Pamela Draper & Paul Twigg on AI, Stablecoins, APIs, Modern Banking & Payment Rails (Part 1)

Speaker A: Foreign,

Speaker B: um, sarny. And you're listening to what the heck. Fintech, where you'll experience and learn that fintech is fin life. Let's get started. Welcome everybody. We have quite the episode today. We're going up to Canada now we're going up to uh, Calgary with, with Pamela and Paul, both from the Digital Commerce Group now and they both have different backgrounds. So Pamela you're more on the business side and probably assume more the finance side. And Paul, you're that CTO for the digital, uh, Commerce Group. So you guys will do it way better than I will to hit, to hit your background and a little bit how you, how do you get into this fintech space and banking and payment type space. So Pamela, I'd love to hand off to you, but before I hand off to you, right. I actually want to make you feel at home. So I got my sicko sign, Boston background. I'm going to change that right now for you. Ready? Okay. Awesome. Now we're right in Calgary for you. So now we're in your backyard. So now you feel at home.

Speaker A: So perfect.

Speaker B: Awesome.

Speaker C: Huh huh.

Speaker B: So okay, so Pamela, I'd love to hear about your background. How'd you grow up into this space and then Paul, you can go closely thereafter. Sound good?

Speaker A: Sounds great. Thanks Rob. Thanks for having us. Thanks for the Calgary background and the warm welcome. So uh, like a lot of things I kind of fell into Fintech. I wasn't actually planning to get into it. I had spent 14 years in my career in investment banking so firmly on the finance side. Spent a lot of time with a founder at a when his prior company, when he was in the ATM space. And I like to say that our founder Jeff Smith was in Fintech when fintech was ATMs because back in 97, back in 1997 the latest and greatest financial truly was the ATM. You no longer had to go into a bank branch to get uh, out cash and do transactions. You could do that from any bar or establishment that you were at. So Jeff started that company in 1997 and grew it to the world's second largest white label ATM distribution company with operations on four different continents. Uh, he grew it from a small little Canadian company to one that he eventually sold to his largest competitor for $600 million back in 2017. So at that time I was his investment banker working on the finance side of and he kept the banking license that he had obtained in Canada while building that ATM company. The acquirer didn't want it. And from 2017 through to today we've been building an online payments company, so building out payments APIs to integrate into every major Canadian and payments rail. And he asked me in late 2017 to come and join him at the start of that journey. So to my point, I was never. It wasn't a plan to go into fintech. I sort of fell into it in that way.

Speaker B: Wow. And then what was your undergraduate degree? Because a lot from all different angles, they come from English majors and then they get, they fall in. I mean, because, you know, it was different time. It was, you know, I'm older than both of you. Right. So, uh, when you said early, uh, ATMs, I remember back in my college, which is in the 80s, and that ATM, um, money coming out. I was down the Cape Cod in Massachusetts, and all of a sudden I got money. I'm like, this is unbelievable. I can't believe this.

Speaker A: So.

Speaker B: But I'd love to hear a background of, of where you went to school and everything too.

Speaker A: Yeah, no, so I went to school at the University of Western Ontario, the Richard Ivey School of Business. So background firmly in finance. And coming out of Ivy, a lot of people are recruited into investment banking. And I just sort of followed that path, thinking, you know, it sounds like a great career.

Speaker C: Wow.

Speaker B: So you're more, um, fin tech, right?

Speaker A: Yeah.

Speaker B: More on the fin side now, Paul. I think you're on the other side of that. I think you're more tech thin, but I could be wrong with that. So, Paul, how about a little background with yourself too?

Speaker C: Yeah, completely on the other side. So the cto, I like to call myself chief Geek as well. Right. It's all about the technology. And for me, my background, you know, since I was 16 in the UK, has been technology there. So, you know, being at, uh, technical school, college, university, all studying computers, all studying technology. You know, back in the day with mini computers and mainframes and now with supercomputers. Right. How we're, uh, processing billions of transactions. Wow.

Speaker B: And now you. Did you, like, grow up in the whole developer kind of path? Right. Started as a developer and then moved on to move to more leadership roles after that.

Speaker C: Yeah. So I, one of the things I, I did in my career, and I'm not sure it was by design, but it happened like that is, you know, I spent periods of my career as, uh, as a developer. I spent periods of my career on the infrastructure side. I spent periods of my career on the database side and also on the support side. And so, you know, when you kind of add them all Together it allows me to get all different perspectives really that come out of uh, a technology team, which gives me the skills to be able to lead it today.

Speaker B: Wow. Yeah, that sounds great. Right, so, okay, so you know, you're like shake and bake, both of you guys working together, figuring stuff out.

Speaker C: Right?

Speaker B: That's awesome. So, so let's see. So I mean, um, how about a little bit deeper now on the Digital Commerce Group? What, like what's going on there? And, and you're more. Well, from a connection into the United States, you're more on the west coast side, right? I, I'd assume. But I don't know if you go down to like that Silicon Valley area. How does, you know, Digital Commerce Group? And you probably have multiple business units going on there too. How does that all fit together in, in kind of the ecosystem in Canada, but then also does it connect it a lot or a little bit into the, you know, United States also?

Speaker A: Yeah, so we have a schedule, uh, one banking license in Canada. So that's the same license as uh, a BMO or an rbc, which you may be familiar with, but we use it very differently. So we use it purely to facilitate online payments. So what we've done at Digital Commerce Group across our companies is we have, we provide a suite of payments APIs and related technology to allow our corporate clients to move money online faster, more efficiently and more securely. So practically what this means is we provide electronic connectivity to all the major Canadian Canadian banking payments Rails and we allow companies to issue Visa and MasterCard cards as well as process card transactions. Our operations are pretty much 100 in Canada. With that connectivity built into the Canadian Rails. We don't have the US Rails built out at this time, but like I said, we do have the credit card piece built out. So there are elements of that can move money cross borders. But right now the business is almost 100% focused on Canada.

Speaker B: Now are you getting into any kind of stablecoin or anything like that yet or not yet?

Speaker A: Paul and I have talked about that. The regulation in Canada as well as it is in the US is evolving on the stablecoin piece. So we haven't done anything yet, but certainly monitoring where that's going and uh, looking for probably more regulatory clarity with respect to stablecoins before we would do something in house. I don't know Paul, if you have any view there.

Speaker C: Yeah, you know, something that we're looking at. Right. I think one of the advantages that will get, you know, as a stable coin becomes a, you know, no Pun intended. A stable part of the economy there is, you know, being able to work with a single type of currency anywhere in the world. Right. So now anytime we go to any uh, country and uh, want to spend local currency, we're always dealing with fx. Right. You um, know and if we spend it on our card, every time you go tatty card in a foreign country, you dealing with FX on every single transaction and there's fees baked into that FX and things like that. When we start working with stablecoin is stablecoin. Right. And we, we're not suffering from all of those FX fees and transactions for every single transaction. So it's much more of a cross border scenario. And in today's globalized world people are moving around a lot. So the need for that scenario is something that's quite evident.

Speaker B: Right, right. And especially for what I hear, you know, because uh, in with Swift too, moving money that, you know, that has high fees also too. Right. So that's why stablecoin can help out a lot with that. And it gets so instantaneous, you know, with, with stablecoin.

Speaker C: Yeah. Swift's been around since 1970. Right. Like, yeah. Why in an ever changing world are we using technology that's been around for 50 years, which is really, let's just move files in flat text files day after transactions have happened and things. One of the things I would add about who we are as a bank uh, as well is you know, we, our DNA is about we build everything, right. So in the technology world there's a buy versus build, uh scenario that always comes up and we build everything. So we've built our own core banking platform, we've built our own core payments platform, uh, core acquiring platform for payment acceptance. And that's something that we're super proud of and actually gives us flexibility to move quickly to look at what our clients needs are, uh, and get them out the door as soon as the client needs them.

Speaker B: Wow. Yeah. That's very cool. Wow. There is that always that. I mean I saw that when I was at Fidelity too. You know, buy verse build. We were heavy build and then it's more buy and integrate. But still a lot of building still going on too.

Speaker C: Yeah.

Speaker B: Even though I haven't been there for seven years now. But still I'm connected with them, uh, and I talk to them a lot and do projects with them too. That's great. Now you know what I'm seeing a little bit. I'd like to get your take on this too. What I'm seeing in the United States and from startups also even regional banks, smaller regional banks, uh, here in Massachusetts are thinking about stablecoin because that, because that the international side and brings more deposits there so they get more revenue and everything. You know, it's all based on that. But also on the other side, um, I've um, run into and actually done some collaborations with um, a company, a startup called Krebit and they're all about helping international students be able to make their tuition payments via stablecoin. And they, they're the office side, they're doing the rails on the other side in Brazil and in other countries. So then it comes over here more cleanly and it saves because I guess a lot of international students come walking over with like, like big suitcases of cash. Literally right. It's. And, and uh, to make their payments and stuff. That's because of all the FX and all that kind of stuff too. So stablecoin takes that out and it saves like thousands of dollars especially for like you know, for, for big university fees and whatever they need. They've actually sold a house over their platform too. Something to look at too for on the other side because they, they do in the rails on the, on the other side of the international side in other countries.

Speaker A: Well yeah, and that's a really great use case for our technology. And we actually have a lot of customers in that space who would be facilitating and they would maybe do them by stablecoins or they'd aggregate them in other ways and what we provide to them is the last mile Canadian payment rails to get those funds, the international funds out, uh, dispersed out to their customers. So they might have portfolios of students that they're helping where the students are paying tuition. We definitely have a client in that space. And to your point Rob, they move the money from overseas, whether that's in larger wires between entities that they have set up in a global distribution network or sometimes stablecoins. And then our technology provides that sort of last mile Amazon type service to get those funds to the end institution or wherever it's destined to in Canada.

Speaker B: Now do you work with a lot of startups, Canadian startups or even United States startups because you're so close to the United States. Do you do a lot of, because you have the APIs now to bridge that uh, gap for the banks and the startups?

Speaker A: Yeah, so we work with a whole um, gamut of customers from startups, we work with some startups to much larger global entities that would be owned by some of the world's largest Payment companies that have operations in Canada. So it really runs the full gamut of startup to global enterprise that we work with. Startup can be a little bit harder because you need to be of a certain size to be able to have the development teams and to be able to integrate our APIs and to have sort of the financial base to afford the services that we provide. But often what we'll do is with well backed startups, we'll grow with them from the startup phase into the more kind of small, medium, large enterprise phase.

Speaker B: Yep, yeah, I know, absolutely. And now Paul, this question for you. Do you have like a sandbox that, so startups and or other banks can play with whatever type of mass data or whatever so they can do that kind of testing and see how the Rails work?

Speaker C: Yeah. One of the things we're actually proud of in the DC group is our uh, strategy with APIs. Right. So you know, we are probably one of the first in Canada to take this strategy. Everybody's starting to catch up now and you know, I'd say, you know, from an API perspective, API is about the only way now you can actually make payments happen in a quick way because it's all about systems talking to systems or computers talking to computers there. And so, you know, we publish our APIs on our website, right. We actually have a sandbox that each of our uh, clients can access even before they become a client so that they can work and try using the APIs that are there. You know, one of our proud moments is being able to take one of our clients, one of our big clients, into a new version of a uh, E transfer API. Just over a weekend there. Right. So you know, the whole goal of APIs is not hey, I want to develop something for six months, it's let's get it done now. Right? Let's move money now. The user experience is a little bit different and that takes some time there. But the integration to make money move is actually really easy. You know, our big considerations as we look at, hey, let's move money faster is how do we do the correct kyc, how do we do the correct fraud monitoring, how do we do the correct reporting around the anti money laundering just to make sure that money's clean. Right. We don't want to be moving bad money around.

Speaker B: Yep, absolutely. And you have all that connection to OFAC and all that kind of stuff too that you want to make sure that that's it, that's not going to bad agents or anything like that too.

Speaker A: Right. We're heavily regulated business we have a banking license regulated by the banking regulator. We have two payments companies regulated by the two payments regulators in Canada, one on the anti money laundering side and a new regulation called the Retail Payments Activities Act. So definitely understand the need to uh, make sure the business operations are compliant.

Speaker B: Right? Right, absolutely. Now you hit a lot of stuff that I uh, uh, want to get even deeper on. So from uh, the business side and on the tech side. So let's talk about AI. What do you, what are you seeing at the Digital Commerce Group from an AI standpoint for what you're delivering for your customers from all different sizes, phases?

Speaker C: Yeah, I think our approach to AI is really being able to split our business into two parts. One is our back office business. You know, how do we use AI to make our people faster and smarter and be able to get more efficient in how they do their work? Right. You know, are we spending hours typing numbers into spreadsheets or are we actually just spending minutes telling AI to put numbers in spreadsheets? That's one side of it, but the other side of it is how do we use AI in our processing business? And a lot of banking is based on rules. Rules, things like you're allowed to send X amount of money in X amount of time frame to certain locations and everything's rule based. And uh, as banking becomes more and more rule based, bad actors find ways to get around those rules. Um, one of the things that we're finding AI is enabling us with is being able to put pattern recognition or pattern detection or what we look at is anomaly detection into those rule based engines. So that we're not just saying hey, has money gone at a certain limit or a certain way from a certain person, but really trying to understand how many flows and why money's flowing. And you know, you'd be surprised with what AI can tell you about a specific transaction.

Speaker B: Right. And from an AI, uh, something that I've been seeing is actually from a uh, startup that I'm collaborating with, it's called Jemson and they built this technology, they shrink it, they take all the PII out of their, out of their data set for the, for the AI and then it sold to thousand and then they make it a thousand times smaller because it's a thousand times faster then, but it has all, it's statistically perfect still for what you want to get from that AI data set. And the uniqueness of there is, is that now you can share that outside with from a fraud and what and from a cyber security center you can share that with other companies to see other trends of what's going on because all the PII data is ripped out also. So, uh, banks are looking at that, right? Because that's one thing that you can't really share that information across other, other uh, other areas, um, securely. This is making it so as long as there's the same structure and you're collaborating with other banks or other financial institution, if they're seeing something similar from a hacking or, you know, or a country coming in or whatever trying to do stuff, you can share that information and have quicker response time because a thousand times faster. Because what I'm hearing, even in AI for the health tech space and for the financial space, it's so much data, takes a while for those models to run and then that might be too late. You want things more real time so you boom, so you can react to it.

Speaker A: It.

Speaker B: Are uh, you seeing that on the business side need and on the technology side at all? That's something that I've been seeing here in, you know, in the Northeast, in the United States.

Speaker A: Yeah, for sure. I mean when like Paul mentioned, when we think about our business, we think about it from all angles. So what can the business people do in finance, in accounting, in sales and marketing, what can they do with AI to make themselves more efficient? And we've given our staff all the tools and said, you know, go out and use all of the tools that you can and some of the staff latch onto it and build incredible things with it. Some of them are more resistant. So one of the things Paul and I are trying to do now is how do we increase adoption, how do we increase the playing around with the tools that we've given them, the experimentation so that they start using them. And one way is you highlight the people that have done really well with that and the efficiencies that they're gaining as a result of that. So we have one person, he's not a technical guy at all. He's one of our top sales executives and he's built incredible things to help him on the sales side be more efficient, do more with his time, uh, and highlighting that to the company. Then you really start to say, okay, this guy wasn't a technical guy at all. Look what he's been able to do with Claude and some of the interfaces with that. And Paul and I even just last week were at a tech leaders breakfast in Vancouver during Web Summit, which is a large conference up there, and we sat down with some of our peers to see what they're doing. In their businesses. And what's clear is every business is in our space especially is starting to use it to various degrees. But in terms of adoption of our staff, we're all still at the point where we're sort of at that first wave of getting going and there's so much more Runway that we could potentially see in terms of efficiencies, in terms of business implementation, in terms of getting staff broadly to adopt it. It's pretty exciting to think about where we'll be at this time next year, I think.

Speaker B: Yeah, things are happening so fast too.

Speaker A: So fast.

Speaker B: And like. Yes. And, and Paul, how do you, you can hear what the business side's doing? Well that, does that mean less coding for you? Which could be a good thing to free up your developers to do deeper level, higher level types type coding and building that you might need for them too. How are you like collaborating? That's always a push pull thing. Even before AI and LLM started getting this big hit, um, there was always that, you know, that technically minded business person, which is what exactly what you need in all your business people, right? To think data first and then to make it industry hardened, you know, come to it and then so can you can use it enterprise wide or whatever it is. Are you seeing that push pull like you getting pulled in more or are you coming to their table to say hey, we can help you.

Speaker C: And I think it's got to be both. I mean we work for an amazing organization with amazing people that just grab onto things there. And so from an IT perspective our job is being let's make sure the tools are available, let's make sure there's an education that's available. More importantly, let's make sure there's guardrails that are available. Right? So in other words, we're not uploading all of our corporate information into somebody's model there, right? So you know, let's make sure that we're protected but let's encourage. Right? And you know, our organization has really taken that to heart and found best in class AI for their uh, associated areas. One of the things that we got to think about, right Is you know, ultimately there's two sides to this AI and uh, this is really why we split it in our organization. You know that business side is all about task management. Right. And so you know, people say, hey, am I going to lose my job because of AI? Right? And the answer to that is if you want to keep your job the same as today, yes, you're going to lose your job. Right. If you're willing to become a manager of AI. In other words, every individual becomes that manager of AI. You're not going to lose your job because AI actually can't think effectively by itself. It's got to have guardrails, right? Where do those guardrails come from? Humans. So for my developers, as an example, do I expect AI to be writing code? 100 I expect AI to be writing code, but I don't expect my developer to lose their job as AI is writing code. I expect my developer to be building the guardrails around how AI can build that. And you know, one of the key advantages of AI is if I look at a development team, right, we have project managers, you know, typically have business analysts of some kind there. You have developers, you have testers, we have database people, we have infrastructure people. You have all these different people that make up a team. And for the last 10 years we've called that DevOps, right? And, uh, we've had all these people. The reality of it is now is, is AI can actually feed those skills into a team, right? So we can actually have AI write some of the business requirements based on some very small amounts of information instead of, uh, actually having to dig deep because it already knows what exists and stuff. So AI is enhancing the role. So if you think AI is going to replace you, learn how to manage AI and it'll never replace you.

Speaker B: Right? I totally agree. Please come back to part two with Pamela Draper, President of Digital Payments, and Paul Twig, Chief Technology Officer of the Digital Commerce Group, as they go deeper into AI and how they're implementing it across their enterprise. Plus how Fintech is. Finlife is what they live every day for their customers. Thank you for listening to what the heck fintech. Um, make sure you tune into our next episode as we continue to interview Fintech leaders and share real world stories from across the fintech ecosystem. So you can fully understand that Fintech is fin life.