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We are proud to be payments nerds – we love sharing perspectives on all things payments. The Payments Nerds podcast features expert guests who explore the most important issues, topics and trends to consider in payments today. If you are a payments nerd too, or are a little bit curious about what’s going on the payments world, just download the “Payments Nerds” podcast from The Clearing House.
Voiceover: [00:00:00] You are listening to Payments Nerds, a podcast where we share perspectives on all things payments. If you are a payments nerd too, or are a little bit curious about what's going on in the payments world, you are in the right place. Let's start the show.
Greg MacSweeney: Hello and welcome to Payments Nerds, the official podcast of the Clearinghouse.
I'm Greg McSweeney, and I'm your host. Today we are recording live from Cybos 2025 in Frankfurt. Cybos is one of the largest financial services and banking and payments events really in the world. And this year they say they have over 11,000 attendees. Somebody told me they have 11,800 plus attendees, which they say breaks the record, which was London in 2019.
So it's actually pretty exciting here. So it's Monday morning, first day of the event. We're all here, still have a lot of energy. We'll see how this lasts throughout the next four days, so it should be a great week ahead of us. I'm joined by Erica Bauman, who is director of the commercial [00:01:00] banking and payments practice.
Attos Insights, a leading research and advisory partner in the financial services industry, and Giles Uag, strategic advisor, Attos Insights. Giles, what exactly do you focus on?
Gilles Ubaghs: So I look at a few different areas. I tend to summarize it as. Digital transformation across the banking and payment space, which is a bit of a mouthful.
But what that means in practice is looking really from top to bottom change in a lot of core areas, including SMB banking and the needs of the mid-market, how that's shifting and evolving over time, but as well as the implementation and usage of new technologies. So think for instance, you know, how is AI being implemented in a real world environment and being operationalized within a banking perspective?
Greg MacSweeney: Got it. Um, and Erica, we'll talk about what you focus on as well, but, um, you know, NATOs Insights, you work with a lot of the largest banks, many of banks in the industry, and. Technology companies, consulting companies as well. G. Gimme a little description about day toss so our listeners know what you guys do.
Erika Bauman: Yeah, absolutely. So we are exclusively [00:02:00] focused on the financial services industry and as you mentioned, we focus with many of the banks. So in the US here, uh. Uh, not here 'cause we're in Frankfurt, but in the US 89 in the top 100 banks. Uh, a lot of the European banks and of course the vendors that serve them.
Uh, and we do a lot of proprietary research. So we're talking to the end users, we're talking to the banks, we're talking to the vendors, and our goal is to help our clients with the, so what, all the things we're gonna talk about, all the buzzwords, what does it mean to them and how do they implement it?
Greg MacSweeney: We'll certainly hear a lot of buzzwords over the next four days here. It'll be filled with buzzwords in the events on the floor and have, yep. Yeah, exactly. So it's helpful to try to decipher and figure out actually what makes sense and what's important for, as opposed to what's not. Um, so talking about some of those buzzwords and what we're expecting to hear at Cybos, um, looking at the agenda, what do you expect to be hearing this week?
What is going to be, uh. On stage here the most. And what is, what are the [00:03:00] things that bankers should really think about after they leave Cybos when they're done?
Erika Bauman: So, I know that we're early in the week, but uh, we've already had several meetings and it's really focused around what are we gonna do around payments, modernization, where do we predict the market to go?
So it may sound like the same old story, but I think there's some new flavors that are happening, especially, uh, if I think about where we were, I wasn't at Cybos last year, but I was at Cybos several years, you know, in a row. Before that, we've just come further in the accessibility of the technology, the urgency for some of the financial institutions that haven't moved forward.
And while we're focused on North America, Europe, and Asia-Pac, anyone who has listened to me in a webinar, a podcast, or just across the meeting table knows that anything us faster payments is something I get really excited about. So looking forward to more of those conversations and then some of the ancillary topics that we've been talking about.
And my colleague Jill, he, uh. Looks at ai, he looks at some of the emerging technologies, but what does that mean into the conversations [00:04:00] that we've been having around faster payments? How does it enhance maybe some of the timelines? So those are just a few of the things that I'm looking forward to as a fellow payments nerd here at Cybos.
Gilles Ubaghs: Just to add to that, I mean, I think some of the big shifts that we're seeing, look you, the big themes are pretty consistent year after year. Everyone knows it's digital transformation, it's modernization, it's new technologies, you know, better serving the customers, trying to get a more holistic perspective across the entire customer lifecycle.
What's starting to change now is I think we're starting to finally shift away from just the theoretical. Right from just looking at like, oh, well we should do something and digitalize and modernize, and we'll get there somehow, and it'll probably be a huge uplift. And now there's this growing realization of just that need to do it, you know, effectively, efficiently, um, using new tools, right?
Doing something that's much more flexible for the future as opposed to just, you know, a big bang walled garden approach of working with one giant vendor. In is something which becomes much more nimble, right? It's kind of building that platform for the future. Now, this is a little bit perhaps optimistic.
I know [00:05:00] the realities of building that is much. Harder said than done, or sorry, maybe other way around. Much, much harder to do than to say, uh, you know, but that execution piece I think is rising. That's why, you know, I expect to hear a lot more pretty similar buzzwords, you know, automation, ai, I think low code, no code is absolutely everywhere.
And that speaks to that. Sorry,
Greg MacSweeney: what,
Gilles Ubaghs: what was low co? What was that? So low code, no code. Okay. So if you speak to a lot of vendors out there, right? This is becoming a big buzzy term within the industry. The idea is you've got your technology platform, your banking platform, you know, payments, whatever it may be.
The code itself is low code, no code. So the intention is for business users to be able to go in and make changes, make adjustments, right, to configure it on their own without needing that huge input from, you know, the technology teams within the bank. In theory, yes. That's how it works. You know, the vendors are all moving that direction, that usability piece is still quite difficult, right.
So I, I think it erases some of those barriers that were there in the past, but it's still not [00:06:00] that easy to do necessarily. But it's still, I think, denotes a shift in the industry, right? The way the market's heading of essentially empowering the banks much more to modernize, to launch capabilities they want, right?
To do things quickly and nimbly and effectively using the technology investments that they've made.
Greg MacSweeney: I imagine it gets you to market much faster. You have an idea, you want to implement it, it helps the customers. But imagine there's a lot of knock on effects too, right? Your compliance folks are like probably thinking, wait a second, the business users are making changes to our platform and it's going to market.
Who's checking that? And the risk folks are involved and, uh. Probably lots of knock on questions there. I would imagine.
Gilles Ubaghs: Yeah. I mean this, we could probably spend a whole hour just on the compliance piece, but I think you know, this technology, part of the core aspect of it is it does include compliance, right?
So help ensure. Using the right tools that you can better enable the compliance requirements you have. I think a lot of banks have seen that process of working with the FinTech or working with an emerging partner and either their compliance team [00:07:00] say, not a chance. Once they kind of dig into the weeds and things sound good and.
If they realize the fintechs may not know as much as they need to do, or there's been some very public blowups or following notes, right? Some of the technology doesn't work. So there's still that interest in working with, you know, the right partners, the trusted partners, um, but that includes tools to make compliance better and smarter and more effective to help enable that.
Right? So it it's becoming much more of the, the core foundation. I think a lot of, a lot of the technology that's out there. Right, including that, you know, compliance as a service, whatever you want to call it. Um, but it's still a long ways to go, right? Banks still have fundamental realities, they fundamental liabilities, which they need to bear in mind.
So this is always gonna be a bit of a push and pull kind of between those two, right? How do you modernize, how do you do so safely, um, across the board?
Erika Bauman: I wanna back up to something that Giles said when he mentioned removing beyond the theoretical. And that's really the key here. So we've always been talking about how do we bypass, [00:08:00] uh, some of the, the hurdles.
How do we overcome legacy infrastructure? How do we do some of these things? And we have the same conversation over and over and over. I think what I love to see, I don't know if you visited all the floors here. So up here is kind of the, the, you know, some of the biggest players, if you go down. If you have some time and look at the, the discovery section, some of the emerging fintechs, uh, they're starting to give some of the legacy players a, a run for their money.
So Giles mentioned the low code, no code, the emerging players, the ability to provide the banks with enough independence that they have more control while not putting all of the development onus on them. Opens a whole new world and I think just pushes innovation faster. And this is such a great opportunity to be able to see that, to look at the demos, to talk to the vendors, to see the great ideas that are happening, to talk to some of these emerging players about some of the clients that they're working with, some of the financial institutions, uh, maybe taking a different approach.
So instead of using only the biggest [00:09:00] legacy providers for some of their initiatives, uh, trying some of the. Outside of the box, newer players, and they can really create some market differentiation by doing so.
Greg MacSweeney: That's a great point. One of the buzzwords we've been hearing, not only we're gonna hear here over the next few days, but what we've been hearing about it for the last year is ai.
I know it's, it's on a lot of sessions here at the conference. Um, people are talking about how it's gonna modernize, help modernize payments, help modernize and reshape the industry. Um. What do you expect to be hearing? Erica, why don't you go first with, with ai, what's, what's the reality and what should banks really be paying attention to, and maybe what's.
Too far down the road at this point.
Erika Bauman: Yeah. So I stay a little more grounded in my view of ai. So Gil, who's our resident AI expert, is looking at some of the use cases, what's coming. When I think about the today use cases, I was just speaking at a conference last week actually, and I asked the banks the room, raise your hand if you're doing something around ai.
Couple. [00:10:00] Raise their hands. Now. Raise your hand if that's something that's customer impacting. Nobody raise their hands. Um, so. The banks are pretty clear that it's, that it's not right now, them independently figuring out the use cases of ai, it's what are their vendors doing? So I focus on, uh, the, the roadmaps and the functionality, the vendors.
When I'm looking at things like integrated receivables or payment hubs, intelligent routing, the banks are really depending on the vendors to bring the innovation. How do you make this better? How do you make it easier? I unfortunately maybe am a little bit more jaded than Giles in that I see a lot of the vendors just taking machine learning, doing a control f, replace, and you know, taking out machine learning and put in artificial intelligence, uh, that's slightly dangerous in that.
Uh, then I think they end up underdelivering on the expectations because now when we're talking about the possibilities of ai, we've all kind of. Played around with it in our personal lives, some of the copilots and chat GPTs and things like [00:11:00] that. So we expect the experience and the automation, everything to just raise the game a little bit.
So when I think of AI and what's here and what's now, it's how are vendors putting this into their solutions to help increase the automation? And at the end of the day, the client's impact for financial institutions without the financial institutions really having to figure that out on their own or implement something separate, uh, from their vendor solutions.
Gia. I know you have a lot to say about that too,
Gilles Ubaghs: so I mean, it's a fascinating space, right? The AI market is almost a victim of its own hype cycle. Suffice to say, and I think we can all agree on this, the hype is just through the roof, right? Where all white collar jobs will be disrupted in the next 18 months.
You know, sky nuts around the corner. We're in a complete breakdown of society in the future. You know, all these big existential horror stories of what's gonna happen next. Now, the thing is, most banks, I think, have probably made at least some sort of public statement about ai. They've probably got some sort of initiative being driven by the C-Suite down to do something, and I think almost more [00:12:00] critically is to be seen, to be doing something right.
You can put it in shareholder letters, tout your technology, look at all the investments you're doing. At the same time, most of what we're seeing so far is very much top down, centrally driven developments of proof of concepts for artificial intelligence within banking. Most of that is fairly generic. A lot of that is really deployments, which are intended to be used across the bank as a whole, right?
So it's not within one specific product division. It's something which you can repeat kind of across multiple practices within the bank. Across multiple areas. Some of those are effective. I think it's, you know, it'd be foolish to say that there's no use for it. A lot of where we're seeing the most disruption so far.
It's essentially any aspect of the bank that you would formally have gone to a BPO provider, right? Business process outsourcing, so think call centers, coding, some of the internal support, whatever it may be. That's becoming a real frontline in terms of what's happening. But the thing is, and this kind of ties into our earlier point about compliance.
Most banks are [00:13:00] just not there yet. Most banks are still looking at, you know, the proof of concept. What could we build internally? What does this look like? Let's play around, is there a return on investment? Is it worthwhile? And again, it's very much being driven centrally rather than by the product teams, right?
The actual people who work with the products, who know their customer base very closely. And this is, I think, kind of the next step of where banks are starting to head to. Some banks are a little bit further ahead. It's actually looking at, you know, not just. What's this technology? How do I just wedge it into my tech stack and bam, magic, we're gonna make more money out of it.
But it's actually really looking at, you know, what are the pain points we can solve? What are the customer experience pieces we can improve? Where's the efficiency and automation that we can generate kind of internally? Now, a lot of that's gonna be, it's the less sexy stuff, right? It's the stuff in the background.
You know, take, take credit memo generation. It's not something which gets necessarily a lot of, uh, headlines, but it is something that for a lot of banks. More automation there does save time, including at a very specific product [00:14:00] level, um, which does generate efficiency, but we're just at an early stage.
What I think a lot of banks are waking up to is they don't need to build or they don't need to build it themselves. They should be working with partners. You know, the vendors themselves are moving very quickly and they are advancing there. This is changing. I think it's very important to not judge. The potential by our current state just 'cause the technology does keep advancing extremely quickly.
Um, so that expectation, you know, more automation, new interfaces, new you know, experiences or just improving existing wines, I think that momentum does remain for quite some time. But one of the biggest issues here, and I think this is kind of the biggest challenge facing the industry. Attitudes change.
You know, they're very different between banks. They're very different within banks, right. Kinda, you know, a part of the big drive of what makes the deployment successful or not successful. Do you have the, the cultural internal buy-in, right? Have you brought your staff on board? Do they understand? Are they willing to use it?
We've done a lot of research on voice of the customer as Erica, me. Our [00:15:00] survey work of mid to large size corporates globally and SMBs show that business users overwhelmingly are very open to using AI technologies for banking and payments like very explicitly. It's about, uh, 72% of SMBs that they're very excited to use this technology to help them manage their payments and finances more accurately, right?
Amongst large corporates. It's also moving very quickly. We've tracked 52% of American companies are already using. AI for their banking and payment needs today. Right now, we expect that number to be up to 70% within the next 12 months, right? So just that escalating momentum is not slowing down. Customers are evolving, so they're gonna expect to see those capabilities.
They're not getting it from their bank. They're gonna at least want the data. To help them feed into their ai. Um, and likewise, just as those expectations shift the banks who can't move fast enough, I think they will get left behind pretty quickly.
Greg MacSweeney: Sure.
Erika Bauman: Isn't that the story with financial institutions, that they're always a little further behind?
Not every bank, but that's kind of what the [00:16:00] industry is known for. I think the point of inflection that we're in and fill in the blank, whether it's faster payments, whether it's ai, um, the end users. Are surpassing the adoption and the movement than what the banks are. So we see the disintermediation going to fintechs.
We see volatility amongst banks, you know, seeking out the best in class and going to the banks that do have the capabilities. Previously for anyone that's been in the industry for a long time. Uh, banks have the grace to be a little bit slow moving, but that's not the case anymore. And I think, uh, all the details that Giles just outlined is a good example of why and why banks need to be hopping on this bandwagon a little bit quicker and taking advantage of the speed of technology, uh, that's available today.
Greg MacSweeney: Yeah. 'cause I mean, small business owners, corporate users, we're all consumers of AI ourselves, right? Mm-hmm. We use it, we use it daily. You do it for, to automate something or to help draft a letter faster or do some quick research [00:17:00] and like, well, how come I'm not getting this with my finances? How come I'm not getting it with my, uh, accounting software?
Like how come I can't. Use a, a widget to help figure out where my money's going. Correct. If they're looking for it. Yeah.
Gilles Ubaghs: I, I did a scan of enterprise software. You know, think about it, there's 1,000,001 SaaS based ERP systems for every little industry vertical you can think of. I literally cannot find a small business focused software solution of any kind, you know, whatever it is.
The Shopify, you know, accounting, ERP, that. Doesn't include on its website. Lots of talk of ai, if not live features today of what they're doing. Right. It's just, it's so ubiquitous and very quickly becoming normalized that while those risks are very real, just the market's moving on ahead.
Greg MacSweeney: Definitely. Well, we could, we could spend it on, we could do an entire podcast just on AI and payments, not alone banking and finance, but just payments alone.
I'll say that for another time. Let's talk about what else is happening here at sbo. I, you know, uh, uh, you know, one of the topics here, of course are cross-border payments, obviously with the, the international feel of the [00:18:00] conference here and instant payments as well. Right. And what is the, across the intersection of instant and cross-border, both in the US and around the globe.
So what are you hearing from an financial institutions about what their plans are regarding the move to instant payments cross border?
Erika Bauman: So those are two separate, uh, you know, we should talk about them as one, but especially here in the US they're kind of separate. They're separate. So what am I doing for faster payments, which implies domestic?
And then what am I doing on cross-border? So I'll start with the cross-border piece first. So we were talking about some of that proprietary research, looking at the mid and large corporate space. Our data's only a few weeks old of asking businesses. Is your cross-border volume going to increase and why?
And overwhelmingly, businesses are saying, even if I'm only sending a couple of transactions a quarter or a month, that volume's low. It is going to increase. And it's extremely important transactions, right? It can't be ignored. And then when I ask businesses why they're going to see an increase in cross border, [00:19:00] they're saying, 'cause they're gonna be doing business in more regions, so they've got to be able to get to.
Countries and business partners that are maybe outside of the traditional kind of correspondent banking model, and they need an efficient way to do that. That's one of the biggest pain points our research shows of why businesses are dissatisfied with their financial institution is because it's just too hard to manage their cross-border payment processes.
So there's not enough visibility. The fees can be unpredictable. The things that we know and we continue to talk about, huge theme obviously here at Cybos that we always focus on. This year is no different. Um, you know, swift has made a lot of investment, obviously in this space. Uh, we have a large percentage of cross-border payments that have the potential, um, or are going, you know, near real time, but there's still this portion of payments that are left behind.
So I think there's two factors feeding into this one. Is, uh, banks are telling me their vendors are not providing them with enough robust cross-border [00:20:00] capabilities. So a lot of banks are vendor dependent in being able to show real-time FX rates, you know, take away some of these pain points. So that's kind of the first piece is that banks are saying, Hey, I need some more.
Help with this. And then we have this, uh, phenomena of the businesses saying, you know, similar to the other functionality Giles was talking about, um, if my bank can't provide it to me, I'm gonna go somewhere else. And cross-border payments is one of those features and functionality. So our, our research from just a few weeks ago, again, of over a thousand, mid and large corporates show that 78% of businesses are already working with a FinTech for a core cash management or treasury service that they would've been.
Doing with their bank, uh, which ties directly into, the second reason for that is access to faster payments. So,
Greg MacSweeney: right. Uh, the research, you mentioned a couple of, uh, what, is there a title for that report and where can our listeners find that?
Erika Bauman: So it's so new that we don't have any specific reports published yet.
Those will be coming. So all of our research,
Greg MacSweeney: this is, this is like inside [00:21:00] information we have right now.
Erika Bauman: This is, you're hearing it for the first. Time here. Cool. Right here in, in SVOs and Frankfurt. Hot off the press. Um, so the research that I'm referring to of the, the thousand mid and large corpse, um, we do look at not just the US and Canada, but Italy, Germany, Spain, France, the uk, India, Singapore, Australia, Japan.
Right. India. And it's shocking to me when we look at faster payments in countries with a hundred percent availability of faster payments and mandated availability of faster payments. Businesses are saying, I'm really struggling with my speed of settlement. Uh, and so one of my, you know, kind of soapbox items is around the education around faster payments.
Banks are still asking me what are the use cases? How do I sell this? Uh, the US banks are very much focused on increasing volume. And if you look at some of the headlines, so for example, with the clearinghouse raising the limit up to $10 million per transaction and that average transaction amount, and Greg, you probably know this better than I do, it was around 800 and something and now it's over [00:22:00] $4,000.
Um, you know, the evidence is in front of us that I don't think it is a. You know, this is coming, this is important. I really, I, I take a pretty strong stance that I think we've already reached the inflection point. Um, the banks that are not moving forward with making payments, and that includes faster payments, that includes cross-border payments.
But the banks that are not making strides in modernizing their payments offerings for their clients, they're already losing, at least in some capacity. And I think there's gonna be more impacts of that felt for the banks. Not in the US with their bank is already offering faster payments, but they're not focused on informing the businesses how they incorporate this as part of their end-to-end process.
Even though they have the capability, I think they still have a lot to lose in this too.
Greg MacSweeney: So you're talking about spec, specifically regions where it is mandated, uh, correct. To cover, cover and mandated for faster, instant payments. But the bank's just like, yeah, we have it, but good luck finding it.
Gilles Ubaghs: This comes up a lot on the SMB side of things, right?
So like, you know, across the [00:23:00] survey work that we do, we've been doing it for many years, it's an annual survey, right? We get that voice of the customer of SMBs. So in particular, since the pandemic, no matter how we phrase the question, right, the importance of speed or real-time payments or instant payments, no matter how you phrase it, no matter how you position it.
Businesses everywhere are really desperate for speed. They want it to be faster and they want it to be smoother. Now, it often kinda gets pulled apart. Well, what does that mean? Because I know it often comes up with smaller businesses. Well, do they really care? Do they understand? And the thing is, fundamentally they don't, I don't think they actually do care about kind of how the rail itself works.
But what they do care about is their experience. And this is where I think many banks are still struggling. What does that experience look like? Right? Is it easy to initiate a transaction? Where does that data sit? Where is it within their workflows for how they currently make a payment? How quickly can they see the data?
How quickly can they see, you know, that the money has moved? And this is kind of those final pieces where the banks have built that infrastructure, essentially. They built that highway. [00:24:00] Kind of connecting all the payments so it goes very quickly. They've not bothered building the on-ramps and off-ramp, so it's actually accessible and usable to the vast majority of end users.
So we do see that momentum and growth, which is really gaining pace now, and I think that's gonna keep building, right. There's no signs of any slowdown there. I always think of that old probably apocryphal Hemingway quote, right? Of like, how did that happen? Gradually, then suddenly, right, which I think is what we're seeing now, and I think that will keep gaining momentum, but you know, if just banks can kind of really think about that final point, what does it look like?
What's the end user experience like? How do we integrate that? How do we help them make those payments day to day to help them run their business or their life more effectively as opposed to just, we've got a rail that's available, it's kind of tucked away on the website. We don't explain what it is.
Greg MacSweeney: Right. So you kind of mentioned the, um, they want smoother, they want faster, they want less hassle, what their transactions, are there certain areas or use cases that, um, you're seeing either with the small businesses or larger corporates that they're really focusing [00:25:00] in on, like they need this type of transaction done or.
Is there anything that that comes to mind?
Gilles Ubaghs: I mean, liquidity is always a, a challenge for small businesses, right? Where it's, you know, it's always that receivables piece, money coming in as it's gonna be more critical than money going out. Um, so I do think that's one aspect, but it's just that visibility. I think even of just understanding of where they sit goes a very long way of kind of where they see some of that movement.
Um, but one that in particular I think is now gonna face even more pressure is think about manufacturing. Right. When you think about kind of, you know, just in time logistics is still very much a thing, being able to move, you know, get the products unique quickly and effectively, which is only getting harder.
I mean, we didn't really touch on this earlier while talking about cross border. You know, the tariffs are complicated. It's confusing for many businesses, and this is going up to the bid market as well, but that need to perhaps scramble to find new suppliers to move money quickly, to do that kind of effectively, to be able to do those transactions without money being held in escrow somewhere for weeks on end.
It's only gonna grow. I think it imports within the near term, so, so [00:26:00] I do think some sectors like that, you know, manufacturing would probably be a pretty prime line where we do see that growing demand and need for faster payments.
Erika Bauman: Yeah, we see construction as well as another good example. The labor market is difficult, so obviously the gig economy, being able to attract the labor.
Same thing with subcontractors in construction. Construction is a, is a, it's a tough industry, so you wanna have the top. Subcontractors, but you're also waiting until you get draws from the job that you're working on. That just in time piece is really critical. And then we see the uptick in use cases around real estate, obviously with the increase in dollar limit.
Um, so I try and spell out for banks, uh, you know, as John mentioned, the manufacturing, the construction, but who doesn't benefit from better working capital and more transparency of their data. Right. Um, in the US in particular, because we see a mismatch a little bit in how much the small businesses are saying they need everything faster, and [00:27:00] some of the banks actually coming to market and talking to their small businesses.
I go as far to say it's almost a moral responsibility, right? So if we want to count on small businesses as sort of the fabric of one of the things that makes a country great in an economy, they drive.
Greg MacSweeney: They would say they drive the economy. Absolutely. Then
Erika Bauman: we need to be giving them the tools to help them be successful and when they're available and we're, we're not making that really accessible and clear to them.
Um, you know, I see a big miss with that.
Greg MacSweeney: Sure. One of the things you mentioned it, it's, you know, gradually then suddenly, uh, they always talk about the hockey stick. Like, what am we gonna see the hockey stick growth with instant payments, you know, what do you think it's gonna take to push it? Past where it is now.
We're seeing, we are seeing good growth, we're seeing, uh, percentage-wise growth every month. Uh, the dollar of value has shot up since the the higher transaction limit. What is it going to take to see the, you know, that hockey stick growth in, in, in the us?
Erika Bauman: I mean, I, I'll start with that. I think, I think worse.
We're seeing it. So I don't think necessarily we have to get there. I think we're seeing [00:28:00] the beginnings of it. Um, we have obviously the dynamic in the US with the launch of Fed Now as well, which has helped to further the conversation of this is something that we need to be able to do. I think that, um.
It's gonna, there's gonna be some other factors like, uh, you know, the executive order about ending checks, uh, that was supposed to go into effect in the US by the end of September. Obviously it's almost the end of September, but it starts the conversation of we need to figure this out. And it depends on where those payments move, um, exactly where we see some additional uptick.
But I think, you know. Maybe the hockey stick is really long, and so the, the, that, that up curve takes slightly longer. But I, I really do believe I'm, I'm pretty bullish in on, on what's happening in the market and the increase in volumes speaking with the banks, hearing from the businesses, looking at the growth in transactions that we are seeing.
That piece, the only thing that's gonna. [00:29:00] You know, make the design perfect and symmetrical and make the shoot up as if we had mandates, which is not going to happen. So I think we're getting as close as we can without that.
Gilles Ubaghs: Um, I'd add to that. I mean, I think you do need more banks on send, right? As opposed to receive only just you need that ubiquity.
Not even necessarily ubiquity. That's probably exaggerating it, but I think just u bigger base is gonna help grow, right? When more end users know that it's available to them and they can use it. But I think, just to reiterate my earlier point. It's really about that last mile. What does it look like? Is it integrated?
Do they know what it is? Do they know how it works? Do they know how much it's gonna cost them? I mean, we've got some fascinating data on payment tool penetration rates, and amongst SMBs in particular, you know, PayPal has a 20 point higher penetration rate than wires do. When it comes to payment rail usage, which is a pretty substantial gap.
Most small businesses don't necessarily need to send wires per se, but that's a huge enormous gap there, right? They're going to a third party FinTech because they can get that real time payment [00:30:00] experience using a pretty slick and minimum amount of input required in terms of credentials. They know it and it's there, like there's that sort of opportunity is there for the taking, if you can just kind of build that final stretch to get there.
Greg MacSweeney: Interesting. Obviously you guys do a lot of research. We talked about some of your corporate and business research. What about research involving instant payments? Are, is there anything you guys have coming out or is there are any key insights that you have from some current research that you do you'd like to share?
Erika Bauman: Yeah, absolutely. So, uh, mentioning the, uh, kind of that flagship survey of the mid and large corps that we just got in. I will be talking about instant payments to anyone who wants. To listen in the coming months with that fresh data. Um, but it does show that 87% of mid and large corps will be live on faster payments within the next 12 months.
Wow. So the businesses are, are very bullish on, we need this, we're gonna utilize it. If it's not with my current financial institution, it's gonna be either with a FinTech or I'm moving financial institutions. We've also seen the trend, uh, [00:31:00] 43% of businesses have said they have already switched their financial services provider to have access to faster payments.
So some. Pretty big numbers. And when I look at the growth as, as Gil's mentioned, we do these surveys year over year. And when I look at that growth just in the last 12 and 24 months, these numbers are just staggering in the businesses that are not saying, Hey, I'm interested, or I might, or I'm thinking about they're, they're all in.
They're like, I am, I have to be doing this. Uh, so those are some of the biggest takeaways that I'll be focused on and some of the reports and insights that I have coming up. That's
Gilles Ubaghs: fantastic from my side. I've just got one more quick one. This might sound slightly esoteric, but I do have a report coming out on the lessons for Canada from the US in terms of what's happening in terms of real-time payments.
Canada's about to launch the RTR, the real-time rail after many, many years of development. It's
Greg MacSweeney: been delayed a few times. It's been delayed a couple times. You know, it'll
Gilles Ubaghs: get there. It's, I believe in Canada, you know, elbows up. Um, we'll be okay, but you know, there's a lot of lessons to be learned there.
There are many realtime experiences in [00:32:00] Canada, which I think serve as a good forerunner of what's to come in the near future, but a lot of that, again, is gonna be based on probably business users in particular. So I think Canada's got a lot of lessons to learn from the us. I think the US could learn a couple things from Canada as well in terms of kinda, you know, how they've developed in advanced over the years.
So, yeah, should be an interesting piece.
Greg MacSweeney: That's fantastic. Well, I think we've covered a lot of topics today. We could probably spend another hour diving down into AI and instant payments and what's going on. But I do have a traditional question we ask here on payments nerds. Um, what makes you, are you a payment nerd and what makes you a payments nerd?
So I'll start with you. Oh
Gilles Ubaghs: man, that is a good question. So yes, I am a payments nerd. Um, what's fascinating about payments is, you know, it's one of those areas where it's so ubiquitous and just the sheer level of data and the rails that we all use, but it also ties into just that experience, right? That businesses have the efficiency of the way the world works, that you know.
Becomes that kind of, it's that oil that's driving the engine of so much that happens across everyday life, right? And it just seems like minor changes that people take [00:33:00] for granted, but just the fundamental complexity behind that and how that keeps evolving, which I think does have an impact on the ways that we interact.
I, it goes a little bit macro there, but yeah, I think it's quite fascinating from a philosophical point of view. It's, you know, exchange is just such a core human foundation and those mechanisms of exchange keep evolving. It's just such a, I don't wanna say alarming, but just astounding rate,
Greg MacSweeney: Erica.
Erika Bauman: So I definitely, uh, a payments nerd.
I actually, I have a t-shirt, uh, that says payments nerd that I wear proudly, so. I started off as a practitioner, uh, and I was in my, one of my first jobs was in accounts receivable, so I worked my way up on the corporate side, and then I was at a bank, uh, managing payments products, uh, for 10 years, and then I went and said, uh.
I'm gonna go make things better. I'm gonna work at a vendor. And so I went and worked at a vendor for several years, uh, and now I'm here. So if you track my career from the very beginning, I have used the payments, sold them, designed them, delivered them, implemented, and now I'm here strategizing and helping the market.
So, uh, [00:34:00] payments, uh, through and through.
Greg MacSweeney: Well, I guess you could say you're both definitely payment nerds, that's for sure. Thank you for joining me today.
Erika Bauman: Thanks for having us. Thanks for
Greg MacSweeney: having us. And that's it here from Cybos. So I'd like to thank the audience for tuning into this podcast. Uh, if you enjoy today's episode and you wanna hear more about payments, subscribe to the Payments Nerd podcast on your favorite podcasting app on Apple, Spotify, uh, Pandora.
Wherever you listen to podcasts, simply search payments nerd and you'll find it. Thank you and have a great day.
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