From Cash to Instant Payments and Beyond – Mark Gould [Episode #11]

Podcast Intro (00:00:00) – 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. In 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.

Jens Seidl (00:00:33) – All right. Welcome, everybody, to another episode of The P.I.T. Exchange podcast P.I.T. standing for Payments, Innovation and Technology. I’m so happy to have a great guest with us today. Mark Gould from the Federal Reserve Bank in the US. Welcome, Mark.

Mark Gould (00:00:51) – Thanks for having me.

Jens Seidl (00:00:52) – It’s a pleasure having you. Thanks very much for making the time. Mark, before we jump in and talk about business, we’re trying something new here and asking people some personal questions to begin with. Just three quick-fire questions to get to know the person. Mark Gould, a little bit better.

Mark Gould (00:01:10) – Okay, now I’m officially nervous, but please continue.

Mark Gould (00:01:12) – All right.

Jens Seidl (00:01:13) – First one window or aisle.

Mark Gould (00:01:16) – Oh, aisle. All the time. I like having the flexibility of not having to climb over somebody to get out of a plane seat.

Jens Seidl (00:01:24) – I’m with you on that. Yeah, especially on long-haul flights. Definitely. Star Wars or Star Trek?

Mark Gould (00:01:31) – A Star Wars. Star Wars blew my mind. I was, like, eight years old, I think, when that came out. And it’s just. Yeah, absolutely. Star Wars.

Jens Seidl (00:01:39) – Excellent. And the last one. What’s your favorite writer?

Mark Gould (00:01:45) – Oh, boy. Well, there’s a lot of people that I love to read, but, probably the one that I read the most, and I buy every new book that comes out immediately is Stephen King. And he’s one of the most creative writers, that I’ve ever that I’ve ever read.

Jens Seidl (00:02:04) – Oh, wow. I didn’t see that coming. That’s really interesting. I’ve got a big collection of Stephen King books as well.

Mark Gould (00:02:10) – So who’s your favorite writer?

Jens Seidl (00:02:13) – John Irving, actually.

Mark Gould (00:02:14) – Oh, okay.

Jens Seidl (00:02:15) – Love John Irving. But Stephen King is definitely up there. Great storyteller. Very entertaining. So. Okay, good. Well, with that, let’s jump into the business agenda. Mark, I’ve known you for many years. I think probably met you first when you were looking after cash for the Federal Reserve. And you’ve come a long way since. And you’re now the chief payment executive, for the Federal Reserve. Can you tell us a little bit about yourself and the way you’ve got behind you and what you’re working on at the moment?

Mark Gould (00:02:45) – Yeah, absolutely. And maybe one thing I’ll say right at the outset, before I forget to say this later, is that everything I say here today is, 100% my own personal views and not necessarily shared by anyone else in the Federal Reserve System. And so with that out of the way, yeah,  I’ve spent my entire adult career at the Federal Reserve, and it’s, in many ways just been an incredibly rewarding place, to build a career.

Mark Gould (00:03:14) – The way that I think about my 33 years here is I’ve had, multiple occupations within the span of one career. And I think that’s really difficult to do and a lot of organizations. But the Fed really makes that easy and encourages that. So as a result, I’ve done a range of work over, over many years. I started as an entry-level analyst two days after I graduated from college, and I remember being nervous about whether I would know what to do, you know, whatever they asked me to do and, but very quickly gained comfort with the organization, the mission. And, you know, when, when people retire or leave from here, the things that they almost always say using their own words, but they always say they really valued the mission, the people and the importance and the challenge of the work. Nobody ever said, my job here was easy. They enjoyed the challenge of the work. And so after starting as an analyst I work my way into, you know, different positions of leadership in our payments group and cash and ultimately, found myself running, the automation arm of our national cash business, then then our national cash business.

Mark Gould (00:04:27) – I spent some time as the CIO of the San Francisco Bank. I was the COO of the San Francisco Federal Reserve Bank and even had a short stint of, I think about four months as the interim CEO of the San Francisco bank, which gave me an opportunity to participate in the FOMC meetings for a couple of cycles, which was, just a thrill for me, having, you know, studied economics and as a student and, you know, learned about the Fed, as a student and, you know, being able to sit at that table as a participant was, was pretty memorable. And then a few years ago, when we reorganized our financial services into a consolidated entity, you know, a single enterprise in the Fed system, I applied for and was selected as the first chief payments executive for the Fed system. And it’s been, it’s been a wild, fast paced three years since I did.

Jens Seidl (00:05:19) – Wow. Thank you for that. That, quick run through of your very varied career, which is really interesting.

Jens Seidl (00:05:26) – And if I may, just a quick plug, you’re still based in San Francisco, and, I was there over the weekend, and I can say officially, all of the rumors about the issues that they are in San Francisco completely exaggerated.

Mark Gould (00:05:40) – It was really fun to host you in our office here in, and, walk down the street to lunch and enjoy the beautiful sunshine and yes, San Francisco is still a beautiful place. It is not the zombie apocalypse that you may, that you may, read about in certain places. Absolutely.

Jens Seidl (00:05:56) – All right. I know you’ve been really busy launching a new product or a new service with the Fed now, and we’re going to talk about that a bit more in, in a little while. but I thought we should really start as the, the at the origin of cash, which is still the most instant payment we could think of. so do you want to tell us a little bit about, what’s going on with cash in the US?

Mark Gould (00:06:25) – Yeah, so happy to do that.

Mark Gould (00:06:27) – And, the way that I describe what’s going on with cash in the US right now is we’re probably in the busiest 10 or 15 year period, of, you know, in our history as a, as an organization, because we’re in the midst of a number of investments to really maximize the resilience. Of the cash business in the United States and ensure that we’ve got the capacity, to, you know to supply, currency, as is our job, both in normal times and in times of stress. The pandemic, you know, was a stress unlike any that we have experienced to date. It was both significant and prolonged, and it indicated that we needed, to think differently about our capacity. So we’re, we’re doing a few things right now. One is we’re upgrading the, the high speed authentication and fitness sorting machines that we use, across our, our footprint in the United States. our current fleet of machines is about 30 years old. I just I like to joke that they started their career about the same time I did.

Mark Gould (00:07:28) – And, you know, if you think about equipment, you know, machinery, electromagnetic, you know, kinds of processing equipment, 30 years is a long time. So over the next five years or so, we’ll be replacing all of those machines. We’re also adding to our vault capacity. We have two big projects, both underway and soon to begin to enhance our storage capacity in Miami and in the New York area, which are two of our largest cache centers in the country. And then there’s work underway to design, a new series of US banknotes. That’s work. That’s happening at the Bureau of Engraving and Printing and partnership with the the Board of Governors at the Federal Reserve, the Secret Service, and we play a role in that also ensuring that those notes are machine able. I think the most fun the best part about the cash business, to me is the cash itself. And it’s something that I think is really underappreciated outside the world of cash as the banknote as a device, really.

Mark Gould (00:08:31) – It’s like a three dimensional object, not a piece of paper with ink on it, but and, and I think that’s just really underappreciated in, in society and maybe around the world. Thinking about the blend of art and technology and history and science built into to each one of those notes. When I travel around the world, I’ve kind of made a habit now of trying to spot some of the places featured on a banknote. And I’ve texted them around to our team. So I was in Romania this summer and I took a picture of a note in front of the house that was featured on this particular denomination. And I said, I, you know, I found it, but I think that that connection to national history, you know, along with commerce, I think is really cool and a very unique to the cash business.

Jens Seidl (00:09:20) – Absolutely. and I guess one other thing that you didn’t mention is that the BEP, of course, is also expanding its capacity.

Jens Seidl (00:09:27) – We were lucky enough for the week before last, when we were in Fort Worth at the Bank Conference to have a tour of the BEP, which was amazing, that the scale of those print works is just, on a different level.

Mark Gould (00:09:41) – Yeah. The Fort Worth facility for BEP has undergone a recent expansion and you know, the Bureau of Engraving and Printing Facility in Washington, DC is it’s in an old historic building that was really never designed to be a modern factory. And so there’s work underway to design and build, really the modern factory that, that’s needed to, to meet future demands for US currency.

Jens Seidl (00:10:07) – Yes, indeed. Okay, well, maybe let’s move on from cash to digital payments and trying to build a segway here. Are there certain attributes of cash that you think are also prevalent in digital payments?

Mark Gould (00:10:21) – But I think what’s kind of funny about that is there are a lot of digital payments that I think are trying to mimic the characteristics of cash.

Mark Gould (00:10:30) – If you think about a cash transaction, if I just hand you a $20 note, it’s immediate, it’s final, it’s irrevocable. I suppose I could ask nicely for the money back, but, you know, you’re under no obligation to give it back. And it’s completely ubiquitous. I mean, it’s tractable anywhere in the world, and it works without power, you know, or without a phone or without a bank account. I mean, it really is a universally inclusive payment instrument. And I think that’s one of the one of the reasons for cash’s enduring popularity, here in, you know, you mentioned that I live in San Francisco. If I go to Silicon Valley, people will ask me, well, I don’t even understand why you’re still investing in cash. I thought everyone stopped using cash 20 years ago, and I my response to that is, number one, no, everyone did not stop using cash 20 years ago. But also it there are there’s a large segment of the population, both in this country and around the world, that rely on cash because they may not have access to the full suite of financial services available to financial institutions.

Mark Gould (00:11:36) – And so I think when I think about electronic payment methods, I think everybody is thinking about how do I make it ubiquitously available, how do I make it resilient? you know, and how do I make it speedy and yet secure? And, and I think those are all things that are built into the cash business that are difficult to replicate. But, everybody is working very hard at it.

Jens Seidl (00:12:02) – Okay. Well, in that context, maybe, there’s of course, a whole range of existing and traditional electronic payments in and not just electronic payments for that matter. Things like cheques, the ACH, Fedwire. What’s going on with these? Are they stable? Declining on an uprise? Where are we with regards to those payment methods?

Mark Gould (00:12:26) – So let me just start with maybe an overview of our entire financial services group that supports these, these various payment rails. So we have just under 2000 people in the Federal Reserve Financial Services Group, or FRFS for short, because we love acronyms across the country and all 12 of the reserve banks.

Mark Gould (00:12:43) – And on a daily basis, we’re clearing roughly $5 trillion, peaking up to close to double that. through all of our electronic payment systems. And we’re serving over 9000 financial institutions. So that makes our payment system and our financial system in the US really complex. And so the role that we play is really trying to be a simplifier to the smallest banks and the medium sized banks in the country to be interconnected with all of those other financial institutions. So check, remains a widely used payment instrument in the United States. I remember being told in 1991 that checks would be going away soon. That hasn’t happened. I think last year we still cleared something like $9 trillion worth of cheques. So there’s really a lot of checks still in the system. and, you know, apparently for the reason that they’re still, they’re still the best payment instrument for certain use cases. ACH, in the United States remains very much the workhorse of the payment system, for recurring payments, you know, things like your mortgage payment, your paycheck, you know, bill pay, etc..

Mark Gould (00:13:51) – ACH is widely used and it’s very, very efficient and inexpensive. And so, billions and billions of ACH payments made every year and, and Fedwire is the large dollar RTGS system in the United States and, you know, really systemically important in that respect because without Fedwire, really nothing else. You know, none of the rest of the financial institution, the financial system would, would struggle to function. What we’re doing with all of these right now is with, check we’re we’re really managing the decline of that business and thinking about, you know, how do we make that business as efficient as possible, also investing in additional tools to help mitigate fraud because that is an issue in that space. Same thing in ACH we just introduced a payment anomaly product to help banks identify potentially anomalous payments. And in Fedwire, we’re preparing to implement the new ISO20022 format that’ll be going live in March of ‘25. That’s a new format for our RTGS systems that’s been going live in in waves in different places around the world.

Mark Gould (00:14:56) – We’re going to join that movement in March of next year.

Jens Seidl (00:15:00) – All right. I have to say, from a European perspective, as you know, I live in Germany. To see that many checks still being cleared in the US is amazing. I think it was in the late 90s here when the EC check was running out basically. And since then, I, I don’t think I’ve seen the check, in, in Germany since. So it’s, it’s interesting that so many people and businesses for that matter still use checks.

Mark Gould (00:15:28) – A lot of those are really driven by small businesses. I think increasingly, you know, I have a habit of asking our interns that we hire each summer, I’ll ask for a show of hands. How many of them have a checking account? And, and I think for the last 2 or 3 years, no one has raised their hand. So I think, you know, demographics will solve this problem over a longer period of time as people express preferences for different, different means of making payments.

Mark Gould (00:15:51) – But definitely small business, is still a driver of a lot of that check business, which is one of the reasons that we’re thinking FedNow, might actually be an avenue for some of those payments to be made more, more efficiently.

Jens Seidl (00:16:04) – Absolutely. Well, let’s talk about FedNow. Let’s, let’s go from the really slow check payment mechanism to a very fast one FedNow, do you want to tell us a little bit about what you’ve been working on and what the FedNow is all about?

Mark Gould (00:16:19) – Sure. In a in a nutshell, FedNow is it’s an instant payment solution that’s available 24 / 7/ 365 that enables money to move instantly between financial institutions and it fills an important gap in the in our payment lineup because none of our other services are available 24 / 7, at least not yet. And, and none of them are really instantly available and accessible in the same way Fedwire is, you know, is real time in its own way, but it’s less accessible than, we envision Fed now to be.

Mark Gould (00:16:51) – So that instant settlement and around the clock availability with irrevocable, final funds are the true defining features of FedNow. We after a series of of public consultations and deliberations about whether to do this, we made the decision, the Fed made the decision, to introduce FedNow and stated our goal to get it launched in July of last year, which we, successfully did, we launched with 35 connected endpoints. And as of today, I hesitate to say a number because I’m always wrong when I say this, because there’s always another one just around the corner. But as of today, we have 777 financial institutions connected, which is in less than a years time I think, I’m really proud of our team’s ability and the collaboration that we’ve experienced within the industry, because we couldn’t do this by ourselves. We you know, we’ve really focused a lot on partnerships with the core providers and the financial technology firms that are supporting, financial institutions. So that’s how it’s going and, volume is growing.

Mark Gould (00:18:00) – We’re determined to reach a point of ubiquity in the United States. We don’t have the ability to mandate that, like, exists in some other jurisdictions around the world. So it will take time, but as I said, we’re determined, and we made really good progress in less than a years time. Okay.

Jens Seidl (00:18:18) – And then am I right in saying that you’ve really exceeded your original goal when it comes to the number of institutions that you’ve signed on?

Mark Gould (00:18:28) – Well, I like I said, I, I think we feel very good about our progress. It’s difficult, you know, we really didn’t know exactly what to expect. We felt like we had a good value proposition. But the last new payment rail that we introduced was ACH. And that was about 50 years ago. And when you only do something once every 50 years, yeah. You know, you’re not working for muscle memory here. You’re learning a new all over again because all of us working on this weren’t around when ACH was introduced.

Mark Gould (00:18:59) – So in some respects, we didn’t know what to expect. Although we know we knew that there was a desire for FedNow because in the public consultation process, what we heard from financial institutions was that they wanted us to get into this space. And so by virtue of them asking us to get into this space, we thought once we launched, there would be demand and certainly there was.

Jens Seidl (00:19:22) – Okay, great. And, of course, instant payments are often seen as a new rail as well to, to enable new payment experiences. So if that’s the case, how should Fintechs think about fit now is is this something they should be interested in.

Mark Gould (00:19:39) – So I think Fintechs should be focused on this. And I think that for a variety of reasons, you know, so one is I think there’s a huge amount of opportunity with financial institutions for Fintechs to be an enabling force in the adoption of FedNow and expansion of use cases for FedNow. I mean, you know, when I meet with Fintechs all across the country, many of them, all of them are focused on solving a particular problem.

Mark Gould (00:20:03) – There’s some niche that they’re that they’re solving in an efficient way that can enable a use case for a financial institution, to just plug in to their core platform and, and then move on. The second thing that I think about is the general business community throughout any business, non-profit, educational institution, really anyone who’s sending or receiving a payment, they really need to think about how instant payments can make their jobs easier or enable them to meet their strategic objectives. And I well, I think we’ve done a great job of educating the financial community about instant payments. I think there’s a much larger, issue and educating the broader business community. I think we have an awareness gap right now, but I think Fintechs can actually solve some of those problems, too, in driving adoption. In the third way is really just thinking about FedNow as a platform for innovation. ACH today is being used in ways that we nobody would have imagined 50 years ago. And I think FedNow is very much in the same in the same place I think FedNow 50 years from now, 20 years from now is going to be used in ways that none of us could have imagined. Today.

Mark Gould (00:21:14) – I think about it just like with my phone. I mean, I flew home yesterday and I, you know, used my phone as the boarding pass and it, you know, and, you know, it gave me, you know, gave me directions through the airport. There’s the things we use our phones today that nobody would have ever thought about ten years ago, even 20 years ago. And I really think that FedNow or instant payments more generally. It’s a platform for innovation that really innovative people are going to create solutions, whether it’s payments being embedded or, you know, other, other, you know, other ideas that I think will wow us in the future. And that’s what I’m particularly excited about. I think Fintechs will play a big role in that.

Jens Seidl (00:21:54) – Okay, great. And it sounds super exciting, I have to admit, because again, I think technology in payments has driven so much innovation in the last ten years or so. I think there’s a lot more to come.

Jens Seidl (00:22:07) – So I can see how this is going to play a role.

Mark Gould (00:22:11) – Yeah, I think the next ten years are going to be maybe one of the most dynamic decades we’ve, we’ve ever seen in payments. And I say that knowing that, you know, we as the Fed, we only provide service directly to financial institutions. But knowing that there’s this whole range of technology firms and fintech firms, you know, looking to help banks, help financial institutions better leverage these platforms that are coming to market.

Jens Seidl (00:22:36) – Absolutely. And I’ve heard the term, use case agnostic being used when talking about Fed. Now what does it actually mean. What does it mean for banks, Fintechs and so on.

Mark Gould (00:22:50) – Yeah. I think, you know, the easiest way for me to describe this is that we’re in the very early in the, the game for instant payments, I mean, in baseball terminology, were probably in the top of the first inning. And I guess I should probably use a soccer analogy again for you.

Mark Gould (00:23:09) – So we’re in like the early minutes, you know, of the soccer match. And so we don’t want to presume that we know what all the long term beneficial use cases are going to be. We know what we’re seeing at the outset. We’re seeing instant payments being used, for things like account to account transfers. So if you’re moving money between a bank account and your brokerage account or something like that, we’re seeing people use it to fund wallets that they might have for some particular purpose. You know, we’re seeing it used to enable things like earned wage access, which is, you know, an employer paying an employee at the end of a shift or at the end of the day, as opposed to once every week or two just to speed the access to earned wages, you know, for consumers. And I mean, if I’m completely honest, I don’t know that we would have 12 months ago or 24 months ago guest that those would be all the particular use cases, that we would see.

Mark Gould (00:24:11) – So we’re very open minded to really think about, you know, what are the those use cases to me, the way that I describe it, it’s anywhere where speed, finality and irrevocably really matter. And that tends to be things like, you know, where maybe the goods have left the dock. And, you know, if you’re the person selling, you really want to make sure that you’ve got good and final funds. and they’re there just so, so many applications like that, that we’re just excited to see what the industry does with this.

Podcast Outro (00:24:41) – Okay. Yeah.

Jens Seidl (00:24:43) – Yeah, it sounds really exciting. And I like the open mindedness of things because, as you said, with phones, when, when an iPhone started, I think the App Store was really the game changer. Right. Was that open platform where people could develop new solutions, new ideas, try out new things. And it sounds like that now. And as you said, instant payments generally are going to provide a similar platform to really develop new user experiences.

Mark Gould (00:25:11) – I think that’s right. And if and I were the, you know, stewarding the BlackBerry at the time the iPhone came out, you know, we would be thinking, well, there, you know, that doesn’t even have a keyboard and how could that possibly be? And we wouldn’t even be thinking about, you know, things like using it to, you know, get directions on your phone or, you know, ordering an Uber or something like that. Just there’s so many experiences that we do every day, really, without thinking about it, that it would have been difficult to predict maybe even five years ago. So I think instant payments are going to transform how payments are made in the United States. But I don’t know that anybody knows exactly how.  That’s what I think is, is going to be really fun to watch.

Jens Seidl (00:25:55) – Yeah. So with all of these endless opportunities, but what do you think is Fed now actually going to potentially displace this is all going to be additional payments, new payments? Or do we need to expect that existing payments will be replaced by instant payments?

Mark Gould (00:26:12) – Well, this is my own view.

Mark Gould (00:26:14) – But I really believe that the total number of payments made in the United States and probably in the world, is going to increase dramatically over the next, the next ten, the next 20 years. And the reason that I think that is that when payments are easy, they’re there just inevitably will be more of them. To use my example from earned wages. Just imagine if, you know, some segment of employers around, around the country, maybe it’s, you know, fast food workers and gig workers or shift workers, if every one of them got paid once a day instead of twice a week or twice a month or once a week, that itself would increase dramatically the total number of payments made, in the United States. And I think there’s a lot of other examples like that. So, you know, number one, I think the total number of payments, will increase very significantly. Beyond that, the way that I think about this is, we should think about payments, the right payment flowing on the right rail.

Mark Gould (00:27:15) – So some people have asked me, well now that FedNow is here, does that mean all of the other payment rails are going to go away because it’s fast and it’s easy and it’s final. And the one way that I’ve answered that is to say that, you know, when commercial aviation became really common, that didn’t make cars, people stop buying cars, people didn’t stop driving just because flying was easier and it was faster.  Today I drive to the grocery store, I walked to my next door neighbor’s house and I fly across the country. Those are all perfectly good means of transportation that fit the particular use case that is required. So I think of payments very much the same way. And I think of instant payments as filling a gap, where today we have some payments that are flowing through check through ACH and through the wire system that might be better suited for instant payments. And they’ll probably, over some period of time, find their way to the instant payments platform.

Mark Gould (00:28:14) – But not all of those payments are perfectly suited for an instant payment solution. So by virtue of the fact that we haven’t had instant payments, they’ve all found their way to other, you know, to other platforms. And I think over time they’re going to find their way. It’s like water. Water finds a way, you know, the right payment will find its way to the right rail over, over a period of time. But I don’t think that that means that all volume will shift from ACH or wire. Although I might express a hope that, again, personal hope that, that maybe, maybe we find our way to stop writing checks like you’ve done, over there.

Jens Seidl (00:28:56) – Okay. you might have just, spoil it. One of our sessions in the upcoming payments week in Kuala Lumpur, where we’re going to talk about are instant payments going to replace all of the other payments? And I do agree with your assessment. I think there’s different tools to do the right job.

Jens Seidl (00:29:14) – Right. And it’s not going to be all instant payments. And, I think another thing related to instant time, the speed of it with speed comes risk. And I know what I’m talking about I’ve been driving on German motorways for most of my life. It’s scary. There’s new risks, fraud risks, for instance, that we’ve seen in a lot of markets that come with instant payments. But there’s also new risks evolving in other payments. Can you talk a little bit about especially the fraud risk and what you’re observing there in the US?

Mark Gould (00:29:42) – Yeah. So I think when I talk with banks, financial institutions all around the country, fraud is one of the number one things that I hear about. And there’s actually quite a lot of cheque fraud happening in the United States right now. And so that’s an area where banks are investing an awful lot. As I mentioned earlier, you know, we’re investing across our services in, risk mitigation, you know, payment anomaly detection tools, you know, things like, you know, being able to detect if a Treasury check has been deposited, you know, more than once and alerting a bank to that or identifying anomalous ACH payments.

Mark Gould (00:30:16) – I think this is going to be an area if you and I sit down five years from now or ten years from now, and you ask what we’re focused on, I think one of my answers will be fraud and fraud mitigation, because I think just as we continue to improve our risk management and fraud mitigation capabilities, somewhere else in the world while you’re having Payments Week, in Kuala Lumpur, there’s going to be a Fraud Expo happening in some other part of the world where the fraudsters are strategizing about how they’re going to, you know, what their strategies are for, for attacking payment systems around the world. And we just need to be very clear eyed about that. I was speaking at a conference recently, and I described fraud as this giant elephant that everyone in the payments business can see a part of. The sender can see a part of it, the receiver can see a part of it. The parties in the middle, like the Fed or other service providers, might be able to see a part of it, but nobody can see the entire thing.

Mark Gould (00:31:14) – And I think that’s going to need to be a challenge for the industry to find solutions for, to collaborate and to find ways to share knowledge and, identify best practices. Because I really don’t think, that any one party is going to be able to solve this. It’s going to require, I think, an awful lot of collaboration in the industry, particularly at a point in time, when, when the threats are, are increasing, you know, through tools like AI or Jen, I backed I was talking with a banker yesterday. And this person told me that you know, their checks of online account opening attempts, were 70% fraudulent attempts that only 30% were real people and 70% were fraudulent attempts, through using various tools. And it’s very sobering statistic to know that there’s, there are a lot of bad actors in the world that require vigilance on the part of really everybody in the payments business.

Jens Seidl (00:32:17) – Well, that that is a shocking statistic. I had no idea. It’s that bad. And of course, you mentioned AI now with, deepfakes, etc. these online KYC processes are must be under scrutiny. Right. And those it’s not the only aspect of that, but one very clearly where with technology now it’s much easier to fake a person ultimately.

Mark Gould (00:32:46) – Yeah. How do I know I’m really talking to you, Jen?  How do I know that this is you?

Mark Gould (00:32:53) – Your digital twin. I think. I think it’s absolutely the case that the risks are going to continue increasing, which means that the mitigation steps are going to need to continue increasing. Which is why I said this, I think this I strongly suspect this will still be on our list of investment priorities five years from now, ten years from now, 20 years from now, because, as creative as we are, this is true for, for the banknote, you know, business due to bring it back to cash.

Mark Gould (00:33:20) – You know, I mentioned that, you know, in the US, we’re working on a new series of banknotes. The only reason that any country,  well, maybe not the only reason, but the primary reason that that the countries, seek a new, you know, new series of banknotes is to introduce new security features because just as the security features advance the means of, of counterfeiting, continue to advance as well.

Jens Seidl (00:33:44) – Sure. Absolutely. But I guess as they say, no risk, no fund. And, to me, it sounds like there’s a lot of fun excitement and and really interesting. Potentially life changing developments ahead of us in the payment space, but do you agree with that?

Mark Gould (00:34:00) – I think so. And I guess the way that I think about it is the, you know, we tend to talk about macro statistics, how many payments we processed, how many billions or trillions of dollars or things like that. But, you know, as we go about our work and, and every day we, we work to keep our systems up and operating and highly resilient.

Mark Gould (00:34:17) – I just I remind myself that behind every single individual payment there is a story. There is a person or a business behind every single one of those payments. it’s someone making a house payment or paying their children’s college tuition or, or getting their very first paycheck. I mean, there is a story behind every single one of those payments. And, so every single day we’re touching the lives of, of nearly everybody in the U.S. and many people around the world. And, I think that’s, it’s one of the reasons why our team is so engaged and, so excited about the work that we’re doing.

Jens Seidl (00:34:58) – Excellent. Great. Well, I think that’s a great note to, wrap this up on, unless you’ve got any last words for us of wisdom that I’d like to share.

Mark Gould (00:35:07) – Really appreciate the opportunity to visit and look forward to doing it again sometime.

Jens Seidl (00:35:13) – thank you very much for joining us today, Mark. Really appreciate it.

Jens Seidl (00:35:15) – Was great to have you. And, yeah, hopefully. See you soon.

Podcast Outro (00:35:20) – Thank you for listening to The P.I.T Exchange, a podcast by Currency Research. Check out our upcoming events and publications at and join us for our next episode to hear what’s trending in payments, innovation and technology.

Welcome to our latest podcast episode, where we delve into the dynamic world of payments innovation and technology. We recently had the privilege of engaging with a distinguished guest from the Federal Reserve Bank in the US, Mark Gould. As the Chief Payments Executive, Mark brought a wealth of knowledge and experience to our discussion, providing us with a glimpse into the next decade of payments and the transformative role of instant payments in the industry.

A Decade of Dynamic Change in Payments
Our conversation with Mark Gould began with a reflection on the anticipated changes in the payments landscape over the next ten years. Mark emphasized that we are on the cusp of one of the most dynamic decades in payments history. The emergence of technology firms and fintech companies is shifting the focus towards instant payments platforms, which are still in their infancy but rapidly gaining traction for various applications, from account transfers to funding wallets and enabling earned wage access.

The evolving use cases for instant payments are a testament to the industry’s innovative spirit, and it’s exhilarating to consider how these advancements will shape the future of transactions.

Coexistence of Instant Payments and Traditional Rails
One of the burning questions we posed to Mark was whether instant payments would replace existing payment methods or coexist alongside traditional payment rails. Mark’s response was insightful, drawing an analogy between the diverse transportation needs served by cars and airplanes and the varied use cases for different payment methods. He predicts a significant increase in the total number of payments, both in the United States and globally, as transactions become more accessible. Instant payments will address specific needs within the payment ecosystem, but they won’t render other payment methods obsolete.

Addressing the Rise in Fraud Risks
With the rise of instant payments comes the increased potential for fraud, a concern that Mark acknowledged as significant. Financial institutions are actively developing enhanced fraud mitigation measures to keep pace with the prevalence of instant payments. Collaboration and the sharing of best practices will be vital in this ongoing battle against fraud, especially as fraudsters employ advanced technologies like AI and deepfakes to refine their tactics.

The Human Element in Payments
As we wrapped up our discussion, Mark reminded us that behind every payment is a story. Whether it’s an individual making a mortgage payment or receiving their first paycheck, the impact of payments extends beyond mere numbers—it touches lives. As we navigate the future of payments, it’s crucial to maintain a focus on the human element, innovating while ensuring security and reliability remain at the forefront.

Exciting Week in June!

As we conclude this enlightening journey, we invite you to continue the conversation and join us for the upcoming Currency Research Payments Week in Kuala Lumpur, Malaysia on June 10-14. This unique event provides a wealth of insights, networking opportunities, and collaborative experiences in the vibrant setting of Kuala Lumpur. We are thrilled to offer not one, but two prestigious conferences back-to-back, giving you the chance to fully immerse yourself in the dynamic world of payments.


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Disclaimer: While we embrace open dialogue and value diverse perspectives, it’s important to note that the views expressed by individuals in our podcast episodes are entirely their own. They may not necessarily align with the views, opinions, or positions of the organization they are associated with.