Unlocking Liquidity: How CHIPS® Drives Efficiency and Innovation in Global Payments, Featuring John Foran of Deutsche Bank

Speaker: You are listening to Payments Nerds, a podcast where we share perspectives on all things payments. If you are a payments nerd too, or are a little bit curious about what's going on in the payments world, you are in the right place. Let's start the show.

Speaker 2: Hello, and welcome to Payments Nerds, the official podcast of the Clearinghouse. I'm Greg McSweeney, and I'm your host. Today we are recording live from Sibos 2025 in Frankfort. Now, Sibos is one of the largest banking payments conferences in the world. I was talking to some folks at Swift today. They actually have over 12,000 attendees at this event that sets a record. I think it beat the London Sibos, which was, I don't know, more than a couple years ago. Pre COVID. So it's quite a lot of people here. It's very exciting. There's a lot going on, a lot of sessions. Michael spoke on a session yesterday. Sibos is really more of a marathon than a sprint. It's a five day, sometimes a lot, a lot going on here. So today we're gonna talk about high value payments, a liquidity efficiency, and what's going on in that space with our chips product as well. So I have two great speakers here today. I have John Foran, who is product manager institutional. Cash management at Deutsche Bank. And I'm Michael Knorr Senior Vice President of CHIPS Product Management here at the clearinghouse. And one of the things that we're gonna start talking about is liquidity, liquidity efficiency. We released a a white paper today, the strategic role of CHIPS network and the modern liquidity management, and really about how CHIPS and the clearinghouse unlocks significant liquidity savings for participant banks, which Deutsche Bank is one of them. Um. We're gonna dive right into that and, uh, I'll start out talking about the three. Core principles are the three, three highlights in the white paper. The first being resiliency. Um, it said the benefits, uh, I'm reading right from the white paper here. One of the benefits of chips outlined in the white paper is resiliency. It strengthens resiliency by maximizing liquidity, efficiency, and giving banks the capacity to absorb market shocks or support overall market stability. So let's talk about that a little bit. Uh, Michael, I'm gonna turn to you first. Why is that important and. Where does this resiliency come into play?

Speaker 3: Sure. Thanks Greg. And maybe for the listeners that are not so familiar with high value payment systems, allow me to, uh, elaborate first, right? Sure. 'cause I think it's important, unlike in the retail space where you have a volume and low value, this is the reverse chips process around, uh, 600. 30,000 transactions per day, but we do 1.9, sometimes over $2 trillion of payments on a daily basis. Wow. And that's now where really liquidity matters because when banks make payments to each other, they can only do that if they do it through normally in Central Bank money. Right. In the us that's the Federal Reserve. And you can only make a payment through the Fedwire system if you actually have cash in the bank, right? If not, the payment doesn't go. Um, so you try to have enough cash in the bank in order to facilitate your payment traffic. Now what CHIPS does, it allows you to net payments right across the participating banks. So, uh, our algorithm finds the most efficient package of, uh, of transactions in real time and nets these off and then only requires, right, a specific amount of liquidity to be available for the settlement. And that's really the key, uh, advantage that, uh, that this system has. It can do basically your. Well, the market can do its, uh, two trillions of, of settlements, but with a lot less, uh, liquidity, right? On average, what we're saying is for each dollar of liquidity you put into the system or in central bank money. You settled $29. Right. And you scale this up now on the amount of, of, uh, or value of payments We do. And that creates now savings, right. For, uh, for the market, uh, o overall and having less liquidity need also improves in that sense. Your resiliency in a sense. Mm-hmm. Because you might need your dollars for other settlements in the market. Right. A lot of banks and. Definitely, you know, hu Banks like Deutsche Bank, they're not just participating in the payment space, right? They're pursuing security settlements and derivatives and so forth. And all these different, uh, uh, systems have their liquidity needs, right? And if you can save on one, it's better than having readily available right? For the other, and that's sort of a key advantage.

Speaker 2: Yeah. Describe the netting, like put that into an example is that if, so, if Deutsche Bank is sending, uh, free payments to another bank and that bank is sending. Four payments to another bank and, but that other bank is sending payments back. Is that, how can, can you, can you put that into kind of a, a real world example?

Speaker 3: Yeah. Good. Yeah, absolutely. So the more banks are participating and the more payments are flooring, the more efficient the netting. So it exactly that, right? It figures out if bank A sends to B. B2C, c back to a, the system knows about that, right? It looks at the sendent receiver and the values, and then, uh, determines that these payments, if I group them together in a, in a little packet or batch and settle them in one go, then I only need to worry about the net amount, right? I mean, in two payments, if you sent money to me and I sent it to you. The system says, oh, great, there's money from Michael to Greg. Instead of, you know, a hundred dollars one way, 120, the other, it's just net 20. Right. That basically need to be recorded. Um, now we, we do obviously capture the, the underlying payment amounts itself. Right. And that's what everybody gets in their reporting to make sure they can reconcile. But from a value perspective, we record it right. In the ledger. We only care about the net 20. Right. Sure. And that creates that efficiency.

Speaker 2: I see, I see. So, so John, how does this resiliency play out? As a participating bank on chips, um, you know, how does it work for the bank and how does it help you plan for funding and prioritize transactions? Uh, can you give some examples?

Speaker 4: Sure Greg. So first, very happy to be here. Thank you for inviting me to participate for podcast here. Uh, really a, a fantastic, uh, conversational opportunity. So the nature of our business really is as, as a global bank and a correspondent bank in the us, um, we facilitate. Payment transactions for financial institutions, you know, all around the world. So, um, we have the honor and the privilege to be serving, um, fis in over a hundred countries for their US dollar payment needs. So for us running that business, the efficiency, liquidity that is unlocked. From CHIPS as a payment market, infrastructure A allows us to service our clients in the optimum manner to deliver payment capability. The speed of payment, uh, settlement transactions, uh, enabling us to deploy our liquidity. Efficiency means that we are able to dynamically route our client payments, um, down the optimum route. So be it, uh, a chips payment, it's settling with another correspondent bank, you know, inward outward payments. Or be it a payment settling into the domestic market here, let's say to a, a regional bank. So, um, being able to, um, maximize our liquidity efficiency means that all channels that we use in the US to settle US dollar international payments. Um. Benefit. It's a kind of a, a virtuous circle. So the, the liquidity, efficiency that CHIPS gives us, um, has this outsized, uh, positive impact across the entirety of our payment operations. Right. And not just here yet, that expands

Speaker 2: globally. Right. Michael, what, what do you hear from other participants on the network, uh, when it comes to this resiliency? We're talking about, um, feedback you're receiving from other participants. What, what, what are they saying about how CHIPS helps them? Day to day.

Speaker 3: Yeah. That, that lines what John just mentions, right? I mean, the bigger participants in the US dollar ecosystem, right. Seek obviously out, uh, chips as, as means to have an efficient way to settle their payments. Um, you know, with less, with less, uh, in central bank money, right? Than they otherwise would, would need to, to do so. Um, so where this also is important, especially to facilitate, uh, payments across the globe, um. US dollar payment system and chips in particular sort of unique because we open already right on 9:00 PM on the following, on the previous day for the existing value day and close only at 6:00 PM that creates now, uh, 21 hours, right, that payments can flow and hence obviously more time to cover. Um, you know, there's more interest also in sort of the net settlement to find efficient offsetting peers during that time. So we have a lot of participants. That do service, for example, the Asia Pacific market and then early in the morning right when we opened at 9:00 PM they submit payments into the system. And since they also support the similar market, meaning Deutsche Bank or the city of Wells Fargo in the same marketplace, these flows then into the system and create sort of an offsetting effect that benefits them on a net settlement amount. And that's sort of what attracts them to the system. Now, you could have the same probably via an RTGS system. That is a much shorter period of time, but the longer your day is, the more you benefit also from the netting process that CHIPS provides to its participants.

Speaker 2: Right. And chips. Uh, chip's Operating day is 21 hours. 2020 hours.

Speaker 4: No, 2021 hours. 21 hours, okay. Yeah. Yeah. And I think it's always an interesting fact that people in, you know, it kind of confuses at first, but yeah, the chips business day. Uh, for tomorrow, starts today. So at 9:00 PM New York time, uh, we, we are already starting into tomorrow, uh, because in Asia Pacific, you know, their business day has already begun. So it gives you sort of an insight into the. Particular aptitude of the US dollar financial system in supporting that global trade and US dollar being at the heart of so many business transactions, you know, all across the world.

Speaker 2: Most definitely. So I wanted to stay on the topic of liquidity savings. You mentioned earlier the 29 to one talk in the white paper. Uh, the liquidity savings that CHIPS provides over the course of a year is over $5 billion to participants. It's about $14 million per day. It's quite astonishing. And the way Piper goes on to say that without the liquidity saving mechanism, that 1.9 trillion in payments would need to be routed in less efficient liquidity, saving ways, requiring banks to maintain much higher, uh, reserve balances. I mean, that's 1.9 trillion in the core over the course of a year. Saving, you know, $5 billion is, is quite fantastic. Um. Michael is there, we can break that down for listeners. Um, you know those numbers, you know, they're big numbers. It's kind of hard to imagine sometimes. Uh, what, what, you know, when you talk about those savings at 5 billion per year for, for the participants, what, what, what does that mean?

Speaker 3: The other way to look at it. Right. And the way we did this calculation, obviously if you edit all up between course of the year, right? It always sounds good having this very large, impressive number. Yeah. But if we focus sort of on a, on a single day, and that's how we've performed this calculation, right, is okay, we know how many, uh, the value of payments we settle on a, on a daily, uh, daily basis. And we said, okay, if we wouldn't be here, what would need to happen? Right? Uh, then these payments would flow through a regular, uh, realtime gross settlement systems like Fed Wire. And so we took a look at, um, historically, you know, what, what's the cool liquidity needed there? Right? To settle those, and that sort of, uh, well, it's assumed as one to four, right? I mean, obviously payments go in and out, right? Also of your, um, of your central bank account. And then we compare this back to, okay, now CHIPS is in play and we, we basically just, um, you know, have a ratio of one to 29, right? Mm-hmm. Um. And, uh, then worked backwards from there to compare. Okay. What's sort of the net savings? Right? Because, um, now it can settle $29 for just $1 compared to, let's say, uh, put $1 for liquidity for $4 and look at that difference and, uh, multiply it out right by, uh, the value we settle on a daily basis. And, um, then it gives us a certain amount and say, okay, if a bank now takes those funds instead of keeping them in their reserve account, they're now able to deploy it in other. Uh, risk-free sort of assets in the market, they make a better return. Right? And then we multiply this return out from a daily basis. So it's a spread between what you would receive in the center bank and what you get sort of in the market. And we'll take that net difference and then multiply it out over the year. Mm-hmm. And that's how we drive sort of those $5 billion in savings. And on a daily basis, that might vary, right? There might be days where, obviously the savings potential, because the value in the. And the system is much higher, we'll be even bigger. Right? But on average, sort of, uh, what we do, we multiply that out and that give us those five.

Speaker 2: John, turning to you these liquidity savings, what does that afford, Deutsche Bank, how does that benefit your customers and what does it allow you to do differently, uh, because of these savings to offer new products or solutions to your customer set?

Speaker 4: Sure, Greg. So I think Michael kind of nicely demonstrated at delving into those numbers. You know, we see this as. Sort of the liquidity, efficiency of chips and if that wasn't there, the sort of opportunity cost of having to buffer those reserves at levels that are unnecessary today given the liquidity, efficiency of chips and that opportunity cost, you know, what would mean to various business lines within our banks. So again, we are a, a global bank, international bank. You know, we operate in cash management, trade finance businesses, loans, business, et cetera. The opportunity cost of not having that capital available to put into those value adding activities for our firm is something that is very real and um, I'm gonna say, uh, CHIPS is a very respected, liquidity saving mechanism for us as we conduct our day-to-day operations in the payment business. That makes lots,

Speaker 2: you couldn't do other things. Could capital be tied up elsewhere? Exactly. Exactly. Anything else on the liquidity savings, the white paper you wanted to point out? Because I wanted to move on to other topics such as ISO 20 0 0 22. Um, anything for

Speaker 4: either one. Yeah, I think one thing I'll mention echoes what Michael was saying earlier, so, um, CHIPS as a market infrastructure, you know, has some. Very dynamic features and capabilities available to participants such as ourselves, apart from the initial funding that goes in when ships opens, participants have an opportunity to inject supplemental funding into the clearing system in, in response to, um, the, the sort of. Happenings of the day or, or any kind of idiocentric transactions that are taking place in the global markets or, or for our particular clients. And there's also the capability to withdraw funding dynamically during the day as well. And basically, these levers enable us as correspondent bank to really, I'm gonna say, be quite focused and precise in the way that we maximize that liquidity efficiency on the clearing system. So I think. Again, Michael, to echo a point you made, you know, a large part of our business is servicing financial institutions in the Asia Pacific region or in Europe, obviously. So during those overnight hours where the Asia Pacific and European time zones are in the height of their business day with the maximum requirements or payment traffic between those economies, those. Facilities to enable us to supplement funding and assure the sort of smooth operation of payments for our international FI clients are really an excellent match to our business. And our goal, obviously is to deliver the maximum client service possible and CHIPS facilitates that for us.

Speaker 2: And so an example would be if Asia Pacific region was very active overnight, we can supplement that in the day. On the flip side, if. You know, there wasn't much activity. There was a, it was a, maybe a bank holiday there, you could weth

Speaker 4: throw money out. Absolutely. So, so that, that, I'm gonna say it's, uh, the global economy is very dynamic. Conditions change, you know, continuously. And, um, having that flexibility, uh, is something that we have leaned into, let's say, to allow us to deliver that level of client service that our clients to manage from us. Okay.

Speaker 3: Yeah, maybe to add, right. The capability to supplemental a fund during the day, withdraw supplemental funds is also further. Um, sort of aided by the ability to prioritize transactions, right? So it's not just send a payment in and then we can't control it any further. We do allow participants to set a priority flag, for example, right on the payment that the algorithm takes into account from a settlement perspective, right? So the users do have a great, as John mentioned, high level of control, right? Through funding prioritization, right? When these payments, uh, go out. So it can be made interactive, but you know, some might not, right? Because it's just the nature of the businesses. They're saying, Hey, as long as this settles during the day in a most efficient way, I'll just, you know, submit it to swift to chip, sorry, and, uh, let it go, right? Um, so it allows you right, a different adjust in a sense, right? Your process, uh, with chips to your, to your business needs, right?

Speaker 4: And I would say we've, we've been on a journey, you know, uh, in terms of. Tapping into those type of capabilities offered by chips. So, um, uh, in light of just of the environment, the last number of years, uh, around interest rates, you know, the cost of capital so on, um, our financial resource management, uh, team have really started to look at those capabilities that chips, uh, uh, allows us to avail of in a different way. Um, so. Our, our own teams who manage the liquidity work with our treasury teams, um, have developed their skillset, uh, over the last sort of two, three years. Uh, and, and really, um, are seeing the value from this sort of capability, like Michael says, to prioritize the rank payments, uh, as well as to use the supplemental, uh, funding and withdrawal facilities. Mm. It's

Speaker 2: interesting you bring up in rates 'cause you know, there was a period where, a long period where it was very, very low interest, interest rates. I imagine now with. Fluctuating incident rates are obviously a little bit higher than they used to be. This is much more important, um, depending on when you're talking this, this volume of, or this value, uh, of, of transactions and what you're funding every day. Yeah, definitely. Okay. Um, I wanna turn to, uh, iso uh, ISO 20 0 0 22. Um, it's a standard, uh, message standard that the high value system payments are on and also other payment systems as well. Uh, CHIPS migrated ISO in 2024. Fedwire followed in 2025. All banks are now on board, uh, chips. The chips migration was very efficient. Um, everybody got on board on day one and we actually had a higher value that day on our first day, which was very nice to see. Um, but now we're a year past. Chips on, Fedwire is on. Um. How are banks leveraging the capabilities of ISO right now? I mean, first of all, are they leveraging them? And if they're not, what can be done to move that forward? Because there are a lot of benefits, uh, messaging capabilities when it comes to this. I'll turn to you, Michael. First, what are you seeing, uh, for some of participants and what does it have to go with iso?

Speaker 3: Yeah, good, good, good question. Actually, we had a lot of. Deep discussions here at SWAs with, um, you know, other market infrastructures and, uh, members of those as well as Swift, right? And we do see still a lot of. Banks haven't, while their messaging is ISO 2022, they haven't fully adopted yet in their backend system. So there's a lot of still translation going on, um, which doesn't enable them necessarily to take all the advantage of sort of the rich, uh, rich data. Right? Uh, but we've seen now examples where there's been more focus also by market infrastructures to, to push really participants to make sure that. The standards used in the correct way. Right. And in some markets, unless, and yes, we don't really use, for example, regulatory reporting Right. Uh, in any way. But if we look across border context, it's, it's important in some markets and can lead to delays, right? If certain codes are not included or not in the right field, then it, uh, leads to, um, you know, a manual follow up sometimes right? With originator before then the value is applied. We have seen some examples there now where, you know, active engagement with local market infrastructures. Um, they, they've been, you know, doing a better job understanding these codes, requesting them, and now suddenly a lot of this becomes straight through processing, right? Pay payments don't get held up anymore, but a lot of this stuff is really. Uh, you gotta get down the weeds with everybody, with originator side, with market infrastructure, some, and chips does a good job regulators and reporting entities to make sure they understand right. How to use these codes, how to interpret them, how to use them in the reporting. So, uh, you gotta go down the detail right? And, uh, the next opportunity we have as a market to do that is, uh, adoption of structured and or hybrid address data as we call it. Um, that starts actually this, um, this November, uh, with the, uh, intent that by next year November, we actually eliminating free format, address information. That is widely still prevalent, uh, out there in, in payments, but also has caused a lot of stoppage, sometimes right in sanction filters where free format data leads to a lot of alleged hits that later turn out not to be really proper hits, right? Sure. And, uh, use of hybrid address data at a minimum, which requires full town name as well as the ISO country code. Should dramatically improve hopefully right efficiency in sanction screening operations for banks. It's still a little bit a daunting task, I think, for the market, but I think we've seen, again, push here at at iVOS to say, yeah, this is happening next year. Be ready. Right. To get rid of your unstructured addresses. Sure. So we'll see a lot of activity. In the next year for the market to really adopt those much more structured addresses. And that will help right everybody else to a better idea on payment flows, right? Because we have proper ISO codes in there on countries. So it'll help definitely the whole, um, you know, from overall payment compliance perspective.

Speaker 2: In your conversations here at Sibos with other market infrastructure providers, were you able to gather any lessons, learned, any tips that other jurisdictions have used to. You know, move iso far a little farther, a little faster.

Speaker 3: Yeah. So it's really the ongoing engagement, right, with participants and especially the vendors, right? Because most banks do rely on their vendors from a payment systems perspective. So getting those vendors on board early on, highlighting the roadmap to them, where we going as an industry? Will be really, really critical, right? 'cause if they are delayed, the participants are delayed, right? So it all hinges on having them sort of fully engaged in the discussion. So they know what's coming. That's, I think, uh, very, uh, very important. And the other thing that marketer structures have done, and so the clearinghouse is really offer the right level of testing support, right? So using testing tools that participants can test out their messages as early as possible, right? Through certain common industry tools. And then also in what we call our bank test environment, right? Allowing sort of intern testing. To be conducted there with participants, and that's really important and we've probably gotta provide more specific test cases maybe in the future, right. To make sure this really works properly, end to end.

Speaker 2: Got it. John, you know, when you think about ISO and, uh, you, we've been through the conversion and you've, you've seen everything going on there, you know, how do you see ISO the message standard? How do you see that helping Deutsche Bank, and how do you see it helping your clients?

Speaker 4: And Sure, Greg. So, great question. So, um, I think, uh, you know, that does come up a lot in our client meetings, you know, so, okay, ISO has done so, so what, uh, the, so what? Right now? Now what do we do? So, you know, for us, you know, we've been using the. ISO transformation as an opportunity, not just to treat it as a, a messaging, uh, undertaking a loan, but to look at our products, our processes, some of our infrastructure, um, and really sort of, um, I'm gonna say, uh, treat ISO as a catalyst to drive forward some improvements, innovations a new capability for clients. So one example that I'm going to. Give you now, uh, is something that we identified early on as a big opportunity for us. So again, you know, if we're, we're a dollar clearing bank, we process over $100,000 wires on a bad day. Um, um, many of those wires transversing. The chips market infrastructure clearing system, for example. But one of the largest categories of exception and investigation handling is what happens when a wire gets rejected. So, you know, it's a simple case. Let's say somebody mistyped an account number and that wire has to come back along the chain. So with iso, um, for the first time I'm gonna on a global scale, there is a dedicated message now for payment returns. For anyone who's technical in nature, it's the pax uh, 0 0 4 message. Um, so when we looked at this, we really saw the chance to put the, I'm gonna say, um, the whole of Deutsche Bank behind driving towards a solution around payment returns, a real point of friction for our clients. Our return could take anywhere from sort of a day to a week to handle in the legacy world. Um, and ISO gave us a chance to say, look. That's gonna be one message standard, globally applicable. Uh, so equally as applicable on the target clearing system in Europe as it is in the US on the chips or fed bar clearing system. Indeed also on swift for cross-border communications. Um, so which. That background, we were able to make strategic investments into sort of dedicated product capabilities around payment returns. Um, and that has been rolled out here in the US for our clients, uh, as our, as our first market. Uh, given the maturity of the US landscape, um, we, we really saw us as a. Front runner on this. Um, and we have actually been successful in transforming quite a large number of the returns we handle on any given day can now be processed in minutes. Um, and this same day? Same day. Same day, a minute, yeah. Minutes. Uh, it's, it's quite a contrast. Uh, and what does that mean for our client? Well, actually, when you're. Operating international payments, uh, you, you seek certainty. Um, and, and anything that causes uncertainty, uh, creates, uh, friction, anxiety, uh, sort of, uh, I'm gonna say has real world impacts in terms of global commerce. So being able to fail fast is actually, uh, a powerful value add for customers in this day and age. So if you're sending a wire, uh, transfer abroad, you know, uh, uh, knowing. That why wire transfer has an issue, and not only just knowing about it, but actually having that cash back on hand to be able to remediate and, and, and you fail fast. You fix fast. So, um, we, we, we see that as, uh, one of the sort of shining stars, uh, in terms of what ISO has already given us. Now. I think there's loads of use cases developing, uh, and, and lots of innovation that will be coming down the tracks. But already that is one that we've been able to put those strategic investments into and leverage ISO to sort of, uh, deliver on the value that has promised for all these years. It's a, it's a great

Speaker 2: example. It's applied to, you know, supply chain or, uh, settling an account. Um. Avoiding late fees because, you know, you knew the, the payment failed right away rather than waiting a week and mm-hmm. Getting interest charges or whatever it may be. It, it's a fantastic example.

Speaker 3: So it's like, like another liquidity topic now from the corporate, not intraday, but over multiple days, right? 'cause in the past you had cash in a sense, tied up, um, in, in these failed payments, right? They, they came back later, right? And you didn't know. Now if the money comes back faster, your account or you can make the next payment, right? Whatever you're supposed to do. Much quicker instead of always having sort of certain value out there. Right. That then later comes back. So I think that's a really, um, important fact I had to highlight. 'cause it makes the whole process a lot more efficient, right? Yeah. From, from a corporate equity perspective.

Speaker 2: I, the, the size of the transactions we're talking about here, it's, this is significant liquidity tied up in could be one or two fail transactions. Yep. And if you know about it right away, you can do something otherwise you're. Surprised sometimes three or four days later, which is not good either. Clients don't like surprises. Um, fantastic. Um, anything else on iso? Anything else we need to discuss on that? Uh, I

Speaker 4: think I would say, um, you know, getting, getting to next month, uh, end of coexistence on, on the SWIFT network is an important milestone. Um, but that, that is more, I'm gonna say the. End of the beginning. So ISO is, uh, a journey. Uh, yes, important milestone coming next month. Um, but really that sort of, uh, next. Trach of, uh, of topics, uh, starts to, uh, come up, uh, now that, now that the world is on the one standard, um, and that's everything from, you know, data quality. So, yes, uh, many banks have implemented ISO and perhaps they've had to take sort of certain tactical solutions, uh, and now the chance to re-look at what the quality of their data and, and, uh, to, to Michael's example around the hybrid address and structured address. You know, what is required to, to lift up and, and, and take advantage of those, uh, next, next phase topics. Um, so we saw, you know, uh, quite a good improvement in terms of our, um, sanctions, embargo screening, uh, false positives, which have allowed, you know, I think double digit improvement, uh, in terms of payments that can process through our, um, books and records, uh, more quickly than they were in the past. Uh, and as data quality continues to increase and as the ISO standard encourages and enables that, uh, we see a good story there that, uh, this, the speed, uh, of, of payments as they transverse, you know, international end to end, um, can continue to be improved Hm. As the standard matures. Sure.

Speaker 2: Well that's a great point. And, you know, talking about next month, it's, uh, I mean, we're in October already, so November's right around the corner for the next, uh, the next milestone. Um, so that, that, that's really cool to hear. Again, we're, as I said, we're almost in November. We're in October going into November, but let's look towards 2026. Um, John, I'll start with you. You know, when you think about what your clients are looking for, what they're demanding, um, what, what do you see coming, uh, both for your clients and from Deutsche Bank in 2026? What, what, what's on

Speaker 4: your priority list? Um, okay. So one of the sort of trends we've seen in the market, uh, over the last number of years, uh, is sort of client expectations have evolved in line with what we see in retail payment space. So in the retail payment space, we've seen the evolution of instant payment schemes, you know, that are not time boxed or they're not Monday to Friday schemes, they can run sort of 3, 6 5. So, um, one of the things we've been spending a bit of time looking at is, well, how can we. Start to take some of that sort of capability that has been developed in these domestic schemes, um, and. Offer some of those advantages to clients operating in the cross border space. So, um, here at Deutsche Bank, we are using our US dollar clearing as a, a pioneering market for us, and we are launching, you know, very shortly, a capability for clients to be able to transact cross-border during weekends. And now this will be rolled out in increments. We are gonna start with what are called book transfers, where both of the clients, both of the, the CFIs maintain accounts with Deutsche Bank. Um, but what we see is that over time, this is a, a capability we want to evolve. Um, and, and again, we, we know that this change has to start at the center. Uh, and as use cases develop, uh, and as banks, uh, in all corners of the world, start to see it in action, uh, it will stimulate further innovation in this space. Um, and for our. Roll out that we're going to announce actually today, uh, here at SBOs. Uh, breaking News right here. Yes. Uh, DB ever on for, for US dollar. Um, we already see that there are a subset of our clients who today instruct us to make payments on a Saturday and a Sunday. Um, and being able to confirm those payments, uh, over the weekend enables them to get ahead of their own workflows, their own client needs and expectations. So, um, that is something, uh, that we see continuing to evolve, uh, into next year as well. And we've starting here in the US and, and obviously, uh, we are. Our home market is, uh, here in Frankfurt. Uh, we are the world's number one Euro clearer. So it is a capability that next year we would, would very much hope, uh, to roll out to our Euro correspondent banking space as well.

Speaker 2: Fantastic. I mean, that makes a lot of sense. Everybody operates 24 7. You know, you do business on the weekends, you bank on the weekends, corporates and banks wanna move money on the weekends too, so it makes a lot of sense. Michael, what about chips? Uh. Yeah, we, we kind of, we we're still building on iso, it's still a journey there, but what's in line for chips heading into 2026?

Speaker 3: Yeah. Beyond sort of supporting. The ongoing message changes in harmonizations, right? The industry with SWIFT and market infrastructures are doing on annual basis. Beyond that is really what John mentioned. We recognize there's an increased demand in moving towards more 24 by seven payment operations. We have the story with real time payment systems, but we see this trend now also spilling over into high value payment markets. So the bank financiation settlements and BIS sort of encouraged as part of their roadmap. Market infrastructure is to really look at this in earnest. We've seen this in Europe, commitment to expanding operating hours and chipsy exploring. Can we add another operating day? Right? We won't be able to do 24 by seven in one go, but the question is, can we add another day? Right? Um, maybe the Sunday. So we're working, um, exploring that further to help, you know, customers like Deutsche Bank. That John just mentioned with their new product as well as other banks over there. Right. Also are investing in this capability so we can interconnect them right through chips. 'cause that's what all we do. Right. We call it CHIPS network and the network lives off, uh, participants who can use it at, at these certain times, right? We've done this early mornings, right? So we're supporting customers there, as I mentioned already, and now we're looking, can we add, does it make sense to add another day to interconnect banks that have this capability already, right? This will then strengthen our proposition as well as their proposition. And um, you know, if we do it step by step, then obviously eventually, right? We also get there with 24 by seven, but we think we don't have to do it in one go, right? We can focus on what our current infrastructure can provide. Through fine tuning it sort of at that, that additional day. And then we'll, we'll need to take it from there, right? As, as markets further, further progress. But that's definitely a big topic where we see, uh, see movement happening. I mean, in prior years was sort of always dismissed a bit, will this really happened? We've seen now more credible commitment and there's probably more coming out there and the rest of the year of plans for market infrastructures to, uh, to support, uh, sort of these 24 by seven propositions.

Speaker 2: Yes, it's a, it's a real time world, I guess, right. Fantastic. Um, anything else we need to cover? Anything else that we didn't touch on today that's on top of your mind? Anything you heard here at Sibos that you thought was pretty interesting?

Speaker 3: Obviously there's a big, I mean, all these shows that has been for many years, uh, if you come to SWAs very often, right? There's always a lot of buzz, right? Of what's the next big thing, right? We had obviously, uh, in the past of, of digital currencies and we've seen now again, uh, big pushy also, um, you know, swift launching some new services in digital space, right? How we can connect sort of the existing world, right? Of, that we exist in, in, in of, of, uh. Uh, central Bank and, uh, deposit accounts and, and messaging right to the digital world. So there's some new products being launched, how we can sort of interconnect these worlds. So it's something obviously we need to pay attention to right from the clearinghouse. Sure. Uh, as we want to be, stay relevant right in, in that market where we've seen, these are good examples to show, right. That the, the, the very, uh, important world, right. Correspondent banking. Right. Interconnected payment systems still fully remains relevant. If we can also figure out right to interlink right. With the emerging world that's, that's, that's coming Right. And provide really that, that bridge. So that will be interesting. I mean nothing that will happen in 2026 for sure. Right? Mm-hmm. But for us to, uh, to think about right. How this world's, something to think about them, the how wheel take home with you. Yep.

Speaker 4: Exactly. Anything for you, John? You know, I think, um, the world of payments, uh, never stays, uh, still it's continuously evolving. And, uh, one of the things that, um, I think, um, maybe was aided by, by isa, but not just a messaging standard, but the sort of, uh, we, we see, we see an evolution of the way payments work on across border basis. Uh, a topic that is getting some traction. Last number of years has really been this concept of one leg out. So the ability of a cross-border settle, uh, payment. To tap into, uh, instant payment schemes for that last mile. So that settlement is a domestic market. And, you know, the, the, I'm gonna say. The improved payment experience that that type of instant payment scheme can give even to a cross-border parties. So, uh, you know, TCH and, and what you guys do as a, a network operator, you know, operates, uh, across a number of different worlds, instant payments being, uh, one of those as well. And, uh, we, we see that as both here in the US and also in Europe as, uh. That's sort of a, an exciting development over the next number of years where we, we expect to see some interoperability between the high value payment networks, uh, and those instant payment networks that have really, uh, taken off in the last sort of 5, 6, 7 years, uh, around the world.

Speaker 2: Yeah,

Speaker 4: that's definitely

Speaker 2: something we're hearing a lot about here. Definitely cybers this year. Excellent. Well, those are all the questions that I have, but actually, no, I, I have one more question. Uh, and we do this as a tradition on the show, which is called Payments Nerds. I always ask our guests what makes them a payments nerd. So John, uh, I ask you, you know, uh, what makes you a payments nerd?

Speaker 4: Um, well, I think, uh, you know, Greg, you reached out to me a number of weeks ago to see what I'd be available to, to sit in and join a podcast, uh, with you guys here at TCH. And, um, you know, you gave me in the email you were. Explaining a little bit of the background of, of the podcast payment nerds, and I was like, yeah, I can, I can stop you right there. And I, I, I know the podcast, not only do I know payment nerds, but I have a favorite episode. So I think, uh, you know that that in itself, uh, is a telltale. Uh, what, what is your favorite episode? My favorite, I have to write it down here. Season six, episode three. I would recommend anybody to give a listen. I think it, uh, it, it, it. Talks about the Instant Payment network, uh, operated by TCH here in the us, uh, from the perspective of, uh, one of the credit unions in, in Virginia. Mm-hmm. And it was just, uh, uh, I'm gonna say an episode that really. Shines a light on what it is that instant payments can deliver to clients and to retail domestic account holders when done right. Mm-hmm. Fantastic.

Speaker 2: Yeah. Good. Well, payments turned right there. Michael, what makes you a payments nerd? Oh,

Speaker 3: I, I have the t-shirt.

Speaker 2: Oh yes, we did give that those

Speaker 3: t-shirt for a while. Yeah, for a while. Yeah. So I still have that. Yes. So, no, I'm very reactive, obviously with for many years with the payment standards. Evolution so closely working with standards bodies as well as Swift, and we always plan ahead. Right. We're looking already at 2027.

Speaker 2: That's right. That's right. Yeah. I mean, Michael's been going to the market infrastructure. Correct. You've been payments, uh, high value payments. You've been doing all the payments nerd events here at at iOS for sure.

Speaker 4: Michael is a, I'm gonna say a, a, a veteran of the industry. So, uh, I, I moved over to the US a number of years ago to take up this role and Michael's name was already well known to me, even though I had never met him. So it's been an absolute delight to get these opportunities over the last three years to work with the legend himself. Fantastic.

Speaker 2: I feel honored. Well, on behalf of a couple of legends here, I'd like to thank everybody for joining us, the podcast for John, Michael, and myself, um, for tuning in today. Uh, if you enjoyed today's episode and you want to hear more about podcasts, you can find payment nerds podcasts on the podcastPage@theclearinghouse.org, or where you subscribe to your podcasts on Apple Podcast, Spotify, or Pandora. Simply search for payment nerds in your podcasting app. Thank you everybody. Thanks for joining us, and that's it from SBOs 2025. Have a great day.

Speaker 5: The Clearing house is full of payments nerds who just can't wait to tell you about how the RTP network helps us financial institutions create a faster and smarter experience for their corporate and retail customers. Check out the schedule for online and in-person events@theclearinghouse.org. Speaker: You've been listening to Payments Nerds. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. Thank you so much for listening. Until next time.