Acquired by Mastercard in 2017, the UK’s Vocalink manages the UK’s Bacs payment system, ATM LINK switching platform, and the Faster Payments System, FPS. To make this more tangible, consider these statistics: Vocalink processes over 90% of UK salaries, more than 70% of household bills, 98% of state benefits, and powers 60,000 ATMs.

Vocalink’s influence goes beyond the UK, with technology that powers fast payments infrastructure in countries such as the US, Thailand, Sweden, the Philippines, Peru, and Saudi Arabia – just to name a few.

Vocalink’s origin story, which began in 1998, spurred payments modernization efforts worldwide. For this episode, we sat down with Gregor Dobbie, CEO of TFPA and former CEO of Vocalink, to discuss what we can learn from Vocalink’s journey and what the future holds for core payment systems.

 

Yvette Bohanan:

Welcome to Payments On Fire, a podcast from Glenbrook Partners about the payments industry, how it works, and trends in its evolution.

Hello, I’m Yvette Bohanan, a partner at Glenbrook, and your host for Payments On Fire. In this episode, we have the great pleasure of sitting down with Gregor Dobbie, who was at the helm of the fast payments infrastructure powerhouse Vocalink, between 2015 and 2022. A time of transformation for the company as well as fast payments worldwide.

Before we chat with Gregor, there’s a bit of history behind Vocalink that you should know. Basically, the history of what we would consider modern fast payment systems. To understand this history requires looking back to 1998 when the UK Treasury commissioned a review on competition in the banking sector. In the UK, two systems, BACS and CHAPS, process low value retail and high value wholesale payments. While these systems power roughly two thirds of the payment transactions in the UK today, there was little if any competition or innovation for improving them for decades.

In 2000, two years after commissioning the review, the competition in UK banking, a report to the Chancellor of the Exchequer, known to most people as the Cruickshank Report, was released. The report, pointing to the long-standing policy framework that enabled banking services, noted that the bank’s control of the money transmission systems, cash, checks, cards, and electronic payments, made their innovation and efficiency crucial to the UK economy, particularly in the then emerging world of e-commerce. The report went on to explain that banks were treated differently from the rest of the economy in some key respects that contributed to this lack of competition. Regulatory barriers to entry were high. Producers were represented on the board of the industry’s regulator. Banks were allowed to write their own rules. Their exposure to competition law was diluted.

The report set out several recommendations that included setting up a fully independent payments committee called the Paycom, to create and oversee a new licensing regime focused on transparency, good governance, non-discriminatory access, efficient wholesale pricing, fair trade, and accessibility, which included access for low-income consumers and businesses. The day after the report was released, then-Chancellor Gordon Brown announced support for the report’s recommendations.

In 2008, the payment system’s oversight report confirmed that the UK’s new fast payment system called the Faster Payment System, or FPS, was a near real-time operated by Vocalink system that transfers value between customer’s accounts 24 hours a day, seven days a week, with settlement between member banks taking place across bank accounts three times a day. So there you have it, the call to action and the response that ushered in the era of modernization initiatives worldwide that have fast payment systems at their core.

VocaLink itself was created in 2007 through the merger of a company called Voca, and the UK’s LINK ATM Network. Acquired by Mastercard in 2017, today Vocalink manages the UK’s BACS payment network, ATM LINK switching platform, and FPS. To put this in perspective, Vocalink is responsible for processing over 90% of UK salaries, more than 70% of household bills, 98% of state benefits, and powers 60,000 ATMs. But Vocalink’s influence goes beyond the UK, with technology that powers fast payments infrastructure in countries such as the United States, Thailand, Sweden, the Philippines, Peru, and Saudi Arabia. What can we learn from Vocalink’s pioneering role in fast payments and from Gregor’s successful career in the payments industry? Joining me for this conversation is Russ Jones, our partner at Glenbrook who leads our education practice. Russ, hello.

Russ Jones:

Hello Yvette, and always great to be with you on Payments On Fire, I always look forward to a good conversation.

Yvette Bohanan:

We’re going to touch on a lot of topics that we often talk about with participants in workshops. Maybe shed a little bit of light on Vocalink and their role in payments here, and get it straight from someone who was there at some very interesting moments.

Gregor, we are delighted to have you on this episode. You’re currently the CEO of TFPA, an advisory practice based out of the UK. But we’re here to talk about your legacy, your journey in payments that led you to being at the helm of Vocalink. So Gregor, welcome to Payments On Fire.

Gregor Dobbie:

Thank you. Thank you for having me.

Yvette Bohanan:

So we always like to begin by asking our guests about their payments journey, and I’m sure you’ve had a very interesting one. How did you get into payments and eventually find your way to being CEO of Vocalink in 2015?

Gregor Dobbie:

Yeah, sure. So the first thing I would say is that when I was growing up, I had no intention of being in payments. I had my heart set on being a golf professional, actually. I grew up in Scotland, which is obviously the home of golf. I thought I was pretty good, and then I realized I wasn’t anywhere near good enough. So I fell into payments, as opposed to aspiring to be in payments.

Russ Jones:

You fell into the sand trap of payments?

Gregor Dobbie:

Yeah, good one. Yeah, we call them bunkers in the UK.

Russ Jones:

Okay.

Yvette Bohanan:

The bunker, you’re in the payments bunker.

Gregor Dobbie:

Unfortunately, someone recently described me as payments veteran, which I find really, really disturbing. But I did point out I’m still under 50, albeit by days, literally days, rather than months or years, but I’m still under 50. So I don’t think I qualify to be a veteran, but I have been in payments for probably 28 years.

Yvette Bohanan:

So how was that transition between aspirations for golf to payments? What exactly did you fall into when you fell into that bunker?

Gregor Dobbie:

Yeah, so where I grew up, it was a place called Dundee in the east coast of Scotland. One of the major employers in Dundee was a company called NCR, who’s obviously a payment, albeit, specialist in cash, but they were a payment giant. Funnily enough, the captain of the golf club was also a very senior director of NCR in Dundee. When I was at university, I begged him to give me a work placement, and that’s how I landed in payments. I left university and joined NCR.

Yvette Bohanan:

Wow.

Gregor Dobbie:

That’s how it began. So there was absolutely no… I think after golf, I quite fancied being a journalist, so I failed at my two primary career aspirations. So I joined NCR post university. I’ve always been a very commercial person. Even when I was growing up, I was always trying to sell things. I was the guy who knocked on the door try to sell. In the UK we have things called Betterware products, which are like household items. I was a guy who used to go out in the rain specifically with no coat on, tried to get sympathy orders, et cetera. So I was always a commercially minded person, and I always tried selling empathy from a young age.

So I always knew I was going to be in and around commercial things. I was never a deep technical person, a woman particularly interested in technology. I was more interested in what it could do, what the output was from it as opposed to how it worked. When I got my first car, I didn’t really care how the engine worked. I was more interested in how fast it would go and how cool or otherwise it would look.

So in NCR, I started off in the product management area, but I quite quickly knew I was aiming to get in the sales area. I have to say it was a fantastic training in the basis of enterprise selling. So I used to look after some of the banks in the UK, managed the relationship of NCR, obviously try and grow the business, et cetera, and it was a very good place to learn. Actually, I moved from Dundee to London, which when you grow up in a relatively small village to when you land in London, I was about 27 years old, it was a bit like I was discovering Mecca. It was really quite interesting. That was my first foray into payments, but it was very much around cash and the management of cash, making sure cash could be distributed, making sure the technology, selling tools to make sure it worked, et cetera.

Then moved from there into another cash supply company, if you like, which was a company called De La Rue, which is another fairly famous British institution. De La Rue is famous for printing banknotes, but also providing technology that managed banknotes in terms of if you go into a bank branch, instead of having traditional screens between you and the teller, you’d actually remove the screens and have a machine they could put the cash in, reconcile it, check it wasn’t fraudulent, et cetera. So I was responsible for growing that business in the UK, again, selling into the UK banks.

Yvette Bohanan:

So at that point, you were very comfortable walking into the banks and talking to them about problems, solutions, technology.

Gregor Dobbie:

Yeah, I always felt I was quite good at projecting myself to the other side of the table. So it was quite good, quite interesting. One of the first sales meetings I went on came out and my boss said to me, “Did you realize that you keep interrupting people?” I said, “Yeah, but I knew what they were going to ask me.” He said, “Yeah, but it’s actually deeply irritating to finish people’s sentences for them.” He said, “You were given two years and one month, and there is a reason for that ratio, so you need to listen more.” Ever since then, I’ve always pride myself being a good listener and trying to understand not just what people want from a business perspective, but also what people want from a personal perspective. Because typically in sales and in business, if you can match the two, you’re on a winner.

So it was in De La Rue, my part of the business was actually acquired by private equity, so The Carlyle Group, which was a management led buyout. That gave me my first taste of, if you like, corporate development, M&A activity, which I found really exciting. Selling the business on top of just selling the products of the business was for me really quite interesting.

Then we became a company called Talaris, where I was UK managing director. So I moved from sales role into more general management role. It was quite an unusual way it came about because I was always open about my ambition, and I used to tell my boss that I could run the business better than he could. Actually I got the opportunity, because he got promoted up and he phoned me on a Friday and said, “Right, you’re starting on the Monday.” I moved from being very much sales driven into running the whole UK business, which is about eight 60 to 80 people.

I spent the first three months interfering in all parts of the business that I didn’t truly understand. I remember my boss, we went out for a drink and he said, “How do you think it’s going?” I said, “Oh, I’ve been doing this and doing that.” He would say to me, “Well, what do you know about engineering?” I said, “Yeah, but I’m the managing director, I need to know about engineering.” He said, “Do you think you know more than the person who’s running that part of the business for you?” I said, “No.” He said, “Well, why do you keep interfering? Your job is to create an environment to get the best from them.” Ever since then, every company I’ve ever worked with, I’ve interfered mercilessly in sales, but that’s just because I felt was the one thing I actually do knew to do. But anyway, that was quite a good career lesson actually.

We grew that business really well, and we were actually sold again in 2012 to a Japanese company called GLORY. I think once you’ve been acquired, I think it’s very often common that you’ll leave. Not for any bad reason, is just because it’s time for change. In 2014, I realized that I was spending a lot of my time defending the use of cash as digital payments began to become more and more mainstream. I actually realized that I was getting fed up of having to be to sell from what I call the back foot. So I joined Vocalink who were very well established in digital payments, faster payments, et cetera. So I joined there in 2014. I knew when I joined the company it would be sold. I didn’t know who to, but I knew I wanted to be part of that journey again. I duly was.

Then we were sold to Mastercard in 2017. I was managing director of sales. But then I saw an opportunity, I’d always had an ultimate career ambition of being a CEO, and I saw that opportunity in Vocalink because I knew that Vocalink needed to retain the level of independence from Mastercard because of the critical nature of the systems we ran and services we ran in the UK. Government would want to retain an entity within the group, if you like.

In 2019, I was appointed CEO, which I was proud of, and about a month later I thought, it’s quite lonely this, being the CEO. So I did that for three years. So my job was twofold. I looked after UK critical services, which was the ability to move money around, but in layman’s terms, it was making sure, I think we paid about 90% of all salaries in the UK flowed through our systems, about 85% to 90% of all the household bills were paid through our systems, all of the cash that was withdrawn from the ATM network, we facilitated, et cetera. So we played a really, really critical role in the UK economy. The other part of the business was to work with Mastercard to try to grow their accounts, bank accounts and bank account business, alongside the card business around the world. So I was involved in, for example, the clearinghouse in the US uses Vocalink software. Yeah. I think we ended up, we had I think 13 of the top 20 GDP countries in the world, which was sold through Mastercard, but it’s still heritage Vocalink technology.

Yvette Bohanan:

So first of all, thank you for sharing.

Gregor Dobbie:

Yeah, it was probably a bit long.

Yvette Bohanan:

No, it wasn’t at all. I think what’s really great about this is a lot of people think that a career journey, a career path, is this linear straight trajectory. What you’ve shared really highlights in my perspective, listening to you, that so much of what you did, even though it wasn’t directly related every single time built confidence, built leadership, built skills, built knowledge that allowed you to achieve what you were really seeking and that ambition that you had to become CEO. So thank you for that.

Gregor Dobbie:

Oh, you’re welcome.

Yvette Bohanan:

I think that you were in this really interesting moment in Vocalink’s history too, and I’d like to unpack that a little bit. How did you go about moving from, we’re operating, we’re running the tech stack and so forth in the UK to convincing other countries they could use this too, right?

Russ Jones:

I was going to ask the same thing. The thing I loved about your introduction, Gregor, was you were really stressing the importance of sales. You said that you’re really comfortable in. There’s historically a thing in payments about do you create demand or do you satisfy demand? I’m curious to get your thoughts on a company like Vocalink, do your customers want to buy this type of stuff, the services Vocalink provides, or do they have to be sold on the benefits, I guess?

Gregor Dobbie:

Yeah. So to answer the first question. To take Vocalink outside the UK was, one of the things is the UK is seen within payments as one of the most innovative countries in the world. We’ve now had the ability to move money in real time from bank accounts since I think it was 2008. We were seen as very innovative. A lot of countries had capabilities in payments. But the other thing that we proved in the UK is we could do at scale, we could actually make it work at scale. Because I always say to people, with payments, if you’re trying to change someone’s payment behavior, the one thing I’ll guarantee is if they use a new method and it doesn’t work the first time, they won’t use it again. They’ll take a huge amount of persuasion to use it again. I think I see a lot of payment projects around the world where that need for resilience is being forgotten and it basically sets countries back.

So when we went around the world, it was a combination of why you needed to change the payment systems you typically offered. That would be driven often by consumer expectation. If you think of a modern consumer, they expect everything in real time, frankly. Even when you watch TV, I can remember I used to get the newspaper and check the TV guide. Miami Vice was one of my favorite shows as a kid, 10:00 on a Monday night, and I would be sat in front of the TV at 10:00. Now I don’t even know when the shows are on because you just download them when you want. So I think in terms of the ability to move money in real time, I think a lot of that’s driven by consumer expectation. Instant fulfillment I called it. We were doing that.

So when we were talking to other countries about doing it, we used to, one, talk about what it could mean to economies, talk about what it could mean to say banks in terms of differentiating their product set, talk about how much more efficient it can make governments, the ability to dispense benefits, for example.

Then we used to talk about how Vocalink had achieved that in the UK, not just in terms of doing it reliably and securely, but at scale. We used to talk about, if I thought about it long enough, I could probably reel off the stats, but we used to talk about the number of transactions we would put through. They were big, big numbers. It was a big amount of money flowing through our systems. I think it was a combination of we were the supplier that did it in an innovative country that really I think stood us in very good stead around the world.

In terms of push and pull, I don’t think consumers typically demand new ways to pay. I think it’s all push. I don’t think that you respond to demand for a new way of paying. I think you generate demand. I think that probably when I joined Vocalink, payments were seen often by organizations as hygiene factor. You needed to offer your customers the ability to pay. I think that changed into as a digital economy advance, and particularly when in the pandemic, the only way to transact in some cases was digitally. A lot of organizations realized it was a differential, it could be a positive differential or it could be a massive negative differential. Some of the abandonment rates of transactions that companies saw as a result of poor payments experience, I think meant that they realized they needed to invest in it. I would say that in an e-commerce journey, that payment experience is probably the single biggest, most important factor.

Yvette Bohanan:

Absolutely. Conversion is just…

Russ Jones:

It made me reflect on when I read in the news, and this is a US-centric thing, seeing the news about the CEO of a bank talking about adopting fast payments in the US and oftentimes the first thing out of their mouth is they haven’t seen any demand yet from customers. That’s why we’re not investing. I guess from your perspective, that would be a little bit of a backward-looking instead of forward-looking approach.

Gregor Dobbie:

I think they should be looking at more how could it help them differentiate themselves? How could it potentially make them more efficient? If they can’t find reasons for doing it in these two, which I pretty much guarantee they would, how can they get the consumers to use it?

Yvette Bohanan:

Did you find you had to modify the platform and tech as you talked with each country? We talk a lot about payment systems are domestic by nature because the regulations are specific to a country, the aspirations are specific to a country. As you went out and talked with banks in other countries or the central bank, whoever you were meeting with, did they say, well, we like this, but it really has to do X, Y, Z. It really has to be… How did you rationalize this? Or did you try to do something unique or bespoke to each country?

Gregor Dobbie:

No, it was a hybrid. There were functions that every country would use. Every country had specific needs in terms of how their economy operated effectively. So in every country we had to do a level of bespoke, just things like settlement operated differently in different markets. It was typically areas like settlement, liquidity rules, et cetera, that varied. We always knew going into new country there would be differences. We had a professional services organization whose job was to identify the differences and then there would always be a development element.

Yvette Bohanan:

That makes perfect sense, actually. I just wanted to highlight that because what’s interesting now is we’re starting to see this arc and this evolution around fast payment systems in the world and now the systems are being connected to support cross-border payments. So the tech is in some cases built to do that from a tech perspective, but they still have all the regulatory items to deal with. Sometimes that becomes the actual critical path.

Gregor Dobbie:

Yeah, agreed. A lot of it’s the business rules vary, and therefore you have to modify the technology to fit the business rules.

Yvette Bohanan:

So with all this evolution and the fact that Vocalink is managing so many different legacy payment systems, everything from ATMs and so forth, BACS, CHAPS, do you see a future where things will consolidate? Do we need all these core systems out there or do you see an opportunity to start eliminating some of these legacy systems?

Gregor Dobbie:

There’s definitely opportunities to consolidate. There’s a number of different factors to consider. I don’t think the way to consolidate is to force people off particular ways they want to transact. I think the way to consolidate is to sell them the benefits of a new way of doing something because then they’re more likely to embrace it and actually make the changes required. I think that technology’s moved on. I’ve always said that a lot of people talk about legacy systems around the world, but what they fail to realize is that these systems haven’t stood still for the period of time they’ve been installed. They’re continually being refreshed, technology has been upgraded, et cetera. A lot of these systems bear little resemblance to when they were originally put in. It does get to a point where there are what I call game-changing technology advancements that mean you have to change the systems to get the benefit of them.

The best example would be public cloud. I see a world where all of this technology is held in the cloud and a lot of technology is not designed for the cloud today. That would be then the opportunity you’d look to consolidate the technology, but you cannot consolidate the technology to the point of risking resilience. So I could never see a world where you’d have critical systems that if they fell over that was it. You’d have to have backup. You’ve seen a lot of advances in multi-cloud deployments, et cetera. So I think it’s perfectly feasible. You’ve got the advent of AI, which again, when this technology was originally deployed, AI wasn’t a thing. Now things like fraud prevention, it does have a big part to play. So there are game changing technologies I think will drive the consolidation.

Yvette Bohanan:

When you look at those systems, even though they’ve been updated, they don’t inherently have the structure at the messaging level to either pass information or support the data needed to control fraud, to put in the right controls for risk management. It’s all built around, bolted on, a lot of times.

Gregor Dobbie:

If you look at the emergence of ISO 20022, probably at least 10 years ago now, it’s still not applied hugely in the world. So the pace of change is very slow when it comes to this type of infrastructure.

Yvette Bohanan:

So in the 180 degree opposite run, here we have the US. Instead of consolidating, we have three, depending on how you count, four maybe fast payment options over here, right? Because we have push to debit with the card systems, we have RTP, which is powered by VocaLink. We have Zelle, which is an early warning thing. Then we have FedNow, which is positioned as instant payment rails actually, which it’s an infrastructure thrust that the Fed has put on that. Then we have 11,500 financial institutions, just to add some interesting parameters to this. So when there’s no regulatory mandate, you said banks should be looking out, what should they be thinking about when they have this wealth of options in terms of fast payments? What success factors should they be thinking about in implementation?

Gregor Dobbie:

Well, the first thing I would say is that I always think a business should always be looking closely at the customer expectation. What do their customers expect? I would argue that in today’s society, people expect the ability to do things immediately would be a factor. I think the way people are compensated now has changed quite significantly. You’ve got the gig economy, for example, where people want instant gratification. I think there’s opportunity to potentially produce offerings that differentiate them from competitors. I think there’s also an economic argument if you look at the cost of cards and then you look at the cost of these types of systems is potentially an economic argument. So I think there’s quite a variety of factors. Open banking is another thing that has advanced in the UK, and if you’re doing open banking payments, then the ability to transact in real time is a prerequisite, I would argue. So there’s quite a lot of factors.

I think in the US without the regulatory mandate, I think it will be the ability to differentiate, actually, to take a lot of cost out of the payment operation. Then I think in terms of the success factors, I always had three rules when it came to innovation and payments. They might be right, they might be wrong. But number one was always if you have to teach someone how to use a new way to pay, then you fail. It needs to be completely intuitive. So best example of that is the UK adoption of contactless, which was driven really by London Underground adopting it and consumers actually copying people in front of them in the queue. So I think from a user experience perspective, if you have to actually teach someone how to use it, you’ve failed.

I think the second thing is that you can incentivize people to use something probably once or twice at best, but if the user experience is a negative, they won’t use it. Even if you continue with the incentives, they won’t use it. There’s obviously exceptions to that, but as a general rule of thumb. The third thing is if you introduce something that threatens the core resilience or minimum needs to match the resilience of the incumbent systems or exceed, if it doesn’t do that, then it’s going to fail. Because one thing I always say to my guys, if you have a fault with a payment, it’s on Twitter within 20 seconds. Despite the fact the other 364 days of the year worked perfectly, there was no tweets. So you don’t get any thanks for working, but you definitely can be very damaging to your business if it doesn’t work.

Yvette Bohanan:

Exactly. I think there was such a thrust 10, 15 years ago for this notion of a minimally viable product that came with the advent of apps on mobile phones. Just get something out there and then iterate and build and learn and call it a beta for three years or whatever.

Gregor Dobbie:

I always thought, in payments, that was garbage. The whole concept of, was it, fix forward or fail fast and fix. Garbage. Payments is too sensitive. It’s such a sensitive area for people. The consumer will not tolerate it

Yvette Bohanan:

Well. It’s trust, it’s the moment of truth. Right?

Gregor Dobbie:

Exactly. I mean we used to look at, laugh at stories about people in the early days of digital banking would use faster payments and then run down to the ATM to check the balance to see if the money had gone in.

Yvette Bohanan:

Yes.

Gregor Dobbie:

Whilst it’s funny, it wouldn’t be funny if it hadn’t gone in.

Yvette Bohanan:

Right, exactly.

Gregor Dobbie:

Because you go straight in the bank branch and inquire. It’s too mission-critical to fix forward.

Yvette Bohanan:

Fix forward. That’s good. That’s actually very apt in terms of the attitude that a lot of people were trying to take. Increasingly, payments organizations are being more tech led in a lot of respects, especially with the FinTech phenomenon that we’ve experienced. I know Russ, we’ve all had countless conversations probably with engineering teams and product teams about why do we need to do that? That won’t happen. It’ll be fine. The volume will be low to begin with. We don’t need to build in that resiliency or redundancy or that feature or that control because we’ll get to that when we get to adoption. What they don’t understand is you’re not going to get it to adoption if you fail that first transaction. Plus the regulatory, plus the fraud issues on and on.

Gregor Dobbie:

The term I always used to emphasize was this is critical national infrastructure. You don’t have the luxury of having two or three stabs at getting the development right.

Yvette Bohanan:

Exactly. Speaking of getting it right, I want to circle back because you made a great point about fast payments enabling open banking, and we’re hearing more and more about this idea of open banking. Sometimes it’s regulated, the EU mandated, other times it’s not, but it’s of interest to certain parties, maybe some parties more than others. When you look out across the globe, have you seen any examples of where countries have really gotten open banking right, where it’s really doing what people have intended it to do? Is the UK on the tip of the spear on this, or is there another country out there?

Gregor Dobbie:

The UK has got some of it, right? For certain types of use cases, like say, I think it’s now something like one in three credit card repayments are now made using open banking, or quite a number of the secondhand card dealerships are now also offering open banking as a payment method. Of course you can now pay your taxes using open banking. It’s got some of it right. But I would say if you asked me to pick a country that I think has done the best job of it, probably be Brazil with Pix, where actually it looks to me from the outside that they have picked the good bits of what happened in the UK. They picked some of the good bits of what happened in India. I’m sure they’ve looked at other countries as well and come up with a framework, really smart, actually, using the good bits from elsewhere. Pix is now I think, the most adopted primary payment method in Brazil now.

Yvette Bohanan:

Yes, it is. Absolutely.

Gregor Dobbie:

So I’d say that they have done a very good job.

Yvette Bohanan:

They had a combination of public-private partnership. They came out of the gate with an API.

Gregor Dobbie:

Yeah. They built a central bank, had a sandbox in place very quickly.

Russ Jones:

Yeah. They also had a mandate on the major banks.

Gregor Dobbie:

Yeah. I think what I quite liked is that mandates in many countries basically force a behavioral that is to do the bare minimum to comply, but I think their mandate meant they obviously had to comply. I also give them the opportunity to develop their business. So a mandate is typically viewed as a negative, but in this case, I think the Brazilian ecosystem, if you like, saw it as an opportunity and embraced it.

Russ Jones:

I think the mandate there was to jumpstart Pix in Brazil and I don’t think they need the mandate now. Yeah, it’s a de facto established system that’s very successful and the mandate was a transitional thing to get it going.

Gregor Dobbie:

So I think they’ve done a very good job. I noticed the US, they’ve announced a consultation for legislation, so it’ll be interested to see how it develops. The US in many ways has had open banking for many years. They’ve implemented it using screen scraping, in many cases.

Yvette Bohanan:

That’s exactly right.

Russ Jones:

We had a end of 2023 roundup and the proposed open banking legislation in the US was one of the big developments, probably one of the top five developments in the US market last year. If it is put in place, once and for all establishing that it’s the bank’s customers that own their own data and not the banks. As a country, we went through that 40 years ago with medical records.

Yvette Bohanan:

We had Carlos Brandt on in early 2023 talking about Pix with us. One of the things that he noted, and he brought up a lot of these points as well, but one of the things he noted was with pride that not only was there great adoption of Pix, but that a lot of the people who were using Pix for the first time were actually establishing a bank account in order to use Pix and this notion of financial inclusion. It’s something that the Cruikshank Report back in the 2000s when it came out, talked about inclusion not just for consumers who were marginalized from the system, but also small businesses. Have you seen any direct correlation between the introduction of fast payments when you’ve looked at things and then the financial inclusion aspect? Do you see this actually occurring consistently across your experiences?

Gregor Dobbie:

Yeah, so I have pretty strong views on financial inclusion, and I firmly believe that consumers should have the choice in terms of how they transact is point one. Point two is they should also have sufficient education to understand what the right choices are for them. In many cases, I think that the move to digital from say cash has been slowed down by the lack of education. People are wary of it. Whereas actually, countries who’ve done it well, there’s two ways to do it, you can educate or you can mandate. So if a look at say what happened in Thailand, they’ve had a mass move from cash to digital, but it was government driven. But interestingly, I think the consumers now wouldn’t want to go back the other way. Whereas if you don’t have that mandate, then you need to support it with a strong education.

In the UK in some ways in the pandemic, people were forced onto digital and I think it must’ve been terrifying for people to actually walk out. If you think about someone who’s transacted, and it could be a business or a personal who’s always transacted in a physical way in person, suddenly they had to do everything online, they get to the payments page and they get this myriad of options. It must have been terrifying because what choice do you make? So I think financial inclusion to me is everyone should have access to different ways to manage their finances, but I think everyone should have the education to understand what the right choices are for them. I think that’s a bit that’s lacking. Probably doesn’t quite answer your question, but I’ve always said when we’ve been deploying faster payments, I think there needs to be education programs rolled out in conjunction to explain to people why it’s not a threat. I have seen that done well and I’ve seen it done badly, and the transaction volumes reflect both.

Yvette Bohanan:

I think that’s absolutely spot on. When you look at the countries that have done a really great job in public education on these systems, you see the adoption. When you see just a maybe financial incentive and the economics of it played around with to try to get adoption or just a regulatory mandate, it’s maybe not picked up as quickly or whatever. So, absolutely.

Russ Jones:

It’s really an excellent point, Gregor about education here, because people are afraid of things that are new. They’re afraid of things that are different. In the US, you have a unique segment of the country that is afraid of the central government. So you have people hesitant to use government controlled payment systems because they don’t want the government to see everything they do. It’s not just education to move things forward, it’s actually education to keep things from slipping backwards in some cases.

Gregor Dobbie:

Yeah, I agree. The good thing now is that in terms of moving people to digital, in many countries there’s more mobile phones than people. So people do have access. There’s lots of exceptions, but in many countries they do actually have access to the technology required, therefore you’ve fixed the hard bit. If you then roll out the education to support, then I think you can drive adoption far quicker.

Yvette Bohanan:

So Gregor, we’re about out of time here, but before we go, I’m reflecting on some of the insights you shared about your career when we started this conversation a little while ago.

Gregor Dobbie:

Still want to be a golfer.

Yvette Bohanan:

I know. I was going to ask you, how’s your golf game now?

Gregor Dobbie:

It’s all right, but it’s never going to be elite level.

Yvette Bohanan:

Well, there’s still time. There’s always still time. You had a couple of conversations through your career of mentors who sat you down over a drink and had a chat. We have a lot of people who listen to this who are new to payments in every aspect of the industry that are new to payments all over the world. We also have quite a bit of change going on right now economically, the macroeconomic level that’s driving people to look for new positions, rethink what they’re doing in the FinTech sector. If you can imagine yourself sitting down with someone who’s listening right now, having that drink and giving them a couple good pieces of advice about payments and what to be watching, doing right now, what would you say to them over a drink?

Gregor Dobbie:

I think the first thing I would say is that payment industry always assumes a level of knowledge in other industries of payments doesn’t exist. By that, I mean I’ve seen it with many salespeople over the years where they go into non… Say it’s a e-commerce retail, some of the things that perhaps we think are obvious, like they’re paying too much for this type of payment capability or they’re not offering this payment type of capability. It’s obvious to us, but it’s not obvious to them because they don’t live and breathe payments. So I always say that don’t assume the level of knowledge within your client. I think that’s quite critical. So you have to start from a position of actually articulating in business talk how payments can help their business if you like. It could be take money out, it could be differentiate their offering.

So that level, it always annoys me, people assume the level of knowledge. I think the second point is I’ve also a view that you can get technology to do pretty much whatever you want, but if you can’t actually apply it to fix a business problem, you’re wasting your time. I do see in payments a lot of technology looking for a home, whereas start from the business problem first would be my advice. Yeah, that are probably the two bits of advice I would give. Don’t lead with the technology, project yourself to the other side of the table and understand your client in deep detail.

Yvette Bohanan:

Excellent.

Gregor Dobbie:

I think that it’s quite a crowded space. Lots of companies try to do variations of the same thing. Think about how you stand out in a crowd. By that I mean how do you articulate your value in such a way that makes you stand out? I have to say as CEO, when I was CEO and had many payment type companies coming to see me, very few of them were able to do that.

Yvette Bohanan:

That is true.

Gregor Dobbie:

Think about how do I stand out in the crowd, even if I’m using the same technology as somebody else, how do I stand out? I was always thinking about that. Is that useful advice or nonsense?

Yvette Bohanan:

I think so. I’m glad you added that third one in because I think that is truth.

Russ Jones:

As they say in the US, take it to the bank.

Yvette Bohanan:

So Gregor and Russ, thank you so much for spending time on this episode. I think we’ve covered a lot of ground and a lot of great insights were shared here in this conversation that I think people will be coming back to and listening to over and over again for a long time. So thank you very much.

Gregor Dobbie:

Thank you very much for having me. I enjoyed it.

Yvette Bohanan:

It’s a pleasure.

Russ Jones:

Thank you. Thank you. It was wonderful.

Yvette Bohanan:

So, Russ.

Russ Jones:

Yes.

Yvette Bohanan:

Wow. What a fun conversation that we just had.

Russ Jones:

Yvette, I can’t tell you how much I enjoyed hearing his comments. Very, very thoughtful. I was smiling end to end the whole conversation.

Yvette Bohanan:

All right. So was I. In full transparency, and to take absolutely nothing away from Gregor because he was brilliant. It wasn’t just because he said so many things that we agree with. We say so often in our workshops and to clients and everything else. But he brought up so many great points.

Russ Jones:

The first thing that really got me thinking about stuff really was the role of sales and payments and the role of the value proposition. I love the conversation about is it education or mandates that drives adoption? Is it the threat? Is it the carrot or the stick? Effectively was a lot of his comments were along those lines. You see that carrot versus stick a lot in the payments industry. I oftentimes joke in our workshops about payment system rules and someone will say, “Well, why do I have to follow the rules?” The payment network is sometimes the answer is because I say so and other times the answer is because it’s good for you.

Yvette Bohanan:

By the way, everybody else using this thing, right?

Russ Jones:

Yeah. So there’s the carrot versus the stick and a lot of that type of stuff. When he was talking about the importance of the business development role and the sales process and payments, it made me think, I immediately went to the world of Federal Reserve and FedNow. I don’t mean to in any way degrade anyone working on the FedNow system. They’ve moved a mountain in the last several years. But what these commercial firms have as an advantage is they have someone who’s a CEO whose job is at the very top to sell the company, sell their services, and sell their products. You don’t find that inside of a central government. It’s not just the Federal Reserve, it’s any central government. You would never find somebody at the Reserve Bank of Australia who says they’re in charge of sales.

Yvette Bohanan:

Not per se. The closest thing actually that we’ve heard about directly from someone about how they’re trying to address that from the central government is Carlos Brandt with the group that he has formed, again to guide what’s going on. Not so much to sell but to guide, which direct in the product roadmap for Pix. But that leads to advocacy, which isn’t exactly sales, but it’s advocacy. I think that’s the closest thing you get outside of the commercial realm.

But yeah, that’s a very important point. I think sales has changed in some ways for the better in payments and some ways to the detriment of companies. You go now online and everything’s XYZ as a service, and if you’re small and you want to use the product, you just sign up online. There’s really no salesperson in all of the FinTech. You have to say you’re spending a whole lot of money to get in touch with a salesperson or an account manager or anything like that anymore. I think that’s maybe helped the companies in signing up customers. But you lose something, you lose the education, you lose the opportunity to differentiate. It’s all about the customer reading the website and educating themselves.

Russ Jones:

It is. It underscores the shift away from direct sales to indirect sales in a lot of ways. Really, really, really underscores the need for high quality educational tools and marketing collateral and calculators to help you calculate and determine how much of this do I need? What should I buy? Which one of these three products is right for me? You don’t have a salesperson helping you do that, so you have-

Yvette Bohanan:

You have to build it all in.

Russ Jones:

It’s got to be there for sure. It can’t be just a table that you look up by row and figure out which of the three products you need. There’s a lot more to it.

Yvette Bohanan:

I think people are looking at NLM, at chatbots, at all this new AI on steroids technology to try to help with that. Now that’s probably one big area in payments that could use a boost if things progress this way. But at the end of the day, the bigger the thing is that you’re selling, or the more sophisticated, the more you need a lot of education going on in the sales cycle. I think that also ties to what he was saying at the end there about differentiate yourself as a product. I can’t tell you how many clients we’ve talked with or people in the industry I talk with and they’re like, we don’t understand the difference between this product and that product. I think it’s really most apparent in the risk management side of payments and all of the different companies that have come out to help with fraud prevention and detection, online transaction monitoring.

They all show up with the same, we use sophisticated machine learning modules and we use XYZ. People don’t know like, well, I don’t know why this product would be better than that. Do I pick the first one in the alphabet or what do I do? I think that it’s been very apparent. Some companies are starting to try to really put some wood behind the arrow in differentiating themselves. But a lot of this stuff always sounds the same at the end of the day. Words of advice, words of wisdom, don’t fix forward. I loved that. I loved that. Try to put some controls in place up front.

Russ Jones:

That is so true in payments is there’s this zero tolerance for not doing things right. People don’t appreciate that. One of the very first learning experiences I had in the world of payments, we were building a micropayment system and we did this market trial and we had live merchants selling digital goods for a dime and for a penny and a nickel. Sometimes our software would eat people’s money, but it would only eat a couple pennies. My naive attitude was, well, it was exactly what he was saying. It was like, it’s just a market trial and it’s only a couple pennies. I thought, what’s the harm of that? Right? It’s not like we’re losing a million dollars or something like that. Our customers didn’t see it that way. Our customers were like, I want my nickel back.

Yvette Bohanan:

Exactly.

Russ Jones:

It’s the principle of it.

Yvette Bohanan:

It’s the principle of it that it’s my money and I gave it to you to do something specific.

Russ Jones:

Now you’re telling me it’s gone and I didn’t get what I was promised. I don’t want an email that says, thank you for helping us debug your system.

Yvette Bohanan:

Exactly. We don’t want that.

Russ Jones:

I want my nickel back.

Yvette Bohanan:

Well, I had totally forgotten until he mentioned it when fast payments were coming out and people were going to the ATM machine to make sure the money transfer or was received or whatever. I thought, yeah, that is just such a perfect example of how important this is to people and how they will check and verify, right?

Russ Jones:

Yeah, absolutely.

Yvette Bohanan:

Very important moment of truth. It’s always a moment of truth lots in this one. I hope people give it a listen, and I think they’ll find a lot of good insights here. So Russ, thank you as always for taking the time.

Russ Jones:

Well, thank you. I loved hearing Gregor’s story firsthand. Really nice.

Yvette Bohanan:

Me too. We wish him every success with his golf game as well as in payments. To all of you listening, thank you for joining us and until next time, keep up the good work. Bye for now.

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