EP 163: Demystifying Core Banking Modernisation, AI, and the Future of Payments

Speaker A: Welcome to Dave and Dom Demystify, a fintech futures podcast helping make sense of the world of fintech and digital finance. Please sit back and listen as the two Ds take a subject and discuss it to make it clearer and easier to understand Demystify. Welcome everybody to the Dave and Darm Demystify Show. This week I'm on my own as Dave is away, but I do have a really esteemed guest with me, a company that actually I've been trying to contact for a while, but Luckily I met HM Up Money 2020 this year and I'm so excited to have Leonardo Collardo from Pismo with me today. Welcome, Leo. Thank you.

Speaker B: Thank you for having me.

Speaker A: Great. Leo, for those people that don't, um, know you, would you just give us a bit about your background and then tell us, what does Pismo do?

Speaker B: So I've been in payments for about 30 years. People sometimes pick an industry. I always say the payments industry picked me in different companies. But I've been at visa for 15 years. It's been a great journey. About two years ago, visa acquired Pismo. It's a core banking and digital processing platform all in1, encompassing one API native. And I've been appointed as general manager to run Pismo globally for on behalf of Visa.

Speaker A: Fantastic. And so my audience knows that I love to write about kind of core banking. And the obvious question I'm going to ask you, I've spoken to literally the good and the great in core banking and they all claim to have this and that, etc. But what I'm really interested in is what separates you from the other vendors in the marketplace, what makes you different or special.

Speaker B: I think when you look at Pismo, we are real time by design. And I think where the world is moving today, it's real time. If you think how you consume everything, whether it's video, music, and that also applies to payment, it's about being immediate on demand right now. And I think that's the way that Peaceful was built. It supports full account and transycle life management with real time event driven architecture. And this is kind of the promise. And this is why when you overlay the Visa foundation on this, where, hey, we want to be with our customer everywhere you want to be and at every moment you want to be. And delivering on that promise is where Bismo comes in as a true platform that allows us to provide services and support to our clients. Real time. I think that's one of the key differentiator, uh, and the other one, it's about we're flexible instead of being fixed. And this is where cloud, native, API phase, microservices driven architecture helps institutions compost, adapt and scale without rebuilding from scratch. So gone are the days where you had to hollow out the core and literally throw your old platform away. This is something where as you grab piecemeal and you leverage our components, you could actually modernize over time. So I think these are the two key differentiators I mentioned, the Visa underlay. And I think this is where you have the power of Peace Mode plus Visa and uh, the unlock of everything that Visa can represent. Security, reliability, capacity, trust. Right, Everything synonymous to Visa and all the value added services that we can unlock in terms of risk and identity, cybersecurity. It provides you a whole package of not just processing, not just a real tie in the flexibility, but an array of new services that are readily available to integrate.

Speaker A: I like the idea of kind of instant payment I guess, but how does that work in a banking world that's kind of surrounded by T +2? How do you make that happen?

Speaker B: I think that's the real challenge, right, because customers expect everything right now. And this is where modernization becomes crucial and important. Dreo events allowed you this about a world where you're providing a loyalty on demand, something that can be customized, something that could be AI driven, personalized to the customer. And you're figuring out once you're in batch and you're doing this after the fact, you've lost that opportunity, you lost that moment of magic, right where the world is going. It's contextual personalization, meaning I need to understand how you shop, why you shop and be able to deliver, in this case offers. And I'm um, able to do that in real time. I think this is the real unlock. What we're helping our banks and our uh, financial institutions do is do that one component at a time, be able to pick out our APIs and be able to deliver some of those experiences without necessarily having to replace their entire platform. The interaction between legacy platforms and APIs is something that Peaceful can unlock and be able to start delivering those services.

Speaker A: Fantastic. So when you talk about real time, is that, does that mean that uh, even the actual understanding of the offer, like when you do your analytics to look at the customer data, uh, and you say, oh, Dharmesh is like in Starbucks now and I have an offer about Starbucks, can you make it there? And then is it actually a real time database driving the offers?

Speaker B: I think that's the goal. Our uh, business capabilities allow you to do that. And what we're able to do is feed all that information so it could happen. And all that decisioning. So look at all that computing power. It's AI driven and all that computing power is happening real time. And I'm actually pushing that out and saying, hey, this is happening. This can be something that we can deliver. And this is where you go. This is why this conversation, the modernizing is no longer about infrastructure, about a novelty. It's actually having to drive strategic growth in your business and consumer and consumer trust. Imagine companies and financial institutions understanding that between 8:00am and 8:05 you stop at your favorite Starbucks in a certain location and you have a Matcha whatever and that offers deliver for you. Exactly at the nick of time. I think that's where the world is going. Computing power is there and the ability for us to deliver those experiences are there through peaceful, through Visa and having the ability to work with financial institutions to deliver this. It's what we're working on.

Speaker A: Fantastic. I mean you probably won't be surprised but I've spoken to so many banks even recently I spoke to a building society and um, they were about to build like a data warehouse to do real time offers. And I'm like, well hold on one sec. ADAT's in a warehouse. That's not going to be a real time offer, that's going to be an offline calculation. Right. And that's not the same time, same thing as a real time offer. And by the way, why are you still building a warehouse when we have technology that can do real time analytics in sub second responses. And that I think is a danger for some of the bankers to rely on even like their legacy. Thinking about technologies like that they create kind of false boundaries about what they think is possible. Would you agree with.

Speaker B: Totally. I uh, like the point that you made because I think that's at the core of modernization. When you have a financial institution, what you have is separate platforms. They have a platform for cards, they have a platform for payments, they have a platform for core banking. And all these platforms today are segregated. They don't talk to each other. What ends up happening is all these platforms are feeding a data lake and then that data lake is feeding downstream systems. And by the time that you're able to deliver and actually act on that data, it's batch. It's what we call batch. And this is where when you think about the power of Piecemo, our platform um, supports more than 8 billion events a month. Think about that data. 8 billion events a month. I'm um, literally streamlining behavior, I'm really streamlining and the ability for banks and institutions to grab the richness of this data and be able to impact new offers, new experiences, unlock really customized payment experiences is what we're aiming for. And I think this is where peaceno being one platform stripping across core banking, whether it's retail, corporate banking, lending, whether it's payments, real time payments, talking tokenized assets, this is going to continue to evolve. Or cards, whether you're talking about debit credit, prepaid commercial products, the ability to see your customer at any single point, whether they're withdrawing money from the atm, whether they're making a digital payment, whether they're doing a swift, whether they're doing a transfer, a money transfer, using Zelle as an example, whatever it is, or they're making a payment, you're able to actually understand consumer behavior and actually deliver those key experiences.

Speaker A: Interesting. I mean um, I'm liking everything I hear at the moment. And one of the challenges I think for core banking vendors is that I guess that the ideal would be they had one version of the software but inevitably they're customizing their one version to work within a certain jurisdiction because you know, in that jurisdiction, let's say Pakistan, the data has to live in that country but uh, you could run the software from somewhere else etc. So it's the localization I guess to countries own kind of data practices but also the regulations, the reporting for compliance, etc. How do you cope with that? Do you uh, ship a separate instance for each country or how do you manage this problem?

Speaker B: So it's interesting question. So from a VISA perspective we operate in more than 200 countries. From a business perspective we're scaling pretty fast where by the end of this year we should be in around 20 to 25 countries open. And every time that we go into a country we're obviously understanding what has to happen from a regulatory, from a compliance, from a scheme, from a technology perspective to be obviously respect the laws of everywhere that we operate the software is the same. This is a software house, this is a software as a service. So we don't change the software. What we're able to do is we have a layer of localization where we're able to understand what makes each of the countries unique. One of the unique things on cards as an example is installment payments. And installment payments are different around and these are credit transactions that allow consumers to buy over time, buy now, pay later. There are multiple flavors in every countries. Even within our countries you could have different types of buy now, pay laters or installments. All of these are actually embedded and built and customized into our platform through this orchestration layer. But the instance of a platform remains the same around the world. It's the same one, which is what makes I think Pismo pretty unique across the world.

Speaker A: Wow. Okay, I've got another challenge for you then.

Speaker B: You've already got that. So I think what we've been is in a journey and we've started with customers that started in a country and they realized the power of consistency of having a consistent offering around the world and saying, hey, if client A is in country A and travels to country B or I have a new acquired customer in a separate country, the ability to provide the same service, have that uniformity and, and that consistency of approach of excellent service, unique experiences. It's what banks are looking for. So we've started this journey of actually expanding in opening new countries along with clients who had made that commitment with these notes as, hey, I want you to go to this country because I want to be able to offer the exact same savers that I'm able to offer in where we started. So that's pretty cool, by the way.

Speaker A: That is very cool. That's very cool. But let me get back to my second challenge for you then is another reason why banks end up with multiple cores. And some banks have in excess of 200 calls sometimes, right? When you think about they have retail customers, they have business customers, they have wealth management, and then within those kind of subcategories, they also have current accounts, mortgages, credit cards. Can you support any products within your platform?

Speaker B: So I mentioned, and I think this is what makes Vista unique. When Visa went out to acquire this service, we scaled the world and we looked at more than 100 companies that would be able to provide this service. What was unique about PSNO is that concept of um, one platform for banking and um, payments. This is the concept of being able to support your client in whatever financial product they're using. So whether it's core banking, so it's retail, so cash deposit account, savings, checkings, you name it, lending, mortgage, auto, corporate banking. We look at the other side of payments. I made reference earlier in the interview about what we're doing with real time payments and real time payments. It's a transaction that requires us pushing banks to be real time. It's the real time decisioning piece of able to support this, but also on the card side, the ability to support and have the capabilities to offer credit, debit, Prepaid, but also the ability to do commercial products, which is another type of world. When you think about all the servicing that has to happen, I think that's what makes Beast Mode unique. The ability to have that one stop shop for all financial products. That's pretty powerful.

Speaker A: Wow. A couple of years ago I wrote an article called One Core to Beat Them all right. And it was like this imaginary call with these. It's a single instance for any country in the world. It's a single instance for any product in the world. It's a single instance for every customer in the world. But it sounds like you've taken my article and turned it into a product.

Speaker B: I haven't written your article, but it seems like you actually were part of the founding fathers founding group for PeaceNote. But I think that's the concept, being able to do this with, with one platform across the world. Consistency with the reliability and security that you overlay with the Visa power.

Speaker A: So there's one question that we literally for the last two years of doing this podcast we've asked everybody and that's really about AI and uh, well maybe we'll come back to AI. But the question that I'm asking everyone this year is what are your thoughts on tokenization? How will it affect core and what do you think it'll mean for banks

Speaker B: when you think about tokenized assets? I think this is all the possibilities in terms of cross border payments, real time settlement. When you think about real time settlement today, even when you do settlement, intraday money doesn't necessarily move within the same day. So when you look at the possibilities of what tokenized asset with programmability and smart contracts, it's a real unlock. It's a real unlock to really drive the opportunities of moving money 24 by 7 by 365. That's powerful. And I think what banks are realizing is that their systems today are not necessarily prepared to support that shift to real time settlement, to programmability to cross, to the ability to move cross border payments instantly. And again, this is I think the real unlock. And look, from a Visa and Pismo perspective, we understand that tokenized asset and core banking are uniquely attached. I think they're very organic in nature. And from a Visa perspective we're closely tying our uh, tokenized asset strategy with the core banking and releasing. We just had one of our biggest events in San Francisco where we talked a little bit about our tokenization and stablecoin strategy and we're working on developing capabilities for both options and we should see something Some great news. I'm um, kind of breaking news here but we should be looking at ah, new stuff and new offerings on stablecoins linked with Visa's capabilities towards the end of this year, beginning of next. These are real proof cases, not a science paper or not a white paper but real proof of concepts that says, hey, this is how we can help our banks really move money in real time. This is how we could use smart contracts to really drive new services around the world. It's a changer. I think it's going to be a changer from the industry. And look from a Visa perspective, from a piece of perspective, this is the promise is at the core of Visa, at the core of peacema is really supporting our client in wherever money is moving, wherever our client is moving, wherever they're going, whatever instrument they're using. That's the promise of Visa. I want to be there, wherever you are being everywhere they want to be.

Speaker A: I love it. So what about agentic payments? I think we've designed a banking system in a world where we've assumed when it comes to money that's an interaction between the people and potentially companies. But essentially it's people driven. But what happens when an organization offers an agent, let's say that can plan my holiday, research it, find me the best hotels, best flights, best places to eat, book them all. But obviously these third parties will all need payment, right? And this agent will be working on my behalf. So it will start to increase the number of transactions it does. Do you see a world where you know, increasingly will shift to agentic payments?

Speaker B: We've seen the AI transactions just in the U.S. i think the number is like 4,000% growth and AI driven transactions is immense. I think people are using AI in a way that especially generative AI in a way that hasn't been used before. I think what's different today with Agentic is the ability to provide that interaction and have contextual data about yourself opting in and saying hey, look at my payment transaction. Look at normally, uh, the type of restaurants that I like to go, the hotels that I like to stay and that personalization is what's changing. And I think we'll continue to change and give rise to agent E commerce. And what's different is the ability to now say not just give me, hey, the hotel or the tour packages or the restaurant recommendation, actually book for them and pay for them. I think that payment is where the infrastructure of today are going to be challenged because there's new authentication schemes. Uh, right. You have to Authenticate this agent. How do you know that this is your agent doing your transactions? How do you know that this attraction is secure? So there's all issues, there's a lot of issues raising around security and fraud and authenticating the right transaction and providing that data and making sure that this is a secure ecosystem requires that computing power that legacy systems don't have today. So modernizing to be able to support adjunct E commerce is one of those things that's critical and it has to be done sooner versus later because I think agentic will continue to be relevant, agenda will continue to rise. I can't remember the website, but there's a website today that's only agents are allowed. It's a community where agents think about a Reddit where agents are talking to each other and influencing each other. Humans can actually go in and actually interact. They can see what their interaction is, but they cannot interact. This is agents alone. Think about that world. I mean it's, it's almost science fiction where you're now thinking about, hey, this is the future. But the future is now, it's happening as we speak. So the whole understanding that you're not longer, you know that agents and this is where financial institutions are going to be challenged, that who's driving the purchasing decision is not necessarily a person or their decision is an agent that understands the contextual behavior of that client. And financial institutions now are having to influence not a person, but an agent. All of that requires modernization, all that requires modern infrastructure. And I think that's what when you combine the power of psno, when you combine the power of visa, that's what we're trying to deliver to the world.

Speaker A: Fantastic. I mean when I look at things like tokenization and I look at agentic AI, I can't see banking looking the same anymore. I can see new products, I can see new ways of new business models, et cetera. I mean, how do you think about agentic AI and tokenization? Do you see them as separate events or do you start to see a new world or imagine a new world on top of them?

Speaker B: It's evolving, right? I think it's an evolution. And today when you look at both of them, they're kind of two trends that are rising separately. And I think the probability of when you think about tokenized assets and what agentic, I mean it's just a new settlement currency. Why would an agentic be able to use if, uh, today is using a card, tomorrow use a stablecoin? I think time will tell. But the convergence of all These technologies I think is inedible and I think we'll see that evolution of payments. And we're seeing it. We saw with cards and how cards now are in the center of it and how digital payments and RTP payments are evolving and there's advantages, disadvantages to all. And I think this is the power of having a platform that supports where the future is going is where you need a platform that's able to orchestrate whatever types of payments, whatever type of currency, whether it's digital currency, whether it's an RTP payment, whether it's cards, whether it's whatever the future holds. Your payment platform has to be so flexible that is orchestrating and saying, oh stablecoin, I know how to do that. Or RTP payment, I know how to do that. Or cart, I know how to do that seamlessly without friction to be able to comply with whatever the customer wants to do. And that's why I think the real unlock and the real magic is having that one stop shop that's able to deliver that orchestration across all payments instruments.

Speaker A: Wow. I just love listening to you Leo. As I said to you In Money20 20, there are a few people that get very excited about the industry and I certainly am one of them, right? And then people look at me as if I'm crazy, like you're getting excited about banking and technology. What I'm interested in is like what drives your passion in this space because you're clearly not only passionate but you have a strong vision and a ah, practical pragmatic view on m, what's possible now versus later on. So just love all of that. But what drives it for you?

Speaker B: Look, I think that's curiosity. Where of the thing is, is curiosity. I've been in this industry for about 30 years. Literally. I started out of high school and I'm public aging myself here and understanding technology and um, unlocking the power of technology and seeing how that translates in payments. And I've seen the evolution from early years of working in this industry and what you've seen in the last five years, I think it became a cliche when we talked about the pandemic and the evolution of payments throughout because there was no physical and contactless push. Then E commerce grew even more and we saw digital payments growing. I think seeing all this evolution and being part of it and being part of shaping that and being in a company like Visa, I think the vision that Visa has in terms of really delivering seamless, frictionless, unique, elegant, uh, personalized experiences, what continues to drive us and personally drives me. I think this is an exciting space. It's going to continue to be. We haven't even spoken about quantum computing but think about the power of competing in the hands of payments and what that does for security, for experiences, for driving adaptive behavior analytics, being able to understand and predict your behavior for loyalty, for fraud, for protection. I mean the unlocks are tremendous and I think this is what makes, it makes this industry, makes working at Visa, uh, and makes working at peace more which is at the core of modernization. Makes it really exciting for me.

Speaker A: Wow, look, you're singing off my hyper sheet because I'm also uh, a big fan of quantum. But what's your perspective on quantum again?

Speaker B: I think there's an evolution of it and I think we're still a few years away from it. Some people say five, some people say ten. Time will tell. But I think unlocking the power, being able to use the competing power to drive better analytics, to drive better security and it's going to force us all to really rethink the world of payments around these areas. Authentication, unlocking uh, I think something that unlocking cryptography today, the current cryptography today could take you years if you think about quantum computer that according to all these keys could happen in a minute. So it's really going to challenge us to think about how we look at authentication, how we look at authorizing transactions, how we process payments, how we bring experiences and all these algorithms for driving personalized experience with much, much larger computing power is going to be exciting.

Speaker A: Yeah. Look, I'm going to mention it very briefly but it's not an advert for my book, but I have a book coming out in September and literally the thesis is what I call the Quan versions. It's Quantum digital twins. Really Contextual data about customers, agentic AI and tokenization will reshape banking. Would you agree?

Speaker B: Absolutely. I think I, I like where you're going. I think this convergence of technology and leveraging the benefits of what uh, agentic tokenized assets. We talked about it earlier. I think the industry is up for a really modernization and just disruption of how we do payments. We move funds, we personalized experiences. I think that you'll see all of them converging and leveraging the benefits of each other.

Speaker A: Fantastic. And we talk, we haven't really talked too much about the longer term future. But what do you think the like beyond 2035, what does it look like in the world of banking?

Speaker B: We kind of touched a little bit. I think it's this convergence of technologies right it's this. When banks who are fully modernized and banks need to understand that there's a need for speed, for adaptability and relevance. And the institutions that understand this complexity and manage this complexity across technologies across Rails will be the companies that would actually be there in 2035. I think what you'll see is companies are modernized providing and leveraging the power of AI, generative AI, uh, providing those experiences, having the ability to cross rails. Today we're talking about tokenized assets but what's the next currency? What is the next currency that we have to manage and having the ability for banks to manage across these technologies across payment rails. I think it's going to be the future of payments. Institutions that are able to do it are institutions that will be successful but they have to act on it today in order for them to be relevant, to be adaptable, to have the speed, to be able to compete with new rising competitors, to be able to keep the demand on regulations and meeting customer demands. The time for institutions to be relevant in 2035 is now to act on it and modernize your infrastructure.

Speaker A: Great. And uh, I guess my last question is really more about Pismo because I don't know as much as I ought to but I mean who would you say are ah, your flagship customers? Who would you boast about as having as a customer and what's your plans globally?

Speaker B: Look, we continue to expand and I think the uh, most exciting thing about PS4 is that we want the mind share of our customers. And Pismo was a strong brand, it continues to be a strong brand. But when you add the power of Visa and you combine Pismo and Visa, it becomes an even powerful brand. Think about putting your business, if you were a bank on uh, an institution putting your business in a fintech. This is the backbone of your operations. What's happening now is Peacemaur is a fintech but now with the reliability and the backing of Visas. So the future of Pismo will continue to be expanding and opening new markets. We mentioned we're in the range of 20 markets. By the end of the year we'll be in between, you know, 25 plus markets. We continue to expand. We have some of the largest customers in Latin America. Like Itau is one of our key markets. We just won, can't mention the name but we just won one of the most important US banks using our core banking capabilities. That's really exciting. We're modernizing core banking for another large institutions, M global institutions in 78 countries. That's really exciting. But there's names like Lunar bank in Denmark, Butte, Ruben, um in Argentina, T2P in Thailand, Dosh in New Zealand. I mean the list goes on and it's continued to grow across the world. We just launched one of the largest NIO bands in Latin America, Nikki as an example, and their expansion in Colombia. So these are the big names continue to come and the tier one names continue to come, which is what makes this really, really exciting. So the future of Peaceful is right. We continue to look at what makes us relevant today and strengthening and enhancing the platform, but we're also making investments, looking at AI, looking at tokenized asset, looking at what comes next. I think one of the coolest things that we're working on today is this single cloud versus multi cloud strategy. When you think about what we're doing is Bismill's working to adjust our platform M to become cloud agnostic. Pretty cool stuff. So it's not just about creating new services, but also saying, hey, how do we replicate some of what made Legacy so attractive on um, the cloud and becoming cloud agnostic to operate, whether it's AWS or shore, whatever it is. Listen, it's the promise of visas. The promise of visa is being everywhere our customer wants to be.

Speaker A: Fantastic. Look, is there anything like our audience is a mix of fintechs and banks and they may be large tier one banks or they may be smaller community banks. Is there any tips that you would give to a bank? What's your favorite piece of advice to give to banks these days?

Speaker B: I'm sitting across the world with fintechs, with tier one banks, with credit unions, with digital banks. And to me, what I continue to say, modern Earth Station is no longer an afterthought. It's not something that is just for the tech geeks like you and I who love technology. Right? It shifted from the technology from the data center room into the C level discussion. This is a strategic discussion. Guys. We really need to sit down and really look at modernizing infrastructure as a business strategy because this is how you win consumer trust and this is how you actually grow your revenues. If you're worried about growing your company, it starts with modernizing your course. It's about modernizing your infrastructure. So this is kind of the tip that I say it has to be part of your business strategy for speed, for adaptability, for relevance. And look, I say the institutions that win will be those that can evolve, continuously meeting customer demands, regulations and competitions. And that's where I think this book comes in and saying, we can help, we can support you in that journey.

Speaker A: Fantastic. I was really excited to have this conversation and you definitely have not let me down. So, uh, I really thank you for sharing so openly and vividly your thoughts on the banking space and wish you every success. No doubt you're going to be a much bigger success too as well. So, um, thank you so much.

Speaker B: Leonardo, thank you so much for having me and look forward to our next chat and giving you a progress update of how Pismo continues to expand and help our clients modernize their infrastructure. So thank you very much for having me.

Speaker A: I want the exclusive on the 78 country rollout.

Speaker B: All right, I'll, uh, let you know.

Speaker A: Thank you.

Speaker B: Alrighty. Thanks.

Speaker A: Thank you for tuning in to Dave and Dharm Demystify.

Speaker B: We hope you enjoyed the show.

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