A Payments Soup: The Latest in Instant Payments, Digital Currency, and AI in 30 minutes [Episode #2]

Podcast Intro (00:00:02) – Hello. Welcome to P.I.T. Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments innovation and technology with the industry’s most innovative thought leaders. Today’s payments are changing and moving around the world faster than ever before. P.I.T. Exchange gives you the knowledge and insights to keep up. Sit back and relax. As we join currency research, exchanging ideas with today’s special guest.

Shaun Ferrari (00:00:36) – Hello, everybody. Welcome to the P.I.T. Exchange by Currency Research. We are thrilled to have you. I’m Shaun Ferrari , VP here at Currency Research. And this is one of our first episodes of the P.I.T. Exchange. So thanks for coming along with us and being part of the family. We can’t wait to be digging into the latest in payments, innovation and technology topics with you. So thanks for coming aboard and seeing who we’re chatting with today. So without further ado, I’d love to introduce today’s guest, Mr. Peter Tapling. We are going to talk all things payments, AI, digital currency and just really get into get into everything in a half hour. But Peter is, one of the best people to to cover this broad range of topics. So Peter, thanks for joining us. Pleasure to have you here.

Peter Tapling (00:01:27) – Shaun. Thanks for having me. And, Yeah, half an hour. No problem. We’ll cover it all.

Shaun Ferrari (00:01:31) – We’ll cover it all. We’ll cover it all. So maybe just to start off with just, if you wouldn’t mind telling the audience a bit about a bit about you, who you are. And, you know why why? We’re we’re chatting to you.

Peter Tapling (00:01:42) – Sure. Peter Tapling, I run an independent consultancy, PTap Advisory, advising financial institutions on how to understand technology and technology institutions on how to understand banks and payments. Right, but my background is, largely on the technology side. So I have a deep understanding of technology, cryptography, I’ve been doing information security when back when we were doing, field level access control for IBM CICS applications a million years ago. So, a lot of time, doing identity and fraud management for financial institutions and in payments.

I worked for Early Warning for a while there, the company in the United States that launched the Zelle platform. Prior to that, my company Authentify, is the company that invented out-of-band authentication as you know it. You can blame me for those annoying six digit pins to support a login. And we supported, three of the largest financial institutions in the UK during the launch of Faster Payments. So a lot of time in payments, a lot of time in cryptography, so when I became an independent consultant, I got to dip into whatever I wanted to. I picked up this thing called the Bitcoin paper, Satoshi Nakamoto, and I’m reading the paper and I’m like, I actually understand all this stuff. And so I’ve been, researching, educating, speaking and operating companies in the area of blockchain and digital currency since 2010 ish.

Shaun Ferrari (00:03:08) – Yeah. It is funny to think, you know, time flies, right? But you think, wow, back in 2010, we were we were already talking digital currencies and and how to how to transact on the blockchain. And, and we’re still talking about that. But we’ve made a lot of progress.

Peter Tapling (00:03:21) – We’re figuring it out. Yeah.

Shaun Ferrari (00:03:23) – Figuring it out. Yeah. And I think you know interesting you mentioned the security angle. I think that is one of the the big topics that everybody worries about in this space is how do you keep keep this stuff secure. And, and while those six digit codes might be annoying, they seem to they seem to work.

Peter Tapling (00:03:39) – Yeah, they I mean, they’ve had longer legs frankly, than we expected they would, and they still work. But, it’s important for people to understand that that six digit code is not standing alone. It’s not the only thing that’s happening. There’s a bunch of stuff going on in the background, and, I call it the ingredients of a fraud and risk management soup.

Shaun Ferrari (00:03:59) – Fair enough. I’m trying to picture what that soup would, would look like. And then. Then I stopped myself.

Peter Tapling – It wouldn’t be tasty.

Shaun Ferrari (00:04:06) – Yeah, no let’s not eat that. But, you know, I think last week I saw some, some online stuff and so forth, there was a US Faster Payments Council meeting. I know you’re part of that group and you spend a lot of time, as you mentioned, in the work you’ve done in the UK and here in the US as well, supporting, you know, faster payments. Just curious, you were there last week. One of my colleagues was there, I couldn’t make the meeting, but just curious what, what you what what? We’re kind of some takeaways from that meeting or what were some, some, thoughts you had from it?

Peter Tapling (00:04:38) – Sure, a couple of things. First of all, thank you for the plug. I am a board member of the US Faster Payments Council, so we always appreciate that. For those of you who don’t know, the US Faster Payments Council is a private member based organization here in the United States with a variety of stakeholders, financial institutions, payment service providers, regulators, networks, etc. and our mission is to do things that accelerate the market based adoption of instant payments here in the United States.

For those of you again, who don’t know, in the United States, we did not mandate the use of instant payments or the availability of instant payments from financial institutions to customers, unlike most other countries in the world. And so, we’re taking our time a little bit. But getting to, you know, some of the takeaways, adoption is definitely increasing. We have two instant payment schemes, RTP and FedNow. Dan Baum from the Federal Reserve announced that FedNow is now over 660 some participating financial institutions. We still have a challenge in the United States that most financial institutions that join these networks do so in a receive capacity. So the use cases are very disbursements and oriented. So wallets that are sending money out to to holders of value in those wallets, getting money into their bank accounts. You know, directories, directories, directories. We have a lot of focus, I happen to be chair of the Directory Models workgroup at the, US Faster Payments Council and it there had to be 3 or 4 different sessions, during the two day conference talking about the need for directories, for requests for payments, for QR code payments and just person to person payments.
The bottom line is, as long as the system is reliant upon a routing number and an account number, people will be reluctant to give that information up to make that payment available.

Shaun Ferrari (00:06:32) – Yeah. And I think there’s, you know, will it be reluctant and it’s also not easy. Right. You have to find it. You have to track it down. It’s easier to give my phone number or whatever.

Peter Tapling (00:06:41) – Exactly. Did you did you memorize your routing and account number, Shaun? Would you like to give it on this podcast?

Shaun Ferari (00:06:47) – Yeah, I’ll just throw it out there for everybody. Hold on one minute.

Peter Tapling (00:06:51) – But you know, the group continues to grow. We have eight stakeholder groups, very well attended, I think we were over 300 people. So, those of you who have any interest on, instant payments development in the United States should check out Faster Payments Council. Org.

Shaun Ferrari (00:07:05) – Cool. No, that’s that’s great. Thank you for that. Was there I know at the the prior meeting and some of the discussion here in the US, you know, has been around that kind of use case. Who? Who is kind of demanding the services? Is it still the case that it seems to be kind of, gig workers or folks that that could benefit from getting paid?

Peter Tapling (00:07:30) – So I think, I mean.

Shaun Ferrari (00:07:31) – Or what are you seeing there?

Peter Tapling (00:07:33) – Well, I, I always like to start this conversation with a question. Do you want your money now or do you want your money later? Like, everyone will answer that question the exact same way. Of course I want my money now. Right? So, one of the phrases that came up, in fact, in the meeting was that, is the phrase red herring. Right? And so this idea that people aren’t asking for it, is a red herring, that that statement was made by someone else on stage during one of the sessions. And the point that she was trying to make was that if you look back in financial, in the products that financial institutions have offered, there’s a whole bunch of products that we knew we needed to improve the ecosystem and we did it. “We” financial institution ecosystem, but customers weren’t asking for it. Customers weren’t asking for ACH, customers weren’t asking for remote deposit capture. But we knew that we needed to move in that direction. I will I will tell you I spoke on a panel with a credit union, you know, $7 billion credit union in the United States, that’s a relatively modest sized organization. And they were three years into their rollout of RTP, they were receive only, so they were receiving a lot of payments from for gig workers and things like that. And, I asked them, like, if they went back three years, what would they have done differently? And they said when they launched with instant payments, they they basically, you know, put a bucket over the light bulb, like they didn’t tell anybody. They just launched it and it was available. And what surprised them was within 45 or 60 days, their members were calling them saying, hey, I got my payment faster from this vendor, and I’d like to get the payment faster from this vendor, how do I do that? And so to say that customers aren’t asking for it, we’ve coached them for 50 years, that you cannot move bank money in less than two and a half days. So why would they ask for it? But as soon as they see it, they’re like, wow, how do I get this everywhere? So so I do think that, and there believe me, there was a lot of conversation at the conference around this idea of creating reasons to do send, and creating this availability of this, of this payment type outside of just large organizations sending to, their constituency.

Shaun Ferrari (00:09:49) – Yeah. No, that’s a good point. And I think, I mean, we’ve said it at multiple conferences and events and I’ve, I’ve heard it said a lot. And I think it’s definitely true here where people don’t, it’s kind like that payment soup that you were talking about, people don’t want to look at it. Right. It’s there, but I want to move my money.

Peter Tapling (00:10:06) – Yeah.

Shaun Ferrari (00:10:06) – They just want to move their money. They don’t really care by and large, you know how it’s being done and what have you. They basically want to know that it will get there. And at times they want to know how fast it will get there and how much it’s going to cost them to get it there. But other than that, you know, whether…

Peter Tapling (00:10:21) – I’m going to give you, I’m going to make an analogy here, because I’m speaking with you at Currency Research, we’ve had decades of development of currency, safety capabilities in currency, inks, papers, threads, all that kind of stuff. Which customers asked for that? The answer is no one, no one asked for that, but we know the financial institution system. We know it’s better and so the whole system works better when you have these things.

Shaun Ferrari (00:10:52) – Yeah. No, it’s a great point. and, you know, with your experience that you mentioned at Early Warning and Zelle and, and, and others, it’s a, I still find when I use Zelle or, or Venmo or what have you. People that haven’t used it, but do, like when I send them something through Zelle or what have you, and it shows up instantaneously. Now, sure there are, it works different and there are other other issues and things, but nonetheless, it is kind of one of those eye opening things of like, well, you just sent me that, and it’s in my account right now.

Peter Tapling – It’s a beautiful thing.

Shaun Ferrari (00:11:26) – Yeah. They’re like, oh my God, that’s amazing. So that’s more of these things come around and faster payments in particular, i think you’re right. People just kind of notice it.

Peter Tapling (00:11:37) – And I’m going to go back, you know, I’m going to go back 20 years. You have a tangential friend, you’ve got a group of seven tickets to the Final Four basketball game. One of your friends brought a buddy, and the buddy said, “well, how can I pay you? I can either give you cash or give you a check.” What would you want? You want cash? I want the money instantly. You really don’t know this person. You want to be able to get the money instantly cleared and settled away we go. And so I think that as an industry around this instant payments use case, we have an education effort that we have to undertake. We have taught the the payments consuming public for since 2000 ish around the launch of, e-commerce, where we were trying to get the consuming public to use their cards on websites, they didn’t know what these website things were. Https was new. They didn’t know about encryption. And so the card networks basically created this concept called zero liability. That said, if you use your card in a e-commerce transaction, don’t worry, if something goes wrong, you’ll get your money back. So for 40 years, 25 years, I guess at this point we’ve taught the payments consuming public, if you use an electronic payment, it’s not your fault. Right. And that’s not true. It’s not true with cash. If I go to scalp a ticket at that NCAA basketball game, and the ticket ends up being not good, and I paid with cash. What do I do? Well, I’m a macho guy. I’m going to run around and beat the guy up, right? I mean, I, you know, but I’m not going to call the bank. So I think we have an education issue, you know, particularly with Zelle, I have found that people who use Zelle love it. People who don’t use Zelle read headlines, and they read the headlines and say, oh my gosh, somebody’s got a gazillion dollars stolen from them with Zelle. Zelle is an inherently unsafe network, and that couldn’t be further from the truth. You know, they, you know, Early Warning, if I’m a bad guy, I want my money faster, too. Right? And so why wouldn’t I use a faster payment scheme? And so Early Warning is doing a lot of work. They’re doing a lot of good work. The fraud rate in the Zelle network is actually, quite low. It’s low relative to debit card even and I think that, you know, that’s the good news.

Peter Tapling (00:13:54) – The challenge is, there volume keeps growing. And so even a tiny, tiny percentage of a really large number ends up being large numbers. So we’re going to be engaged in this fraud fight for a long time. In the UK, we already see reimbursement models, have arisen 50/50 distribution in the case of scams. In the US, Zelle has implemented a a reimbursement model and RTP and FedNow don’t have them yet in the United States. But that’s because to the point we made earlier, no one’s really using these systems. When people start using these systems, we’re going to see something similar arise.

Shaun Ferrari (00:14:29) – Yeah, I think there’s, and I know, not to keep going back to the Faster Payments Council, but there’s a whole committee on on fraud and risk and that sort of stuff as well. And I think there’s definitely a lot of work to be, to be done there. And it will, as you say, you know, I like the analogy back to currency. You know, it at first, even when currency came out, there weren’t really any security features in there It wasn’t until counterfeiting started to pop up that people were like, oh, we should probably put some stuff in there. And then and then, you know, it’s every transaction size or every every denomination size, right, has its own set of security features. They’re more expensive and more sophisticated the higher you go up. I would imagine models will be similar for, for payments. You know, if you’re making a $50 payment to somebody and it’s, you know, you don’t necessarily need to worry about that as much as a ten payment.

Peter Tapling (00:15:21) – And I know you want to move on to other topics, but if I were to give one bit of advice to people, if you are going to move money in Zelle, always send a dollar first, the first time to make sure that you got the telephone number, right and stuff like that. And no, your bank will never ask you to send them money to protect your account, and you are not going to get the white puppies, and you did not get, win $1 million lottery.

Peter Tapling (00:15:44) – Like, one of my favorite phrases, Andy Compton, who is a Vice Chair of the Fraud working group at the Faster Payments Council, has this phrase she uses and she says slow yeses, fast no’s. Like when you get when people ask you for money, be very fast to say no. Be very slow to say yes. Be thoughtful.

Shaun Ferrari (00:16:04) – Yeah. No. That’s a great motto, thank you for that. And maybe, we were going to go to AI, but maybe I’ll take a slight detour quick to digital currency only because we were talking kind of about use cases and, and demand for, faster payments. I think there’s a similar story kind of going on in the digital currency space, too, whereas it’s, you know, there are those folks that have it, love it, and when I’m talking digital currency here, I’m mostly talking or I am talking kind of CBDCs or, or the main stablecoins that are out there like a USDC and, not kind of the in investment type or the speculative ones.

Peter Tapling (00:16:45) – Cryptos. Yeah. Yeah.

Shaun Ferrari (00:16:46) – Your cryptos. So, you know, and I know you’re on top of that space as well. Is it a similar, are you seeing kind of similar trends where it’s a, it’s a development that the financial system kind of sees as needed or somebody sees as needed, or the way this should go and the use cases will kind of come along or or is it it all different from that?

Peter Tapling (00:17:09) – It is it’s evolving, but it’s evolving very differently. You know, we talked about 2010 Bitcoin comes out. I gave a presentation in 2010 to a group of 300 largely financial institutions, some regulators, some payment service providers. And the organizers had asked me to give an introductory speech on Bitcoin. So I stand up, it’s listed on the agenda, I start the presentation and I say first slide is, you know, Bitcoin whitepaper Satoshi Nakamoto and three representatives from large financial institutions get up and walk out of the room. Now I know these people. So I catch them afterwards. And I said, hey, what’s the deal? Like, did you all three get the same phone call? Like what happened? And there like, no, no, no, there was a memo that came around and it’s like, if anybody starts talking about Bitcoin, you have to leave the room. And so you know, we kind of we started from this position of fear loathing, doubt, it’s all terrible, you know etc. etc.. And you know Gartner loves to use the hype cycle. So I think we’re coming through the trough of the life cycle of the hype cycle, you know, where the trough of disillusionment and we’re figuring out what these things are good for. And so I, you know, the, the, I look at the pure cryptocurrencies as hobbies. So these are the bitcoins, the Ethereum’s, etc., etc.. And when I say that, I don’t mean to demean those, there’s $1 trillion of value locked up in there. But they’re it’s kind of like pork bellies.

Peter Tapling (00:18:39) – You know, not everybody, the common consumer did not trade in pork bellies, still does not trade in pork belly. So those things are out there. There’s money tied up in them. There’s a potential that you could as an individual or a company, make a decision that you want to play in that world. But that’s not mainstream finance. In mainstream finance, people want to know that they’re that their money is there and that it’s safe, etc., etc.. The one thing that the, that the distributed ledger based currencies have is there are no borders. That’s a plus and a minus. It’s a minus because within our borders we have all these regulations and you know, we have them for good reason. And so when you cross the borders, it’s the same reason it’s really hard for instant payments to, to develop a cross borders. Right. Currency fluctuations in FX and you know, AML CFT challenges and things like that. All that said, I think that, the by the way, one thing that I should say is nothing in payments ever goes away.

Peter Tapling (00:19:39) – People think about, oh my God, central bank digital currencies, we’re going to get rid of cash. We’re going to get rid of instant payments. We’re going to get rid of… we’re not going to get rid of anything. They all have their purposes and they serve different purposes that provide different values. You know, one of the things in financial institutions that’s really gaining, I think it’s I think it’s reached the point where financial institutions understand it well enough, and they can control it well enough, that they are beginning to use it, and that’s tokenized deposits. So creating ecosystems where fiat currencies are put onto a ledger and participants within the ecosystem can move the money back and forth instantly, you know, instantly 24 by seven by 365 assured settlement, finality, visibility, all the things we like in a payment. Now, I will tell you that today that’s largely done on a wholesale level, not a retail level. Central bank digital currencies are developing, they’re developing much quicker in less developed economies. The reason for that is, is there’s a lack of trust in the government.

Peter Tapling (00:20:42) – There’s a lack of trust in the in the currency, you know, currency fluctuation, all those kinds of things. The Bahamas came out first with a central bank digital currency, and it’s not used very heavily, but it was the most sound reasoning I had ever heard. You know, their reasoning was, look, we’re an island of a few. we’re a country of a few hundred islands. And when there’s a disaster, it’s really hard to get a boat in the water and move cash to fill an ATM machine, right. And so we want to make sure that the economy has a way to keep on going. Okay. Well, I get that I think that’s a very valid that’s a valid purpose, right. I think it was Columbia stated that the reason they wanted a central bank digital currency is for visibility from government to consumer, because they have a problem that nobody pays taxes. Right. So so I think that, you know, it’s going to be very interesting to watch what’s going on in the UK and watch what’s going on in the EU around their, you know, digital currency.

Peter Tapling (00:21:37) – And the purpose is for it. I think that the leaders in developed economies are kind of building the central bank digital currency for the central bank, digital currencies. Purpose and then to see what happens with it. Right? Just like instant payments, Hey, nobody’s asking for it. Well, no, but it’s, we believe that it’s an improvement overall to the system.

Shaun Ferrari (00:22:00) – Yep, yep. I agree with that. And I think, you know, one of the things, just to plug one of our own events a little bit, you know, that we’re going to be talking about in London in September, as we’ve been putting together an agenda for our digital currency conference, a lot of the commercial banks that we’re talking to, to your point, on deposit tokens, it does seem like there’s a lot of, of progress, and, the commercial banks are really seeing the benefit, and playing a lot in that digital asset and deposit token space, and want to talk about it. And there is an interplay that some of them are looking at between how do you how do you use all this stuff together like they’re starting to look at, okay, so I have a CBDC or a commercial stablecoin and a deposit token, and how does this ecosystem interact and what what can I do with it? Does it alleviate the cross-border challenges? Does it alleviate, some cost and time pressures that they have? I mean, it’s just a it’s an interesting world that I think they’re all trying to figure out. Cool. So I think the other the other big, big development, which, we’re going to, we’re going to chat about now a little bit is AI. It definitely seems to be capturing the headlines in every industry these days. And I think the financial industry is no exception. Now, we we know banks, are are more risk averse than, than some other most other organizations out there and central banks even more so than that. But nonetheless, I think they are, well, they are exploring how do we use this, this AI in our, in our space? And the government, governments are looking at it as well to say, how do how should we be regulating it? How what do we have to watch here? How do we we make sure it’s being implemented, implemented responsibly? In that space, what are you what are you seeing from the financial sector or the government sector?

Peter Tapling (00:23:58) – Yeah. So, first I would back up a little bit and try and explain to your audience why we’re having this conversation about AI. You know, in financial services, we’ve used AI for decades. It’s been used to, you know, figure out, been used a ton in fraud and risk management to try and identify fraudulent transaction activity. It’s been used for liquidity management. It’s been used for determining, you know, future prices of, you know, currencies and pork bellies and all those things. So but it’s all been back office. The public launch of ChatGPT, which happened at the end of 2022, I call it it’s the up for that moment for AI. If you remember when the when the iPhone came out, they, you know, they had this big advertising campaign on, There’s an app for that. And what I mean by that is, it’s the first time that AI was really approachable by a consumer. They had a website and app and you could go in and you could ask it questions and it’s like, wow, is this thing really smart? Right? Well, we’ll come to the conference, we’ll talk more about that.

Peter Tapling (00:25:04) – But the bottom line is, so now we have rather than back office AI, we have the opportunity that I can be much more consumer focused. You know, and by the way, ChatGPT is a particular form of AI referred to as generative AI. And that concept of generative is that it’s it’s generating new content. It’s taking in questions, looking at a massive corpus of data, and from that massive corpus of data, interpreting the question and then giving an answer. There are some really, if I can use a brand name, there’s there’s a highly publicized use of AI by Klarna that has saved them something on the order of, you know, 700 equivalent persons, in in call center activities. But think about Klarna business, like Klarna does business is a very global business. They have to do customer service in a variety of languages. They have to train up every person who speaks a certain language on all of their products, and to to have them give the right answers.

Peter Tapling (00:26:08) – Right. That’s really hard. That’s a big human resources management issue. And so to be able to use generative AI to train it up against a closed database, a closed corpus of information, that is the, you know, their products and the answers they want to give, and then to be able to generate those answers in whatever languages they need, turned out to be really successful. There’s a whole bunch of challenges with, with AI and the people think, oh, artificial intelligence, it’s intelligent. Well, ChatGPT gets all of its information from the internet. Raise your hand if you believe everything on the internet is true. Right. But that’s where the answers are going to come from. and so so we have this challenge that we have to understand the source of the data. If you are an enterprise and you say, oh, well, I’m going to take, I’m a bank, I’m going to take all of my customer’s information, I’m going to dump it into a body of data and allow an AI to provide an answer. Well, if the question is, how do I manage my finances to send my child to school? You don’t want the answer to be driven by someone’s personal decisions that they made at a at an earlier time, right. So there’s all kinds of privacy issues, things like that. I ask this question all the time of financial institutions. They want to use AI to say, hey, let me look at my customer base, the behavior of my customer base in the past in order in order to inform the products that I make available in the future. That sounds like a great idea, but do you believe that your entire customer base is representative of society as a whole? If it’s not, then you are taking whatever biases exist in your customer base, and you are furthering those biases via the AI. So you and you and I talked about it earlier a little bit in our prep, but, here in the United States, President Joe Biden issued an executive order on artificial intelligence, I believe I have it up right here.

Peter Tapling (00:28:07) – I believe it’s executive order 14110. I don’t know if you’ve ever read an executive order, but they’re typically pretty tight. There are three, 4 or 5 pages. They tell one department of the US government to go do something. This order is 100 pages long and it tells, you know, 50 some departments within the government to collaborate and deliver some 125 deliverables over the course of, you know, ranging from 30 days to 550 days. So it is a massive, massive undertaking and in fact, the first, the first report that I’ve seen is a report, just issued, this month by the Department of Treasury on, managing AI specific risks in the financial services sector. So, you know, keep keep an eye out for that. If I can give another plug for an organization that I’m not associated with, but, the University of Stanford, has something called the HAI Institute, and they have a, they have a executive, an AI executive order tracker. So they have a whole spreadsheet of all the things that are supposed to be done and what’s going on.

Shaun Ferrari (00:29:14) – There you go. I wonder if AI is generating the AI tracker.

Peter Tapling (00:29:18) – It’s a great question.

Shaun Ferrari (00:29:19) – I’m sure it’s helping.

Peter Tapling (00:29:19) – I asked, I asked AI questions all the time about what would I think about this, and it’s kind of curious to see their answers.

Shaun Ferrari (00:29:27) – Yeah. No, it is. And I think, you know, I was at a, an event a couple of weeks ago and, it was interesting because there was, it was the topic was on kind of the bias and, and how does how do financial institutions, you know, how can they use their data or how can they see other financial institutions data, you know, to try to build a bigger data set? Or is it synthetic data? Is that real data? You know, there are ways of looking at it. And it seemed like there was a project going on with one of the larger IT vendors and a couple different depository institutions or financial institutions, that were collaborating to basically share their, their pools of data, to see what they could do with it.

Shaun Ferrari (00:30:14) – Which, I mean, you’ve you’ve been closer to the financial services or the financial institutions than I have over the years. But to me, that seemed like a, well, look, get rid of the the bias, no, because there’s it’s still biased data sets right of customers. But at the same time, what struck me about that was, kind of a willingness, for the various depository institutions you probably saw it working with, with Zelle to where there had to be a cooperation, but it’s not necessarily the, the usual to, to have folks kind of, competitors cooperate like that. And I was like.

Peter Tapling (00:30:49) – Well, so there’s, there’s a pro and con, as with everything, you know, fraud is not something that financial institutions consider a competitive issue, right? If they can improve their fraud standpoint, the rising tide raises all boats, right? That’s on one side. On the other side. If in order to achieve that objective, I need to take my entire customer database and hand it to somebody else. Well, I’m not really very willing to do that. Right. And so building networks is hard. Anybody, I mean, anybody who’s been through the process. And believe me, I spent years, at early warning, understanding the process. I can’t take credit for building any of that, but, but it’s very difficult. Really effective. I mean, incredibly effective when it’s when it’s operating correctly. Right. I will say that there are a number of vendors on smaller scales who’ve built their own networks that say, if you buy my event, this happens a lot in fraud management. If you buy my product, I’m going to anonymize your data and make it part of my bit of information so that everybody who’s using my product benefits from what I’m seeing. Right. And so those have been successful, but they’re successful at a smaller scale. I’m going to tie it back to instant payments. So one of the challenges of instant payments that comes up in the topic of scams and Zelle, Zelle fraud, which is almost always a scam, where where the bad guy isn’t, isn’t trying to initiate the transaction. The bad guy lives on the receive side of the transaction. So the bank that’s initiating the payment, they don’t know anything about the receive side. They have no idea. Right. And so networks in solving that problem can be very powerful. I, one of my alter egos, I participate in the Federal Reserve scams information sharing work group, and what we’re trying to do is we’re trying to, as an industry collective, figure out what’s that bare minimum of information that we can make people, make financial institutions comfortable sharing that solve that problem of, you know, the rising tide raises all boats by by reducing fraud. Giving some information to senders of transactions about the receiver at the time of the transaction. Anyway. So, you know, we were we were at AI and I went back to instant payments. But that’s why we’re talking about this all at the same time. Exactly.

Peter Tapling (00:33:11) – Yeah. It all it all kind of blends together and comes around. So and I think you’re bringing it around full circle because I think we’re, we’re about out of time. So do you have any, any kind of final thoughts you want to leave the audience with? Whether it’s instant payments, digital currency, AI, financial soup, you know.

Peter Tapling – Whatever your fraud management soup. That’s right.

Shaun Ferrari – (00:33:31) – There you go.

Peter Tapling (00:33:32) – Yeah, I think that, I think, you know, again, digital currencies, I think digital currencies have passed through the trough of disillusionment and I don’t know what the timeframe is. I don’t know if it’s three years, five years, seven years, ten years. But we are going to see in financial services regular usage of digital currencies. And so, you know, now is the time to make sure that you understand that stuff. If you want to be a leader, start building things. If you care to be a fast follower or just mainstream, it’s still important to, to understand those developments. AI has become so prevalent so quickly, that it’s almost, because of that consumerization of AI, there was a true story recently that, a, Treasury sales representative at a financial institution was going to a customer, and they wanted to know how to improve the customer’s finances and what kind of loans to offer them. So they uploaded their financial statements, a private company customer’s financial statements to the AI. Well, the problem is that becomes part of the corpus in a public eye. That’s a bad thing, right? And so, governance is going to be huge, particularly, you know, governance around AI. How do I use it? Who can use it? What am I using it for. What’s the source of data? We talked a little bit about bias. Bias is going to be critically important. and it’s not only social bias but it’s it’s product bias. Like am I not offering certain people products? Am I am I stopping transactions that maybe I shouldn’t be stopping all of that stuff needs to be paid attention to, and a lot of the work that’s going on in that, under that executive order that I talked about is putting guardrails around, making sure that people know what’s going on with AI.

Shaun Ferrari (00:35:17) – Awesome. There’s a lot going on with all of this. clearly. And I thank you for taking the time to come and chat with us about all of it. And, I would say if you’re if you’re piqued around what Peter’s been talking about, definitely come, come see him. I mean, I know he travels a lot and is on the speaking circuit all over the place, which is great. He’ll be helping us out at Currency Research with our events in London in September. So the Digital currency Conference and Central Bank AI Conference, so you can find him there as well for a week, and again, Peter, thank you for taking the time to, to come chat with us.

Peter Tapling (00:35:50) – Thanks for having me. And we didn’t do too bad a job in a half an hour.

Shaun Ferrari (00:35:53) – I think we did pretty good. We covered a lot of topics. So. Yeah, I think you’ve set the bar high for future discussions on this. As always.

Peter Tapling (00:36:01) – Thank you. I look forward to seeing everyone in London.

Shaun Ferrari (00:36:05) – Awesome. Thank you sir. Thanks everybody for joining us and listening to the exchange from Currency Research. We will be back with you with another episode shortly with yet another expert, but for today, definitely, thanks, Peter Taplin, for joining us. And please, everybody out there, like subscribe, follow the PIT Exchange and we can’t wait to talk with you soon. Thank you.

Podcast Outro (00:36:34) – Thank you for listening to The Pit Exchange, a podcast by Currency Research. Check out our upcoming events and publications at Currency Research.com and join us for our next episode to hear what’s trending in payments, innovation and technology.

Navigating the Future of Payments

Welcome to our latest podcast episode, where Shaun Ferrari, VP at Currency Research, delves into the dynamic world of payments innovation and technology. We recently enjoyed engaging with Peter Tapling, an independent consultant at PTap Advisory, to explore the latest trends and challenges in this rapidly evolving sector.

The Evolution of Payment Technologies

Our conversation with Peter Tapling, a seasoned expert in technology and cryptography, was particularly enlightening. With a rich background in information security and a pivotal role in the launch of the Zelle platform, Peter brought a wealth of knowledge to our discussion.

The Push for Instant Payments

A key takeaway from our discussion was the insights from the recent US Faster Payments Council meeting. The meeting underscored the growing adoption of instant payment schemes and the hurdles financial institutions face in their implementation. We delved into the critical role of directories for requests for payments and the integration of QR code payments, which are instrumental in enhancing both user experience and security within the payments ecosystem.

Meeting the Demand for Speed

The demand for faster payments is undeniable, especially among gig workers and individuals who seek quicker access to their funds. Peter emphasized the importance of education in fostering consumer adoption of instant payments. He drew parallels to the historical shift in consumer behavior towards electronic payments, underscoring the need to create compelling reasons for consumers to embrace these new technologies.

Digital Currencies: A New Frontier

Our discussion naturally progressed to the topic of digital currencies, including central bank digital currencies (CBDCs) and stablecoins. Despite initial skepticism, the financial community is beginning to recognize the potential of cryptocurrencies in mainstream finance. Peter highlighted the advantages and challenges associated with distributed ledger-based currencies, particularly the significance of tokenized deposits and the development of CBDCs in emerging economies.

The Importance of Security and Education

Throughout our conversation, Peter provided invaluable insights into the changing landscape of payment innovation. He stressed the importance of security and risk management in the context of faster payments and digital currencies. The need for consumer awareness and responsible adoption of new payment technologies was a recurring theme, emphasizing that education is key to navigating the future of finance.

Listen to the full episode to discover more!

Stay tuned for more insights from industry leaders on the P.I.T. Exchange podcast by Currency Research.


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