Josh DeTar: [00:01:00] Welcome to another episode of the digital banking podcast. My guest today is Seb Thibault. You may have noticed I skipped a part of the [00:02:00] intro that I usually do already. The part where I tell you his title and the company he works for. Here’s why I simply cannot put all of the crazy stuff Seb is up to in a single line.

Don’t worry. You can find it on his LinkedIn and we’ll talk about some of the things he’s working on throughout this episode. So on to introducing Seb is my guest today, and I’m going to keep it brief. I know that’s unusual for me, but because this dude is straight up fascinating, you will realize as I did very quickly, he’s probably about 6.

2 billion times smarter than I am. And that’s rounding down. I mean, check this episode out on video, please. He has a suit of armor behind him and is recording this episode with me from his home bar. What you see is what you get with Seb. Zero filters. He realized that, you know, barring a [00:03:00] few awkward conversations with HR now and again, life is way more fun without filters.

Born in France, tracing lineage back to one of the oldest noble families gives him the fun accent, but he says, eh, my accent can change depending on what I’m drinking. He’s been a hacker, worked in NFC and security, was a part of the early days of PayPal and Zelle, loves to build Legos, love to break rules that don’t make sense.

Ask him about sneaking into seven countries without a passport. When you get a guest like this as a host, you are stoked to get them talking. So let’s get to talking about all things open banking, payments, delivery, the list goes on for miles. So with that, let’s go. Seb, welcome to the podcast.

Sebastien Taveau: Thank you. Just was a very amazing introduction. I do did blush a little bit.

Josh: I mean, look behind you, man. You are absolutely [00:04:00] fascinating. Um, I had the incredible pleasure of getting introduced to you through, uh, our mutual friend, Siva, our CEO. And, uh, and you were just one of those people that, yeah, I mean, within five minutes of talking to you, I was like, I absolutely have got to get you on the podcast.

Um, so I’m really excited to be here with you today. I think, um, we’ve got a lot of really interesting topics to cover, but I mean, we have to start with anytime somebody has got a freaking suit of armor behind them in their office. Like we got to know the story behind this thing. So, uh, you gotta gimme a little bit of the background on just some of the, the lineage of your family and the, um, the, the family crest behind you.

The suit of armor. You were telling me kind of a fascinating story and I was like, no, no. Hang on. We gotta get this on recording.

Seb: All right, so I’m going to try to make it short because it’s like hundreds of years of history, but, um, we can trace back my family to the early 8th century. So 711, not the convenience store, but, uh, the year. And. Uh, from there, we were able to just kind of follow, uh, because of the record that [00:05:00] were done both by the family and at the time, the church, the evolution of where they were and where they have been, because it’s been in only a very small area of France.

It’s also very easy to trace back, you know, a name from a village to the other village and they never really move far away. Except when, uh, they were like, uh, you know, the, the Knight Templars were not welcome in France anymore. And they had to escape. And a couple of my ancestors, two brothers, actually one went to Scotland.

The other one went to Ireland, um, which explained the armor. Uh, it’s a Templar armor in honor of these two brothers who went away. And one of them came back actually to the family castle with a big title and an Irish garrison protecting the castle during the 100 year war. Um, That’s why I also have a lot of Irish blood in me because that’s the The lineage that we took over.

So,

Josh: Yeah, that’s wild. Yeah. I wish there was somewhere in my story like we go back to the family castle, but it’s a

Seb: you know We don’t we don’t have it anymore So [00:06:00] that was a very it’s a money pit at the end of the day if people think like castles are great It’s a money pit and uh, I think like the the last person with her name That was living in that castle sold it in 1953 uh, because it was not uh They could not like maintain it anymore.

So

Josh: I mean, I can’t imagine the heating bill alone.

Seb: Yeah, it’s a it’s a big, big place. So,

Josh: Um, well, you know, you haven’t been out running around fighting any wars in suit of armors, but you’ve been doing some pretty cool stuff in your career. Um, so talk to me a little bit about just, uh, kind of your evolution in, you know, you, you kind of started, uh, I guess it depends on where you want to pick your starting point, but you know, you were saying you’ve done everything from.

Um, you know, kind of the early hacking days to really your professional career kind of started in security, NFC, semiconductors. Um, and how did that translate into bringing you into this U. S. banking ecosystem? Um,

Seb: the day, and I want to also to reassure some people, you know, entrepreneurs or young [00:07:00] graduate or whatever, uh, I do not have an engineering degree yet. I manage big teams in engineering. During my career. How did I do that is actually I was dropped in the world of technology when I was a teenager in the early days of computer and building my own computers, writing my own software, uh, creating my own viruses, infecting my own computers, having to beg my dad to buy me a new one because my computer was, of course, destroyed.

Uh, which was very efficient virus. Um, but that’s what got me into one technology and, uh, security or cyber security, which was not the name in the days when I was doing that. And because I love technology, of course, uh, first thing I did was to find a job that was technically in Canada in Montreal, but the company moved to Texas.

And I just followed the company. So, um, my, my journey to the U S was supposed to be a journey to Canada originally. Uh, but again, uh, the company had been acquired by Motorola and the up in Austin, Texas. Uh, there I was working on semiconductors, if you know, smart cards, secure elements that were [00:08:00] used on, on devices and everything.

All the part that were like embedded software that got me to start working on them. Point of sales terminals and how to again secure these devices, not from a payment point of view, a financial point of view, but really from, uh, chips and technology communication point of view. So I did work on telecoms.

I did work on on mobile device, mobile phones and keep in mind these terminals back in the days that was connected to a telephone line in the back and you were just hoping, you know, like, I spare you the sound of the 9600 BPS modem, but you had to mostly survive with that. Um, but that was the skills that I acquired doing different things in my career that got the attention of PayPal and PayPal brought me in the mobile team in the early days to focus on how to get to the physical world.

How to move from, you know, web based transaction to, can we go and play with merchants? So my knowledge in NFC Zigbee or telecommunication, uh, [00:09:00] way to exchange information was what they were looking for. Uh, the knowledge of mobile devices and hardware was also very important. And that’s so actually I dropped into the world of payment or financial industry.

Josh: and then from there you were a part of the Zelle team, right? So maybe talk to me a little bit about, let’s not open the whole cannon worms on that. We’ll come back to it, but just like your involvement and kind of how you got brought into the Zelle project. Okay.

Seb: So mostly my mandate was to build Zelle from scratch. Um, The way I got into that, that role, it was an interesting conversation. Actually, it was in Las Vegas at Monday, 2020. And I was talking to the CTO of early warning, um, Aaron, and. I was just, you know, reading the press releases, reading the move that were announced around early warning and everything.

I told him I was just like, we’re having a few drinks. I think you’re trying to build the fifth network in the US, right? You’re going to be the next [00:10:00] Visa, MasterCard, Discover, Amex. You’re going to build the next one. Again, the name of Zell, I didn’t know at the time, but he looked at me and said like, Who else knows about it?

And I’m just like, well, just me connecting the dots. And he said, hold on a second. You need to meet with my CEO. They brought the CEO of early warning, uh, the day after we had a chat and mostly the decision was made on the spot and say, you’re coming and working for us. So I ended up going and fun fact is, um, that first executive dinner we had, uh, in, in Arizona that night.

Uh, first time I was actually on the big site, uh, they finally shared the name of Zelle. We are building this product, this network, retired payment network, which is Zelle. And I was just like, Ooh, I’m not in the inner circle. That’s great. I know the name. I know who’s there. It was doing the stuff. Okay. And that name was leaked the day after in the Wall Street Journal. And I was just that morning when I walked in the office, I was, I hope they’re not going to think that was me because that’s not good. I’m, I’m the [00:11:00] latest add on to the inner circle and here you go. It’s in the Wall Street Journal. So, uh, that, that was not me. That was a person that knew about it. That was a little bit, uh, chatty in a bar in New York.

So that was good. But, uh, that’s one of these moments. We just like, uh, uh, uh, that may not reflect very well. Yeah. Um, but yeah, and one definitely one of the biggest challenge of my career because, um, we had to integrate three different companies together and then we have to generate eight different products or application on the other side.

So all of us needed to be combined and the moving parts were, uh, I’m not gonna say like insane, but it was constantly an exercise of balancing the back end of what we were building and how to present it to consumer. And that exercise was. You learned a lot about diplomacy. You learned a lot about how to work with seven banks.

We are not all equal from a technology stack point of view. Uh, we may have different way of going to market or how they want to present products to their customers. So it was a great exercise to just learn and absorb [00:12:00] from, um, everything around me. I think that was like, I was like a sponge and it was just great time to just build it on.

Some moment were stressful. Some others were very rewarding. I’m going to put it that way.

Josh: so before we kind of shift gears and I want to start picking your brain on different

Seb: Uh huh.

Josh: what are you up to now?

Seb: So for the past couple of years, I’ve been working, uh, what I call like in the shadow of, uh, private equity firms or venture capitalists firms. Uh, doing few things. One is the due diligence before they decide to invest in the companies, but also fixing, uh, or helping with their existing portfolio companies, as they say, podcos.

Uh, a different aspect is either they bring me in, Uh, right at the time of investment to help them, uh, set up and make sure that the company has the right way or the right processes to deliver product, the right processes of how the team should work together and then, uh, how to go to market at the end of the day.[00:13:00] 

That’s the nice part, because you really early on in the stage and you helping craft and you kind of an add on to the executive team with. Your experience and your views on because you were not knows down, you know, in that company, you can have the outside view and bring us like, maybe if you do that, or if you do this, that’s going to be a bit better.

Uh, and then, of course, there’s the part that’s a little bit more complicated. That’s when they bring you in 18 months in, and that means the company’s in trouble and you have to make decisions. Pretty fast decision on how to get it back on track so that, uh, again, the investment thesis can be realized on that.

There is light at the end of the tunnel and that’s money and not a train. Yep,

Josh: on top of all of this, you decided, on a whim, And I think the best part of this story is that your wife didn’t even believe you. Even after it published. On top of all of this, you decided, you know what, I’m just going to write a book too. Why not?

Seb: exactly. So I [00:14:00] was bored during the pandemic. I think a lot of people got got a bit bored and I was thinking about like, Hey, what? What I’ve been talking about, right? So I went back and revisited some of my posts on LinkedIn, some of my posts on other medium. And I was like, huh, there is some cohesiveness there.

Are there some, some train of thought that kind of like follow through another one and another one. And all of these, by the way, were written over a period of eight years. So I was just like, maybe I can organize these in a way that it will be a book. And if it’s a book, then maybe people will want to read it. So I told my wife, she asked me one day what I was doing on my computer, typing like a maniac. And I was just like, I’m writing a book. And she said, yeah, sure. And she walked away. Uh, then, uh, three months later, I put the book, the printed book on her bookshelf and she has like 30 books to read, of course. Uh, so, but I put it on the top of the pile of books and I was very excited that night or just, Oh, she’s going to say something and read it.

Uh, [00:15:00] no, she actually. Pull the book from below, like few, few books below and read the book. She wanted to read and then put it back on my book. And then she started doing that. And I could see my book going lower and lower and lower in the pile. And I was like, okay, that’s not good. So finally I told her, I said, by the way, what do you think about my book? And she was like, which book? So I pointed to her the orange book. And she was like, Oh, wait, you wrote a book. And I said, yeah, of course I told you. And. No, she didn’t believe me. But yeah, so she saw it and she read it and she made a few comments after that. But, uh, you know, it was out, so it was in the real world and I could not, you know, like change much of it.

But, um, so she learned that, you know, when I tell her I’m doing something, well, I’m going to do it. Uh, you know, I also build a human size Zen garden in my backyard because I was bored. So if you don’t, you know, Zen garden you have on your desk with the sand and the rocks and everything. I have one that is full, uh, grown up adult size. was bored. [00:16:00] Yeah,

Josh: I just think of the things that I do when I’m bored versus the things you do when you’re bored. I think we’re on very different levels, sir. I’m like, ah, I’ll watch some trash TV with the missus. Sure. You’re like, I’ll write a bestselling book. No big deal.

Seb: that was, uh, and I created my accidental best selling book. That’s the part, you write a book, you have no clue if that’s going to be of any interest or whatever. You just put it out there and, and you just hope like, okay, something’s going to work. And, and when you’re on Amazon, their, their algorithm are so weird and bizarre that, um, where I put like some keyword to get the book to popped up. The book never popped up in these areas, right? It started popping up in other categories and was like, Oh, that’s interesting. And then it started growing and that’s where it landed. Actually number one in three different categories on Amazon that I was not planning at all to, to even like get linked it.

So that’s what I say. If someone can explain to me the algorithm placement of [00:17:00] books on Amazon, I would be very grateful and I will pay for the drinks.

Josh: Uh, huh. I might know some people. Um, that, that’s also gotta be really, uh, just, I don’t know. That’s gotta be an interesting exercise for your own mental and emotional state, putting yourself out there in a book and then, and then putting it out there and to your point, like wondering, is anyone ever going to read this?

And if they do, what are they going to think when they do?

Seb: Yeah. And that was also, you know, like the part was I’m talking about my experience. So it’s not a memoir. It’s not like a business school book. It’s kind of a mix of like, Hey, here’s my story. Here’s what happened. Here’s what I’ve done. Here’s what I’ve seen. Here’s what was kind of like one of the key things is what I’ve done.

I’ve done which been repeated and always work mostly at the end of the day. Um, but some of the stories are linked to companies and time that some of my former colleagues could relate to, right? And it was very interesting actually to have former colleagues who read the book. And came back. And even if I did not mention [00:18:00] names, even if I did not clearly stated that this is during that time, a few of my colleagues actually could pinpoint exactly to what I was talking about.

And that was just like, Whoa, did I made it too obvious? Right? And there was like, no, no, no, we were, we just knew about it and we could connect the dots on our side. But, uh, uh, they were just like, we’re glad someone at least was able to, uh, to talk about it also and share that story because some of them were, uh, we’re just like playing crazy, crazy fun, but playing crazy.

So it’s always interesting when you have someone else that comes in and say like, I remember that moment. That was great.

Josh: moment. Uh, well, uh, you know, we gotta give you the opportunity. Can you give the shameless plug? So what’s the name of the book? And maybe for those watching, you hold it up and show them. So like, cause it’s behind

Seb: all right. It’s right behind me. So it’s called the delivery man, the art of turning ideas into product in Silicon Valley. And you can find it on Amazon, uh, Apple book and,

Josh: As long as you know the algorithm.

Seb: yep, exactly. And, and, uh, we have an audio version too. Um, I’m going to do another plug, [00:19:00] sorry, but, uh, you can also go and check my sub stack, uh, where it’s called the Deliveryman, a sub stack, and if you scroll down in some of the early post, there is one that’s called a full experience, a full UX for the Deliveryman, and there you will find actually the Spotify soundtrack that goes with the book, and you will also find the pairing list that goes with the book, so you will have a pairing for wine, a pairing for beer, and a pairing for liqueur.

And all of these were,

Josh: I don’t want to discredit the amazing content that’s in the book, but I think that’s what did the trick. Seb, I think when you give anybody, you’re like, Hey, read my book and I’m going to give you a booze list to drink as you read it. People are like, yep, yep. Sign me up. I don’t care what it’s about.

Let’s go.

Seb: and, and, and, and funny enough, some of the drinks actually linked to what I was drinking when I was writing the book. So, uh, that’s what, yeah, that’s why some, some of the part of the book are very eloquent and very nicely written and some other, a little bit more sketchy or grammatically [00:20:00] challenging, uh, you will know which type of drink I was drinking as I was typing.

Josh: Where, uh, were there any instances too where the pairing list is like, At the end of this delivery project, I needed a very strong glass of this. So that’s why this is the pairing.

Seb: Yeah, that’s mostly if you look at the every pairing that goes with chapter 5 and 6. That will be the type of drink you will find on, uh, on these, these ends of projects. So, yep.

Josh: Well, I’m pretty excited. Seb gave me a link to get a copy of the book. So I’m going to, I’m going to definitely have to, uh, to combine all of the elements to get the full experience. reading, listening, and drinking. Um, well, let’s, okay. See what I mean when I said like, there was no way I was going to put this in one line like this, this is subs title.

Um, but so let’s kind of shift gears. And I would really love to talk about some of the things that you’ve been really paying attention to over the last little bit. And I wanted to start with the topic of open [00:21:00] and I’m going to leave it to you. The word open, very open because in your eyes it is right.

It’s, yes, we’re talking about open banking, but open just as a concept. Um, I think we should discuss and you, you have some different ways of thinking about it and analogies of what open means. So what does open mean to you?

Seb: And again, that’s, that’s something that, that came along like different, uh, moment in time, but the word open in some, uh, especially in the industry of banking is kind of a scary word, right? Again, you’re a machine like open banking. There’s open API, there’s open finance. There’s everything that, that gets the word open.

Yeah. Can trigger some, uh, uh, safety concern on the bank side. Right. Which is like, why are we doing that? Um, so the way I’ve been defining the word open from the beginnings, right. Uh, was almost like you go back to the days of Linux and the best definition of Linux operating system was, it’s like you work in a bar and when you work in the bar, you can walk enter for free.

You can go [00:22:00] to the bar and ask for a glass of water for free. But when you want the top shell drinks, you’re going to have to pay. Right. And that’s a bit the same of open everything, right? Is you may be able to get access to free stuff, but when you want to go to the meat, the real content that you need, you’re going to have to pay for it.

Right. And that’s how you create like monetization of APIs. For example, you have different level of pricing or the other example I use. It’s like, it’s almost like you have a glass box or a plexiglass box and you can see what’s inside. Right. And you just can’t touch it. Right. That’s open. You can see it.

You can see what it is, but you’re not allowed to touch it. If you want to touch it, then you need to be granted access. And that’s where, uh, it’s more reassuring for financial institution to know like, Hey, it’s not like a running and rushing for everyone. It’s going to be a way to do it, which is going to be controlled.

So, and so I kind of define the word open and just to reassure everyone. And again, you go into open banking. It means a [00:23:00] very different thing in Iceland that it will mean here in the U. S. So.

Josh: Um, okay. So yeah, so let’s talk about that then. So how When you use your definition of open, you apply it to open banking. So now what is open banking mean to you? And then, yeah, could you talk about some examples of what open banking means across the world?

Seb: Yeah. So and again, in my mind, open banking has always been the way it was supposed to be done. And that Iceland did right, which was you have your own informations as a consumer. You have your bank account. You have your statements. You have everything that goes into your banking life. And open banking was supposed to be, I do not like my bank anymore.

I’m going to walk across the street, go to that other bank, and I’m going to say, I want to bank with you. Please grab all my information from that. All the banks import them. And I’m set up to do exactly the same thing I was doing [00:24:00] before with the other bank, right? Which man also, you know, if you’re using bill pay, you have these long list of vendors.

You are paying every month and everything. Try to switch bank now and try to remember how to do that list in the new bank. So that definition has been tuned down or watered down in the rest of the world. Actually, you can look at UK or even Canada or US. Open banking now is more like, Hey, as a bank, I own some data on my clients, on my customers.

And if you are another authorized entity that wants to have access to these data, I will let you see them. Right, which is mostly at the end of the day, an API call, um, but that doesn’t mean that me as a consumer, I can say, I want all my data and I want to transfer them to that new institution. That doesn’t work that way, right?

It’s more like the authorization to use data between banks or between fintech and banks that are consumer related. That’s that’s mostly what it is at the end of the day. So it’s [00:25:00] very different from the original mindset. I wish the original mindset could be implemented because again, you look at the number.

We all have been banking most of the time with our bank for 17 years, at least. And when you go to that level, that means you’re not moving. You’re not changing banks. And why is because it’s overly complicated. All the artwork that needs to be done is on the consumer and try to close a bank account.

You’re gonna have to remember first. What is a branch? Uh, you’re gonna have to go back to the branch and you have to try to remember. What do I talk to? Uh, what is that interaction? I need to have with someone to just ask to close that bank account. So it’s a very different, um, Implementation from the original concept that was back in the nineties.

So

Josh: Um, so going back to some of the examples, you said Iceland did it really well. Um, so can you talk to us a little bit about, so how did Iceland implement it? What does it mean for the financial institution and for a [00:26:00] consumer? And then could you give us maybe a couple of other country examples that if you, you think have done varying spectrums of right and wrong or just different variations of it,

Seb: the way it came to be like between Iceland and Australia, for example. So you had the, the government or the financial entity representing the government in Iceland. That’s mostly said like, Hey, we’re going to do open banking. And what that means is you will transfer everything from that consumer to a new bank.

If the consumer requested. Right. Given, you know, with some safety parameters, safeguards and everything. But that was truly the original idea of open banking, where I could move to another bank. Did that, you know, meant that a lot of Icelandic people decide to move their money to another bank? Some of them, yes.

But That didn’t mean like you had to do it But the people really enjoy the fact that they had the freedom that a if my bank does something I [00:27:00] do not like like a instead of paying 15 euros per month per account You’re gonna pay 30 euros because you are everything is based on fees, right? Uh, you’re gonna be like well, no that doesn’t make sense I’m gonna go and bank to the other bank, which is still 15 euros, right so you can control How you bank?

Um,

Josh: probably also has a significant impact on, um, just how people do it. Competitive advantage, right? And sorry, one quick ignorant question before you move off of it. Do you know how many, so how many financial institutions are in Iceland?

Seb: I was going to say like from a bank point of view, I think you have like four big banks

Josh: Okay,

Seb: about, that’s, that’s about it. Uh, by, by,

Josh: I just, I want to put a pin in that to come back because when we talk about the difference between, you know, Iceland versus the U. S., then it’s four institutions sharing amongst each other versus, you know, 8000 plus in the U. S. So anyway, okay, so, so that’s kind of the Iceland [00:28:00] example.

Seb: yeah, and I think that by the way, that that’s the number I didn’t mind. That may be wrong. So if anyone wants to check and verify that I’m, I’m keeping me honest, uh, that would be great. But if you look also like in Australia, uh, Same thing. You have four big banks and then you have smaller one, but most of you have, it’s dominated by four banks.

And then the equivalent of federal reserve bank in the U S in Australia, the reserve bank mandated that open banking needed to happen. But what happened there is there was a pushback by the bank and the way they did it was more in a self regulated way. So the bank worked together and everything. And of course that created that water don’t.

type of open banking where they just exchange a little bit off of data. And the only thing that was really shared was, uh, the length of the consent, right? Because you have to give a consent to also get your data moving around. And that concern was 90 days. Right. So that’s what the banks were sharing to us.

Oh, you want access or you want to see this data for that person? That’s what it is. But it was more like there was a [00:29:00] mandate that came in, but the banks say, okay, we’re going to do it the way we think it’s going to be the right way.

Josh: Yeah.

Seb: was some pushback, but a lot of friction. And I think that was delayed by 8 years or something like that.

Um, so, um,

Josh: As, sorry, as you go through these examples too, you made me think of one other thing that would be interesting for you to touch on. So, um, in, in the examples talk about like who mandated it. So in Iceland, like it was mandated by the, uh, isolated government, right in, uh, Australia who mandated it, but also, but one of the things I’d be really curious to get your perspective on.

Would be then so and if we could go back to the Iceland example real quick, just close that out. But, um, who then creates that API? Who owns it? Who regulates the standard for that? Um, and, and what’s kind of the process of that? Because I think that’s one of the other things that’s fascinated me that I just, One, I’m not technically, uh, you know, adept enough to understand and to have done enough research on.

But just as I look at different countries implementations of You know, different [00:30:00] things. Sometimes you’ll see, like, we’re going to mandate the standard and it will be this. Sometimes it’s you and you can or don’t have to use our standard. And then sometimes it’s you create your own standard. And then sometimes it’s there is no standard, right?

But even in an example where we create the standard, but you don’t have to use the standard, then other standards get created. And then there is no standard. Right. So I’m just, I’m curious as you look at like who’s doing the mandate and then what is the standard for kind of that messaging set?

Seb: and I think that if I recall correctly and again, uh, my memory may not be, uh, exact. So again, please check online. You can Google it if you want. I’m not going to do a Google now, but if I recall correctly, that was an agency created by the government or tech aggregator or tech company that created that, that plumbing to add the banks, move the money together.

Of course, with the cooperation of the banks, um, that was the other aspect to, by the way, the banks were not fighting it back. [00:31:00] In Iceland, they were, you know, they understood what was going on and that to do it at the end of the day. So there was no real pushback. So they were all cooperating together to and making sure that that central entity was going to be able to provide the technology that was needed.

So, um, very different mindset. Definitely the, um, the idea that it was good for, uh, the customers, but it was also good for the people. It was good for the society. It was good for the country. Because more freedom and you know, uh, more transparency means also that you have more trust and people didn’t switch bank because they trusted their bank to do the right thing.

And if they were not, then you could, you have the freedom to go to the next bank. So, and I feel that that’s very important to that, that establishment of trust that, that create the stickiness right with your clients. Most of the time.

Josh: Yeah, no, I agree. And that’s also an interesting part of that too, is like, what was the genesis of the move to open banking and what was, um, [00:32:00] what was the purpose? Right. So, I mean, I, it, I, this always fascinates me if I’m being honest, like, I think the vast majority of us as humans. We always know what the right thing really is. And then the question is, do we do it? And how close to the doing the right thing do we do? And how much do we let whatever it may be, right? Like ego, greed, um,

Seb: Yeah,

Josh: know, get in the way of that. But yeah, I mean, in all reality, like I think, you know, I might, I might get myself in trouble with some statements here, but like, I mean, in all reality, that should be the right thing with everything we do in anything, right?

Like your family, not because we’re family, but because we choose to be good to each other and we choose to want to be together. I choose to do business with you over and over again, not because I have a contract with you, but because you’re the right provider for my business. So like across the board, we kind of know the right things to do.

And I [00:33:00] think if I apply my moral lens to it, like that’s what open banking should be, right? Like customers should choose to do business with me because I continue to earn and deserve their business. And customers continue to choose to bank with me, not because it’s total pain in the ass to move, but because you’re doing the right things for me.

Seb: Exactly. And at the end of the day is, um, what do we have to realize too? And that would be a nice thing when that’s going to happen in the U S free, right? Uh, it also depend of the financial understanding of the population, right? In Iceland, I feel like most of the people understand what is the world of banking and what is the world of, of making more money or saving or investing, right?

That’s, that’s part of the education of the society at the end of the day. Uh, And that’s, I think, one of the thing that you can see in North America, putting USA and Canada in same boat here, right? But, uh, you have a vast majority of the population. [00:34:00] I’m not talking about the unbanked or underbanked, right?

But we are banking normally. But they do not have a clear understanding of what, what is banking, what is saving money, having, you know, a saving account or having, uh, uh, uh, uh, uh, investment account or having, you know, like these longterm account, uh, how does that work? And people do not do the research because they were not educated to understand and do the research.

So for the bank, it’s great because no one really questions what they are doing. Or if people will question them, the other people who understand and were educated and can question them. And guess what? We are able to go and switch bank if we want, or we have multiple banks because we understand how the system work.

And I know that if I put my money in a saving account in that bank, they’re going to like generously give me like 0. 1 percent per month. But if I go into that credit union, they’re going to give me 1. 2%, right? Um, may not seems a lot, but. That’s better than nothing. Um, that bank is [00:35:00] giving me nothing. That’s bank is giving me, uh, uh, checking, uh, credits or checking account reward, right?

If I leave money or certain balance in my account, I get rewarded with a little deposit at the end of the month. That’s the difference. So why do I want to go with the bank that gives me nothing when these other banks, you know, give me more? Um, but it’s not a natural instinct. I think in most people here in North America, while you take in Iceland or the country, they will question like, Hey, why, why is it in place?

Josh: I mean that opens up a whole nother can of worms is just financial education. And it is so, this is another one of those things that I, I always love where podcasts go. Sometimes this is why I love kind of the open forum dialogue is like, um, but my wife and I were talking about it this morning out of just a meme that she was, she was like laughing out loud in the kitchen and I came out, I was like, what’s so funny?

And she was like, Oh, I just saw this meme that was like, um, Um, you know, I’m so glad that in school they taught me to play the recorder because it [00:36:00] really came in handy when I went to go diffuse this difficult, um, you know, situation at work. I just whipped out my recorder and started playing it, you know, and it’s like, it’s funny the things that we choose to, you know, educate on.

Versus not. And for whatever reason, like financial services is just not something that we educate on in the U S. You know, the joke I always love to see every, uh, you know, every April is the, you know, I’m so glad that in high school they taught me about parallelograms cause it’s coming in really handy this parallelogram season,

Seb: Yeah. In the

Josh: I have no bloody clue how to do my taxes, but I know what a parallelogram is.

Um, you know, And so that is, I think that is a really other big element of understanding why a consumer would switch financial institutions. And this is something, you know, you probably even heard Siva talk about this, but um, you know, Siva talks about the amount of money that Americans have forfeited by leaving [00:37:00] their deposits and doing banking with big financial institutions versus credit unions and community banks.

It’s trillions of dollars that had been left on the table that could have gone back to American families that are living paycheck to paycheck simply because they lacked the understanding of what they were leaving on the table. Right? So that is an interesting that you bring that up in the Iceland case.

Mm

Seb: Explain, you know, the dynamic of the market, right in the U. S. The banks have a lot of power. Why is because again, no one really question what they are doing on. No one has the capacity as a, you know, uh, mainstream person to. To question why I’m paying these fees or why are you giving me a ridiculously low interest rate on my saving, right?

Uh, if you don’t ask and you don’t questions, they’re not gonna like voluntarily come to you and say oh, by the way If you go to that bank, uh, you’re gonna make twice the amount of money that you’re doing on with us, right? Not going [00:38:00] to happen, but that give them that power while if you go to places again, you take iceland or you take some uh, Some of the banks in the EU, um, where people have the education, the financial education, and Ken questions.

That means as you see earlier, the bank have to compete for your business. Those bank have to compete for your trust, and that doesn’t mean you’re gonna stay with them. That means that they have to every day, they have to reassess the relationship.

Josh: hmm. Um, okay. So going back to the whole open banking thing, So we talked a little bit about Iceland as the example, and then you were talking a little bit about Australia. So in the Australia example, um, what was kind of the creation of the open banking standard and API sets for that? What did that look like, do you know?

Seb: So I. I worked a bit on it, so I don’t have like the, you know, the dirt from behind the scene. I always love when I can get some of the, you know, behind the curtain events and everything, because that tells you a lot about the dynamic of why that was done. Um, but I think what happened was, um, the, the equivalent of the, the, the Federal Reserve Bank here in the U S and [00:39:00] have a blank on the name, but in Australia started talking about the fact that we need to have open We need to be able to have, uh, A customer to say, I want my da my data to be moved to another institution.

Or I want, uh, my data to be used by another institution, for example, a mortgage application. Right? Why do I have to provide again, my information? Why do I have to provide again, uh, you know, fill these forms in three different companies and sites, which are exactly the same, right? Why do I need to, uh, pull my.

Tax return PDF or whatever and share that with all these companies, right? When that information could be made widely available and shareables with some safeguard. And I think that was the original concept, which was like, Hey, we need to be able to have this. These data that the banks are highly protective of to be shareable to make the life of the consumer easier when you are doing another financial activity or another financial request.

[00:40:00] To another institution. And I think that was the original mandate, but they’ve been always a very, uh, conflicting relationship between the top four banks in Australia and that, uh, uh, central bank, uh, that, that kind of like, say, we should do that. Right? So that’s, I think that’s when the banks decide to say, okay, we hear you.

We’re going to do it. But then they just like. We are going to define it, right? And you were talking about standards, right? There’s a standards. And so they created their own little standards of a, what can we share anything? And of course, um, you look at what open banking has been mostly by the banks. And that’s what you see in the U S that’s what you see in Canada is the sharing of the information is really purely related to your day to day banking activities.

That’s your checking and your saving, right? If you have an investment account, if you have a retirement account, if you have Any other type of account that is not your checking or your saving. These do not fold under the scope of open [00:41:00] banking, except if the bank voluntarily make these available, right? So you are extremely limited in the type of information that’s going to be shareable under your name, on your behalf, if you consent for that sharing, and that can be used.

It does not give a full 360 view of your financial situation. It just give a few of your banking situation in the most basic way. And that’s what I was talking about, like tuning down a lot of what was the original idea of open banking to make it what is the minimum common denominator and effort that we can do where we still gonna keep as a bank a lot of the information that we want to keep. And not make it available, but still be able to say like, look, we are doing open banking, right? And I don’t want to ditch on the banks again that they have a lot of reason of doing, you know, like keeping some of the information, uh, uh, way unsafe. But, um, that’s, um, that’s the biggest challenge. I think you can see when, um, You observe different geographic location and be [00:42:00] like, okay, that’s very, uh, that that’s, they, they could have done a bit more.

They, the effort could have been a bit bigger. Right. It’s very interesting when you see that

Josh: Well, I think you’ve got my head kind of turning in the right direction. Going back to what we were talking about earlier, right? Like a lot of times I think we know what the right thing to do is. Um, and we want that whole utopian Kumbaya society. The unfortunate fact of the matter is, is that, you know, nine times out of 10, it’s unrealistic.

And, you know, as you were talking, it got me thinking, you know, Yeah, this whole concept of like open banking being truly 100 percent open and can move anything, anywhere, anytime, zero restrictions, blah, blah, blah, all these things. Like, we know that that’s the right thing to do and that sounds right, but there are complications to that that do sometimes make it so that while on paper and in theory, it sounds great.

Um, I don’t know. I was just, I was trying to think of an analogy as you were talking about, like, you know, There’s, there’s reasons that we would do [00:43:00] varying levels to it where it’s like, yeah, my home is an open home. Like anyone is welcome in my house. Unless you’re an asshole. Uh, unless you’re, you know, trying to steal from me.

Um, and even then, like maybe my, my house is open. But like, do me a favor, don’t go into the master bedroom. Like that’s, that’s our space or, um, you know, to you, like my house is open and you can take anything you want out of it, but just ask permission or, you know, maybe like my best friend, right. That I like, you know, have raced cars with since we were kids.

Like if he just came over to my house and came into the house, he knows the alarm code, grab the keys to my car and took it for a drive. Like I wouldn’t question it. Right. So it’s like a hundred percent open to him. Um, But like, Hey, Seb, you seem like a really nice guy, but if you came to my house and just grabbed my car, like we’d probably have a conversation about that.

Right. So

Seb: Well, the,

Josh: just same

Seb: the first thing we’ll be like, eh, what, what’s your driver’s license? Right? It would be the first question, do you have a driver’s license? So,

Josh: have a

Seb: that I feel.

Josh: Yeah, that’s great. Exactly.

Seb: a great. [00:44:00] Actually, it’s a great analogy. And I may actually steal it from you at a point of time when I’m trying to explain open banking, open finance and open API.

Josh: Hey man, if you walk away with something from this podcast that you took from me, like,

Seb: I’m I’m that that’s actually that’s a very good analogy. Because when you if you walk in the shoes of the bank, that’s exactly how they are thinking about it, right? Which is like what? First of all, Prove me who you are that you either I know you or if I don’t know you can you show me something that Will actually reassure me that yes, you can walk into my house and two Um, yeah, it’s it’s what are you authorized to do?

Inside the property, right? And I feel like you can even like, you can connect the concept where, you know, like open finance is your home, right? And you’re walking into the open finance world where if you’re authorized to do everything, you do everything. But now, uh, if you look saying like, okay, the master bedroom is a flea meat.

Now, you may be to the open banking where you say, like, the only thing you can look at is the living room and the restroom downstairs, right? Uh, or the backyard. And then you can [00:45:00] even go and select. And by the way, uh, the open API is. There is the bar in the living room. You can go and pick up any of the drinks that are on the shelf, the first shelves, but don’t touch the second shelf.

Right. Um, we’re talking a lot about bar, by the way, that’s very interesting. Uh, I guess that’s where our

Josh: regretting the fact that we didn’t schedule this for maybe a little bit later in the day and we could be doing this over some scotch.

Seb: but, uh, but that’s, I think that’s, that’s a great concept because you can even link all the open. You know, like a concept that goes around finance to that, that analogy. So yeah, I’m definitely going to steal it from you. Sorry.

Josh: I’ll take it. Um, you know, but, but yeah, that’s what got my head going of, and again, when, when you look at the Iceland example, right, when you have four banks that are all like, I, I maybe if we continue to use that analogy, Like, um, here, actually. Perfect. We, we use my wife’s family, right? So we have our house and within, uh, about a couple mile, uh, you know, square, we have her parents, her little sister and her little [00:46:00] brother.

And we are the true like open family. Like I would literally not bat an eye if any of them just walked into my home, took something and borrowed it. I know it’ll come back. We’ll do the same with them. Right? So, you know, we’re, we’re the four Icelandic banks and we all get along great. We have no problem with this.

Things move amongst our houses. So that’s really easy for us to be able to say, hey, let’s all cooperate together. We already cooperated anyway. So open, open banking is fine. But then in the U S that’s like saying, you know, for like an 8, 000 institutions plus, that’s like, you know, every single person in my entire, you know, surrounding Metro area can now access my home completely open.

Then I’m going to step back and go, Hey, I like a lot of people cause that in that, in that group includes my four family members, but it also

Seb: Yeah.

Josh: some, you know, not so great people. So now when I start thinking about opening up [00:47:00] my home and opening up open banking, I’m like, well, yeah, I like the idea of being completely open, but, You know, I’m a little credit union in, you know, Mobile, Alabama, and quite frankly, no offense, but I don’t want to share all my data with Bank of America.

Sorry, not sorry. Like I want to be thoughtful about that.

Seb: And I feel like the, the, the point that comes out of that, right. Is that your four families. There was a conscious collective decision that, hey, we can walk into the home of the others, I give you the key to the place, you can open the door whenever you want, you know the alarm code and everything, because there is a massive trust that’s established and there was that collective decision that was made, right?

Um, but to your point, yeah, when you have like, Seven, 8, 000 banks is how do you get that collective decision? Who’s got the most weight in that decision, right? Is that the regulators? Is that a federal reserve bank? Is that the big banks or is that all the banks? And how does that work? Right. And it’s very, um, it’s very challenging to just, [00:48:00] my mind cannot grasp, like, how could that be, um, deployed or how could that be You can’t do that.

That makes sense. You can’t do in the U. S. What’s been done in Iceland that that would not work, right? And I think the what happened with the bank is, yes, they may have gone for the lesser common denominator and just focusing on shaking and saving your basic banking situation. But. That was to start somewhere, right?

Can we agree at least on that? And I think that that’s the starting point. Will they go to the next level, which they go to, to being able to share your investment account, your retirement account or whatever? Um, some companies actually in the US have built the plumbing to do that, right? If you want to get a 360 data aggregation of your financial life, technically, You could do that, but, uh, the only legal requirement or the only, uh, uh, collective decision that was made by the bank, uh, in the banking industry is you’d get only to see the checking and the saving. [00:49:00] So, yes, it’s another step for you as a consumer, if you want to have a better service, or you have you. You want to get your full financial life is now you’re gonna have to do an effort and figure out like, how do I feed in these other accounts, the other investment that I have, the other real estate property that I have to really give a good snapshot of my financial situation.

I love to say, I’m going to jump to something really different, but. The credit scoring system in the U. S. Has always been one of the most crazy thing that I looked at coming from Europe, right? And look at why is your financial life and everything that you can do mostly in the country is decided by a score that does not reflect really what you’re doing.

And it’s gonna be an even bigger problem for the new generation where they don’t really believe in ownership, right? They don’t own a car. They don’t want to buy a home. They don’t And yet these are very heavily tilted into creating your credit score, right? And then how do you do that? It’s one minute.[00:50:00] 

Yes, I can see you’re checking balance. I can see you’re saving balance. Great. And that’s going to be my credit score. You’re going to be generated. But they don’t see that. I may have, you know, 2 million in my retirement account. They don’t see that I may have, you know, five properties in Europe. They don’t build into my score, my financial score.

So you look at it, you’re just like, wait a minute. How can I have truly a true view of that person, financial situation. And today the system is so tilted in, in a narrow view, and that’s your score that decide to your life. So I always joke, like I have, you know, in my wife’s family, these young kids. And their credit score is terrible. I mean, terrible. Yet they made a fortune with crypto investment and they have millions of dollars. They have millions of dollars sitting in investment account, right? And yet their credit score is in the five hundreds, right? Why? [00:51:00] Right. Does that make sense? Yes or no? No, that doesn’t make sense. So I think that’s, that’s for me in mind is that’s where open banking should go next or open finance as in let’s be honest and let’s revisit the system and let’s make sure that whatever is presented as information is truly gonna help the person and truly is going to, uh, you know, create the tools. To get you to the next level from a financial point of view. And that means that I should, we’re talking about that, right? But who wants to file three times the same form to just apply for refinancing of a mortgage, right? Uh, who wants to go and find a public notary to just put a stamp and sign the document, the piece of paper that just.

You have to sign for doing a refinancing like everyone knew during the pandemic. I refinanced my own my mortgage low interest rate, which was great, but it was the weirdest thing having to get a public notary to come to my home, of course, in the backyard safety distance and everything. So they could just put a little rubber stamp and [00:52:00] scribble, you know, like some letters or whatever.

To say like, yes, I was there and I witnessed they really signed it, right? They could have got my ID information from anywhere in the world, right? It could have pulled from the government ID that me or whatever that would have verified where I was No, let’s you know, let’s still make it a bit more complicated than what it should be Yeah, yeah, what do

Josh: had to take a couple of notes while you were talking cause you gave me a couple of things I want to come back to, but I want to go back to the kind of open banking conversation. The more you keep talking, the more this has been so helpful for me, said like it’s been helping me think about this, that expanding that analogy that we were talking about, right? Opening that up. And again, if you use kind of that Iceland example, right? And you use the, our four families and my, my family and our houses and things, you know, because when we talk about who’s, who’s creating the mandate, And then who’s creating the standard has a big impact on that [00:53:00] as well. Well, when you look in the Iceland example or my family example, right?

In that case, maybe let’s say my father in law, who we, you know, treat as the head of the household of all the families. Um, you know, maybe he’s the one that kind of comes up with and says, Hey, we’re going to do this whole open house thing. And all of us are like, yeah, we’re totally game for that. So, but we also know the way he would bring that to our family would be in a way that’s not him forcing it on us, but it would be him bringing the idea that we as families collectively agree to it.

And then we decide, hey, you know what? We’re going to create a standard for that to make it easier. So we’re going to all use the same alarm code. We’re all going to use, um, you know, uh, we’re going to go change the locks on the houses and we’ll use one master key. That’s the same lock for all the houses, right?

So now we have a controlling body. That is made up of a head that dictated it, but the, the four, all are a part of an aligned to, we created a standard that allows us access. But once we go through the standard [00:54:00] access point, we have access to everything behind the locked door. But then you bring that to the U S market.

And now we, we expand that analogy to now it’s my entire town. So now who gets to make that decision? Is it my town’s mayor? Is it the local law enforcement? And then who decides what all is included once they have access. And so you can see how all of a sudden that that example of that kind of perfect utopian open banking makes a lot of sense when it’s simplified.

But as we start to expand it, it becomes pretty challenging for everybody to agree to.

Seb: and and that’s that that reflect I think exactly you know the the situation of when you’re talking about a You The country like the U. S. Where the banking industry has been around for a long time, right? But they also there is a lot of complexity because you have a lot of players. You have a lot of intermediaries that are in there.

And again, you go back to the financial education of the customers from the bank. All of these factors combined. Uh, I think [00:55:00] that’s what create that complexity of why that was kind of like tuned on by a lot is. And when I think about it, you know, I was, you can look at it or like, well, they didn’t really try.

They didn’t like try hard enough. Right. But at the same time you look at it, you go like, well, at least they tried and they started somewhere. Right. Which is pretty good. But going back to your family example, right. It’s like, uh, the other complexity here is, is you are all living in the same neighborhood.

Right. But now, you know, on my side, my family is on another continent. My wife’s family is all spread on the West coast and East coast. Um, Even if we decide to have open house and show up whenever we want, it’s not good. We will be announced, right? If we go to LA and visit, you know, a brother’s home, of course, he’s going to be made aware that we are coming and everything, and they can get ready, right?

And probably you’re the same than us, right? When you have guests and we know they’re coming, you’re going to like clean up your homes and make sure everything looks good and everything. And, you know, like, hey, oh, you want to see that? Yes, of course [00:56:00] it’s right there, right? You have to reorganize a little bit of everything so it looks nicer.

Um, but I feel that that’s a little bit like where you could also look at the banking, right? So like, oh, we have someone that’s going to come in and say like, Hey, I want to see these data. So let us organize what we can and everything that we don’t want to be seen. We’re just going to put it in the closet in the master bedroom where they’re not supposed to go and no one will see the mess, right?

Um, and I feel that that’s because, because of the complexity and, and. The fact that all banks are not equal right in the U. S. Because you have the big one. You have a smaller one. You have the regional bank, the credit union. And that means they don’t necessarily also have the same, um, technology savviness between the different players.

So that goes back to. We’ll make the decision. And is that a business decision? Is that a technology decision? Is that a very regulatory decision? Is that a standard decision? No one can really decide. Because if you want to be fair with everyone, that means like the 8000 banks should have a vote of a we’re going to do it that way.

Doesn’t work that way. Right? [00:57:00] So should that be the Federal Reserve Bank? Let’s say, well, we are kind of like the entity that supervise all the banks. So therefore, it’s going to be done that way. But then is that fair for everyone? Right? Yeah. You don’t know. Or is that going to be, uh, yeah, the, the, you know, standardization body that’s created by, um, by whoever decided to do it or, or in the example of, of early warnings there, right?

Is that a joint venture between seven banks of different size? By the way, that was not just a big banks. That was different banks of different size. Is that joint venture the, the, you know, like the, the ground to start innovating and finding new way to do it? Maybe, but is that fair for all the banks were not part of that original discussion of that original decision at the end of the day?

So it’s Yeah, it’s definitely more complex. And I think like, uh, it was a good conversation because that got me to rethink and change a bit my position of, know, being a bit frustrated by what I’ve seen here in the U. S. From an open banking point of view to being like, Well, is there [00:58:00] a way where, uh, you know, I’m going to have to think of it, but like where I could like, as I’m revisiting my thinking process and my position on it to maybe there is a way to reframe that and maybe be more helpful than just, you know, being very French and criticizing.

So, um, that was very good. And again, I’m going to steal your analogy, but that’s going to create some thinking for me. I’m going to spend the whole weekend. I think the wheel spinning and, um, that, that may end up being a post on my, uh, on my sub stack. Definitely. That’s, uh,

Josh: Well, I want to see what you come up with because I’m just the idiot that has to dumb it down to an analogy because I don’t actually understand.

Seb: know, but you changed my mind at the end of the day. It’s like, you, you just put my mind in another place that, that I knew about, but I did not, I did not put the way that was deserved into that, that. That space. So I should have thought a bit more about it. So yeah, definitely. I’m going to have a, I’m going to have a thinking session with myself to just figure out, okay, do I write something about it or no?

So,

Josh: Um, [00:59:00] well, so, okay, so now thinking about what we’ve talked about. So we’ve talked kind of heavily about Iceland, a little bit about the U. S. You were talking a little bit about Australia too. So how does Australia kind of fit into that or, or what other maybe examples come to your mind of, of other ways open banking has been approached?

Seb: yeah, and I’m very careful. I am not an expert in any form or shape of the Australian banking industry or whatever I was, uh, what I call like a, an external player that happened to, uh, to have to do some stuff there, but, um, I think the, The Australian market is a great, I’m going to give an example, right?

When we were at PayPal, um, we use Australia as, or, um, uh, testing ground. So when we were launching a new product, we were, uh, trying it first in Australia for different reasons. First, um, control banking system. You don’t have to, to, to work with too many players to get something going, which was great. Uh, the other aspect too, is you have a lot of, uh, cross border money movement.

Right. Because the Australian have to transact with, uh, there’s a lot of purchasing from the US, from the UK, a lot of [01:00:00] import from China. So all of these, uh, um, the banking system is also very well versed in cross border and money movement that goes in and out, in and out of the country. So that make them in a position where everything that you need to try something new in the banking world is highly concentrated.

Great. And you get all the elements that you want to play with in one place, right? So it was a great, uh, testing ground because the other reason to where we really liked it was If it worked and the adoption was working then you deployed it to the rest of the world, you know to the u. s If it didn’t work or the product was, uh, you know, very bad Or the user was just like what what are you trying to do with that?

Then you just mostly like test it Cap it, bury it and no one will ever know because it was in Australia, never leaked outside of Australia, right? Um, so great place to to I call that to innovate because you get everything that you need and yet you are Far enough to if something goes wrong. Yeah, that’s [01:01:00] okay.

If something goes right you just you know, you just You just give the credit to everyone else.

Josh: Doubt it.

Seb: but yeah, so for Australia and they never get the credit for how much actually they are being used to be the test bed of a lot of solution in the world. And yet, um,

Josh: Huh.

Seb: they have some of the, they have some of the greatest engineers and they end up leaving Australia because they go and work somewhere else.

But that’s the, that’s the odd reality. They should get more credit. I think definitely.

Josh: Um, so what other, are there other examples of kind of different ways open banking has been approached that you think are, are worth referencing?

Seb: I think that we went from the two extreme, right? Which is Iceland or the original, the original concept of open banking as people were thinking about it to how it’s done in the U. S. And kind of like a you can do a bit of, you know, half and half in Australia. I think that’s covered pretty much. Uh, the part where it’s going to be interesting is, um, to observe, you know, in another place in the world, like South America or whatever is, how is that going to evolve?

Yeah. [01:02:00] And, you know, you have some, some, I call it like political instability that’s happening in, in different countries around the world, right? So what’s going to be the impact and, and what’s going to be the, the overall financial, um, uh, capacity to either innovate or to implement open banking and under which form, and to your point, who’s going to control that, right?

And then you throw that in the, in the top of that, you throw, you know, like some of these countries just. leapfrog and they are using a blockchain or they’re using crypto or they, and you go like, wait a minute, is that part of open banking or is that completely something to be different? Right. And then you also have like this, um, uh, you know, even the bank in the U S uh, it’s pretty interesting to see the discussion sometime between the same bank, where you have the commercial side, you have the customer side, and you have the investment side that do not talk with each other and do not share information.

Inside the same bank, right? So we’ll be interesting to see if if open bank can also open a bank [01:03:00] on itself and start seeing that that flow of information working because, um, I can tell you is like I have an investment into one bank and have my checking and saving to the same bank. And yet, uh, it’s like a complete different experience when I go from one side to the other side and the website does not open.

Talk to each other. So,

Josh: I mean, that opens up a whole nother can of worms of, um, just. You know, legacy tech stacks and,

Seb: yeah.

Josh: growth strategy through acquisition. And,

Seb: Oh, yeah. Yep.

Josh: I wanted to touch on, I don’t think we need to like unpack it or anything, but I think you bring up a good point that needs to just be pointed out to that when we talk about, you know, open banking globally, politics plays a huge part in that too, right?

I mean, you just, you look at how like China has implemented their quote unquote open banking. Versus, um, you know, what you see in Iceland or the US, right? Obviously in a communist political control, that’s going to be very different. And yeah, as you look at countries that may be in [01:04:00] political instability, if the current party is coming up with it, but there’s instability, the insurrecting, you know, government may want to kill that just because that was what the others did.

Not because it was wrong, right? I

Seb: yeah, exactly.

Josh: factors that go into this stuff, depending on who’s controlling the interest.

Seb: And I think the source of all of that is what is the motivation,

Josh: Yeah.

Seb: And that’s, that’s what decide of what we’re doing. And I think you, you mentioned you like China. That’s a great example. The biggest motivation by doing open banking is actually to bank people. To go away from the cash economy and yet, you know, cash economy is still pretty strong, but you don’t do open banking with cash, right?

You can’t really do it. So one of the motivation is clearly like, Hey, do we get people to be banked? Or do we get people to pay their taxes? Right? Um, so that that’s how you bring slowly. Uh, you know, like the banking world to the masses and get make sure that now they are in the system. Right? And you just have to find that.

What is the [01:05:00] motivation of the decider? As you were mentioning, someone needs to decide what’s the motivation of the decider and then what’s going to motivate the users to just be okay. That makes sense. I’m going to do it. Right. And it’s a, it’s a very, it’s another discussion.

Josh: Well, and we’re already over an hour of recording, and we haven’t even touched on one of the areas you’re one of the biggest subject matter experts, like, period, on. Which is money movement and payments. And that’s a huge part of this whole conversation that we’ve just been having, right? Is when we talk about things like open banking and the ability for me to move from one place to the other.

Well, what’s the big thing that I want to move? It’s my money. Um, and so you have been a part of some interesting evolutions of that, even just here in the U S market, but you’ve also had some really cool global exposure, but just, you know, referencing, you know, your time with PayPal, uh, obviously Zelle. And now, you know, you’re doing a lot of research and, um, kind of thought leadership [01:06:00] around instant payments here in the U S.

So I don’t even know where to start with this one, Seb, but like, can I just open that can of worms and just give me, give me your word vomit. Like where’s your head at in the world of money movement?

Seb: Well, I’m going to start making a statement, you know, we talk about the bank and I’m have did should be on the bank. So let me start giving some create or so to the banks. If you are a CIO of a bank today, uh, I think you’re in a nightmare situation and you’re gonna have to deal with so many different, uh, integration or implementation that are coming from different direction, right?

They’re coming either from the bank industry. They’re coming from the regulators. They are coming from the international pressure. You as a CIO you have to decide what to do, right? There’s the, the, the, the, the messaging standard format that’s changing there is the whole ISO 85 83 to the new ISO O 20 0 22 that’s coming in.

Which version of ISO 20 or 22 do you wanna do? Which by the way, is behind Fed now, right? It’s behind rtp, it’s behind Z. You have two version, right? Do you pick the XML [01:07:00] which help you support your legacy type implementation? Or do you go full js N which is the API and then you’re open API compliant, right?

Which one do you take? Right. And then you’ll set the timing. Do I do that now? Or do I do that in two years, three years, five years? How long can I delay? All of these things coming my way, right? You have to do open banking, open API. You have to do these ISO change. You have to do this messaging set. There’s a lot of things that that’s converging.

And either it’s an easy integration or implementation, or it’s a very complicated one. And then you also have like the regulatory pressure coming because ISO is in the mandate now in the EU. And it was a mandate as of January 2024, January 1st, of course, it was not enforced. So January 21st, 2025 will probably when you will start seeing some, um, control or pressure coming from the banks in Europe or the regulators in Europe.

Uh, but that means it’s also come if you’re an international bank in the U S guess what? It’s coming [01:08:00] full blast your way. And if you have to implement it, you better pay attention to it now than later. Um, so I think the bank in the U S today, and actually the bank globally are in this massive transition period.

And, and that transition means that a lot of changes, small or big needs to be made. And it’s going to be like, in which order do you make these changes? And how do you decide which ones are truly critical and which ones are just like. Nice to have, right? And that’s the biggest challenge. You know, it’s as I always joke, like, especially when you talk about Russia is not a good thing, but it’s like the most school Moscow joke, right?

Where it’s just like must have should have could have won’t have right. And mostly like every bank right now, CIO is in Moscow. They’re trying to figure out how does that work? Um, and, and that’s going to have an impact, I think, on the banking industry, not just in the US, but in the next 10 years. And the next five years actually are going to [01:09:00] be critical because what the decisions the banks are going to make is going to decide what is truly the priority, right?

So is open banking the priority or is open API the priority or is, uh, implementation of real time payment network into the bank across the board, not just P2P as there, but, uh, you know, like, uh, FEDNAV, B2B, B2B2C, C2B, every combination you can think of. Is that the priority? And they have to make that decision because it’s coming and it’s being, uh, uh, you know, it’s challenging.

So I know we talked about some of the work that’s done by Typhoon. Some of the, there was an article published this morning by a retired Federal Reserve Bank person talking about the concept of digital twins. Can we create digital core on the top of, uh, existing core banking because updating or grading the core banking, uh, in a bank. It’s not trivial. It takes a lot of thinking and you don’t want to, again, as you say, you want to move money, but you [01:10:00] absolutely also do not want to lose the money of your customer by doing a, oops, we did a digital implementation and the money is gone. Right. Um, so that’s, that’s these discussion are ongoing.

And I mean, like I see it coming from left and right and, and at all level of banks, big banks, small banks, credit union, they are all have to think about like, Hey, what’s next. And what do we have to do now? And what’s next and what can we, you know, like punt on the sideline for to do in five years and not easy, not an easy task to do.

So,

Josh: Um, before we dive a little bit deeper into just kind of your thoughts on the current state of instant payments and kind of what maybe some of your thoughts on how people should navigate their thought process there. Um, you know, when, when I first got connected to you, you had mentioned, you know, there was a lot of like lessons learned and some interesting stories that came out of Zelle.

Are there any things that you could share with us just about some of those lessons [01:11:00] learned some of the things you found? Interesting, surprising, shocking, scary.

Seb: yeah, well, and I think you look at it that that comes from, like, the product design and the way the technology is implemented and, and, you know, And the framework in which you can deliver that, right? Because when we build Zelle, we, we had to take into account, uh, first, the integration of three different technologies.

And I’m going to give you the secret. How do you do instant payment? You do like the bank did with, uh, early warning was actually a risk management company for the banks. Then you had authentified, which was doing the authentication verification for the user of the bank. Uh, so the access control, and then you had clear exchange, which was doing the money movement. Right to the real time payment. You need to know who’s doing it. You need to manage the risk associated to the person doing it and you need to be able to move the money. That’s all you need. That’s a secret right behind behind zero any real time payment network. That’s what you need. And that’s what the consortium of bank on early warnings did by consolidating these three entities together to create [01:12:00] A real time payment network, Zelle.

Same thing has been used by TCH Clearinghouse, uh, on RTP, and Fedna is using the same underlying, uh, technology or concept. Now, how do you present that to the consumer, right? So, we had to create, like, almost, like, different integration for each one of the banks, because, um, Of different technology savviness or different willingness or way of doing their user experience.

So we had to kind of think every time of, hey, how is that going to work and look into the banking app? I love to share the example of like, as we were thinking of, of how do we provide as much security and safeguard to the user, to the consumer? And that was constantly, you know, something you were thinking about.

And in Zelle, in the original version, they may have changed it since then. But. They were like 12 risk moments that were happening before you even press that send button, right? As you are opening the apps, you know, we know the device. We know when the bank account was created. We know what is the balance.

So we had a bunch of way to [01:13:00] verify. But one of the thing that we saw was it’s you sending money. You’re sending real time. You know, an instant transfer. The money is gone. It’s like you’re giving cash away to someone. And you better know who you’re giving the cash to, right? No one will give a hundred dollars to an unknown person in the street and not expect that person to just take off and run Right, that’s kind of like the natural natural thing that will happen So we were trying to find a way to protect the consumer and one of the things that we had built in was Hey, can you can you let us see your address book, right?

And not that we want to know who is in your address book, you know We don’t need to know like with your your four families living in your neighborhood You We don’t really care. Uh, what we wanted to know was if you enter a phone number, which was one of the identifier for number of emails, but phone number was the main one.

And there is a, uh, the number is off by one digit, right? And we can see that in your address book, you have a number that’s very similar, but off by one digit. Then we could popped up a notification [01:14:00] that say, Hey, are you sure you want to send money to that person? Because you have that number in your address book.

It’s very close, but It’s of by 1 digit, so we could warn the person before they even send the money, um, because of regulation. And I know it’s working. It was only an opt in mechanism. So everyone was opt out. And if you want to do it, and granted, you just say, yes, I want to do that part of the onboarding flow, uh, 93 percent of the people say no in the study and the 1st round of usage.

So. We could not see that. We could not help them for fat fingering numbers on the Zelle app. So what happened is, um, we had to rethink about like, hey, as we’re in this framework, I think what else can we do? And this is why today when you send money through Zelle and you enter a phone number, you’re going to see the first name of the person and the last name of, uh, the first initial, sorry, of the last name.

Popping up with the number and say, you are thinking about sending money to that person, right? And only when you confirm that, yes, that’s the person you will see the full last name. But that was the first [01:15:00] step to be like, Hey, at least let’s make sure that you know that person or the person gives you the right first name and the right last name by doing the initial.

So there was a way to compensate for what we could not do in an easy way because it was easier to be able to say like, Hey, by the way, we saw that we see that numbers. You may want to check it out again to now. I would say like the burden of, of informing that there was an issue was on us informing the, the customer.

Right. The user. But by doing that changing and having the verification of the name and, and initial of the last name, the burden is now on the consumer. You have to make the decision to check that, yes, I’m really sending the money to that person and, and pressing that button. So it was a bit. Challenging because that goes back to the financial education we had, right?

Will the user understand what they were doing by doing that? Because now we have put part of the burden on them. And from what we’ve seen, yes, they do understand. And, you know, there’s still some, uh, some issues sometimes, but, um, I call that like the [01:16:00] LOAC, uh, trust, uh, bridge. Thing that happened was someone just scammers that just take advantage of the system and there’s nothing you can do behind as a bank.

You can’t protect, you know, uh, someone that’s being scammed and decide to buy. a game ticket on the sidewalk from someone that say pay me with there and you’d get the ticket and then you show up at the stadium door and this ticket do not work and that person is long gone we can’t stop that there’s no way right so um that’s part of the fun

Josh: yeah. And I, I, I hope you know that I, I don’t mean this with any negative connotation, but I mean, you know, the, the things that you hear a lot are, you know, there’s problems with fraud and reconciliation and Zelle and that coupled with, you know, lots of other reasons or some of the reasons why, um, you know, FedNow, RTP.

You know, a push network that’s instant settlement along with instant money movement, um, run by a central bank. That, I think that’s why there’s some of that attraction to it, right? Can [01:17:00] you speak to your thoughts on that?

Seb: yeah and i think that’s where it was going because the original mandate of zell was really like p2p friends and family only Right. That was the mandate. So what happened is, of course, people started paying, uh, you know, their cleaning lady or the gardeners or the farmer’s market that took it outside and, and there was no way to block it because it’s still a P2P, right?

Small, ultra small merchant or service provider. So, How do you block that? It’s a person, right? Um, but what that man is to your point is, how do you take that and scale it to have a different purpose? And I feel that’s what Fed has been doing is they are starting really act from the B to B side is how do you move money from business to another business?

And how do you make sure that That money is not delivered in real time. If you have an exchange of goods, for example, you’re buying goods for your store and you’re buying that from a wholesaler as a wholesaler. I would love to know that when I’m releasing these goods to you, I have the money in my bank account, [01:18:00] right?

Cash flow management is much easier now, uh, right? So I think that’s kind of the angle that they are taking, but what we are seeing too is like beyond that. And that’s some of the things that’s happening in Europe, right? Is now you’re going to have a store like. Instant movement of values. And I’m very careful with values.

It’s still a monetary, uh, element, but, uh, you have like big, uh, securities clearing centralized system in Europe that clear actually stock markets, stock tradings, right. And it’s very important to do that in real time, right? If I’m buying stocks and I’m reselling and turning around and reselling right away.

You still want that money to be moving, right? And you want to make sure that it’s a real, um, it’s a real trade. Uh, and you probably have heard of these oral stories, you know, in the U. S. But in Europe, where you had like traders that were making fake trades, uh, I velocity fake trades. So their money was popping up.

And then, You know, things were wrong and you have like 12 billion that just disappeared from the balance sheet of the bank. Um, [01:19:00] so all of these elements of, of bringing, that’s a very bad day. Uh, but all these element of bringing, you know, real time or instant or almost instant doesn’t have to be like, you know, with it.

But now you’re talking about things that are high velocity and everything that is high velocity requires to be very cognitive of the risk associated, but also providing a framework. That is well understood. And I feel that’s where like the, the Federal Reserve Bank and Fed now that’s important because the framework is very well understood and then they make sure that what they were creating actually was based on the standards.

That was accepted across the world. So Europe is thinking the same way, right? Same standard. Um, you take, uh, I think it’s, uh, Brazil using the same standard, Australia using the same standard, right? So now you have like this, this dynamics that of things are being built, not maybe necessarily the same speed or not, maybe looking the same way, but the fundamental underlying technology elements would be the same.

Thank you. [01:20:00] And that’s when you start seeing like, Hey, as Zelle is a U S only P2P instant money movement system. Now you’re going to be able to see something that may be called Fedna or something else. That’s going to be truly cross border where you will be able to send instant money to someone in France, for example, right?

So that’s where it’s going. And I think that’s why it’s important to have like this trusted, don’t want to say like centralized, but trusted entity that kind of say like, Hey, here’s the framework, here’s the guideline, here’s the standard that we really want to rely on. And everyone needs to play by that, that game, by that, sorry, by that playbook.

Just make, uh, the life easier. But again, as I was saying, from a CIO point of view at the banks, that’s only one of the thing on your plate. You have like, probably like five or six other coming at the same time. And it’s, uh, it’s a very busy time for being a banker today.

Josh: Do you think, um, do you think True instant payments, uh, in the U. S. is going to change things.[01:21:00] 

Seb: It’s, uh, it’s interesting way. I don’t, I don’t know when that will be and when we’re going to get there, but, uh, you will still have to get a secondary flow that needs to happen. I’m going to give you an example, right? In, in Zell, um, If it’s an in network to in network, right, and none of the risk moment red flags have been triggered, technically you can go to the ATM 20 seconds after the person sent the money and take that money out.

Right. That’s instant payment. That’s real. Right. But if one of these risk moment is triggered, or if, for example, it’s in network and out of network or whatever, now you’re going to another risk management flow. You’re going through something that may take 223 hours before you get your money. Right. But if It’s clearly something that, that, you know, out of the 12 risk moment, you have like six red flags.

Of course, you’re not going to do the instant payment. You’re going to go back and go back to the old system, which is, you know, [01:22:00] the ACH rail, a good old batch processing at the end of the day and you’ll get your money in two to three days, right? That’s, that’s, uh, again, the banks are risk averse. So of course, they’re not going to move your money if they see that there’s a big risk.

And what that means also is, As we are seeing more and more frauds, you know, like as uh, people targeting like elderlies and saying like hey send us like 20, 000 and and we’ll release your grandson or whatever, you know, uh, The romantic scams or whatever. They are not the scammers are not stupid. They’re going through this Instant rails.

They’re trying to get like, Oh, zealous money, right. Or Venmo’s money or whatever. Um, so I think that’s important to have that, that framework of what I call like the secondary rail steel in existence for this type of scenarios, because they are not going away. I mean, scammers and bad people are always going to be around and, and I want to be protected by my bank.

So, if that means that the money I was [01:23:00] supposed to receive, you know, to pay my rent is, uh, two days late, I don’t mind going and talking to my landlord and saying like, Hey, I’m going to be late. Uh, in payment, but the money is going to be there. I can guarantee you then, uh, saying my, my rent money gone to someone that was pretending to be my landlord and the money is gone somewhere in, uh, you know, in China or a place like that. And that’s the part or so where it goes to the next level, which the standard that’s used by, uh, you know, this institution for open banking for real time payment, everything. Is also the standard that’s pouring behind the scene, the invoicing and invoicing is going to be a big deal as now you’re also going to trust when you receive requests because you mentioned, you know, the pull push payment right now it’s a one way payment.

It’s not anymore. Like the old days where it’s ping pong, you know, like you ever send you have the request and you have the answer. It’s one way and establishing that trust in, in, um, Who you are sending the money in money to, it’s going to be kind of critical. And I feel that [01:24:00] that’s, everything is kind of converging.

Uh, the question is when, and I don’t have that answer. I don’t have that answer, but there’s a lot of things that points to like, it will happen.

Josh: I don’t want to put words in your mouth, but I think I’m safe to do this at this point, given what you’ve been talking about. But, I mean, I think you’re alluding to that once all the other factors have been removed from, um, Politics to monopolies to controls of powers or whatever it may be, right? Like, if all of those things do get removed, technically, FedNow is the last and only payments method in the U.

1. Right?

Seb: it’s it’s when it when it’s feasible and to, uh, it’s encompassing all the elements to to build the next thing, right? Always, you know, it’s a little bit what happened in the world of fintech, right? I always say like fintech is dead long live fintech What I mean and that’s the same position I think for Fed now And real time payment there in [01:25:00] the same spot where you had a fintech market or fintech ecosystem for many years and VCs were pouring money and everything and then fintech became just part of other ecosystems, right?

So you need fintech to do prop tech. You need fintech to do wealth tech. You need fintech to do secure tech. You need fintech. Everything is going to require a money movement of some values. It’s going to lift what was built by FinTech doesn’t have to be money movement, but could be valuables movement.

And these new ecosystems. For it from. The Fintech ecosystem. So that’s why I say like FinTech is dead. It’s mostly FinTech is now becoming, I’m not going to say, but invisible, but that’s becoming a legacy ecosystem that is pouring new ecosystem on the top of it. And this new ecosystem actually leveraging the experience of, uh, the FinTech ecosystem to build new things.

And, and, and, you know, I don’t even know where that’s going to go. So I feel like Fed now. It’s going to [01:26:00] be the stepping stone to build these new things around e invoicing, around cross border trading, around securities management, around whatever it is. I think that’s going to go more and more towards that part.

And, you know, as much as ACH, uh, has been extremely, uh, good for the U. S. and, uh, the great purpose, um, it’s, it’s time to, you know, maybe part with ACH and, and that show and do something a bit different. And I know they’re trying to do like a real time ACH or, or now ACH or whatever it’s called, but, um, they, they have to, they have to play the game of Fed now if they want to stay relevant.

That’s just a small take. That’s just what I think, but doesn’t mean it’s true. All right. But that’s where my mind’s going.

Josh: yeah, I’m, yeah, I mean, I’m with you. It’s, it’s when you finally have fast and cheap, when you have push instant settlement, right? No reconciliation. You can always make it slower. You can always make it cost more, right? Artificially, [01:27:00] but you can’t just all of a sudden say wires are going to go fast or, you know, cheaper.

That’s, that’s a lot more difficult. Um,

Seb: cheap and secure and you can only pick two. Right. And I think if we can get to the actually, I don’t want to pick two, I’m going to do the, I’m going to do all three. Uh, that, that would be awesome. That’s going to be a big change game changer.

Josh: Um, but speaking of that, so you’re talking about kind of like, it’s not necessarily if it’s when there’s going to be some catalyst moment, there’s gonna be some tipping point, right? Uh, it makes me think back to, so, so there’s gonna probably be a similar. Uh, need to prepare when it comes to FedNow.

But I remember when, uh, when I was talking to you the first time, you gave me a little nugget of the story. I’d love to hear a little bit, maybe more of it, of when, when you guys turned Zelle on. It was kind of like, it was an accident how fast it happened and how quick you had to actually scale up. Um, so it’s one of those, like, we’re like, Oh, I don’t know if I need to do this or people are going to want to do it.

And then all of a sudden we release it and we’re like, Oh shoot. Yeah. Yeah. No, we got to go like crazy. Go, go, go.

Seb: Yeah. And I remember that moment because [01:28:00] the way, uh, early warning was built, it was built. It was a mix of on premise, uh, infrastructure and cloud based infrastructure. That was a big of a mix. And thank God we actually had the cloud, uh, to help us scale because when we released it, uh, and, and the, you know, the switch was turned on, uh, Our planning was with these two banks to be like the testing run, and then we’re going to deploy the other banks of our, you know, timeline and doing it, we were kind of thing.

Okay, if we get like 20, 000 user. Per day, you know, maybe per week, that’s going to be awesome. And then we’re going to scale and we’re going to see if it’s working because again, it’s moving money in real time. We’ve never done that. And, and testing the risk, uh, uh, safeguard that we had put in place and see it was going to work and making sure that the integration on a mobile bank app was working with our system.

And so it was a lot of things that were tested, but you’re going live, you’re going live. So it’s like, you always have like the surprises of like, Oh, we didn’t test that scenario. Great. Um, So, but what happened is like that, that went like wildfires and, and, and the bank or release at the [01:29:00] same time, they didn’t wait it for a time, you know, it’s proper slow.

And we were having like a hundred thousand new user on body per day, five times the capacity that we were thinking of. So of course you start looking at like, all right, who was doing the capacity planning? Okay. I need to talk to that person like right away. Right. And going and like, How, how are we going to do that?

Right. And, and that went on for like weeks. I mean, that was not like, Oh, a couple of days, a hundred thousand users. I think that was for like two and a half weeks nonstop. Uh, and then it’s still, it’s still ongoing. Right. But, um, talking about like testing your system or testing your infrastructure by fires, trial and fire, it was not really trial, but definitely fire.

Um, that was, um, I’m going to put it that way for about like three, four days. Uh, none of us slept a lot. Uh, and I think we were, uh, that that pizza company where we keep delivering pizza at random hours of the day and night in the office must have been wondering what the heck we were doing in there. But, uh, uh, again,

Josh: at a lot of hours. Hmm.

Seb: but again, that was it was a great team.

I mean, there was a lot of. Big [01:30:00] brain, great talents. And, uh, we put it through and we monitor and you’re like, uh, the nice part to is like to the credit of the banks and the tech teams on the bank side, they were also available 24 7 during that time. And that was also, I feel like. You have the joint venture where you have like, you know, people from the banks who also monitors and everything, but having that capacity to have like the bank team itself being like available and you see something and just like, okay, I’m not sure is that on our side is on their side or is that something completely random happening?

And how do we keep track of that? Um, everyone was, I feel like it was all hand on deck and making sure that, uh, Okay. We getting that things running and we understand also what’s happening. The risk management was, I think the risk management thing during that time was unbelievable. I mean, they were like filtering and receiving calls.

And I said in one of the risk management or fraud detection center for a couple of days and, uh, I won’t share some of the story publicly here, [01:31:00] but, uh, I have, I have great, great deal of respect for whoever works in a fraud call center for detection center, because one, their job is not easy. Uh, and it’s under, uh, you know, stress and time pressure because they have to make the decision.

It’s not a machine anymore. It’s a person and seeing, I think they are pretty like the best trained people in the world in human psychology. And, uh, human behavior reading and seeing, you know, these, these people within two seconds, they know if it’s a fraud call, or if it’s a legit call within two seconds, one of them, I sit on that call.

It took me probably like 2 minutes before I figure out was not Correct. Not right. And after when we debrief is that person, she was like, Oh, I already know, like, as soon as she started talking, I know that was fraud and I would just, okay, can you explain? And she explained, I won’t, I won’t divulge the, the, the, the, the way they’re thinking, but she explained to it.

And then I was like, that makes a lot of sense because yes, I did picked up what you picked up, but [01:32:00] my, my, uh, you know, my alarm brain did not, not a red flag. Let’s keep going. Let’s keep talking. And they, they were like, I mean, like they, they were like unbelievably, uh, busy during that time. Uh, but they were also like, uh, uh, They were like the front line, you know, to protect users and everything.

Cause we were out and we had to figure it out. Um, you know, making sure that fraud was not, uh, rampant and no, like every new product you go on the market, you have, uh, what I call like low key fraudster that comes in and, and we have all seen, you know, the video on YouTube or Tik Tok or whatever, let’s say like, Hey, I send 50 to that phone number at bank of America and 24 hours later, they send me back 500.

Right. And if people are gullible, of course, they’re going to send 50 to that number, hoping to have 500, but it’s actually a fraudster number that gets 50, 50, 50, then, you know, you whack that video on YouTube, you have 10 more that popped up, uh, and you try to, to stop, you know, that numbers and you try to, uh, uh, make sure that [01:33:00] that’s only like legitimate accounts that’s going and everything.

But. They were smart enough sometime to actually make this fraud happen off Zelle rails, but they make it look it was Zelle. And it was very, uh, a lot of frustrating discussion with some of these, uh, social media platform, publishing these videos and not removing them, uh, in a timely manner. That’s for sure.

Josh: Isn’t that crazy? I mean, it’s just. This goes back to what we, you know, kind of started with of just some of the, like I love to just live in a world where I don’t ever lock my house or my car and I don’t worry about it. But, but I don’t, like there’s just some really crummy people out there unfortunately.

And, um, and the fraudsters are always trying to come up with new scams are always going. We’re always trying to stay a step ahead of them. But in all reality, I mean, they, You know, they only have to get lucky once. We have to get right every single time. We’re just not like the odds are in their favor.

Unfortunately. Um, I tell you what, as you were talking to it made me think this [01:34:00] has come up a few times in the last little bit. Um, I’ve had friends that when they hear I work like in the banking industry, you know, serving banks and credit unions, they’re like, Oh yeah, I wish I had bankers hours. I’m like, Oh gosh, you have no idea what bankers hours are anymore.

Like bankers are

Seb: work that way.

Josh: in so many ways. I was like, you have no idea how many times I’m talking to our customers, you know, and people at the financial institution and it’s Saturday at two in the morning. Like, trust me, you don’t want bankers hours anymore. These people work really freaking hard to allow you to do the things you want to do with your finances to the best of their ability.

Um, Uh, you know, before I let you go, Seb, I, I, you threw one thing out at me earlier and I took a note and I said I was going to come

Seb: All right.

Josh: I want to, I want to throw a crazy oddball out of you. We haven’t even like, uh, really touched on, which is the world is changing, right? And the way that finance and people’s lives [01:35:00] happen is changing.

And, uh, you know, you brought up the credit score element and just how, like, you know, you have family members that have, you know, a sub 500 credit score and millions of dollars thanks to crypto investments and things. Um, I’m actually bummed I haven’t had a chance to talk to him yet. Because I would have loved to have picked your brain a little bit further on it.

But, um, I had to reschedule him unfortunately because of some, some traveling stuff. But I have a guest coming up, um, who is with a company that is helping to solve some of these problems based out of Dubai. And the whole premise of is, and as soon as he started talking to me about this, I was like, Oh my gosh, you’re so right.

Like I never thought about it though. Um, You know, he used, he used the example of like, there’s, you know, a 19 year old kid who plays video games online and allows people to subscribe to his Twitch channel to watch him play video games. [01:36:00] And this kid could be making a hundred thousand dollars a week. And sometimes somebody will pay him 30, 000 to watch him play a video game.

And then that kid goes to a traditional financial institution and wants a loan on a house. And they’re like, oh yeah, no, you don’t make, you don’t make money. You don’t have a job. And he’s like, no, I made 30, 000 in five minutes playing a video game earlier. And they’re like, oh yeah, that’s not real. People don’t do that.

And then he goes, no, it is. And I just did. And they’re like, oh, well, that’s a fluke. Well, actually I’ve been doing it for years and I’ve been making millions. Thanks. But he doesn’t fit the traditional finance mold, right? There’s a lot of things that are coming out like that that are just completely bucking the trend for how we look at things like credit score and how do we help people manage their finances?

And then where does that lead these people?

Seb: Yeah. And I feel that that goes back or something like the, the, the new generation is going to run more and [01:37:00] more in this program, right? They don’t want to own a car. They don’t want to own a home. Uh, they’re renters. Uh, they just, um, You know, just book a car for the day, pick it up from the parking lot, drop it back to another parking lot.

Uh, it’s a very different mindset, right? And, and when you go to a bank or you try to apply for a loan and they check your credit score and they just like, well, you haven’t built anything, right? Well, I’ve been paying my rent. Every, every month for the past 13 years or 15 years on time and everything. And, and yes, I’m a very reliable, financially responsible person, but for the bank, that does just like, no, you do not, you do not feed our risk profile.

Uh, system. So we can’t get you in, right. Or we can’t get you the loan. So I think that’s also where we, that’s where we’ve been seeing like more and more of these FinTech companies or this, whatever I see like backdrop tech or whatever, where they’re thinking about that, this new set of behavior. Yeah. And trying to bring that in the regular financial system, right?

So it’s like you had this company that, that [01:38:00] friends started, um, that was actually giving you credit against your credit score for being a renter, especially here in the Bay area, which is very, you know, a lot of people run in San Francisco is very expensive. So what happened is they were that find a mechanism to convert that and make that as it’s going to go against your credit score to lift it up.

Right. And that, that company got bought by shine as, as, you know, uh, alternative bank or, uh, these specialized bank that actually try to serve these, uh, new audience, these new customers that the traditional banking system does not provide. Even know where to start, right? Uh, how do you handle that? Um, so I think there is a, again, as, as the banking industry is in a transition and as the banking industry is getting modernized and there’s new system, new process, new things coming in, it may be in the next year, it may be in the next five years, it may be in the next 10 years.

Right. But I think it’s a good time or so for us as an industry. And I love [01:39:00] using that right to press the pause button and see like, Hey, how do we change and how do we get this new. Ideas are these new way to do thing into the system. So we can lift the existing system to where it should be. Right. And that means like, as you leave the existing system, then you can also leave people who, uh, you know, we need a bit of help with the financial education or the financial world or whatever.

And, and I think that’s, that’s all these elements converging are great. Uh, and I just do hope that, you know, few people in the industry will take the time to say, okay, time out, pause, Let’s think like, are we making it really better or are we just, you know, making it slightly not as bad as it used to be?

Josh: Yeah, I absolutely love that. Um, That is a phenomenal way to close this out.

Seb: Yeah.

Josh: well before I let you go, Seb, uh, two final questions for you, sir.

Seb: All [01:40:00] right.

Josh: I don’t even know if I want to know the answer to this one cause I’m never going to have the time. I don’t know how you do, uh, to be able to dig into all of it cause I’m going to want to, but where do you go to get information?

Seb: Uh, I have a few places, right? So the first one is I always go and I look at what he’s posting about and talking about that’s, uh, Dave Birch. I don’t know if you know Dave Birch, but, uh, uh, works for consult. I pay on one of the top influencer in FinTech and identity in, I think, in the world, not just in Europe.

So, um, and he stakes on, on multiple industries is most of the time, always on the money, uh, pun intended. And, uh, always thinking about like. Okay, great. We’re talking about that now. But what’s next? Right. So that’s one of the source. Dave Birch. He has a post regularly on LinkedIn. He has some videos where he’s walking around in nature and talking about a very serious topic.

But that’s one of my sources. The other one is I always [01:41:00] try to track down where is, uh, Sanjeev Kalita and my moustache is my emulation to him, right? Uh, in a poor fashion, but so Sanjeev, Sanjeev was part of Money2020, now he’s running FinTech Meetup and. He posts on LinkedIn and other area, but I always try to feel like where he’s in the world, right?

Because where is he going? And the conference is talking about, you will sometimes have some extract of information coming in. And that gives you a little bit of an understanding of like, Hey, what’s going on in that region, right? We’ll have no what’s going on in the financial industry or banking industry in the Caribbean.

Absolutely not yet. When he goes to a conference there, he posts about what he’s seen and what he has observed. So now at least have a little glimpse in what’s going in the Caribbean. I would not have known before, right? So that’s another source. And then,

Josh: I love that you call out Sanjeev. I, uh, I don’t know if you’ve noticed, but, um, he was a guest on this podcast, gosh, maybe 10 or 15 episodes ago. Um, and

Seb: check it out.

Josh: just [01:42:00] fascinating guy. That’s super cool. I didn’t realize you guys were connected. I’ll have to drop him a

Seb: yeah, so i’ll check it out. Yeah, that’s the mustache part I guess and then the other Then i’m going to give you a third source, which is a bit different, but it’s more like on management and how to think about uh tech companies trying to Be innovative and more like the human factor like the management the employees.

I know you get better So this guy is called ethan evans And he was one of the VP at Amazon and now he’s retired. He’s a coach, executive coach, but he’s retired from Amazon. Beside the fact that he actually created one of the 14 values that is listed on Amazon, uh, management style. So one of them he created, um, He’s working.

He has like this, this step up, uh, podcast and sub stack where you explain like, how do you become a better manager? How do you manage? How do you do? Do you deal with crisis? How do you deal with a lot of different topics? I think on leadership, which are great. Um, and also love the fact that he was, uh. He’s not [01:43:00] shy to talk about, he was doing a big demo of a brand new product.

A lot of people in the room and Jeff Bezos was there and that demo failed miserably. And, and when you tell the story, it’s real. So when he’s mine, he said, like, Hey, you go, like, I know I’m going to get fired on the spot that was terrible and everything. And he said, that’s when you know, that, you know, like you have a great boss.

He’s like Jeff Bezos arrived, sit down with him, explain, and try to understand like what went wrong and everything. And so, okay, cool. Uh, Let’s try again next week. Right? And that was not like putting him down. Not not telling him like, Hey, you’re far away. That was more like, Hey, this stuff happened. Uh, let’s try to do a quick, you know, like, uh, root cause analysis.

And then let’s try again next week, making sure it’s going to be good. Right? And I think that’s how you build the confidence of team.  

Seb: um, 

Josh: um,

Seb: when When that happened, we tell the story right that that how do you keep innovation going right? And I think that that was the right way to do it. And I think that if we can have leaders in the financial industry, I think the industry will think the same way, right? Not just techie, but being able to connect these dots and also [01:44:00] being like, hey, sometime we will fail, but at least we are trying, um, that’s going to go a long way.

But I think that’s, uh, These are my three sources that I go back most of the time. Uh, I do read a lot of, uh, different articles and I’m lucky enough to having worked at PayPal to also be part of the PayPal mafia and to be able to ping on former colleagues or people who are very well known or connected industry to just ask questions.

And I think that’s the biggest point is like, if you have a network or you have people you can go to and just ask questions, you know, and, and even if you think that that’s a stupid question. Uh, so you learn and you have to keep learning and learning and learning. Otherwise you just get stuck. So that’s the mindset you have to get. Don’t be shy as the questions and learn.

Josh: I love that and I love that it’s easier said than done, but the take a pause and Just is this are we doing it the way we’ve always done it or is this the right way to do it? [01:45:00] Well, Seb, if people want to connect with you or learn more about you and what you’re doing, how can they do that?

Seb: Well, I think the best way is, uh, they can go on my sub stack, which is the daily remand at that sub stack that come, uh, where you will find what I’m thinking of and what I’m writing about, uh, for that week. Uh, so every week the topics may. Change from something that relate to the financial industry to the wine industry.

Uh, I’ve talked about entrepreneurs in different, uh, industries outside of my core, uh, work, because I think that’s just, uh, it’s fascinating to see like what, People in other field of work are doing and thinking and how they get successful. Um, so that’s one. I’m on LinkedIn, too, if someone wants to ping me.

And I do have a website for the book. I’m going to do a shameless plug, but if you go to the deliveryman. info, uh, then you’ll be able to find also the way to contact me and, and of course, buy a copy of the books. And, um, If you want the pairing list and the soundtrack on Spotify, I’m always happy to just share it [01:46:00] directly.

Josh: That’s awesome. Seb, thank you so much for coming to be a guest. This has been one, just a fascinating, but a really fun conversation. Um, thank you for coming and sharing just some of your, your thoughts and insights and your time.

Seb: And I’m very glad I was on the, on, on your podcast, because now I have a story I can steal from you and I’m going to repeat it and use it as an example many, many times.

Josh: Hey. Like I said, take it. That’s a, that’s a huge honor. That’s, that’s going on my tombstone

Seb: Yeah,

Josh: gave one nugget that Seb took. I’ll take that.

Seb: that was the greatest, uh, I think the greatest analogy. That just makes perfect sense. It’s plain common sense. And yet that was well done. Well

Josh: oh. I appreciate it. Well, thank you again, sir. Uh, thanks for coming and being a guest on the Digital Banking Podcast.

Seb: Thank you very much. Thanks. 

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