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Welcome to The Payment Expert weekly podcast, brought to you by SBC Media. Each week we analyse the news driving the global payments industry forward; the innovation, the infrastructure, and everything that has to happen to make it all possible.
So I think one of the key things that I'm going to try and do at this event is maybe go to some of these stablecoin pro guys who, you know, talk about the hype and stablecoins that they have been doing over the past 12 months and maybe say, well, what happens if this project takes off and you've got some real competition on your hands?
Hello and welcome back to the Payment Expert podcast, your source for the latest news, insight and analysis on the payment industry. I'm Lewis Thomson, news editor at Payment Expert and with me here today at Money2020 Europe is our senior journalist, Kieran O'Connor. Kieran, thanks for joining us today at the show. Yeah, it's good to be here. I mean, we're fine on the hill Lewis. I know we had some trouble getting here through the airport as always. We did a little bit.
But we're here, we're on the ground, the floor's buzzing. It's going to be a busy week ahead. Yeah, mean, how have you found it so far? Any kind of key takeaways from the opening panels, keynotes, sessions, things like that? I know there are sort of key pillars at this year's show. Yeah, so the first panel that I went to, had Arjun Sefi, who was the co-CEO of Kraken. One of the key things that he spoke about from the off was agentic AI and...
sort of how we see it sort of progressing and developing over the coming months. And also on the panel, they kept reminding us about the four key pillars. So I know you have agented commerce as one of them. You have the sort of regulation side, stable coins, and then you've also got fraud as well. I think it is gonna be...
a really busy week and I think we'll keep coming back to them four key pillars throughout the content that we've got planned. Definitely. mean, know Agentech AI is probably going to be one of the defining themes from the show this week and we've seen some real milestones in recent months around that. We've had sort of those live end-to-end Agentech executed payments happening. And I suppose there is a gap though opening up between
the rails being ready and everything that's in place being in place. But obviously we need the frameworks or the industry should need the frameworks around that to be consistent. The consent frameworks in particular, protocol standards and any other surrounding regulatory clarity as well. How do you think we are when it comes to kind of closing that gap around the regulations and things like that? What do you think this show can help to highlight when it comes to closing the gap around?
Yeah, so I mean we've not been here too long but I've already had one interview and that was with Janet Bastiman who is the chief data scientist at Napier AI and we sort of spoke at regulation in that and she was a part of an FCA Supercharged sandbox where they were developing a product to help with the issue of money laundering and we sort of spoke about how these sandboxes are helping and
You have the UK, you're chucking sandboxes at everything it seems. know Rachel Kennedy, the editor of Pemex, spoke about that on a previous podcast episode. Whereas in the US, they're sort of trying to lead more with what the market are saying and more market-led. And then you've got the frameworks in Europe. But it is quite interesting to see all these different markets come together and how they're all trying to win the race.
I guess here at these panels, we will see who is leading, who has got the strategy right, and hopefully we can speak to some people and get the answer for our readers and listeners. Yeah, sure. mean, one of the big things that I'm sort of picking up on is tokenization. I mean, we've seen recently Project Agora, the Bank of International Settlements, published its findings sort of just last week, really.
which sort of highlighted how atomic settlement across currencies use those tokenized central bank reserves and commercial bank deposits. And it proved that it is achievable with those kind of real testing now in place. When it comes to tokenization more broadly, when you look at stable coins as well as tokenized deposits, how are you seeing that landscape shaping up from anything you've
spoken about on the floor this week. So not come to the subject of stable coins yet, but I know for a fact that we will be speaking a lot about it. But it comes to sort of that project to go. I think that's definitely something that I sort of to speak about because stable coins are being seen as the cross border tool and what going to help improve cross border payments and speed it up right. Because they're using the blockchain, it's much faster.
than the traditional infrastructure that banks have been using all these years. However, with the project Agora, it really was interesting because it's bringing this new idea into the conversation which we don't really speak about a lot. So I think one of the key things I'm going to try and do at this event is maybe go to some of these stablecoin pro guys who...
you know, talk about the hype and stable coins that they have been doing over the past 12 months and maybe say, well, what happens if this project takes off and you've got some real competition on your hands? Yeah, I mean, I find it fascinating how obviously we've got when it comes to stable coins, it's still one of the key pillars at this show. Perhaps despite us talking about it quite extensively over the last year or so, it's still prevalent. A lot of use cases around it seems to be now on the cross border use case when it comes to
moving money and obviously how the regulations evolve around that. was just talking this morning with OpenPaid and obviously they've had a recent funding this week, they've gone public, but talking about how those regulations are shaping up in different environments. Obviously when you look at the US, you've got the Clarity Act and Genius, Clarity Act as part of Genius and getting that through.
Europe obviously has the Markets and Crypto Assets Act, MICA and sort of talking a bit about how the UK is shaping up around that as well. Obviously the UK, we're a little bit behind when it comes to stable coins. if the UK, Kieran and I both being from the UK, course, if we want to sort of catch up on that trend, perhaps a little bit of work needed as well, if we want to consider ourselves leaders in the space, but it's fascinating to see how
things have evolved and fascinating to see how when you've got tight regulations or regulations in the UK that aren't particularly catered to, say, well, coins at the minute. Yeah. And you have something in the US with the clarity wanting those wanting that yield debate to happen with, you know, obviously, Coinbase and Circle. But actually hearing and listening to some of the firms, seeing their revenues actually rise and go up without the yield in play, I think just goes to show that actually Babs.
even without that in there, perhaps maybe a Coinbase would like it to be, as we all know from those discussions over in the US. Actually, it's not too detrimental to growth for a lot of players in the market. Obviously, Coinbase's revenue share model with Circle, they would argue different, but when it comes to the broader landscape, I think we can see that.
That's been shifting there. Another one of the topics we've been sort of diving into is the great rebundling and consolidation across the industry. We've seen partnerships merged together today. I know Equals and Rails are partners. Yes. A couple of years ago, but now they've rebranded to Equals. There's been a lot of M &A activity that's been going on outside of that. What do you think the mood's been around that in terms of how everyone's?
coming together, consolidating their different facets that they bring to the payments industry. I mean, we're seeing it a lot, right? We're seeing sort of neo banks or fintechs trying to move into these different markets through acquiring traditional banks or firms that have been there for so long and they already have the licenses, which then allows you to buy that firm and enter the market sort of as if you've been there all this time.
It was a topic that came up again in the first panel. So they asked Arjun Sethi, who's co-CEO of Kraken again, about Kraken's parent company, Paywood, and their &A strategy. And he said they said exact same thing. He mentioned how you have the money transfer licenses, which are so attractive. You have the security licenses, which are so attractive. And then also you have them banking licenses, which...
seem to be the license that a lot of people are going after so far this year and last year. It is really interesting because he said that by acquiring these licenses it really benefits the company who is acquiring but it can also benefit other people in the ecosystem as well as your competitors which I thought was a quite an interesting take but he said he's not too worried about that.
because by getting the right permissions, you can reduce costs, you can expand access to Rails for various other fintechs, and you can really sort of reduce that friction. Yeah, yeah, I suppose by coming together in that way. I know on another topic, one of the key things you were looking at, or you were particularly keen, Kieran, for this week was,
around fraud and identity. seems to be growing and also it's a leading thread throughout a lot of the conversations that we're having at the show this week. Deepfakes, AI enabled attacks, and there seems to be a bit of an arms race as we all know between those perpetuating the fraud, those fraudsters using AI and those using it for defensive purposes. And it's who can get there quickest, who can use it fastest.
in deployment. What are your takeaways or what are you hoping to hear around the subject over the next few days? I'm hoping to find out what progress, what sort of magic we have next. mean, I remember going to a show, maybe it was two years ago or last year, and they were showing me at one of the stands how they could tell if the person, if you are using your account or if someone sort of hacked your account and using your account through all these different things.
The locations are giveaway. If you're 500 pounds when you usually only send 20, that's a giveaway. But it was sort of the other tells, which were such as if you type your password in and the way or the pace that you type them letters into the box. Yeah, sure. That they'd be able to tell if it's you or not, or at least flag it for a suspicious activity. So I'm really looking forward to seeing what the magic.
what kind of magic they have this year. But also just trying to find out if we have any answers on data sharing. mean, AI is built on data, right? And your model is only as good as the data that you put into it. And an issue is data. You can't share it with everyone. It's very private. It's all protected. And this has been a big issue for the industry. You've got the good guys who have all these rules and regulations.
that they have to maintain and sort of work in the guardrails of, where the bad actors have a massive network, they've got huge funding, they've been using AI since it come out. Frauders are service packages now, it lowers $50. Literally, yeah. It goes on and on. And they all speak to each other, they tell each other the best way to sort of defraud people. So they are fighting an uphill battle. So I'm sort of wondering if there's any room on the...
on the data sharing front or if there's a solution which doesn't require it and maybe there's a... Yeah, it's an interesting take. I mean, I was talking on one of our previous episodes to Samantha Kite. She was at the GSMA, which obviously is a mobile connectivity institute and focusing on how, you know, the mobile industry's role in payments in fraud and how those things are interconnected. I think...
There is slowly but surely a growing sense that industry outside of payments needs to come together in order to work collaboratively, not even just in mobile, but if you look at social media firms, and I know obviously the UK government are doing some work on that to sort of bring it together. But I think that obviously needs to be something that's shared more broadly around the world. I think a lot of the fragmentation when it comes to fraud today still exists in a cross-border sense.
when you have different rules locally in different places. obviously having any international standard will always be a rather impossible holy grail for many people to have. but you know, I think certain things are moving in the right direction, but also it's worth considering that obviously fraudsters are moving in that direction as well. And they're shifting, I think a lot from focusing on the institutions to moving to people. I wrote recently last week,
piece from Visa about how fraudsters are of shifting targets and scams are becoming more and more popular because it's deep fakes are better, things like that. by going for the person rather than the institution, which for the most part, those defenses are holding up really well. But obviously, people are probably the most vulnerable, those that don't know about deep fakes or things like that when you look at the consumer side.
So that's where fraud seems to be picking up quite big. But obviously it's about now, I think the industry meeting fraud where it's happening. So moving it from where it was by having those institutional defenses to moving it to where the people are and what are the checks in place on the customer side they can provide? What are the extra steps they can offer to someone so that they know a transaction is legitimate, it's coming from a legitimate source. It's not, you know,
a fake bank account claiming to be their account. It's something that's actually legitimate. think that's probably where the industry is to get a bit better because as the deep fakes are getting really good, so too must the security measures in place help people spot these things. So I think on the consumer side, that's good. think the business side of fraud is pretty robust at the minute, but obviously where fraud is moving, so too must...
the industry. Another thing around fraud, that's new and upcoming. And obviously, we're in Europe, we're at Money 2020 is EI-2.0, which is addressing what the identity stacks, what overhaul means for payment providers whose maybe their KYC infrastructure was built for maybe a different era. How significant do you think...
The shift is on that. Obviously, its core feature is having a sort of European digital identity wallet. So it's obviously enabling those everyone from around the EU and the block to securely store and share their digital identity documents in a safe place. Do think that's going to help when it comes to obviously people getting defrauded in Europe, having them all in that share place? Yeah, I mean, every credential sort of inside that wallet, so you've your driving license.
ID card, no matter what it is, it will be digitally available inside that wallet, which they hope will make it impossible for fraudsters to sort of forge or alter anyone's document. And obviously the onboarding and the digital ID part of the fraud process is huge. So yeah, it should have a huge impact on combatting fraud.
but I would love to sort of get the people's reactions from the floor and what they think and if they see that there's going to be any issues or sort of friction when it comes to this project. Yeah, absolutely. Well, great to have you, Kieran. One last question that I've been asking, I'm going to be asking as well, continuing throughout the week, people in our little video series is where the real bottlenecks in payments innovations are. So as quick as possible, because we are tight on time here, but...
So for you, where's the real bottleneck in payments innovation? Is it the technology, the regulation, or simply the will to deploy? How quick do you want the answer, Quick or short as you want. I'll pick one then. So I think it's probably regulation, but obviously this depends on which market you're in. As we mentioned, every market has got their own sort of strategy when it comes to regulation. But at the end of the day,
innovators want to innovate and sometimes the regulation can hold them back and I know the UK and the FCA are doing their best to sort of work with innovators and encourage innovation but I also know from conversations that methods like sandboxes can put some people off because the regulator is getting involved in the process so early on and maybe they're gonna react
to certain things that you're doing or certain things that you want to do and push back on it too early, when maybe everyone should be a bit more like the US and sort of let them innovate and then decide or react to the market. I know not everyone wants to be like the US, but you know. Yeah, well, that's an interesting take and we'll see how everyone else reacts to that from across the rest of the show. Unfortunately, that's all we have.
time for today. Thank you very much to Kieran for joining me. I know we're both busy on the floor today, but it was great to bring you all our weekly podcast. If you're not already subscribed to the Payment Expert podcast, make sure to subscribe wherever you do get your podcasts with plenty more insight and analysis coming up in the weeks, months ahead. And for the latest news as it happens, you can find that over at paymentexpert.com. We'll see you next time.
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