Episode 233 – How unexpected technology combinations can lead to practical payment solutions with Glendy Kam, Tassat

Yvette Bohanan

February 28, 2024

POF Podcast

As humans, our brains like to organize things – classify them, put them in silos. This thinking often works to our advantage – enabling deep analysis and understanding. Sometimes, though, it can work against us. We can be bound to a siloed thought process – a “this or that” false choice that causes us to miss the greater value inherent in doing both.

In searching for guests who will inspire us to eschew false choices in favor of unexpected combinations, we met Glendy Kam, Chief Product Officer at Tassat. In this episode, Yvette enjoyed geeking out on payments innovation with Glendy and digging into how Tassat is creating an infrastructure enabling $1.4Tr in payments for commercial bank customers.

For all the participants who have been through a Glenbrook workshop and have asked about real-world use cases for distributed ledgers and blockchain technologies in payments, or are trying to figure out how to combine new and existing technologies to solve a problem, this episode is for you. Enjoy!

 

 

Yvette Bohanan:

There’s an ice cream company that was founded in Portland, Oregon called Salt & Straw. In 2011, when they were just one tiny food cart, Portlanders would seek them out for a frozen treat with great expectations and sometimes a little trepidation. You see, Salt & Straw made a name for itself with delicious ice cream that often had unexpected combinations of ingredients, flavors people were familiar with on their own but had never thought about in combination, and certainly not in an ice cream. For example, smoked cherry, bourbon, and bone marrow. On their own? Sure. Together? Hm, interesting. In an ice cream? Unheard of.

This episode draws inspiration from Salt & Straw’s, “What if we combined?” innovation mindset as we consider the combination of new and existing technologies to innovate in some complex corners of the payments industry. First, we’re exploring distributed ledgers and how they can be used to enable immediate atomic payment transactions. Second, we’re looking at Smart Contracts and how they may improve the utility of a payment system. Third, we consider the business-to-business, or B2B, domain. At $58 trillion globally, the B2B domain is roughly as large as all of the other domains combined. This is a complex domain with numerous manual steps and legacy systems required to complete a single transaction.

And to make this conversation really interesting, we’re talking with Glendy Kam, Chief Product Officer at Tassat. Tassat’s offering is focused on helping small and medium-sized banks process over $1 trillion in US and global B2B payments in an operational environment laid in with legacy systems and third-party providers and subject to many regulations, seemingly not a space to easily introduce a new combination of technologies.

What can we learn from a company innovating at the intersection of banking and payments? How can their experience inform our thinking about new enabling technologies, new payment systems, and complex legacy challenges?

Glendy, this is your cue. Welcome to Payments On Fire.

Glendy Kam:

Hi, it’s nice to see you again.

Yvette Bohanan:

It’s wonderful to have you on the show. I have been really looking forward to this conversation with you and digging into some of this technology and how you’ve been deploying it. It’s really fascinating and I think it’s going to be super helpful to people who listen to our podcast because we get a lot of questions about this.

But I want to start by asking you, as we ask many, many of our guests, how did you land in payments and how did you make that journey to your current role at Tassat?

Glendy Kam:

Okay, that is very interesting. I was brought into the payment world… Actually, I started in JP Morgan. I was brought into the payment world by an ex-manager of mine, and at that time, they have a need for an architect in the payment area. So I started in technology, so that’s how I started my journey.

So a lot of learning, but then it was really great experience because I started with a lot of regulatory tech. We were doing some re-architecture, such as screening, AML process within the bank, and then also later on, I was able to do an ethics program which exposed me to the cross-border foreign currency on payments, and then involved in the global payment strategy, which also broadened my horizon on not just US dollar payments but also payments around the world, in APAC, in EMEA, and how they’re being processed. And those are really, really valuable experiences that I had in my past and in the last few years.

And then I piloted a program on open banking and API which started with a very small, just test-the-water program on API, and then grew into a really large open banking and API program, which also exposed me to a lot of collaboration and interaction with FinTech companies at that time because at that time, that was such a new thing in banking. So I was working with a lot of FinTech and companies at that time, and it was very interesting to see how agile, how fast they are, and innovative that they are, and that kind of pretty much set my eye on where I wanted to go next.

And so when I was ready to make the career change, or ready to make a change at that time, and I was looking for FinTech solutions.

Yvette Bohanan:

Listening to you describe that journey, I can see how that is a perfect setup to all of the things you’re trying to accomplish with this product offering at Tassat. That’s really cool.

So let’s get into this a little bit. What really struck me when I started looking at Tassat was this sort of… I’m going to coin a phrase from the fashion industry right now. You know how they say, “Quiet elegance” kind of fashion and all of that stuff? Quiet volume. In our workshops that we do at Glenbrook, our participants often say, “How are distributed ledgers and blockchain really being used right now? This all sounds so academic.” And a lot of the use cases that are coming up are non-obvious, it’s this sort of quiet volume thing going on under the hood.

So can you explain for everyone what Tassat is doing and how you define your offering in terms of functionality? And then we’ll get into the how, which is really what I wanted to dig into in the episode, but let’s start with the what. What is it?

Glendy Kam:

Yep, absolutely. So Tassat is a blockchain solution for financial institutions. So we started working with banks and we offer a blockchain platform for the banks to be able to tokenize US dollar deposits sitting inside the bank on a private permissioned blockchain. So the infrastructure is sitting within the bank. It doesn’t connect to the outside world because there’s a lot of confusion between blockchain as a technology and the application which may be crypto or other applications on that. So what we offer is really the blockchain as a technology to the banks so that they can use it to create digital representation of US dollar deposits sitting in the bank and use that for their clients to be able to transact among themselves. So this is what we offer.

And now, the value transfer is not the most interesting. We started with that because what we see is payment. Value transfer is essentially a payment. There’s a lot of applications that you can put on top of that, and that’s what we are using blockchain for. We are using the Smart Contract capability that we put on blockchain to put applications on top of that because before you make a payment, there are things that you need to do. We call them the payable services. After the payment is made, then there are also other things that you need, maybe obligations you need to fulfill. Those are receivable services that we are actually putting on the blockchain.

Also, we noticed a lot of our clients are also using the blockchain solution that we offer for liquidity management. So this also ties into all these really, really cool business applications of having the value transfer on the blockchain because it’s really the intelligence that you can put on top of blockchain that is most important.

Yvette Bohanan:

So this is great. So let’s just kind of unpack this a little bit to make sure people really get it. So you go to Bank A and they become a customer. Is it just clients within that bank working with each other who are enabled to do this, or if there’s a another bank, say Bank B, that is also a Tassat customer, now can you bridge these payments between two end parties at different banks together? Does everyone have to have a bank that’s enabled on Tassat? How does that work?

Glendy Kam:

Great question. Your question basically just explained the journey that we have on putting blockchain on the banking platform.

So we started with an intrabank solution. So the blockchain, like I mentioned earlier, is a private permissioned blockchain. So only customers within the same bank, they would be able to transact with each other on the blockchain, or only customers that have multiple accounts on the blockchain, they would use it for liquidity management within their firm. And then last year, we rolled out our interbank payment solution because we’ve got the intrabank working, so now there are clients who want to work with or who want to transact with other parties, their counterparties at different bank. Two banks must both be on the Tassat paid network and then in order for them to transact.

Yvette Bohanan:

Okay, so that’s helpful. Now we’re going to start digging into this how, all these things you’re mentioning here to describe your solution.

Let’s start with distributed ledgers. There are a lot of ledgers in payment systems, as you well know from your background and experience. One bank can have, I don’t know, thousands of ledgers running around in these systems if they’re really big. They’re not all using distributed ledger technology or “blockchain technology distributed ledger.” There’s a mix here of sort of the past and the present, and some of the past is really, really old legacy stuff. Like, really old. Like, when I started in computing and my instructor knew Grace Hopper, that’s how old. It’s going back a little way, right?

So first of all, you’re talking about a permissioned blockchain and that means something very specific and it probably has a lot to do with the fact that you’re working with regulated entities, with banks, as your customer. So how does that work? Who’s the permissioned entity here? Is it Tassat? Is it the bank? Do you have a role? Just the bank?

Glendy Kam:

Absolutely the bank. So we offer all the tools and all the capabilities for the bank to authorize or entitle their customer to be on the blockchain. Let’s say a bank has 10,000 customers, 10,000 business customers. First of all, the platform is only for B2B payments. So let’s say a bank has 10,000 customers. They also decided that only maybe 500 of them should be on the network. That decision’s totally up to the bank because there are a lot of criteria that the bank would need to look at before they decided to offer certain products to customers. So that decision definitely resides on the bank.

Once they make the decision to put a customer on the bank, their operational personnel would be able to use the tools, the administrative platform that we offer, along with the client-facing part of TassatPay to be able to entitle these client users to onboard onto the blockchain to use it.

So we provide the tool, the decision making is completely with the bank, and also the tool, we offer the tool, but actually the operational process to bring these customers onto the blockchain platform is also with the bank.

Yvette Bohanan:

So the bank is making decisions for its node of Tassat and it’s controlling the operations team. How long does it take for an operations team to learn this new technology? I’m just curious because-

Glendy Kam:

Basically, we pretty much… Because it’s a very extremely user-friendly platform. For example, user interface, even with the make-a-checkout process, it’s not a very complicated usage. Of course we have material to help the bank to train the payment operation team to do the work to onboard clients. From my experience, we pretty much have to just give one demo, how this needs to be done, and then they would be able to start using it.

Yvette Bohanan:

Wow. The bank’s operation team is the team that’s granting things, deciding things, adding customers into this environment and so forth. So the bank has a bunch of ledgers under legacy systems. The promise of distributed ledger technology, one of the promises of distributed ledger technology is the fact that there’s these atomic transactions. That has implications for eliminating, within the distributed ledger technology environment, eliminating asynchronous timing risks, simplifying reconciliations.

What you’re doing here is actually bridging two worlds, the old ledgers that exist, and this new ledger technology. How does that work?

Glendy Kam:

Yes, that is, that’s a great question because this is the reason why this is the perfect time to do it. As you mentioned, a lot of the ledgering systems are really old. I believe a lot of banks, especially big banks, they may still have mainframe platform in the backend.

Yvette Bohanan:

Well, and hang on, just so people really understand because I was at a bank for a while, you were at a bank for a while, banks, inside of the banks, have a lot of ledgers. We’re not even going outside of the banks to other places where ledgers exist that have to be reconciled. Within the bank, these systems don’t always talk to each other. So you can have asynchronous timing issues for reconciliation between one system at the bank and another system at the bank. Something super simple like a checking account system, a savings account system, and an online banking system that’s displaying the current balance from those other two systems can go off. They can have asynchronous timing, recon issues, just within those environments, right?

Glendy Kam:

Yes, absolutely.

Yvette Bohanan:

So let’s just start there. Now you’re introducing something that’s like, “I’m always accurate. I’m atomic. No recon needed.” How do you marry that up? Let’s just be real basic.

Glendy Kam:

Okay, so there are two prompts to that. Number one is a lot of those systems that require synchronization sit outside or on top of the core banking platform. So when we bring it into the bank, we directly integrate into the bank’s core banking platform. When we do that, the question is how do we synchronize with the rest of the system? So we actually work with the bank to identify what needs to be done and we have all the tools for the banks to do reconciliation and also to make sure that all the information is accurate. So that is one.

The second part is when we are offering this technology to the bank, we provide an end-to-end solution. So we actually are offering not just an integration into the core, but actually from client experience all the way to all the reporting, all the reconciliation process that the bank needs to integrate into their existing process that needs to be done.

This is actually a really good time to bring a blockchain platform into a bank because now we can see that it actually, there are new things… When the bank wants to do new things, building it on top of a future technology is better than continuing to build on top of your legacy technology because eventually you have to move on. We’ve already seen a lot of banks moving to realtime DDA and systems like that, and it is challenging for banks to move off legacy system, but this is really the good time for banks to start thinking about blockchain technology, integrating into the core, offering realtime, instantaneous transaction, and also in adding on all those applications in a platform. That is going to be the future of financial services.

Yvette Bohanan:

Yeah. And a lot of times, the banks aren’t actually controlling their own core system. They’re going into a processor and saying, “We need a core system,” especially if they’re a small or medium-sized bank.

Glendy Kam:

Absolutely.

Yvette Bohanan:

They’re not running their own shop, if you will.

Glendy Kam:

Absolutely. Only a few banks, they actually have a homegrown system that actually controls their core or maybe they buy and then they customize per needs. So Tassat works with most of the major players in the core banking platform. So we integrate, so we have experience integrating with the top three vendors out there, so we are very familiar with how it works, so it’s really important that we have this kind of strategic relationship with the core banking platforms.

Yvette Bohanan:

So you had to go to those big processors who have lots of stuff on their roadmaps, on their tech roadmaps, and you had to convince them as a FinTech that you had a product that they needed to work with you on in order for both of you to serve a common customer.

Glendy Kam:

Most of the time we also work through our client, the bank’s relationship also. So it usually starts like that. Certain core providers, we have been working with them over and over again, so we are also already very familiar with how the product actually works.

Yvette Bohanan:

And then once you’re in the core system through the processor, any client of theirs can become a client of yours fairly quickly, I would imagine?

Glendy Kam:

Yes.

Yvette Bohanan:

I mean, I don’t want to put words in your mouth here.

Glendy Kam:

No, absolutely. That’s the reason why most of the clients that we have talked to, they use the three, four major players in the core banking platform. And so now we have, as long as it is one of those, we have brought down our implementation time down to 30 to 60 days. Most of that 30 to 60 days is not really technical implementation. It’s a lot of paperwork within the bank and then getting the people and things like that. The technical implementation time is really short.

Yvette Bohanan:

And so it’s kind of an interesting environment to try to navigate through. In dealing with all these stakeholders, were there any challenges you faced in getting this figured out, how to work with the processor, how to get the bank onboarded, how to have the right kind of customer journey for the bank and their commercial customers, their business customers? Was there anything unexpected as you were designing this and bringing it to life that you learned that not something you thought would be an issue, and all of a sudden, it cropped up and you’re like, “Oh”? Because marrying up a lot of people, you’re marrying up a lot of processes, you’re marrying up a lot of tech. It doesn’t just all go smooth every day of the week.

Glendy Kam:

There are challenges every step of the way. If you talk to any FinTech company, they will probably share the same because we are just discovering and then we are learning new things every day. There are challenges every step of the way from the moment that you start talking to a bank that they have a vision, they want to have a blockchain strategy.

And it’s very interesting. Two years ago when I started this job, when we’d go talk to the banks, they would ask us. I would say, “What should we do with blockchain?” Now they would be like, “Oh, what is blockchain? What can we do?” Now they know, they know what it is, and they know they need a strategy. They’re looking to us as a partner to bring some of the vision onto the platform.

In that process, a lot of the challenges is within a bank, in order to get anything approved, it has to go through a lot of people, and sometimes there’s some education that’s still needed in the industry right now because people still confuse blockchain with crypto. So a lot of the times, we need to go in and explain to them that blockchain as a technology has nothing to do with crypto. Even crypto builds on blockchain. It’s just an application on blockchain. Blockchain is a technology that has many, many other applications.

So in that process, in that even before a bank decided to bring Tassat into their organization, a lot of education, a lot of making sure that we clear the confusion, crypto and blockchain. There’s some challenges. Also, use cases to be able to work with banks. We have some bank partners that are really, really great that they actually would bring their clients’ use case to us and tell us that, “How can we solve this using blockchain, using Smart Contracts?” So those are really great conversations. Sometimes because we don’t have that direct relationship with the bank’s client, so sometimes that process can be a little bit challenging just because you don’t have that direct relationship.

Then once it gets to the integration, like I mentioned earlier, we are already very familiar with those large players in the core banking platform market right now. So integrating into them, we know how the product works, but a lot of the times, banks also customize the product. Banks buy a platform, they start customizing it based on their needs. Those are usually the surprises that we run into. Like this is how the product’s supposed to work, we start integrating, we realize that, oh, so you add on another component to do something else.

So those are things that we just… It’s a discovery journey with the bank, not unsolvable, but as you asked, what are some of the processes that we run into, those other things that we would encounter.

Yvette Bohanan:

Coming also from an operations’ perspective on this and this notion of one ledger that’s atomic and many ledgers that are not, sort of a one-to-many issue there, from an operational perspective, does it really impact how much manual work or process they have to do to reconcile? How does it change the bank’s actual function of reconciliation and thinking about it? Because that’s pretty important. They’re regulated. They have to actually be really accurate about this stuff.

Glendy Kam:

Absolutely, absolutely. And that is something that is not so much on the technical side, but like you said, really understanding the bank’s operational process, and every bank is different from what I have seen.

So we really have to understand when we are integrating into the platform, when we are bringing this onto as an additional payment rail for the bank, how they want it to work with their GL accounting, and also most important, reporting. Reporting not only internal and reconciliation, also client reporting, how they want to work on that. And because we have worked with several banks, so we have a lot of suggestions, but then we also need to understand. So it’s really a two-way conversation that we need to understand how the bank is doing it right now and what we can do to work into that process. We don’t have a, “Oh, this is our solution. Just plug it in and it works.” It is a lot of communication, understanding what they do so that we can help to make sure that all the processes are aligned and correct.

In those conversations, that’s the reason why, at the beginning, I said that every step you have surprises and challenges because every step you’d work with different people. Very early on, you work with very senior executives and maybe strategy people, and then when you start implementing, you work with the technologists, and then for your last question, we work with a lot of the operational personnel because those are the people who need to support the system. Those are the people who receive calls from their clients if there are any issues, and those are the people who need to close their books at the end of the day. If they have not, then that is a big problem. That is their job. And so every step, we work with very different people, and we have dedicated team for every step of the way and they-

Yvette Bohanan:

Yeah, you have to.

Glendy Kam:

Yes, we do, and very knowledgeable. In addition to that, we also have dedicated team on the security and compliance so that we know what the bank needs and then we need to make sure that we provide everything for the banks to provide to their regulators, to adhere to the internal compliance requirement, and also to make sure that we are giving them all the security measures that they need to satisfy their security requirement from the bank side as well as from the industry perspective.

Yvette Bohanan:

Yeah, that’s a really good point. It’s a very good point.

So when you’re talking with the strategists and the executives out there at the beginning of the engagement with a new client, they probably not only have a vision these days usually for how they want to use distributed ledger technology or blockchain technology, they also are talking about fast or instant payment rails, right? We’ve had RTP, we’ve had FedNow. And a lot of times, those strategies feel really orthogonal, the same way that it feels like distributed ledgers and legacy ledger systems are orthogonal. You have to do one or the other. It’s sort of like an either-or kind of thing all the time, right? But it doesn’t work that way. It’s a lot of ands, not ors.

Is it possible for you to add in instant rail technology on top of the distributed ledger technology on top of the legacy systems? Are you seeing banks and processors trying to marry all this up and what’s going on under the hood with that?

Glendy Kam:

I get asked that question all the time. We have already… If you are only offering a instant payment capability, we have already got TCH RTP, we are thinking about FedNow, and why would I need you? How would you bring benefit to my organization, and what exactly? How do I fit you into mine? Because now every bank starts, especially with FedNow rolled out this earlier this year, every bank is thinking about, “What is our realtime payment strategy?” from a bank’s perspective.

Many banks have not adopted RTP yet. So now, with FedNow coming, there are two options already. Now adding onto TassatPay, three options. What am I going to do? Three logical questions. They should be thinking about that, and when they talk to us, they talk to us about that all the time.

I don’t see TassatPay as a competitor or even contradicting to FedNow or RTP. If you look at FedNow and RTP, they’re really payment rails. They’re payment rails built on legacy platform and legacy payment rail.

What we are offering, what TassatPay is offering is more than just instantaneous payment. Like I mentioned earlier, blockchain comes with application, comes with the logic and the power to bring application on top of the payment. And also, TassatPay is not just a payment rail. We are an end-to-end solution, like I shared earlier. Not only do we have all the client-facing channel application that is already there, when the client gets TassatPay, they already get our client-facing portal, as well as a set of API that they can immediately integrate into their platform or offer it to their clients. So if you have a more tech-savvy client, they can use our API to interact with the blockchain. In addition to that, we have the whole administration tools for the bank to run the platform.

So it is not just we offer you a way to make the value transfer. It’s more than that. So that is something that is very important for the bank to understand. Also, the important thing about the payments on blockchain, it’s not just about payment; it’s really about the application that you can put on blockchain, and then open up your door, open up the bank’s door to be part of the ecosystem. If you believe blockchain is going to be the future of financial services, this opens the door for you to connect to other blockchain capability or applications in the future.

Yvette Bohanan:

So they can coexist somehow. This is really interesting because a lot of times when we talk with people about any fast payment systems, here in the US, anywhere in the world, pick whichever one, pick Pix, the poster child of fast payment systems in Brazil now or UPI in India, we say there’s certain capabilities that every central bank or whoever, the clearinghouse, whoever’s creating the system, decides is inherent to the system and then there’s a whole bunch of stuff that people are expected to add on top and we call those overlays. When we talk about fast payments, they say it’s an overlay.

And the way you’re describing what you’re doing is in the technology and how you’re creating a solution for B2B for the bank, it’s similar to what we would say would be like an overlay service in fast payments, and it’s adding value, adding capability. It’s solving the actual problem, not just solving settlement.

Glendy Kam:

Absolutely. And that is also the reason why that’s the way that we want the banks that we are working with to see the value of Tassat. And also, that’s the reason why some of our customers, we also offer a Fedwire integration into the bank system. So in addition to everything that we are doing using blockchain for the intrabank transactions, when the payment needs to go outside of the bank, they can also use our integration into the Fedwire system. Well, we don’t have a direct Fed line, of course, because-

Yvette Bohanan:

You’re not a big bank.

Glendy Kam:

Yeah, we’re not a bank. So then we integrate into the bank’s Fedwire system to be able to connect them to an alternative value transfer method.

Now, we already have that, and also we are working with some of our partner banks that they are exploring. FedNow is still new. I think many banks are still looking at… They’re already, some of the FinTech partners and core banking platform, they’ve already got the FedNow integration. So when the bank is ready, when the bank become a FedNow bank, we can be able to do the thing. That’s the reason why your explanation, how that is perfect. That is the overlay on top of existing payment rail.

In addition to that, we also offer a instantaneous value transfer payment capability on the platform.

Yvette Bohanan:

Within the chain, within the distributed ledger?

Glendy Kam:

Within the ecosystem, within the Tassat ecosystem. Yes.

Yvette Bohanan:

So let’s turn for a second. We’ve been talking around with this Smart Contracts. Can you help the audience here understand exactly what a Smart Contract is or what it isn’t, however you want to describe it?

Glendy Kam:

Yep. I would say Smart Contract is if you look at… Blockchain is a ledger, so basically you record all the value transfer. It has an immutable capability on the blockchain and all the transparency and immutability, all the parties on the blockchain, they will be able to trust the information, see the information, and know that the information is immutable. Smart Contract is really the programming or the logic that you can put on top of these value transfers.

If you want to think about it as now my money movement has a mind of its own, knowing that, for example… A good example would be, let’s say, RTP or FedNow. FedNow is going to offer request for payment. RTP already has requests for payment and also some of the legacy payment rails, they also have that, where request for payment is just a one-way, I request money from you, then you send or not send to me.

But then if I can put logic on top of request for payment, that solves a lot of the existing treasury management, cash management, even business application, so I can even put a deadline or delinquent charge. If it’s certain days late, I’m going to have a delinquent charge of certain amounts, or if you are willing to make the payment early, I’m going to give you a discount. These are logics that right now are being handled manually in a lot of the treasury or business application or even within TMS and ERP systems, like treasury management systems and ERP systems right now.

If you put it on blockchain, not only the participant would be able to decide on their own logic, put in parameters into the Smart Contracts so that they can decide on the criteria of the payment, on the consequences of the payment, they would be able to let it run on the blockchain. Everybody has that visibility or everybody who are involved in that transaction would be able to have the visibility on the blockchain. So this is a really, really powerful usage of blockchain on payment. That’s the reason why I said we started with payments, but we don’t think that’s the end of the game. We think that there’s so much more blockchain can add onto payments.

Yvette Bohanan:

Absolutely. It’s a general purpose technology that you happen to be applying to banking and payments and business-to-business and all that, but it could be used for a lot of things.

When you think about the information, the data that drives all of that logic, a lot of people are very enamored right now in the fast payment space with ISO 20022, and even not for fast payment. People are just enamored with ISO 20022 and the Data Dictionary because it can enable information about the payment to travel with the payment. But I think what you’re calling out here as a key difference is a Smart Contract is programmable, and ISO 20022 is data-rich, but it’s not programmable.

Here’s my question then. Can you use the data that you’re using for ISO 20022 in a more static but moving along with the payment sort of venue to feed the logic of the Smart Contract? Do you envision sort of a common data repository that can support both technologies?

Glendy Kam:

Absolutely. Actually, I think ISO 20022 opens up a door for a lot of this because of the structure nature of ISO 20022, and I think that’s also the push in the industry to move to ISO 20022. Like I mentioned earlier, I was involved in global payment strategy many, many years ago. At that time, ISO 20022 was not well-adopted at that time, and we have converted from system to system, from channel to channel just to make sure that we get the data, the payment data into a form that the system can understand.

Now, when the industry starts moving to a standardized format of payment information, that actually also helped blockchain initiative on payment because now you know when you receive something, when something is called with certain identifier, you know exactly what that data element means. That actually helped with the programming nature because programming the logic if-then-else is cool, but you need to know what condition. You’re operating on these conditions. You need to know where I get the data element to make that decision. A standard is good because then now you know exactly when I see a payment instruction adhere to the ISO 20022 data format, I know exactly where to pick out my data to make the determination in the logic.

Yvette Bohanan:

So what seems like sort of this unlikely combination of marrying up ISO 20022, distributed ledger, Smart Contract is actually kind of a genius move if you can think that big, and that take away how people are applying the base technologies, these general purpose technologies, and really get into what problem am I trying to solve and what’s the best thing to use to solve it, and then they do have the capability to come together.

Glendy Kam:

Yes, absolutely. Because right now, as the whole world is moving to ISO 20022, one of the things that is going to come into the payment world… ISO doesn’t carry any logic. It just tells you where you can find the information in a payment instruction in the structure. Once it gets to blockchain, of course there are some work that we need to do between bridging the gap between the existing ISO world and the blockchain world on how these data elements would travel because ISO, I know payment people, when we talk about ISO, immediately it’s XML, but because I also came from the open banking world, I know that in open banking, ISO 20022 carry a different meaning, slightly different meaning because now we are moving it onto JSON.

So I see a similar move. It may actually go to blockchain as well. However, how the data element is being identified, that has to be consistent across all platforms.

Yvette Bohanan:

That’s the key.

Glendy Kam:

Yes.

Yvette Bohanan:

The identification is the key, not the technology you’re using, XML, JSON, or whatever.

Glendy Kam:

Exactly, exactly.

Yvette Bohanan:

It’s so funny because the more things change, the more they remain the same. But anyway, so with the-

Glendy Kam:

– it’s so important, yep.

Yvette Bohanan:

How people get confused, yeah, and people get confused because they get so quickly married to one way of doing it when they haven’t sort of taken that step back to see how general purpose the nature of this stuff really is intended to be, which is pretty powerful if you can do it.

So before we wrap up, Glendy, my last question for you is if you’re going to paint a picture of what payment systems look like in 10 years, what systems would disappear and what would be in their place? Will we get rid of checks? Those kind of questions. How big is this going to go? What’s the world going to look like for the next generation’s next generation or whatever? However big you want to go.

Glendy Kam:

I do believe checks are going away, but there are some nature about checks that is hard to remove. I think a lot of people are working on that right now, but I do believe-

Yvette Bohanan:

Especially in the B2B space because they’re the hangers-on of the checks, right? Yeah.

Glendy Kam:

Exactly. We need to solve the benefit of checks and I do see that blockchain actually is the perfect solution for checks. So I think checks are going away, number one.

I think instantaneous payment, it doesn’t matter RTP or FedNow, instantaneous payment is the future of payment, not just because of speed. Everybody thinks that, “Oh, why does it matter that I changed from two days or 24 hours to two minutes or two seconds?” It is because it’s important to shorten the time from the moment you disperse the payment to when you know that the payment has been received or been credited. That is the most critical thing, especially in the B2B world. It’s not about I shorten two days to two minutes or two seconds. It’s about I send a payment, now I don’t have to hunt down where my payment is, I don’t have to go call my counterparty to figure, “Are you going to deliver the shipment because I sent you the payment two days ago? Where is my payment?”

That is the reason why instantaneous payment is so important in the industry. I actually believe that is shortening the time from sent to know.

Yvette Bohanan:

I think those are the two foundation elements of where we’re headed here.

Glendy Kam:

Yeah.

Yvette Bohanan:

Thank you so much for this conversation, Glendy. It has been an absolute delight. I wish you all the best with all of the things you’re trying to accomplish at Tassat. And the team there, I wish them all the best. This is a big space that you’re delving into and a lot of hard work is going into it and you make it sound easy, but I’m sure every day there’s new stuff to do, so keep it up.

Glendy Kam:

Thank you so much for having me. It’s always fun to talk about payment. I know some people think payment is boring, but I think payment is really cool. It’s always fun to talk about it.

Yvette Bohanan:

I think it’s a lot of fun too, and especially now when you have all these new tools in the toolbox to deal with and explore and figure out and use to problem solve things that people haven’t been able to solve yet. So this is cool. It’s a cool time to be in this space.

Glendy Kam:

Absolutely. I agree.

Yvette Bohanan:

All right, thank you so much. And to all of you listening, thanks for joining us once again, and until next time, keep up the good work. Bye for now.

Glendy Kam:

Thank you. Bye.

Yvette Bohanan:

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Payments On Fire is a production of Glenbrook Partners. Glenbrook is a leading global consulting and education firm to the payments industry. Learn more and connect with us by visiting our website at glenbrook.com.

All opinions expressed on our podcast are those of our hosts and guests. While companies featured or mentioned on our show may be clients of Glenbrook, Glenbrook receives no compensation for podcasts. No mention of any company or specific offering should be construed as an endorsement of that company’s products or services.

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