EP1019: Beyond Core Banking: The Rise of the Modern Bank Operating System

1 00:00:01,840 - > 00:00:04,799 SPEAKER_01: I'm Pujan Shandram of MIBS Intelligence, and you're 2 00:00:04,799 - > 00:00:07,200 listening to the MIBS and IVs podcast. 3 00:00:07,360 - > 00:00:11,199 With me is Bhushan Drinka Chamberli, CEO of FINSLI, a 4 00:00:11,199 - > 00:00:14,880 fintech company based in Shamalit USA, is a banking and 5 00:00:14,880 - > 00:00:18,079 payment technology company that helps financial institutions 6 00:00:18,239 - > 00:00:22,320 modernize their infrastructure through a cloud native platform. 7 00:00:22,800 - > 00:00:26,480 Known for its unified payment hub, FINSLE enables banks to 8 00:00:26,480 - > 00:00:30,480 manage multiple payment rails, improve interoperability, and 9 00:00:30,640 - > 00:00:33,439 accelerate additional transformation while supporting 10 00:00:33,439 - > 00:00:35,920 evolving regulatory and customer demands. 11 00:00:36,159 - > 00:00:40,640 Today we are diving into how evolving ACH regulation that is 12 00:00:40,880 - > 00:00:44,960 automated clearing house, a US electronic payment network that 13 00:00:44,960 - > 00:00:47,119 moves money between bank accounts. 14 00:00:47,520 - > 00:00:50,799 Real-time payment and modern banking infrastructure are 15 00:00:50,799 - > 00:00:52,240 shaping the future of banking. 16 00:00:52,399 - > 00:00:54,159 Welcome to the podcast, Pushin. 17 00:00:55,280 - > 00:00:56,479 SPEAKER_00: Hey, thanks, Puja. 18 00:00:56,640 - > 00:00:57,600 Nice to be here. 19 00:00:58,079 - > 00:01:00,399 SPEAKER_01: Pushan, the industry is increasingly talking about 20 00:01:00,399 - > 00:01:02,799 the rise of modern bank operating system. 21 00:01:03,039 - > 00:01:05,519 What is driving this shift and how does it differ from 22 00:01:05,599 - > 00:01:07,280 traditional core banking model? 23 00:01:08,239 - > 00:01:11,760 SPEAKER_00: So if you look at the banking, the bank has been 24 00:01:11,760 - > 00:01:14,879 using the technology that has been there for the last like 30, 25 00:01:14,959 - > 00:01:15,840 40 years. 26 00:01:16,079 - > 00:01:17,760 Nothing much has changed, right? 27 00:01:17,920 - > 00:01:19,359 Banking is always the banking. 28 00:01:19,439 - > 00:01:22,879 Like, you know, banking does three things in general. 29 00:01:23,200 - > 00:01:27,280 They receive deposits, they lend, and they move money. 30 00:01:27,439 - > 00:01:30,000 These are the three major functions of the bank. 31 00:01:30,079 - > 00:01:32,319 And these functions have not changed, right? 32 00:01:34,719 - > 00:01:39,280 From paper ledgers, they went to system ledger, right? 33 00:01:39,439 - > 00:01:42,480 And then after that, digital banking, online banking came, 34 00:01:42,560 - > 00:01:43,920 and then mobile banking. 35 00:01:44,159 - > 00:01:49,599 So at every revolution, what happened was the systems, the 36 00:01:49,599 - > 00:01:53,040 COBOL mainframe systems, it just remained the same. 37 00:01:53,280 - > 00:01:56,640 And banks continue to create layers and layers on top of 38 00:01:56,640 - > 00:01:56,879 that. 39 00:01:57,040 - > 00:01:59,920 So every time they want to do something, they will create a 40 00:01:59,920 - > 00:02:01,599 solution, they will create a layer. 41 00:02:01,840 - > 00:02:05,519 And what happened was over a period of time, all the systems 42 00:02:05,519 - > 00:02:07,439 became so complex to manage. 43 00:02:07,680 - > 00:02:10,080 Layers and layers and fragmentations. 44 00:02:10,240 - > 00:02:12,719 So they will create solutions and assemble it. 45 00:02:12,800 - > 00:02:16,400 And even if they buy a vendor solution, the vendor has bought 46 00:02:16,400 - > 00:02:19,199 from like five other different mergers and acquisitions. 47 00:02:19,439 - > 00:02:21,439 And it created complexity. 48 00:02:21,680 - > 00:02:23,599 You know, banks couldn't move, right? 49 00:02:23,759 - > 00:02:28,479 So what we all started seeing is that fintech started evolving. 50 00:02:28,560 - > 00:02:30,400 Hey, you know, banks are not doing anything. 51 00:02:30,560 - > 00:02:32,639 Let's do, let's do that job for you. 52 00:02:32,879 - > 00:02:39,280 So fintech started doing the banking services and used banks 53 00:02:39,280 - > 00:02:41,520 as a back-end utility. 54 00:02:41,680 - > 00:02:43,759 And you know, that solved some problems. 55 00:02:43,919 - > 00:02:48,000 And uh players like Square, Stripe, you know, Modern 56 00:02:48,159 - > 00:02:51,439 Pressure, all these things is kind of it became better 57 00:02:51,439 - > 00:02:56,080 solutions for businesses because banks were still doing the same 58 00:02:56,080 - > 00:02:58,400 things they did for several decades. 59 00:02:59,199 - > 00:03:03,360 And um now what you are seeing is that fintechs are becoming 60 00:03:03,360 - > 00:03:04,400 banks, right? 61 00:03:04,960 - > 00:03:08,800 Now almost every fintech in the US is applying for a banking 62 00:03:08,800 - > 00:03:10,800 charter, and they're all becoming banks. 63 00:03:10,960 - > 00:03:14,319 Now the question is, what is the future of the banks? 64 00:03:14,560 - > 00:03:15,039 Right? 65 00:03:15,199 - > 00:03:19,039 That's where the interest the banks are at at this point. 66 00:03:19,199 - > 00:03:22,159 You know, fintechs are becoming banks, banks are still banks. 67 00:03:22,400 - > 00:03:23,840 How can we bridge that gap? 68 00:03:24,000 - > 00:03:26,479 That FinSley is addressing that gap, right? 69 00:03:26,560 - > 00:03:30,000 How can we enable banks to stay ahead, to compete with the 70 00:03:30,000 - > 00:03:35,199 fintechs, to recapture their business of receiving deposits 71 00:03:35,199 - > 00:03:38,719 and moving money and doing that business the way they used to 72 00:03:38,719 - > 00:03:38,960 be? 73 00:03:39,120 - > 00:03:42,639 And that's that's exactly what what the industry needs, because 74 00:03:42,639 - > 00:03:47,360 banks, you know, the communities, the the can the 75 00:03:47,360 - > 00:03:51,039 countries need banks because banks are very highly regulated. 76 00:03:51,280 - > 00:03:54,960 And you know, if I ask you, where do you want to keep your 77 00:03:54,960 - > 00:03:58,400 money, would you like to keep it with Strike, or would you like 78 00:03:58,400 - > 00:03:59,520 to keep with their bank? 79 00:03:59,599 - > 00:04:01,360 You know, you'll say it's a bank. 80 00:04:01,520 - > 00:04:05,840 Um, so I think that's uh that's that's very very uh very 81 00:04:05,840 - > 00:04:06,159 important. 82 00:04:06,479 - > 00:04:10,960 And and and it is very important for banks to address that gap 83 00:04:11,120 - > 00:04:15,120 and quickly address that gap because you know the the kind of 84 00:04:15,280 - > 00:04:18,720 technical debt they have created over a period of period of time, 85 00:04:18,879 - > 00:04:20,079 it's too much. 86 00:04:20,399 - > 00:04:25,600 And uh the key is how can they address that gap faster so that 87 00:04:25,600 - > 00:04:30,480 the gap doesn't continue to increase and start to compete 88 00:04:30,480 - > 00:04:34,079 and start to grow their business and start to uh earn more 89 00:04:34,079 - > 00:04:34,480 revenue? 90 00:04:34,560 - > 00:04:38,639 I think that is more important um in today's economy. 91 00:04:39,439 - > 00:04:41,680 SPEAKER_01: Banks have spent years modernizing their 92 00:04:41,680 - > 00:04:42,800 technology stacks. 93 00:04:42,959 - > 00:04:45,920 Why do many still struggle with legacy constraints? 94 00:04:46,000 - > 00:04:49,360 And where have previous transformation efforts fallen 95 00:04:49,360 - > 00:04:49,759 short? 96 00:04:50,160 - > 00:04:52,720 SPEAKER_00: You know, I guess I think if you look at the way the 97 00:04:52,720 - > 00:04:57,439 banks have operated, right, um they totally rely on um a core 98 00:04:57,439 - > 00:04:58,079 platform. 99 00:04:58,639 - > 00:05:00,879 And uh they built around that one. 100 00:05:00,959 - > 00:05:03,360 You know, a lot of time they get constrained with you know, the 101 00:05:03,600 - > 00:05:06,480 some of the cores they have like very ridiculous contract 102 00:05:06,480 - > 00:05:07,120 agreements. 103 00:05:07,360 - > 00:05:09,920 Then if you do business with them, you cannot do business 104 00:05:09,920 - > 00:05:10,639 with anybody else. 105 00:05:10,720 - > 00:05:13,600 You cannot buy anything else from you know any other 106 00:05:13,600 - > 00:05:14,560 provider, right? 107 00:05:14,959 - > 00:05:18,079 And um, and you know, some of those constraints, and uh and 108 00:05:18,079 - > 00:05:22,160 when they don't have such constraints, um, they will have 109 00:05:22,160 - > 00:05:26,800 a commercial banking solution from a vendor, and then they 110 00:05:26,800 - > 00:05:29,360 will have a consumer banking solution from a different 111 00:05:29,360 - > 00:05:29,839 vendor. 112 00:05:29,920 - > 00:05:32,319 They'll have a mobile banking solution that maybe created in 113 00:05:32,480 - > 00:05:32,800 house. 114 00:05:33,519 - > 00:05:37,199 So all these things you create like you know, layers and 115 00:05:37,199 - > 00:05:40,399 layers, like you can create multiple solutions. 116 00:05:40,800 - > 00:05:43,519 All of these things are doing one thing, right? 117 00:05:43,839 - > 00:05:46,800 They are not trying to solve the customer's problem. 118 00:05:46,959 - > 00:05:51,199 If you look at banks, banks are, you know, they want to seriously 119 00:05:51,199 - > 00:05:55,040 address what is important for their customers, consumers and 120 00:05:55,040 - > 00:05:56,160 businesses, right? 121 00:05:56,639 - > 00:06:00,399 And when they want to address those problems, when they look 122 00:06:00,399 - > 00:06:03,759 back and look at the technology providers, and they are like, 123 00:06:03,839 - > 00:06:06,879 you know, they are not going, they are not delivering what the 124 00:06:06,879 - > 00:06:08,000 banks needed. 125 00:06:08,240 - > 00:06:11,680 So they are in a position where, hey, I need to deliver what my 126 00:06:11,680 - > 00:06:14,079 customers want, and I have these limitations. 127 00:06:14,319 - > 00:06:15,439 Who can help me? 128 00:06:15,680 - > 00:06:18,319 There will be some players, they will just solve one problem and 129 00:06:18,319 - > 00:06:20,639 they will go and say, hey, come and solve my problem. 130 00:06:20,879 - > 00:06:22,720 Three months later, there will be a different problem. 131 00:06:22,800 - > 00:06:24,079 Who can solve this problem? 132 00:06:24,319 - > 00:06:26,639 Let's bring them, let them address this problem. 133 00:06:26,879 - > 00:06:30,720 So over a period of time, they ended up having like so many 134 00:06:30,720 - > 00:06:32,959 vendors, so many point solutions. 135 00:06:33,600 - > 00:06:37,600 And what happens is if you touch one thing, then like 10 other 136 00:06:37,600 - > 00:06:38,879 things is going to fail. 137 00:06:39,600 - > 00:06:42,240 It's that's that's the reality today, okay? 138 00:06:42,480 - > 00:06:46,000 And nobody wants to touch anything, so they just keep it 139 00:06:46,000 - > 00:06:48,879 as it is because they don't want to disturb customers, right? 140 00:06:48,959 - > 00:06:52,160 Because you know, you may want to keep some customers happy and 141 00:06:52,160 - > 00:06:56,399 you touch it, you are going to make someone else unhappy. 142 00:06:56,800 - > 00:06:59,360 And that cycle they don't they totally want to avoid. 143 00:06:59,439 - > 00:07:03,680 That makes them just stay statuscope, right? 144 00:07:03,920 - > 00:07:06,959 The thing is, the demands of the customers don't change. 145 00:07:07,040 - > 00:07:10,000 They keep demanding more and more because you know, um, 146 00:07:10,319 - > 00:07:13,759 fintechs are moving at at the speed of technology, right? 147 00:07:14,000 - > 00:07:18,079 Banks, they are moving at the speed of their people who are 148 00:07:18,079 - > 00:07:18,800 laying on. 149 00:07:18,959 - > 00:07:24,160 And that that that gap is uh it's a serious problem for them. 150 00:07:24,399 - > 00:07:28,879 So as as they as they look at what these specific problems, 151 00:07:29,439 - > 00:07:32,079 and uh what we tell them is hey this is this is one of the 152 00:07:32,079 - > 00:07:35,360 reasons why FinSley, I I work for banks, I'm I'm a 153 00:07:35,360 - > 00:07:38,800 technologist, and I couldn't see these problems continuously 154 00:07:39,040 - > 00:07:42,399 troubling the banks the way they can, they have to uh modernize 155 00:07:42,399 - > 00:07:43,439 and innovate. 156 00:07:43,839 - > 00:07:48,480 And we decided, hey, banks need something, yeah, radically 157 00:07:48,480 - > 00:07:49,600 different solution. 158 00:07:49,759 - > 00:07:54,720 Instead of just continuing down the same path, why don't we just 159 00:07:54,720 - > 00:07:58,720 think fresh, like nothing, apply first principles, think about 160 00:07:58,720 - > 00:08:02,399 what is available today in the in in technology. 161 00:08:02,639 - > 00:08:05,040 And because like technology is so advanced, right? 162 00:08:05,199 - > 00:08:09,680 There is no reason why banks have to get stuck with these 163 00:08:09,680 - > 00:08:10,560 kind of problems. 164 00:08:10,639 - > 00:08:12,959 It's like unbelievably bad. 165 00:08:13,680 - > 00:08:19,759 Um so we said like no, we have to rethink, reimagine, and let's 166 00:08:20,079 - > 00:08:22,879 think about what we can do, right? 167 00:08:23,120 - > 00:08:27,199 One is the legacy systems are going to remain. 168 00:08:27,279 - > 00:08:30,240 Like they don't nobody wants to touch that one because it is so 169 00:08:30,240 - > 00:08:32,320 fragile, nobody wants to touch that one. 170 00:08:32,480 - > 00:08:35,039 And I want to address what my customers need. 171 00:08:35,360 - > 00:08:39,120 And we said, hey, let's create a parallel operating system. 172 00:08:39,279 - > 00:08:43,600 Let's create a parallel bank operating system where banks 173 00:08:43,600 - > 00:08:46,480 will be able to add new solutions, just like you know, 174 00:08:46,559 - > 00:08:50,399 you are in your iPhone, you like an app, you install it, you use 175 00:08:50,399 - > 00:08:50,559 it. 176 00:08:51,279 - > 00:08:54,559 Why don't we give that similar solution for banks? 177 00:08:55,120 - > 00:08:58,399 If the bank has a problem, if there is a solution, just add 178 00:08:58,399 - > 00:09:02,000 it, test, and start serving your customers. 179 00:09:02,480 - > 00:09:07,840 And I think that philosophy, that concept shaped the way uh 180 00:09:08,159 - > 00:09:10,399 FinSley is built, right? 181 00:09:10,639 - > 00:09:13,440 So we built that operating system that has everything like 182 00:09:13,519 - > 00:09:17,919 you know, every banking system needs compliance, audit, 183 00:09:18,159 - > 00:09:21,440 documentations, communication, and all that, all that stuff. 184 00:09:21,600 - > 00:09:25,519 So we built all that stuff, and then on top of that, we created 185 00:09:25,519 - > 00:09:27,039 galaxies of solutions. 186 00:09:27,200 - > 00:09:30,240 So you know, we have payment galaxy to address payment 187 00:09:30,320 - > 00:09:31,600 specific challenges. 188 00:09:31,840 - > 00:09:35,600 So if you go into the payment galaxy, payment systems, on the 189 00:09:35,600 - > 00:09:40,000 other side, the legacy systems, you have ACH system, ACH team, 190 00:09:40,159 - > 00:09:44,720 ACH experience, wire system, wire team, wire experience. 191 00:09:44,879 - > 00:09:48,000 And banks have like six, seven different uh payment rights. 192 00:09:48,080 - > 00:09:51,519 You have that many teams, that many vendors, that many systems. 193 00:09:51,759 - > 00:09:55,120 And basically, banks were continuously pushing these 194 00:09:55,120 - > 00:09:58,960 products to the customers rather than giving them an experience 195 00:09:58,960 - > 00:10:00,000 of money movement. 196 00:10:00,240 - > 00:10:02,720 Hey, let's start with what the customers want. 197 00:10:02,799 - > 00:10:04,720 They just want to move the money. 198 00:10:04,879 - > 00:10:07,840 Like, you know, when you go to FedEx, you don't have to tell 199 00:10:07,840 - > 00:10:11,600 them, I want this to be shipped by flight or by train or by 200 00:10:11,600 - > 00:10:12,159 track. 201 00:10:12,399 - > 00:10:13,679 I just want to move the money. 202 00:10:13,759 - > 00:10:17,360 Just tell me where you want to move, how fast you want it, and 203 00:10:17,360 - > 00:10:18,320 then here is the fee. 204 00:10:18,399 - > 00:10:20,240 That's all the customer cares about. 205 00:10:20,399 - > 00:10:24,639 So we started from there, and then we created that the galaxy, 206 00:10:24,720 - > 00:10:28,720 which is payments, ACH, wires, instant payments, international 207 00:10:28,720 - > 00:10:32,720 payments, all of them got bundled in that payment galaxy. 208 00:10:32,960 - > 00:10:35,120 Next, we looked at ledgers. 209 00:10:35,279 - > 00:10:39,440 You know, we created accounts galaxies for everything that you 210 00:10:39,440 - > 00:10:42,320 want to keep track of, debits, crits, balances, all those 211 00:10:42,320 - > 00:10:44,879 things went into the ledger galaxy. 212 00:10:45,039 - > 00:10:47,440 And then foreign exchange trade, the comment, you know, the 213 00:10:47,600 - > 00:10:50,480 treasury capabilities, the advanced customers, uh, 214 00:10:50,639 - > 00:10:54,080 corporate customers they need, it all went into Trade Galaxy. 215 00:10:54,159 - > 00:10:57,120 And then we have token galaxy for blockchain, right? 216 00:10:57,279 - > 00:11:01,519 So at the end, what we did was we created the solutions so 217 00:11:01,679 - > 00:11:06,159 banks can assemble all these galaxies, create the stores, and 218 00:11:06,159 - > 00:11:07,360 create their own universe. 219 00:11:07,679 - > 00:11:11,919 Because every bank, their needs, their business is different. 220 00:11:12,159 - > 00:11:15,600 And we decided, hey, let the bank build their own universe, 221 00:11:15,759 - > 00:11:17,519 build their bank the way they want it. 222 00:11:17,679 - > 00:11:22,320 So that's how our bank operating system is helping our banks to 223 00:11:22,320 - > 00:11:24,639 compete uh with any players, right? 224 00:11:24,720 - > 00:11:28,639 Today, yeah, even yeah, a regional bank can compete with 225 00:11:28,639 - > 00:11:29,279 JP Mode. 226 00:11:29,519 - > 00:11:32,559 That's unbelievably great thing that's happening. 227 00:11:32,720 - > 00:11:35,679 And uh we are we are extremely proud of what we are building 228 00:11:35,679 - > 00:11:35,840 here. 229 00:11:36,240 - > 00:11:38,159 SPEAKER_01: That could ideally be a pull code. 230 00:11:38,399 - > 00:11:41,600 AI adoption is obviously accelerating across banking. 231 00:11:41,679 - > 00:11:45,440 What role will AI and agent tech capabilities play within the 232 00:11:45,440 - > 00:11:47,600 modern bank operating system? 233 00:11:48,080 - > 00:11:52,720 SPEAKER_00: Yeah, I think AI is is uh you know is is very 234 00:11:52,720 - > 00:11:53,279 important, right? 235 00:11:53,360 - > 00:11:56,720 Today, nothing is going to be great without AI. 236 00:11:57,039 - > 00:12:00,320 And I think what I'm excited about AI is a few things, right? 237 00:12:00,399 - > 00:12:04,799 One is how AI can help bankers do their job better. 238 00:12:04,960 - > 00:12:08,000 You know, for example, how it can accelerate some of the 239 00:12:08,000 - > 00:12:12,000 payment investigations, reconciliations, and uh, you 240 00:12:12,000 - > 00:12:13,840 know, general operations work, right? 241 00:12:14,000 - > 00:12:19,200 Because now tomorrow, let's say you want to triple your payment 242 00:12:19,200 - > 00:12:23,039 volume, are you going to add uh that many number of people to 243 00:12:23,039 - > 00:12:24,240 support that volume? 244 00:12:24,480 - > 00:12:29,200 Or are you going to use AI and start doing more intelligent 245 00:12:29,200 - > 00:12:33,200 work and use that intelligence to enable your bank operations, 246 00:12:33,360 - > 00:12:33,679 right? 247 00:12:34,000 - > 00:12:36,879 And when you do that, I think one of the most important things 248 00:12:36,879 - > 00:12:39,120 is how can you still stay compliant? 249 00:12:39,360 - > 00:12:44,720 Because when the bank regulators come and question your processes 250 00:12:44,960 - > 00:12:48,240 and uh you know general workflows and other stuff, you 251 00:12:48,240 - > 00:12:51,120 cannot tell, hey, AI made the decision. 252 00:12:51,200 - > 00:12:54,399 You know, you that's that's not a good answer to give to 253 00:12:54,399 - > 00:12:55,120 regulators. 254 00:12:55,279 - > 00:12:59,440 And you need to be able to ensure the AI is doing its job 255 00:12:59,440 - > 00:12:59,840 correctly. 256 00:12:59,919 - > 00:13:03,919 So it is important that whatever that we are doing in AI within 257 00:13:03,919 - > 00:13:06,799 the bank is compliant and regulated, you know. 258 00:13:07,039 - > 00:13:10,639 Banks are still taking accountability and take 259 00:13:10,639 - > 00:13:13,679 responsibility for the decisions made by the AI. 260 00:13:13,759 - > 00:13:16,639 It is just only going to get better, right? 261 00:13:16,879 - > 00:13:22,799 So that part is going to help primarily banks do the job 262 00:13:22,799 - > 00:13:25,759 better, enhance their operations capabilities. 263 00:13:26,080 - > 00:13:32,399 And then the next angle in AI is how can banks help their 264 00:13:32,399 - > 00:13:35,360 customers do better business with that, right? 265 00:13:35,519 - > 00:13:39,600 How can if the if a customer wants to connect from cloud to 266 00:13:39,600 - > 00:13:43,120 the bank and then you know do some enquiries and data 267 00:13:43,120 - > 00:13:46,720 investigations and create a summary or you know, anything 268 00:13:46,720 - > 00:13:51,120 that you know, any alumni thinks that they want to do, they 269 00:13:51,120 - > 00:13:55,120 should be able to do it from cloud or chat GPT or any AA 270 00:13:55,120 - > 00:13:56,639 agent they have, right? 271 00:13:56,960 - > 00:13:59,840 So that angle is becomes important. 272 00:13:59,919 - > 00:14:04,159 And when you do that, now the question is how do you know it 273 00:14:04,159 - > 00:14:09,360 is the customer is doing the job because now AI agents are doing 274 00:14:09,360 - > 00:14:12,000 it, and you know, the customer is going to say, Hey, I didn't 275 00:14:12,000 - > 00:14:12,960 authorize this one. 276 00:14:13,120 - > 00:14:16,960 And how do you prove that they are the one authorize the agent 277 00:14:17,039 - > 00:14:17,919 to do the job? 278 00:14:18,080 - > 00:14:22,080 So it becomes very important for the banks to kind of ensure 279 00:14:22,080 - > 00:14:24,720 there are controls and auditability and traceability, 280 00:14:24,879 - > 00:14:30,159 everything is in place so that they can ensure that the AI is 281 00:14:30,159 - > 00:14:31,600 helping their customers better. 282 00:14:31,679 - > 00:14:35,679 And I think the way, you know, if if any bank is not on AI, I 283 00:14:35,679 - > 00:14:39,200 think they are going to be falling behind further. 284 00:14:39,440 - > 00:14:44,559 And I think, you know, it is it's important that every bank 285 00:14:44,559 - > 00:14:49,679 has an AI strategy for their own operations team and for their 286 00:14:49,679 - > 00:14:50,559 customers. 287 00:14:50,960 - > 00:14:53,759 SPEAKER_01: Many banks want to modernize but are wary of 288 00:14:53,759 - > 00:14:56,080 large-scale uh core replacements, right? 289 00:14:56,159 - > 00:14:59,759 Uh, how can institution transition to a modern operating 290 00:14:59,759 - > 00:15:04,000 model without taking on significant migration risk? 291 00:15:04,399 - > 00:15:07,039 SPEAKER_00: Yeah, so I think that's that's one of the common 292 00:15:07,039 - > 00:15:09,200 problems that we see across the banks, right? 293 00:15:09,279 - > 00:15:13,279 Because you know, as I told you before, the systems that have 294 00:15:13,279 - > 00:15:17,519 been created over the la like the last few couple of decades 295 00:15:17,759 - > 00:15:21,039 is kind of layered, layered, fragmented, and complex. 296 00:15:21,200 - > 00:15:22,639 Nobody wants to touch that. 297 00:15:22,799 - > 00:15:25,120 And if you want to touch it, you're going to break it. 298 00:15:25,360 - > 00:15:28,639 And if you're replacing that means it is like it's 299 00:15:28,639 - > 00:15:29,519 impossible. 300 00:15:29,759 - > 00:15:33,919 So I have seen banks who have taken over 10 years in their 301 00:15:33,919 - > 00:15:34,960 core replacement, right? 302 00:15:35,039 - > 00:15:38,480 You know, like think about you know, you start this project in 303 00:15:38,480 - > 00:15:42,240 2016, and now you are completed that one. 304 00:15:42,320 - > 00:15:46,399 By the time you're done, the industry has moved so much, and 305 00:15:46,399 - > 00:15:49,600 there are so many other advanced technologies, and now you are 306 00:15:49,600 - > 00:15:51,679 again, you know, catching up, right? 307 00:15:52,000 - > 00:15:55,120 So that is never the right option. 308 00:15:55,519 - > 00:16:00,000 And um, what we do is we we recommend our banks to take this 309 00:16:00,000 - > 00:16:00,559 approach. 310 00:16:00,879 - > 00:16:04,000 Surround the core, shrink it. 311 00:16:04,159 - > 00:16:07,039 So surround the core, you're running a parallel bank 312 00:16:07,039 - > 00:16:11,600 operating system and let it do what you want to do to your 313 00:16:11,600 - > 00:16:12,000 customers. 314 00:16:12,080 - > 00:16:14,080 Like now, how you want to help your customers. 315 00:16:14,240 - > 00:16:17,200 If you want to launch a new product or you want to launch a 316 00:16:17,200 - > 00:16:21,120 new capability, or you want to serve a new segment of the 317 00:16:21,120 - > 00:16:25,840 customers, start doing that in this parallel operating system, 318 00:16:26,080 - > 00:16:26,399 right? 319 00:16:26,960 - > 00:16:29,919 You know, some banks, some of the banks they say, you know, 320 00:16:30,159 - > 00:16:34,639 um, I want to start offering this new API capabilities for 321 00:16:35,200 - > 00:16:35,759 payments. 322 00:16:35,919 - > 00:16:37,200 Okay, start there. 323 00:16:37,360 - > 00:16:41,440 And then migrate the other, you know, other channels to FinSt. 324 00:16:41,759 - > 00:16:43,759 And then migrate the incoming way. 325 00:16:43,919 - > 00:16:47,679 So there are different ways that you kind of slice and dice, but 326 00:16:47,679 - > 00:16:53,279 um, the the Q core idea is start as a parallel core and then 327 00:16:53,279 - > 00:16:55,279 start moving one piece at a time. 328 00:16:55,600 - > 00:16:59,279 Now you you are kind of slowly shrinking that one, and then you 329 00:16:59,279 - > 00:17:01,519 can exit out of that legacy system. 330 00:17:01,840 - > 00:17:04,000 So surround, shrink, and exit. 331 00:17:04,079 - > 00:17:08,079 So that's the that's the strategy banks should adopt um 332 00:17:08,079 - > 00:17:10,640 when they want to modernize their work platform. 333 00:17:10,960 - > 00:17:13,759 SPEAKER_01: Looking ahead, how will emerging innovations such 334 00:17:13,759 - > 00:17:17,839 as real-time payments, tokenize deposit, and stable coins shape 335 00:17:17,839 - > 00:17:22,559 the future of bank operating system and the broader banking 336 00:17:22,559 - > 00:17:23,279 ecosystem? 337 00:17:23,519 - > 00:17:25,920 SPEAKER_00: Yeah, so real-time payments is not any more modern, 338 00:17:26,000 - > 00:17:26,160 right? 339 00:17:26,319 - > 00:17:28,720 That um you know, most of the countries they have real-time 340 00:17:28,720 - > 00:17:29,519 payments. 341 00:17:29,920 - > 00:17:33,680 And um, you know, um ES is different. 342 00:17:33,759 - > 00:17:35,920 Okay, it's it's one of the largest economies. 343 00:17:36,400 - > 00:17:38,799 If you ask, has there been your real-time payments? 344 00:17:38,960 - > 00:17:39,440 Kind of. 345 00:17:39,680 - > 00:17:42,480 You know, we have had Zell, we have had, you know, the debit 346 00:17:42,480 - > 00:17:43,920 card is always real-time. 347 00:17:44,160 - > 00:17:47,519 If you look at other economies, they never had this such thing. 348 00:17:47,759 - > 00:17:51,920 And they moved from, you know, check cash to directly to 349 00:17:51,920 - > 00:17:53,839 real-time payment systems. 350 00:17:54,160 - > 00:17:58,559 So the the real-time payment systems today in the US is 351 00:17:58,559 - > 00:18:00,880 addressing some new use cases, right? 352 00:18:01,039 - > 00:18:02,480 That that is very important. 353 00:18:02,960 - > 00:18:05,920 Now, almost all the banks they know that they need real-time 354 00:18:05,920 - > 00:18:06,319 payments. 355 00:18:06,559 - > 00:18:10,240 But what is happening is more than the real-time payments, 356 00:18:10,480 - > 00:18:15,920 what's happening beyond these traditional payment rates is 357 00:18:15,920 - > 00:18:19,519 that blockchains and stable coins and tokenized deposits, 358 00:18:19,599 - > 00:18:19,839 right? 359 00:18:20,079 - > 00:18:24,640 Add that, yeah, like all these things are making so much of a 360 00:18:24,640 - > 00:18:25,279 difference. 361 00:18:25,519 - > 00:18:29,200 Uh, think about tokenized deposits and stable coins. 362 00:18:29,279 - > 00:18:33,119 I think you know, there are significant differences between 363 00:18:33,119 - > 00:18:35,759 both these digital assets, right? 364 00:18:36,079 - > 00:18:40,319 Stable coins are really good when you want to transfer money 365 00:18:40,319 - > 00:18:42,240 from you know one country to another country. 366 00:18:42,400 - > 00:18:46,480 Like it's uh, you know, the money is collateralized and it 367 00:18:46,480 - > 00:18:48,640 is reserved and kept in treasury. 368 00:18:48,720 - > 00:18:50,400 So your money is there, right? 369 00:18:50,640 - > 00:18:53,759 And um, the money is going to move from one place to another 370 00:18:53,759 - > 00:18:56,880 place very quickly and you without any intermediaries or 371 00:18:56,880 - > 00:18:57,359 anything. 372 00:18:57,599 - > 00:19:02,079 But the problem is the money is going to stay with treasury that 373 00:19:02,079 - > 00:19:06,559 cannot be used for the money cycle that is generally created 374 00:19:06,559 - > 00:19:07,119 by the banks. 375 00:19:07,279 - > 00:19:11,920 When you deposit$100 at the bank and um, you know, they receive 376 00:19:11,920 - > 00:19:14,799 that, take the deposit, there is a ratio that they have to keep 377 00:19:14,799 - > 00:19:16,079 it as a reserve. 378 00:19:16,319 - > 00:19:20,559 But the remaining money, let's say for every$100, they can lend 379 00:19:20,559 - > 00:19:20,799 $80. 380 00:19:21,359 - > 00:19:22,799 They keep that$20. 381 00:19:23,440 - > 00:19:25,759 And the remaining$80 they can lend, right? 382 00:19:25,839 - > 00:19:27,519 They earn interest on that front. 383 00:19:27,759 - > 00:19:30,400 Now that money they are lending, it is going to come back as a 384 00:19:30,400 - > 00:19:34,000 deposit, maybe in the same bank or maybe as some other bank. 385 00:19:34,160 - > 00:19:36,240 So that cycle continues, right? 386 00:19:36,559 - > 00:19:41,359 But with stable coin, that cycle is broken because you deposit, 387 00:19:41,440 - > 00:19:42,160 that's it. 388 00:19:42,480 - > 00:19:44,400 It stays as a collateral. 389 00:19:45,200 - > 00:19:50,720 So banks were very concerned about the stable coins, you 390 00:19:50,720 - > 00:19:54,799 know, like there were like over a trillion dollars of money is 391 00:19:55,039 - > 00:19:56,400 moving on the in that one. 392 00:19:56,960 - > 00:20:03,039 And uh several billions of dollars has has been stored as 393 00:20:03,039 - > 00:20:03,920 stable coins. 394 00:20:04,240 - > 00:20:09,039 And that means this much of money is moving from the banking 395 00:20:09,039 - > 00:20:13,440 system to to a treasury, which is going to be you know just 396 00:20:13,599 - > 00:20:17,440 earning some interest, but not going to help the banks to do 397 00:20:17,440 - > 00:20:18,880 their uh business well. 398 00:20:19,200 - > 00:20:22,640 So banks came out with this tokenized deposit, which is 399 00:20:22,640 - > 00:20:23,440 awesome, right? 400 00:20:23,599 - > 00:20:27,039 Now they said, hey, I'm going to I'm going to give you the 401 00:20:27,039 - > 00:20:31,680 similar characteristics of a blockchain payment or a 402 00:20:31,680 - > 00:20:36,000 stablecoin payment, but I'm going to continue using these 403 00:20:36,000 - > 00:20:37,440 money cycles, right? 404 00:20:37,680 - > 00:20:41,200 The$100 deposited is still$100 deposited. 405 00:20:41,359 - > 00:20:44,640 Instead of keeping in a traditional ledger, I'm going to 406 00:20:44,640 - > 00:20:46,640 keep them in a blockchain ledger. 407 00:20:46,960 - > 00:20:52,799 I can still lend$80 to other other customers. 408 00:20:52,880 - > 00:20:54,799 And that money cycle continues. 409 00:20:55,039 - > 00:20:58,240 But it all at the same time, it brings the characteristics of 410 00:20:58,240 - > 00:20:59,599 the stablecoin, right? 411 00:20:59,839 - > 00:21:04,880 So there are several consortiums of the banks in the US, right? 412 00:21:04,960 - > 00:21:08,640 And it's a carry network, a cell network, and then there is a 413 00:21:08,640 - > 00:21:10,480 clearinghouse network that is coming in. 414 00:21:10,640 - > 00:21:12,880 And there are like, you know, there are there's one more for 415 00:21:12,880 - > 00:21:13,839 credit unions. 416 00:21:14,000 - > 00:21:18,720 So all these consortiums, what it's going to do is the deposits 417 00:21:18,880 - > 00:21:22,400 that is, you know, that is received as a tokenized deposits 418 00:21:22,640 - > 00:21:25,839 can be moved to any account in the network through this 419 00:21:25,839 - > 00:21:27,200 blockchain instantly, right? 420 00:21:27,279 - > 00:21:30,480 So the real-time payment capabilities uh come into this 421 00:21:30,480 - > 00:21:31,920 uh blockchain network. 422 00:21:32,079 - > 00:21:35,839 Um, the next step, what what I'm more excited, interested in 423 00:21:36,160 - > 00:21:39,279 solving the problem is that how can we connect all these 424 00:21:39,279 - > 00:21:39,759 networks? 425 00:21:39,839 - > 00:21:43,279 Because let's say I'm in one network, I'm in one consortium, 426 00:21:43,519 - > 00:21:45,279 you are in a different consortium. 427 00:21:45,440 - > 00:21:49,680 How can I send money from my bank to your bank instantly 428 00:21:49,680 - > 00:21:53,680 through the similar same blockchain tokenized deposit 429 00:21:53,680 - > 00:21:54,319 network, right? 430 00:21:54,480 - > 00:21:57,359 So that is that is going to be interesting uh development that 431 00:21:57,359 - > 00:21:58,160 is going to happen. 432 00:21:58,319 - > 00:22:01,200 But I think you know the tokenized deposit stablecoin is 433 00:22:01,200 - > 00:22:01,839 here to stay. 434 00:22:02,000 - > 00:22:07,279 I was not a big fan of the crypto, um, but I think the once 435 00:22:07,279 - > 00:22:10,640 they tokenized deposits development started, I got more 436 00:22:10,640 - > 00:22:11,119 excited. 437 00:22:11,200 - > 00:22:14,880 I think that is going to be the biggest difference, and uh it's 438 00:22:14,880 - > 00:22:19,039 going to encourage more adoption of the digital asset and uh 439 00:22:19,039 - > 00:22:20,000 blockchain money movement. 440 00:22:20,400 - > 00:22:22,640 SPEAKER_01: Moving on, uh Finzley is also looking for 441 00:22:22,640 - > 00:22:24,160 geographical expansion. 442 00:22:24,319 - > 00:22:26,000 Would you want to talk more about that? 443 00:22:26,319 - > 00:22:27,759 SPEAKER_00: We have built a great technology, right? 444 00:22:27,839 - > 00:22:31,519 And if you look at the US market, it's the most regulated 445 00:22:31,759 - > 00:22:36,000 and very competitive and highly demanding market in the entire 446 00:22:36,000 - > 00:22:36,240 world. 447 00:22:36,400 - > 00:22:39,519 So if you are solving the biggest problem, then you can 448 00:22:39,519 - > 00:22:41,680 solve any problem anywhere in the world. 449 00:22:41,920 - > 00:22:45,759 So we are always very ambitious to grow further. 450 00:22:46,000 - > 00:22:49,119 But I think we are, you know, we we are looking at various 451 00:22:49,119 - > 00:22:49,440 options. 452 00:22:49,599 - > 00:22:53,680 You know, we don't have a clear plan of where exactly it is, but 453 00:22:53,680 - > 00:22:57,039 we'll be growing outside of US very soon. 454 00:22:57,200 - > 00:23:01,279 And uh you can start seeing us more in uh different parts of 455 00:23:01,279 - > 00:23:02,000 the world. 456 00:23:02,480 - > 00:23:05,359 SPEAKER_01: Bhushan Rengachari, CEO Finzley.