

41:30

good example of very seamless

41:33

deposit target acquisition which was

41:35

l he pays you a

41:37

bow products. Which

41:39

was this savings feature in the wallet?

41:41

Now in the Us, the closest equivalent

41:44

we have is the Apple card. And

41:47

Apple savings were. Apple was able

41:49

to raise a billion dollars in

41:51

deposits in just four days. and

41:54

in china with you a bow similar

41:56

thing in the wallets they were able

41:59

to raise over $300 billion

42:02

of deposits in Yui Bao, which

42:04

made it the largest deposit pool

42:07

in the world. So

42:10

that's on the deposit side. And

42:13

on the credit side, of course,

42:15

we have the example, a great

42:17

embedded example of buy now

42:19

pay later, which got a

42:21

lot of traction early on in the

42:23

pandemic, then got panned as

42:25

being out of control with debt. And now

42:28

we have the flip side, we've come out

42:30

of that and Klarna is about to IPO

42:32

in the EU later this

42:34

year. And

42:36

they've done that off the back of very

42:38

healthy growth on the buy now pay

42:41

later side, which is taking revenue

42:43

away from credit card programs. So

42:45

there's a few examples of

42:48

early embedded banking

42:52

revenue as it plays out. So I

42:54

think the opportunity is

42:56

very robust there on

42:58

the savings side of it. I

43:01

do have to, you do have to realize

43:03

that what is the difference

43:05

between Apple, Apple savings,

43:08

you know, and, you

43:11

know, Yui Bao compared with

43:13

traditional savings accounts. One

43:15

of the things is very low

43:17

friction onboarding for the customer for

43:19

the savings, making it really

43:23

easy to save money, you

43:25

know, is, is one of those

43:27

ways that we think of the

43:29

differentiation of embedded banking and

43:31

embedded finance opportunities. There's a really good

43:34

study coming out of India about this.

43:36

Actually, the RBI did some research on

43:38

this. And the CEO of

43:40

Federal Bank, I think it was, he talked

43:42

about the fact that if

43:44

you spend a million dollars on branches versus

43:47

a million dollars on digital

43:49

deposit acquisition in India today,

43:51

you're going to get 300

43:54

times the response using digital

43:56

acquisition of deposits, then

43:58

you will opening a branch. So

44:00

I want the listeners who are with

44:02

us to think about that as a

44:05

statistic. It's a really interesting statistic. If

44:07

I told you you had a 300 times

44:11

better chance of acquiring

44:13

deposit digitally than getting

44:15

someone to walk into your branch to give you

44:17

a deposit, would you argue that

44:19

that's good revenue for the bank? I think

44:21

we would, right? So...

44:23

Yes, that's amazing stats. Yeah, great

44:25

stats. Let's talk about the virtual

44:27

account a little bit more, Bhushan,

44:29

if we can, because

44:32

the other element of this is being

44:35

able to set up an account in

44:37

real time for something like credit access

44:40

or for a savings account,

44:45

or for a new wallet account,

44:47

sort of move money offshore, for example,

44:49

with remittances. All of

44:51

these are potential examples of a virtual

44:53

account. But why

44:56

are virtual accounts so critical

44:58

for the embedded banking piece?

45:01

Yeah, I think there are several examples.

45:04

For example, I talked

45:07

a little bit about accounts payable,

45:10

accounts receivables departments, where they

45:12

want to have the ability to track

45:14

the payments at every individual customer level

45:17

or supplier level. So

45:20

today, all those payments or

45:22

collections are happening in one

45:24

account. And then it's a

45:26

lot of manual processing for

45:29

every finance department to

45:31

make sure, hey, you know, did I receive the payments from

45:33

this customer? And then I have

45:35

to go back and mark my ledger that, hey,

45:38

I have received this payment. Is

45:40

this payment that is written? Then I have to

45:42

go back and send another follow up letter and

45:44

do whatever is needed. But the feature

45:46

is not batch based. It's all real time. It's connected.

45:49

So, you know, when you do that part, okay,

45:52

even if you do that payment real time, if

45:55

you have the same accounting structure to process

45:58

accounts, payables and receivables, is

46:00

still the same inefficiency that you

46:02

dealt with before right. So, instead

46:04

you can go ahead and create

46:06

virtual accounts for every one of

46:08

your you know customers and every

46:10

one of your supplier and here

46:13

is this account I want to start paying and

46:15

receiving through those virtual accounts right and

46:17

if I want to do that from

46:19

I need to be able to create those virtual accounts

46:21

in real time you know with a simple API. I

46:23

don't have to go to the branch or I don't

46:25

have to call the bank can I open

46:28

a virtual account it should be done in

46:30

a simple way through those APIs and

46:32

those virtual accounts can be just one-time use

46:35

or it could be you know

46:38

used continuously you know throughout that

46:40

life cycle of that customer. There

46:43

are uses of one-time use where I want

46:45

to send you money and I want to

46:48

part that fund in a virtual account and

46:50

let you know let him pick up however

46:52

he wants let him pick up that funds

46:55

either through RTP or ACH or

46:57

card however he wants he can

46:59

do that part right. So, there

47:01

are there are various use cases

47:03

basically we are making that money

47:05

transfer you know for example

47:07

you have an escrow account. Escrow is I

47:10

want to take you know some Mr.

47:12

Bob service and I want

47:14

to keep that fund in your in your

47:17

virtual account then escrow account

47:19

and then let whenever Bob completes his

47:21

job I say approve that job is

47:23

approved the payment can be initially immediately

47:25

moved away from the virtual account back

47:28

to his account right.

47:30

So, you know these are just

47:32

like few examples that can be used. No

47:34

but it's the ability to sort of do

47:36

this on the fly which incorporates sort of

47:38

the KYC but it's you're just extending

47:41

that you're having another account we're

47:43

not going through separate KYC for

47:45

this account because we're just essentially

47:47

opening up some new capabilities on

47:50

the ledger. I do

47:52

think there are some really good examples

47:54

that come out of the corporate world

47:56

as well like we know

47:58

for example in China that Alibaba

48:01

and Alipay combined are

48:04

very serious lenders for

48:06

corporate accounts, SMEs in

48:09

particular. In 2022, my

48:11

bank, which is the digital

48:13

bank, working obviously

48:15

in conjunction with Alibaba

48:18

and Alipay, they

48:21

accounted for 40% of

48:24

the total loan volume in

48:26

China for SMEs, which

48:28

is a phenomenal achievement.

48:32

They had this approval process

48:35

for a loan from SME, which

48:38

was 310, they call it, three minutes

48:41

to apply, one second approval,

48:43

zero humans involved. The

48:45

one advantage, first of all, they

48:49

have a significant data advantage at

48:51

this point. This is a really

48:54

interesting example. The

48:59

NPL ratio for my bank, for their

49:01

lending portfolio for these 54 million

49:03

SMEs or whatever in 2022,

49:05

their NPL ratio was half

49:07

that of the big banks

49:10

in China. How

49:12

is it they're so good at managing

49:14

risk? You could say it's technology,

49:17

but actually a lot of it is

49:19

the fact that they see the cash

49:21

flow of the merchants because the merchants

49:23

are using Alibaba to run their business.

49:26

Once you have cash flow, merchant

49:29

cash flow, you have an

49:31

excellent way to assess risk, far better

49:33

than asking for two or

49:35

three years financial statements. We

49:38

talked about API, but let's talk

49:40

about data acquisition. In

49:42

terms of embedded banking, for things

49:44

like Buy Now, Pay Later, you

49:47

can build the credit function

49:50

into a purchase experience. If

49:53

you're doing a general lending

49:55

capability, let's say you're doing housing,

49:57

you're doing mortgage lending. Well,

50:01

I'm not going to know you're interested in buying

50:03

a home unless you come and ask for a

50:05

mortgage on the bank's website. But someone knows, Google

50:08

knows because you've been doing Google searches,

50:10

Apple knows because you've downloaded a real

50:12

estate app on your phone, Facebook

50:16

knows because you joined a property investment

50:18

group or something like that. These are

50:20

all leading indicators of your intent to

50:22

buy a home, which could lead to

50:24

an embedded finance

50:26

experience. On the data

50:28

acquisition side, how would

50:31

you advise banks to deal

50:33

with that problem so they can be better at

50:35

the embedded banking? Yeah, I think

50:38

all the banks know they need to do a

50:40

better job in this one, but

50:42

they're just not enough

50:44

tools and enough data, enough

50:46

stuff that is available. For example, my

50:50

bank today, the

50:53

bank that we are working for, working at,

50:57

for Finstly Banking provider,

51:00

they don't know the health of Finstly,

51:02

right? Because they really don't

51:05

know all the cash flows, everything that's happening

51:07

because that's all happening in my accounting system. And

51:10

if I have to take a line of credit, why

51:12

don't we offer corporate accounting systems behind

51:18

the logging? Exactly. That would get us cash

51:20

flow. Because I don't have those services. So

51:22

in a sense, I don't have those services.

51:24

I have to look outside the bank to

51:26

do all of those things. Now, let's

51:29

bring those services back in the

51:31

banking because unless the bank connects

51:33

with the customers the way they

51:36

want to do the finances, there

51:38

is absolutely no way banks will

51:41

know where the customer is, right,

51:43

how they are operating. So we

51:45

should have those facilities,

51:47

have the solutions available for the

51:49

customer. So I know, okay,

51:52

here are the cash flows, here are the receivables.

51:54

Okay, now I can make a, here is a

51:57

option. Finstly is

51:59

going to receive. $3 million next

52:01

month. And, you know, there

52:04

is only, I have only $2 million

52:06

this month, and I need an

52:08

extra million dollars to run my operations. Let

52:11

me offer a million dollar loan for pushing

52:13

just a month loan, right? I think that

52:16

something should automatically come because of the data

52:18

that banks can collect, right? But

52:20

we need a system. So if I go to my, you

52:23

know, if I go to a car dealership and

52:25

bank, it's my bank, I can get geofence and

52:28

I can even find out, hey, who's going to

52:30

be a dealer? That means he's

52:32

going to be a pro. That's an intent. I

52:34

can use the data. I can send and follow

52:36

email. Hey, you know, here's a great deal that

52:38

I can, I'm going to give you better than

52:40

what you get from the dealership. Or you walked

52:43

into a Tesla dealership and I give you GPS

52:45

directions to Toyota because you really can't afford a

52:47

Tesla. All right. Let's

52:50

ask our final poll question and then we're going to

52:52

get into the Q&A. We've got some great questions from

52:54

you guys. The final poll question is,

52:57

do you think offering embedded

52:59

banking services can create greater

53:01

stickiness with your corporate customers?

53:05

All right. While we're doing that, let's

53:07

answer the first question that we

53:10

got from the crowd, which was,

53:12

how can you attribute deposit numbers

53:14

to a bank's embedded banking program?

53:17

Well, I think this is a good

53:19

question. The

53:22

easiest way is obviously

53:24

with customer acquisition where they

53:26

fund the initial account. And

53:30

if that is done in an embedded nature, I

53:32

think you could easily say

53:34

that the account opening and

53:37

the initial deposit for that

53:39

is digitally acquired. We

53:41

do know that for players like

53:44

Revolut and NewBank, 100% of

53:46

their deposit numbers are digital,

53:50

are 100% of their deposit numbers embedded,

53:52

not necessarily,

53:56

but we are seeing,

53:58

for example, with Revolut, we're seeing a lot

54:00

of people who are not. the loot with

54:03

their remittance business, with their crypto business and

54:05

so forth, we do see embedded deposit numbers

54:07

there and certainly we've seen a lot of

54:09

traction of that with the wallet programs as

54:12

well. I

54:17

guess my bigger

54:20

answer to that question is, can

54:23

you acquire deposits at digital

54:25

scale? Because this was probably

54:27

an issue in

54:29

the collapse of First Republic in the

54:31

United States, they weren't able to acquire

54:36

digital deposits quickly enough because

54:38

of their outgoing lending program.

54:41

You could argue what's the most successful

54:44

deposit acquisition program we've seen in the

54:46

US in the last few years and

54:48

you'd have to say Apple with the

54:50

Apple savings product, right? That's

54:53

embedded, it's embedded in Apple Pay but

54:56

yeah, I don't know if that answered

54:58

your question Enrique. I'm

55:00

mindful of the time, we've got a few more minutes. Let

55:03

me throw this one at you for

55:07

Bushan, this is one for you to

55:10

take in terms of Q&A. In

55:13

terms of KYC in embedded

55:15

banking, which will be the

55:17

most fast and secure process

55:20

for customer validation in KYC,

55:22

who should be ultimately responsible for

55:24

KYC in the embedded banking world?

55:26

Is it the job of the

55:29

banks or is it the

55:31

technology platforms you're embedded in? How

55:33

will KYC work in this future

55:36

of embedded finance? Yeah,

55:38

I think that's a great question. The

55:41

identity is the government's responsibility.

55:44

It is nobody else's responsibility.

55:47

The identity must be digital. If

55:50

it is digital, then KYC becomes

55:52

much easier because that's

55:55

how I see the future. But

55:58

today identity KYC is all broken. We

56:00

are just trying to do all we can to

56:04

know the customers better, to prevent the fraud.

56:07

But that cannot be

56:09

done without having a

56:11

centralized, decentralized government-provided identity service.

56:17

That means that if I'm applying an account, I

56:19

use my identity, and then government author

56:22

says, it is in fact motion, and here's his

56:24

picture, here's his details, and then it goes from

56:26

there. And then you use that identity at your

56:28

bank, and you manage the data with whatever you

56:30

have. And then you want to take the data.

56:32

No, I think that's fair. I

56:34

mean, if you look at, if

56:37

you look at UPI

56:40

in India, it's definitely built off

56:42

the ADAR card. The success of

56:45

embedded deposits in China is

56:47

much simpler, because of facial

56:49

recognition, and so forth. We

56:52

had a good suggestion as well that Robin

56:54

Hood is a

56:56

good example of growing deposits in the

56:58

embedded finance world, so I like that

57:00

example. One

57:02

final question before we wrap up,

57:04

how do banks get revenue from

57:07

Apple, Google, and other wallet partnerships?

57:10

I think, you know, that's a great question again. You

57:14

point, those are the distribution channels, right?

57:16

Banks should have a channel strategy, hey,

57:18

how am I going to distribute? And

57:20

banks should also have your direct to go-to-market

57:23

strategy. Because whenever you have a layer,

57:25

whenever you have a channel, you're sharing

57:28

that revenue with other providers. And

57:31

that channel strategy is great. You know, hey,

57:33

just use the API, because for

57:35

me, I don't have to spend marketing and

57:38

anything else, you know, Apple and Google, they are going

57:40

to do all the marketing needed

57:42

for me, and I'm just the backend

57:44

for them, so give them the API, and

57:46

I get those deposits, I get

57:49

those transactions. You know, it's kind

57:51

of a wholesale business, right?

57:53

And then direct to market.

57:56

So banks should also think about direct to market, because I

57:58

don't know, I don't know. need a middleman

58:02

that we have to use to provide

58:04

those services. So I think banks should

58:06

have both these strategies. Yeah,

58:09

all right, well, let's wrap. We do

58:11

have a

58:14

final link for you guys if you

58:16

wanna find out more about the virtual

58:19

account capability, which is really your ability

58:21

to in real time spin up either

58:24

that deposit account or that

58:26

credit facility in real time

58:29

without having to do exhaustive KYC

58:32

as we typically do it,

58:34

that low friction embedded nature

58:36

than the virtual account setup

58:39

at Finsley you can get some more

58:41

information from that. Obviously you

58:43

can go to finsley.com as well. Bhushan,

58:45

how can people that have been

58:47

attending the session today find

58:50

out more about Finsley and more

58:52

about what you're doing personally in

58:54

the space? Yeah,

58:56

sure, like, you know, anybody who wants

58:58

to know more about what our product is

59:00

there, you can submit the form in the

59:02

Finsley website. If you really wants

59:05

to connect with me, I'm in LinkedIn profile,

59:07

Bhushan Rangachar, you can find me there, happy

59:09

to connect and chat more. And

59:12

it's just really great conversations, Brett.

59:14

You know, I think you brought

59:16

in a lot of details from

59:18

international perspective, really enjoyed having this

59:20

conversation. I'm sure the listeners learned

59:22

a lot from this, from your

59:24

experience and all that, you

59:27

know, FinTech experience that you have gathered. And I

59:29

really enjoyed this one, thanks so much. I

59:32

would say this is, I

59:34

do think no matter which

59:36

jurisdiction or market you're in, you are gonna

59:39

have to figure out how to work with

59:41

wallets in the future if you wanna do

59:43

embedded revenue for sure. So I'll leave you

59:45

with that thought. Bhushan,

59:47

thanks for joining us. Thanks all of

59:49

you for joining us on our discussion

59:51

today. We hope to do a few

59:53

more of these in the future. Let us know what

59:55

you'd like us to talk about next. We'd really enjoy

59:57

your input into what could have made this discussion. better

1:00:00

as well and thanks for being

1:00:02

a family

1:00:04

and thank you Finley for sponsoring

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