Going Boldly – The 2025 Top 5 in Payments and the Dark Mirror: Bold Predictions That Virtually No Banking Professional Will Say Out Loud – Alan Koenigsberg [Season 2 | Episode #4]

Podcast Intro 00:00:01 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, and 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 00:00:33 Hello everybody. Welcome to this week’s episode of The P.I.T. Exchange, where we talk about the latest in payments innovation in technology. I’m your host this week from Currency Research, Shaun Ferrari, and I am thrilled to be joined with Alan Koenigsberg. Alan, how are you, sir?

Alan Koenigsberg 00:00:52 Hello, Shaun. Good to.

Alan Koenigsberg 00:00:53 See you. Good to hear you.

Shaun Ferrari 00:00:55 I guess I’m doing great. I’m doing great. I think it’s been a little while since we’ve seen each other. I remember it was hot and sticky in a country far, far away. Last I think we were we were sitting down. We were in Kuala Lumpur.

Alan Koenigsberg 00:01:10 Actually talking about the air conditioning.

Shaun Ferrari 00:01:13 We were we’re.

Shaun Ferrari 00:01:15 You know, and it’s aptly timed that we’re we’re chatting again because that was, at our last central bank payments conference, and we are recording this shortly before we are going to host our next central bank payments conference coming up next week in Paris, where, where you’ll be as well. So looking forward to seeing you in person then.

Alan Koenigsberg 00:01:32 I can’t wait to see you again. It’s always great to see Currency Research. It’s always good to spend time with your team.

Shaun Ferrari 00:01:38 Awesome. So, Alan, what are you up to these days? You’ve started a an insights business, correct?

Alan Koenigsberg 00:01:44 I, I have I have I you know, it’s been a great career in financial services. I, just I guess you could say I retired, but I haven’t retired, from a fantastic almost six years with visa and I’ve spent many decades in financial services and American Express and Visa and Merrill and J.P. Morgan and, you know, when you look back at all those years and I’ve been very lucky to have a lot of experiences and, and operations and middle office and front office of corporate banking and you name it.

Alan Koenigsberg 00:02:17 I look at the generational chips that we have and, you know, the old term pay it forward sort of strikes me as that.

Shaun Ferrari 00:02:25 You.

Alan Koenigsberg 00:02:25 Know, maybe it’s time, you know, maybe it’s time to sort of begin to share some of the I wouldn’t call it wisdom, but I’d call it maybe some of the, learnings that I’ve had. You know, back with the industry. So, yeah, I’ve started this insights sort of, capability to begin to share some of the knowledge that I have back with the industry. not consulting, per se, but begin to editorialize some of the work that that I know with, with the business. And, it’s been a lot of fun so far, honestly. So one of the things that I’m doing is write and writing editorial pieces around some of the things that have happened in the industry are happening in the business, and how interesting they are that history does repeat itself over and over again. And I think we’ll talk about a little bit about that, that article today that’s coming out next week for sure.

Shaun Ferrari 00:03:18 Yeah. No I definitely want to jump into that I think. As you say, it’s great that you’re able to kind of take a step back and reflect on a lot of what’s happening in the industry and how to, to use your words, pay it forward a little bit and sharing some of your your thoughts and analysis on the the latest in payments. And to that end, as you as you say, as we’re recording this, you are about to release a new article, a thought piece on the top things in payments. Right. You’re I think you’re you’re calling it kind of going boldly right in in 2025, kind of the the top five trends and payments, and what the dark mirror may may tell those things that are. Are not really talked about. So tell us a little bit about the piece and we’ll go from.

Alan Koenigsberg 00:04:03 You know, do you know me pretty well? I, I for years I’ve done this. I’ve always talked about the, the top thing or the big five that everybody wants to get done and whatever year it is.

Alan Koenigsberg 00:04:13 But we very rarely talk about the dark mirror of that. You know, the funny thing is that we never want to talk about. So this year we’re talking about the top five and then the top five things that no one wants to talk about.

Shaun Ferrari 00:04:25 And you could do that, right. You could do that now. Right now that you’re not with, a large financial firm, you can you can talk about some things that people don’t want to talk about.

Alan Koenigsberg 00:04:33 We’re not going to get crazy.

Shaun Ferrari 00:04:34 We’re not going. Oh, come on, we’ll talk about we’ll talk about we’ll talk about quickly ten things. But you’re. Well, why don’t we start with the top.

Alan Koenigsberg 00:04:41 Five that everyone wants.

Shaun Ferrari 00:04:42 To talk about. And we’ll we’ll dive into.

Alan Koenigsberg 00:04:44 Your top five things that, gosh, we probably don’t talk about it. The Thanksgiving dinner table, that are a little bit more controversial than five that, gosh, you know, that we should be prepared for, but we’re not really talking about that accurately.

Alan Koenigsberg 00:04:59 So let’s.

Shaun Ferrari 00:04:59 Start here. Yeah. So let’s start there then. So in terms of like the the top five trends, the key trends that are happening in payments this year where give us one of them to start with.

Alan Koenigsberg 00:05:10 Well I think the obvious one is, you know that whole idea payments are going social. You know, like social media platforms are continuing to lead big changes in payment services. I mean, like look at X, look at X, deal with visa. I think that’s fantastic. You’re going to continue to see deals like that to compete with things like WeChat. I mean that is an obvious move in the industry. You’re going to continue to see that money, but then.

Alan Koenigsberg 00:05:39 You’re also going to begin to see.

Alan Koenigsberg 00:05:41 Other other moves as well, like Truth Financial. That’s another, interesting sociopolitical kind of move in the industry as well. So you know what that is a competitive open market kind of a capability where perhaps politics, economics meet financial services. Where is that going to go? Well, I think the customers decide where that’s going to go.

Alan Koenigsberg 00:06:07 I think embedded finance does meet financial services in a way that perhaps it hasn’t met before, and in technology helps drive that capability. Yeah, that is a degree of.

Shaun Ferrari 00:06:19 Yeah, I was going to say on your, you know, kind of bridging. I have the benefit of having a look at Alan’s article, which is which is great. And I’m going to tie a couple of these key trends together because I think you just mentioned it. You have your your payments going social. That in my mind dovetails to another key trend which you just mentioned, which was the embedded finance. So you’re going to need ways to embed that finance and the payment experience into the into the non-financial platform. And that also in my mind dovetails dovetail. So the other one you have, which is the digital payments evolution. those three I see really kind of coming together. Do you, do you also kind of see, see that kind of triad of key trends kind of feeding off of each other?

Alan Koenigsberg 00:07:01 Well, 100%, 100%.

Alan Koenigsberg 00:07:02 So look, I mean, of the five things, a lot of them sort of are close cousins to one another. We’ll do them a little bit out of order, but sure. You know, AI is another big deal. AI is another one of those like big, big, big topics. But AI is a if used properly, it is a big defender against fraud. so you can leverage artificial intelligence to protect your customer, whether it’s business, government or consumer. Embedding technology, embedding finance to meet the customer and to meet generally the customer where they want to be. So customers are going to demand to be there. And their journey, their journey could be where they are in an ERP platform, where they are in their purchasing journey, their procurement journey. That’s important. And if you’re not going to need them where they are, they’re going to go buy something somewhere else and almost view this as a little bit like The Empire Strikes Back. You know, I look at the journey of an ERP company.

Alan Koenigsberg 00:08:05 Those organizations have been making huge investments, whether they’re acquisitions or organic investments, in sort of bringing their businesses back to being that customer where they are, whether they be big companies like SAP or Oracle. It’s like a real intermediation of their organization, really investing and meeting that customer where they want to be. Because over.

Alan Koenigsberg 00:08:31 The years.

Alan Koenigsberg 00:08:32 They have complex infrastructures. But the trick is they have all that data. It’s leveraging that data to really meet the customer on that journey. So that’s an important thing to remember. You mentioned also the whole real time digital aspect or the digitization of the payments. That’s a big topic too. But I think it depends on who you are and how you play a role in the ecosystem. We’re going to be meeting next week with central bankers and commercial bankers for a really exciting payments week, and I think that makes this particular series of conferences really impactful. This year, I guess, in Paris. But I love the saying, you know, tastes great. That’s filling that well, real time.

Alan Koenigsberg 00:09:13 For who? In real time for what? It’s the thing I always like to tease people with. So as a consumer, when you say real time payments, you know, sometimes you get a little bit of a dog eared look back. You say, well, what do you mean? And just your average consumer, they don’t necessarily care about the settlement mechanisms and all the machinery that works in the background. They just care that their Venmo payment or whatever it is, is, is realized and, you know, credited to their account immediately. They’re not necessarily paying attention to the settler risk or whatever algorithms are running in the background. You know, for that particular consumer. So like, you know, EP was a 25 year ago project and all these things going on, I think there’s a lot of tinkering happening in the background with companies trying to win in this landscape, saying, how do I monetize, you know, how do I make money at this? If the EP is a guide, a lot of people didn’t make money generally in that space.

Alan Koenigsberg 00:10:17 BD yeah, and there was some general guide to how that was monetized, but it’s yet to be realized how some companies actually made it at scale and made it, of course, safe and secure and data centric to the user.

Shaun Ferrari 00:10:35 Yeah. I think, you know, on the real time payments, one, you as you say, a lot of these are interrelated. But, you know, as I think through the real time example, I’ve, I’ve heard that some of the the US Faster Payments Council, as I sit on some of those meetings and some folks there have been talking about, is there a way to, you know, kind of rebrand almost the the real time payments? It’s not necessarily real time instant payments. That is maybe the, the driving force of it, but is it more precision payments like you want this paid when you want it or, you know, rather than I think it’ll be paid sometime within the next five days, it will clear I can tell when I want it to.

Shaun Ferrari 00:11:14 You know.

Alan Koenigsberg 00:11:15 I’ve heard the pizza meter, I’ve heard the Fedex model, I’ve heard that one, you know, for so many different years. And I don’t want to sound like I’m bitter about it or anything, but. Okay, so I’ll ask you this. You know, I’ll go back to taste. Great. Less filling. So tell me, answer these questions, you know, on all the questions you need to build the model you you need to make to be successful. So tell me something. If you answer these questions. If you have a customer. Right. So if you can answer the question, you have the customers, the infrastructure, the operators, the revenue stream, you’ll have it all figured out. So for real time, for who and for what? Answer that question real time for who and for what, and you’ll know everything you need to know about who will pay for it and who needs it. And I think that when you understand all of that, you’ll know that who needs to really actually realize the benefit? I think most consumers would say my use case.

Alan Koenigsberg 00:12:08 Do I need to pay my rent? Earlier, I told you that story when we were actually talking in our pre, you know, get together, do I need to pay my rent three weeks early, which happened to me in the UK where faster payments rolled out. They took my rent payment from the faster payments from five years ago, you know, two plus weeks early. That’s not necessarily a use case that I would need to pursue. The answer’s no and I wouldn’t pay for that. So I think that there is a use case for everybody. And then there are use cases that are worth monetizing. Friday night electric bill where my lights are going to go out. It’s worth paying for, right. So I think there’s a whole host of things that are are worthwhile in monetizing fairly. And then there are ones that probably are in. Yeah. Then you would turn your attention to infrastructure and say between financial institutions, central banks, whatever, where you want to eliminate risk out of the system.

Alan Koenigsberg 00:13:06 That is something that’s variable. But cost did with with risk. And, you know, those things are extremely important to eliminate risk between central banks and banks. Be you know, banks to banks has nothing to do with the end user, right? Yeah, I think so.

Shaun Ferrari 00:13:23 It’s a similar thought. I mean, the the end user piece, it’s the same conversation we had when looking at digital currencies. And I know we’ll, we’ll, we’ll touch on digital currency probably a little bit more in the challenges and threats that no one’s talking about necessarily right now. But a similar thing in terms of we spend a lot of time thinking of the consumer, and it’s going to be a year for who, for who, and why do we do it right? It’s like, you know, settlement risk, instantaneous settlement, maybe at that wholesale bulk level, whether you’re a bank or a central bank, makes a whole lot of sense for a consumer. If I want to go buy a pair of socks or I want to pay you for dinner last night, not necessarily critical that you get $20 today settled, right? It could be Zelle, it could be Venmo, it could be.

Shaun Ferrari 00:14:13 And your point about what do consumers really know or care about the settlement mechanism? They just want to know they get their money when they get it. And the private market has actually thrown out some decent options to do that at the consumer level without worrying about the plumbing underneath it.

Alan Koenigsberg 00:14:30 But and forgive me. Forgive me for being a little anecdotal here, but for a major payments network twice in my life. when you go to a point of sale and you buy something, there’s reasons why you would pull out perhaps a credit card for sure. A I don’t know. I mean, in the olden days, you know, a check versus something else a consumer or a small business makes a conscious decision based on other factors like, I don’t know, remuneration book points or something else, or the safety and security of making or payments or points or whatever that is. Yeah. Today it’s what QR codes and all kinds of things sitting in the payment. I’ll tell you something. We’ll be talking these kind of forums and making decisions on behalf of the customer.

Alan Koenigsberg 00:15:13 The customer makes a decision, not us, you know, for the customers. And when you put that hat on as the customer, really try to make that or take on that persona, I think then you have your answer. Yeah. You can’t make the decision for the customer. It’s not a binary mathematical Decision. Yeah. So that’s the kind of point I’m trying to make is, you know, it isn’t only about cost. It’s about how and why they make that payment. And it isn’t about only about risk. And lastly, I leave you with the following. You know, there’s a lot that’s built into the networks that have to have a hometown advantage. And it isn’t about expense only. There’s a lot built into what the networks deliver. And a lot of it is around safety and security. And merchants get a lot out of that and it’s often discounted.

Shaun Ferrari 00:16:02 Yeah. No, that’s a good point for sure. So I guess, you know, one kind of final question on key trends before we kind of move to what folks aren’t necessarily talking about as openly, which is really a catchall, is that, you know, have we have we missed something in the key trends that that you think we should really drive home to, to folks.

Shaun Ferrari 00:16:20 What’s gone on?

Alan Koenigsberg 00:16:21 I think the other trend is buying power. I think BNPL.

Alan Koenigsberg 00:16:25 Is a big, big trend. I think that I think I know that the consumer and and small business and and it is moving up market is extremely high. I see it now even a cryptocurrency settlement for buy now pay later in the role that I’ve had in large corporate. We’re even seeing the factoring business to get it to rebrand itself into talking about the buying out daily in different flavors of that. I think that’s an interesting shift in the market. Factoring is, frankly, an old fashioned kind of of place that a lot of financial institutions have traded from over the years.

Alan Koenigsberg 00:17:08 And the answer.

Alan Koenigsberg 00:17:09 Is that it is a very specific market that underwriting needs to be well understood. Okay. Let’s put something into the secondary market. And so two things buy now, pay later. You need to understand what you’re underwriting or you may get yourself into truffle on the factory market is well understood that if you don’t understand what you’re underwriting, you definitely will get yourself into trouble, especially if there’s a failure.

Alan Koenigsberg 00:17:36 So again, this is about digitisation. This is about getting from one, you know, from one form of payment to another. But it does create a disparity in things from understanding traditional credit and underwriting to fragmenting it into different places and potentially a more challenging way to measure it, especially in the consumer segment and small business segment of the population. So I think the jury’s still out on how that is measured and understood, especially in times of stress. I think I’ll leave it there.

Shaun Ferrari 00:18:12 No, I think yeah. And I think times of stress is a, you know, who knows when and where they pop up. But I think that’s when folks rely a lot on that traditional System that’s there. That’s that’s people might complain that the traditional banks are slow to move. They’re not innovators. You can argue all these points, of course, but it’s a common, common argument. But a lot of that is built in the risk averse nature and the structure intentionally built to be slow to move and avoid risk, and to have safeguards put in place in times of stress and panic.

Shaun Ferrari 00:18:46 Anyway, just a.

Alan Koenigsberg 00:18:47 But, you know, like most of the paid, most of the bigger buy now, pay later movers are non-banks, right? So they’re so tied to investors who are tied into investors who were tied into banks, who were tied into others. So is that well understood? And that begins to feel a little bit like, dare I say, what we saw in the financial crisis. So we don’t really understand that whole chain until the chain is yanked. So we’ll see how that all sort of. Well, ultimately everyone sees how that all plays out in the end.

Shaun Ferrari 00:19:21 Yeah. For sure. well.

Alan Koenigsberg 00:19:23 That was cool. That was charity shot. Thanks.

Shaun Ferrari 00:19:25 Yeah, it was cheery. I’m glad we could. We could talk on that positive note of of financial collapse. No.

Alan Koenigsberg 00:19:30 Okay.

Shaun Ferrari 00:19:31 so, speaking of things that that people don’t necessarily want to talk about, let’s look into the dark mirror to really cheer us up. So I think you, you outlined in the article some things and challenges that banks are in particular are facing, but aren’t really discussed all that often.

Shaun Ferrari 00:19:47 and that openly. So maybe chat us through a little bit of, of what some of these, these dark mirror discussions are or how we should think about them.

Alan Koenigsberg 00:19:57 So here’s the dark. Well, the dark bear isn’t the dark mirror per se, but so these are some of the things, I think that when you talk to bankers or corporate or transaction bankers that folks are worried about, but they don’t necessarily want to have an open discussion about some of the stuff. No one has a discussion about what they’re worried in. Right. So, you know, the industry is contending around a lot of change happening at the same time. But the landscape is changing and you just have to face it there. Adapting to new technologies. A lot of regulatory shifting market demands continue to push press against them. The value that business and consumer are getting from Non-banks, and there’s a lot of competing priorities that are out there. Plus competition. So you have smaller banks, mid-sized banks, large banks all trying to get their piece of the pie and undereducated non-banks and fintechs that are out there moving faster than they are.

Alan Koenigsberg 00:20:56 So you have all of this going on at the same time. Plus, at least in the West or in the in America, an era of deregulation beginning to accelerate, that brew is beginning to not cause instability, but beginning to shake things up. So the modernization the or the underneath the underlying stability of. We know what we had in front of us is beginning to become a little bit more unstable. This transparency of understanding the pricing model that we’ve had had for decades is also eroding. In other words, P times V, a corporate customer pays a bank for the banking services that they have, has been pretty stable for decades. In the code that we talk to customers like P times V, price times volume equals what we pay, with the exception of Asia. That’s what your customers pay their bank to do their transaction. Banking Asia. No, because there’s so many countries, so many currencies. There’s different ways that you would remunerate you know, your bank. Would that be fair? Yeah I think that’s fair.

Alan Koenigsberg 00:22:06 But with RTP and blockchain and all kinds of different things going on, that’s also eroding. And so with these things all happening at the same time, traditional revenue models are being upended, like their swift revenues are in decline in some cases, or their traditional payments revenues. So where are they going to focus on their activities and efforts? Ask yourself a question at your corporate treasurer talking to your banker in the US. Why does the US have to Https. But what is it? And I know that’s a controversial question. And if you do have two RFPs. Why don’t you talk to each other? And you know, these are questions that corporate treasurers ask their bankers and their bankers ask their central bankers. Does it make any sense to you? It doesn’t really to me. And so. And who pays for all that? And so those are things that have to be rationalized over time. This new paradigm should be a wake up call for institutions to be more competitive. And so that’s one sort of area that we should be talking about more.

Alan Koenigsberg 00:23:22 That it really isn’t. I noted from last year’s conference it was not talked about more actively. It was actually avoided. That should be talked about more. Another one is sort of by called New Rules. You know, what’s the share of non-bank players? You know, big tech firms, you know, like Apple or Amazon or Google, or Neobanks or ERP providers are leveraging client data. They have it in their platforms to win. And I mentioned it earlier to like re intermediate themselves back into the frame and throw that share of wallet into question and embed payment solutions right in the middle of where that corporate workflow is. That’s dynamite. That’s absolute dynamite. My. How was the bank gonna compete in that environment? Well, they still will, because most ERP players, right, are going to. Most are going to say, I don’t want to be a bank. I have no interest in being a financial institution. So even though a bank may be viewed as slower moving, an ERP, a player most of the time is going to say, you know what, I’m going to bank.

Alan Koenigsberg 00:24:39 You know, I’m going to partner with my financial institution because I have no interest in carrying this kind of risk on my balance sheet.

Shaun Ferrari 00:24:44 I was going to say, that’s the risk question, right? It’s like, where does that risk sit? I mean, they might have an interest in in getting in there for customer service or speed or other things. But at the end of the day, once you start performing bank like function, you’re taking on a lot of risk. And is it worth it at that point?

Alan Koenigsberg 00:25:02 And so it’s just adapting the relationship to what the new paradigm is. It’s not, you know, helter skelter in the whole world. You know, the sky is falling. It’s just adapting your organization and your culture and getting smarter about how you manage your client relationships. If you’re a big bank, it really is about making your people smarter about managing relationships. I think that’s really what the key is going to be. Another is digital currencies threaten bank deposits. Okay, so it’s not 1985 anymore or 1995 anymore.

Alan Koenigsberg 00:25:33 You know, it’s it’s a liquidity conversation about digital currencies and threatening bank deposits. Is it or is it? Well, yes, we have digital currencies and we have liquidity. And yes, we need to partner more actively with our central bankers. And how do we manage that? Those relationships, and in some cases, how do we regulate them? I think that’s important, especially across cross-border flows. You know simple. We do it today. We’ll do it tomorrow. CBDCs is a good example. You know, in the US we just saw some action by executive order.

Shaun Ferrari 00:26:10 Requiring a lot of inaction.

Alan Koenigsberg 00:26:12 Neal. It’s interesting. CBDCs in the US, we saw the Trump in executive order on what whether they call it the press banning CBS. Well, you know, an insider told me that at the end of the year, it was pretty much, I’ll say the provocative were dead anyway. Yeah. I think our president just sort of like said it out loud, you know, so I don’t think it was that provocative anyway.

Alan Koenigsberg 00:26:38 But does it open the door for another market, another country in the G20 to advantage themselves? Well, that’s the breaks, kid. That’s how it works. So if they’re going to do something, then let them do it. We’ll see. But with the central bank digital currency really ever ethos of a digital currency.

Shaun Ferrari 00:26:58 Not really. Not really. And I think it had the most legs in the wholesale space, as you say, letting letting a central bank settle with another central bank in a different way. I think that can still happen. Whether or not you call it a CBDC or some other digital asset transfer type thing. You can, you can, you can settle at that level, no problem.

Alan Koenigsberg 00:27:20 And that’s the beautiful thing.

Alan Koenigsberg 00:27:22 That’s a that’s a great thing. Is it, is it like another form of digital currency that does a different type of use case in function? Yeah. Can they both operate together? Absolutely. Yeah. So I think it gets caught up in these debates that don’t make any sense or people don’t fully understand their use case.

Shaun Ferrari 00:27:42 You know, on the on the digital currency one. Just curious, your thoughts on I was I was chatting with one of the, the main stablecoin issuers, a couple of weeks ago and, and they said, you know, they’re really starting to think of their, their role as another payment rail that, you know, they’ve kind of reached a place where the tech is proven. They can they know how they settle. They know how to price them. They basically they’ve reached a maturity that it’s not a question of how they can be used, but will they or who wants to use them as another form of, of settlement? outside the banking, the banking world, do you think stablecoins are there or approaching there, or how do stablecoins factor into this whole whole picture? For those of you that are just listening, you couldn’t see the eye roll at me right there.

Alan Koenigsberg 00:28:29 Now, the directors the there wasn’t that big of an eye here. Sean asked.

Shaun Ferrari 00:28:35 Me to.

Alan Koenigsberg 00:28:37 Look, I think that this is all about how much risk, you know, a let’s let’s use corporates.

Alan Koenigsberg 00:28:44 A corporate wants to take, you know, when, when the tide goes out, who’s wearing a bathing suit, right. That kind of thing, you know. So is this a safe and stable way to make payments in a time of stress? As a famous, you know, mentor, find corporate treasures. You know Health. Do I want to bet my job on making cross-border payments with a form of payment? That could be my role, versus just a traditional swift payment and wire where I understand it and I understand the risks. If the answer is no, then I’ll wait and see. But it’s mature. You know, I think that, if we answer those questions, you know, I’ll be a laggard until it’s a mature way to make a payment. I think we’ve seen this happen over and over again. I’m not fully there, although I’m a believer. I just don’t see it being a bit all that mature. Fair enough. I don’t know if you have an opinion, but maybe you can.

Shaun Ferrari 00:29:44 No no, no. I think I think all these, whether it’s stablecoin or CBDC or real time or check whatever, whatever your payment model is, I think kind of our discussion before, I think they all have specific use cases. they all have. Reasons that a consumer or a business might choose them. And I think there are use cases for stablecoin where they could serve a purpose. But to your point, would I, would I want to be risking my entire household income, or if I were a corporate treasurer or my balance sheet on on it? no. I’m going to use the traditional banking system for a lot of that.

Alan Koenigsberg 00:30:23 so, so on last year, BIS and, you know, was talking about, multilateralism and, you know, cross currency and making payments and, and bis, I love what they’re doing in the projects. One of the comments, not by BIS, but what the panelists said, you know what, we’re going to make those payments, but we’re going to let the countries decide on the rules.

Alan Koenigsberg 00:30:46 And the, you know, all know you have to worry about everything, you know, and and harmonizing all these rules, before you actually make the payments. In other words, the, the returns, the disputes, the chargebacks, whatever you want to call them. You can’t just make a payment and not have rules against that, just like Zelle. You can’t, you know, make the payment and say, well, there’s nothing protecting the consumer or the small business. It doesn’t make sense. I’ve seen some really heartbreaking instances in the United States where there’s nothing protecting the consumer, and the consumer doesn’t really understand what they’re getting themselves into. And that, to me, isn’t a really good way to, you know, facilitate a transaction. Yeah, I’m just keeping the truth. Because if it’s somebody like me that understands this business quite well, lost money. Sure thing. And that’s not a great that’s not a great way to add.

Shaun Ferrari 00:31:43 Yeah.

Alan Koenigsberg 00:31:44 Right.

Shaun Ferrari 00:31:44 If only there were a protection bureau that protected consumers.

Shaun Ferrari 00:31:48 Oh, wait. So I guess let’s let’s go to open banking. I know that’s another another area that has some, some potential, but also some risks associated with it a challenge.

Alan Koenigsberg 00:31:57 Well, we should open banking. Okay. Next stop. I mean, I think open banking is. It continues to be a huge opportunity. I’m not the arbiter of open banking. I used to joke and say, open banking is. You know, the unintended consequence of economists that make rules. But I was joking then, and I’m joking now. Oh, spanking and Uber. Just like in Europe or E3. You know, our policies that are driving banks to open up their infrastructures. I think that’s great news. If it trickles down to consumers and business having more choice. Period. End of story. I think that APIs being open that can be leveraged is a great thing. But what I’ve seen is, is that if you have a set of APIs that are regulated to be open by, if you have another set of APIs that are the deluxe ones, like we had with ISO when it came out, Then you don’t really have open banking.

Alan Koenigsberg 00:32:57 You have like a basic open banking, and then you have basic plus and all the rest of it. It makes things sort of the way they are today. Maybe I’m oversimplifying, but I think that institutions have a right to have their own secret sauce, if you will, in terms of why they’re competitive. And so open banking is prescribed for billing and other other capabilities, has a place and use cases in the market, and maybe we haven’t seen the best of it come yet, but I think that there is a place for it. I think we’ve seen a couple of operators. My former employer acquired a company that’s doing some amazing things in that space, and I think we’ll continue to see that evolve.

Shaun Ferrari 00:33:43 Yeah, no, I think I think that’s right. I think whenever you talk about projects and initiatives that are looking to try to harness this, this data that’s out there that everybody has now and how to make it flow more, more streamlined and make some automated decisions. It the opportunities are are boundless.

Shaun Ferrari 00:34:03 yeah. How to set up some guardrails on it. And those sorts of things of course have to be analyzed. But the opportunities are all out there.

Alan Koenigsberg 00:34:09 Well, look, listen, I mean, we’ve been screen scraping in the US for decades for sure.

Alan Koenigsberg 00:34:12 So I’ve been very clear why. I mean, well, yeah, that’s I.

Alan Koenigsberg 00:34:16 Love what.

Alan Koenigsberg 00:34:16 That does. And I’m not trying to make be catty or make a joke, but that to me makes my life a lot easier when I’m doing business with multiple brands at the same time. And, if you could do that, safer and sounder, I’m sure. Why not?

Shaun Ferrari 00:34:31 Yeah. Well, and to that end, I think, you know, you’re another one of your, your points is, is AI and how that is automating, treasury services also, you know, as, as a way of taking that information that’s out there and making decisions faster based on data and so forth, we have this AI revolution. so, yeah, if you want to bring up a little about about AI.

Alan Koenigsberg 00:34:53 I think that you could define it. And if you can measure it and you can repeat it.

Shaun Ferrari 00:34:58 And.

Alan Koenigsberg 00:34:58 And you can add in some, you know, predictability through artificial intelligence, and you can predict what a treasurer will do and make it bespoke to them. I think that’s accretive to what a company will do. And that can be controlled by a CFO or a treasurer. And I think there are a number of companies out there that will use that, like a Ariba or other companies that will absolutely take advantage of tech out there, that will program algorithms that will do amazing work in the field, to make corporate treasurers, CFOs, etc. much more adroit at running their businesses and take it to the next step period in the story. I think that’s the perfect use in the corporate space. And you’ll take that down to consumer and you’ll take it right up to, you know, the top enterprise level as well. I think that’s a wonderful use of AI. And then there probably will be, you know, not so great use, you know, of a generic use of AI.

Alan Koenigsberg 00:36:02 You know, for free, if you will. So I don’t think it goes any further than that, at least right now.

Shaun Ferrari 00:36:08 Right. No, that makes sense. We had a, a roundtable in the, in the UK a couple of weeks ago talking about kind of some of your key trends area about about AI, but more of the fraud protection services in AI. And you know, how to whether you’re a corporate treasurer or somebody else, how you implement it in a way that maintains its its ethics and that regulators have a comfort in and they know what you’re doing, it’s explainable that that sort of stuff. And they kind of boiled it down to talking about this, because I’m wondering how it would play out in a kind of a corporate treasury realm. they boiled it down to however you implement AI, You need to have a neck to choke at the end. Like if something goes wrong. No one wants to hear. Well, I told me that. Or the computer told me that.

Shaun Ferrari 00:36:59 so there has to be this consensus in the room was essentially there has to be someone at the end of the day that’s responsible for that modeling and that AI modeling that takes responsibility for it.

Alan Koenigsberg 00:37:11 So for Sean’s audience, what he means is there’s going to be one throat to hug the rainbow. So, Sean, why don’t we do this for your audience? Why don’t we take your recording and put it on ChatGPT and have it rate this conversation? See how accurate we are before it goes live, and put that text out there to see and have it roast us before this goes live. I bet. Lots of interesting comments.

Shaun Ferrari 00:37:36 I bet it will.

Alan Koenigsberg 00:37:38 I think that really there’s there were two last points I wanted to make for your for your audience on that on this subject is there’s an interesting dynamic here, and they both sort of have their cousins to one another. Finance and politics and technology I know are uncomfortable subjects to meet one another, but they are sort of converging again in a very interesting way, almost like the Alice in Wonderland, you know, like up is down and down is up is sort of like happening.

Alan Koenigsberg 00:38:09 And it’s a little uncomfortable, but it is happening like in the United States. And it’s, it’s sort of ushering in a new era, I think, of logistics and trade and change like we you talked about in the US, the Consumer Protection Agency is sort of shuttered, affected yesterday, which was February 10th, I don’t know. Yeah. so when the new administration is shuttering it, the FDIC is facing some changes and there’s new executive orders that are happening. My reaction to that is mixed and mixed. Not meaning. Negative. Mixed. Meaning. I remember seeing a spaghetti chart that was presented by a major tier one CEO a decade or plus ago saying, look at this mess because it was a mess. I’m not mentioning who that was or what the senator had drawn it. But I will tell you that it made. See? It wasn’t because the CEO was ill intended or the Senator was ill intended. It was just because it was bureaucracy at work. And so it was difficult. So maybe this was necessary to sort of stabilize a lot of the friction costs that has gone on in regulation.

Alan Koenigsberg 00:39:24 So maybe some of it is good. These developments are likely to have some long lasting impacts on the industry, and hopefully our industry can come together and do a little bit more self-regulation and get that straight, because we have enough on our plate today with cybersecurity and fraud and all of the other things that are facing us, that regulation is, frankly, from a government perspective to take a long time to catch up, you know, so we need a lot of help to get that, get those things done. And then really lastly, I want to make a point to you, I call it, you know, Armageddon isn’t talked about at the kitchen table. And my point is, is that and at least my I may be old but and look 30 but I’m not. I’ve seen this happen at least five times in my career. Is that the sky is falling. Oh my God, the sky is falling. But every time I hear the sky is falling. The pie, the revenue pie keeps getting bigger and bigger and bigger.

Alan Koenigsberg 00:40:29 And it’s usually has to do with the use cases growing and technology advancements continue to march forward. And to be blunt, most of the non-bank players seek to actually grow and our financial institutions adapt. And these core businesses outside that realm, like ERPs and others, just continue to move forward and provide services to customers. And we see new in new entrants continue to get better and better. So while there’s going to be exceptions and there’s going to be winners and losers, the revenue mix is just going to continue to move around. But Armageddon it’s not. so you know, yes. Musical chairs as it is. And the top, you know, the fortune 50 is going to be different in ten years than it is today. You got to be smart. But you know what? It’s just going to be what it’s going to be. You know, you got to be a smart investor and you’ve got to be, you know, well-read and you’ve got to be just continue to manage your portfolio accordingly. That’s the job.

Alan Koenigsberg 00:41:30 So I’m excited about the future. But there’s one last thing that we have to pay attention to. And I think that we’re not talking about. I think it’s really important and I’m really not talking about and and that’s quantum and quantum computing is something that affects everybody, every industry and is really the next dimension of computing power. That is not Armageddon, but it is a computing dimension that actually it’s almost like the whole idea of mutually assured destruction if used improperly. In other words, a quantum box that could hack everything. One quantum box that could actually understand everybody’s passwords immediately, and not to overdramatize, which I’ve been known to do, but to say, I don’t know, a quantum box that would know everybody’s algorithmic password for a if I institution. So like it’s like Y2K times are under it in an industry within six months. I’m not saying that would happen, but if I and their partners alike need to be prepared for that potential reality. Not within decades, but within at least years or several months.

Alan Koenigsberg 00:42:53 So that’s something that I know is on the horizon for banks. It isn’t about the actual tech. It’s about the bandwidth cubits. And so there’s a lot of work going on in the shadows, and that’s coming to the forefront. And that’s something we need to be talking about more. And spending time in these kinds of forums and getting experts to talk about investments.

Shaun Ferrari 00:43:14 Yeah, absolutely. And I know we’ve got a couple of quantum discussions coming up in Paris, and then I’ve I’ve started putting together our agenda for our digital currency conference in Bangkok, coming up later in this year, and talking to one of the big the big IT fintechs out there right now. On trying to get a good presentation together on quantum and what it means for financial services. And, you know, depending on who you talk to. Is that or is it not? Armageddon, I think has a different answer.

Alan Koenigsberg 00:43:39 Armageddon is a little bit of a strong get into the Andy. I’ve seen a couple of outfits, you know, that are doing a lot of work on quantum AI.

Alan Koenigsberg 00:43:48 The dear, dear colleague, like a Marianne Francis that, you know, was sort of leading the charge on digital currencies, who’s really shifted all her efforts towards quantum. And I’ve seen companies that are continuing to not only focus their efforts on certain capabilities, like on expense management, like a car delay or other types of companies that are really specific begin to shift their attention towards alternative computing technologies. So it is fascinating to see the shift, and I like to see it because that is the future. And they’re realizing that that’s going to make them competitive in the future.

Shaun Ferrari 00:44:27 Yeah for sure. Awesome. Well, Alan, thank you for for the kind of roadmap through your upcoming release. Upcoming article. This will be this podcast will be released, maybe just before the article comes out, if if not along with it. So for our listeners, we will definitely attach the article to the to the podcast site. So you can you can get it. We’re also happy to to work with Alan on getting it out to you as well, if you’d like, if you’d like to read a copy, we at Currency Research will make it as easily accessible as possible to you, as will Alan’s team as well.

Alan Koenigsberg 00:44:58 So be sure to thank you. You know, you guys are fantastic. Currency Research is a fantastic organization. You are a star in terms of running a great podcast. And congratulations on your new role.

Shaun Ferrari 00:45:13 At the Currency Research. But no thank you, Alan, and congratulations to your not so retirement. You’re still hard at work, but and we look forward to seeing you next week where where we will be talking about all sorts of payments stuff. in in Paris. What are you talking about on your panel next week?

Alan Koenigsberg 00:45:29 we got central bankers. we’ve got a gentleman from wise Bank of England, central banks talking about cross currency and emerging markets. And actually, it’s going to be dynamite. I’m really excited about it. it’s going to be more of a debate. So not only cross currency emerging markets, but a bit of a debate on the how the waters are. Right. next Thursday.

Shaun Ferrari 00:45:53 So awesome. Well, we look forward to it. We’re going to. Well thank you Alan. Thanks, everybody for listening.

Shaun Ferrari 00:45:59 We hope you like subscribe download however you get your podcasts. Please do so and we look forward to chatting with you and seeing you somewhere around the world soon. Thanks so much.

Podcast Intro 00:46:11 Thank you for listening to The Pit Exchange, a podcast by Currency Research. Check out our upcoming events and publications at currencyresearchc.com, and join us for our next episode to hear what’s trending in payments, innovation and technology.