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Latin America continues to be, in my opinion, the most dynamic and interesting region in the world when it comes to fintech innovation. And there are now significant billion dollar deals getting done, as some of the biggest financial institutions on the planet are looking to make their mark in the region.
My next guest on the Fintech One-on-One podcast is Daniela Binatti, she is the Co-Founder and CTO of Pismo. Pismo has created modern financial infrastructure to help banks move away from their legacy technology. Visa saw the potential of Pismo and announced last year that it was acquiring the company for $1 billion in cash. That deal was consummated in January of this year.
In this podcast you will learn:
- The family affair that was the founding story of Pismo.
- The opportunity they saw in the Brazilian market.
- How they were able to start getting traction.
- Pismo’s core offerings today.
- How they were able to sign the largest bank in Brazil very early on.
- What these large banks are using Pismo for.
- Some of the other big names that are using Pismo today.
- How Daniela views what is happening in the US and other developed markets.
- The impact that Pix has had on their business.
- Her personal take on what Pix has meant for Brazil.
- How they decided to take on international markets.
- How the acquisition conversation with Visa began.
- What they can do with Visa now that they couldn’t do alone.
- What this acquisition means for Latin American fintech.
- What new innovations they are thinking about for the future.
Read a transcription of our conversation below.
Peter Renton 00:01
Welcome to the Fintech One-on-One podcast. This is Peter Renton, Chairman and co-founder of Fintech Nexus. I’ve been doing this show since 2013, which makes this the longest running one-on-one interview show in all of fintech. Thank you so much for joining me on this journey.
Peter Renton 00:27
Before we get started, I want to remind you about our comprehensive news service. Fintech Nexus News not only covers the biggest fintech news stories, our daily newsletter delivers the most important fintech stories into your inbox every morning, with special commentary on the top story of the day. Stay on top of fintech news by subscribing at news dot fintech nexus.com/subscribe.
Peter Renton 00:57
Today on the show, I’m delighted to welcome Daniela Binatti. She is the co-founder and CTO of Pismo. Now if you’ve heard of Pismo it may well have been because they were in the news a lot last year, when Visa announced that they were acquiring the company. That acquisition completed in January. And we obviously talk about that in some depth. But Pismo is such an interesting company. They provide the technology backend infrastructure for banks, fintechs and other financial institutions. And we obviously talk about what they offer, how it all works. And Daniella is the CTO, obviously very steeped in technology. We talk about the global footprint that they have and how they have attracted companies from all around the world. We talk about Pix and the impact that that has had on their company and on the ecosystem in Brazil. We obviously delve deeply into what the acquisition means for Pismo and what it means for Brazilian and Latin American fintech. And Daniela also talks about what is in store for the future. It was a fascinating discussion. Hope you enjoy the show.
Peter Renton 02:17
Welcome to the podcast, Daniela.
Daniela Binatti 02:19
Hey, Peter, thanks for having me.
Peter Renton 02:21
My pleasure. Let’s get started by giving listeners a little bit of background about yourself. Can you just hit on some of the the high points of your career to date?
Daniela Binatti 02:31
Of course. I started my career as a software software engineer. I went through many of the different areas such as, like a programmer, but then going to databases, analytics, infrastructure and security. This is my, spent a couple of years in in software house developments. But then I joined another company here in Brazil back in 1999 to build a payments processing platform for pretty much providing services in Brazil. But then after 16 years working there, I decided to leave, and then, setting up the launch business, so the second processing platform in my life from scratch.
Peter Renton 03:13
Okay, well, let’s kind of get into that then. What was the founding story of Pismo? I believe it was a bit of a family affair. Can you tell us sort of how it all came about?
Daniela Binatti 03:23
Yeah, because we are four people at the founding team. So me and Marcelo, Juliana, Ricardo. Juliana is my sister, Marcelo is my husband. We’ve been working together for more than 25 years, alright. I met Marcelo working. And then as Julie was kind of following my path from, on the career, she joined us in 2000, like 24 years ago, as an intern by that time. So yes, it’s true that we are family. But actually there was a lot of experience working together before, so we worked for 16 years in another company, being that platform that I just mentioned. And then we decided to leave, I actually decided to leave the other experience not to launch Pismo each of us left the company for different reasons. But after a couple of time looking at the market, we kind of reunited and decided that it was time to do something different.
Peter Renton 04:16
So what was it in the market that you saw? What was sort of the opportunity that you felt like needed to be created?
Daniela Binatti 04:22
Actually, back in 2013-14, there were lots of challenger and fintechs launching, not only here in Brazil, but also in Europe. There was in Brazil, there was no bank. No. Outside we could see Monzo, Starling, many, many, many companies launching, building fully digital products. But what actually was going on was that like innovation was only skin deep, let’s say. They were still relying on legacy systems or they had enough funding to build their own processing platform. So most of the financial services industry, until now, are still operating on systems built in the 60s or 70s. They are still running in COBOL, and physical data centers. And at that time, and he was, by the time I left Conductor in 2014, I saw that the huge gap that there was between the financial services industry and other industries, everybody was talking about public cloud, big data and many new things. And we thought that there was time to bring innovation to what is under the hood. So instead of like those challengers, and those banks that were looking for transformation, would need something more, like something relying on bleeding edge technologyto get the resilience and the flexibility they want. So then we decided to launch Pismo.
Peter Renton 05:51
Okay. You know that was obviously a few years ago now, and you guys have been a big success. But I’m curious about those early days. How did you start getting traction?
Daniela Binatti 06:00
It was not easy, actually. Like, we spent, we spent a couple of years. We launched Pismo in our 40s. So kind of it was a bootstrap. We invested our money, me and Marcelo actually, we spent until the last cent that we saved in our careers to in the system, in this platform. And then when we move it to go to fundraising, when we like, we signed the seed fundraising round in late ’16. And we already have an MVP, a product that could, actually we started looking at something like, what we were thinking was, How can we build a SaaS company? How can it provide services to players that are only paying for what they use, because usually when you see, especially when you look to retailers, like the big stores the big chains, they have their own cards or products, the smaller ones, doesn’t have because it was too expensive to launch something like that. So we were looking in a way to democratize the use of those services. So we are looking to build an infrastructure that could be accessible not only to incumbents, but also to smaller fintechs. And so it was a bootstrap, we had a couple of clients, and then we get to sign with Redpoint Ventures in late ’16 for a seed fundraising round. But then right after signing, they said, Yeah, we love this. But this is going to be much more interesting for big incumbents, we’re looking for internal transformation. So at the very beginning, I used to say like, I’m CTO of the company, but most of my conversations were with lawyers and people to like, how could I explain how client data would be stored in public cloud, that I didn’t have the address of the data center. So it was much more a conversation around, because we’re not talking, only talking about outsource core processing, it’s outsource core processing to a startup that will be storing our data on public cloud. So it was a hard conversation at the beginning. But then finally, the regulator, the central bank here in Brazil, decided to make that legal. Make that like the storing information in public cloud, something that was allowed, then things started to become a little easier, like the conversations were better.
Peter Renton 08:32
Right, right. Okay. How do you describe Pismo today? Like, what are your core offerings?
Daniela Binatti 08:38
What we have here, well, like we have a full platform for developing financial services. So we provide core banking services, card services, like debit credit, prepaid cards, we provide services to the stock exchange here in Brazil, we provide corporate banking we provide lending. So there’s a bunch of services that were built, that we, like we create the capabilities on top of a full infrastructure for financial services. And the way that we built that is that we used to say, when it goes to a bank, usually the conversation is around building versus buy, like the whole financial services industry still rely on protocols that were developed like 50-60 years ago. There’s a protocol called ISO 8583, which is used by all the credit card networks and the last release was in 1987. So it’s not easy to hire people, hiring human resources that really understand how those things work. So if a bank decides to build that in house, they would have to be concerned about how to communicate on those rails, and how to maintain a team that can be up to date to everything that’s going on in the market. On the other hand, if they decided to go with outsourcing the core processing, usually it’s a black box. There’s no differentiation between the competitors. So everybody who’s using that platform, that system, like will have the very same feature in the same capabilities. What we decided to build here is an alternative path to that conversation between build versus buy. So what we provide what Pismo is a full infrastructure to build financial services products. It’s a headless systems. So we don’t touch customer facing application. We don’t touch internet banking, we only provide a toolkit, a set of APIs, where clients, banks, fintechs, or every like, financial institution can build their products on top of that. We are pretty much like the same way that AWS and Google Cloud, they have the infrastructure of the services, we have something on top of them, which is infrastructure for financial services products, with the very same code base everywhere in the world.
Peter Renton 10:53
Right, right. I want to talk about the companies that use your service. When I was doing research for this interview, I discovered that the largest bank in Brazil, Itaú, it was a fairly early client of yours. That was obviously a massive win for you guys. I’m curious about one, how you were able to land a client like that and what they were using you for exactly?
Daniela Binatti 11:17
Yeah, actually it was one of our first clients right after signing that seed investment brand. And was by that time that we decided to pivot to something like more to enterprise clients. And the reason why they hired me is at that time was because they were looking to something that could be more flexible. Like it’s hard when you have big competitors. Usually they have tons of systems piled up one on top of the other, it’s hard when there’s something wrong, it’s sometimes it’s hard even to find out where the problem is. So we’ve built Pismo in a way, we are not only using, building our technology, programming languages in public cloud, but also we build the whole platform in smaller pieces in a way where we can kind of make it renewed almost organically, we can just rewrite pieces of the system to make that in a way where we are up to date, without like having to shut everything down. So they were interested about looking to something that could be more flexible. And of course, but the challenge at that time was like, Okay, I like what you are telling me, I like what I see. But can the system handle the huge volumes that I have as the biggest bank in Latin America at that time? So we partnered with AWS at that time, hired an outsourced, another company to run a bunch of load testing to prove with evidence that we could handle huge amounts of data, huge amount of transactions per second, to provide them with like, all the guarantees that they need in order to outsource the system. So the way that they started was the very way we suggest for every client. If you look at the market, usually players like, most of the time, because the banks they hate the processors or the best scenarios, they are only tolerating them because it is something that they need to have. But the way that we provide services, we are SaaS company, want the client to be here, because we are providing the best service and not because they are tied up to very long contracts. So what we recommend when we start is that, something like build, test the system, launch like five or six or 10 cards in production and start using. Like without (inaudible) like just for you and your team, build a full product of two credit card using Wallets, Apple Pay, Google Pay, all the features that you wish you could have. Start using, and decide to move to us when you are convinced that this is actually the best solution. And we will also build around a heal, or like a toolkit for migrations. Like I spent most of like a huge part of my career as a database administrator. And many times someone came to my workstation with a tape backup and said, Hey, this client is migrating, please do your magic. And it was hard because you lose information and you are translating from one database to the other. But when you have a full process by calling APIs one by one, like we run migrations from legacy systems, almost weekly. Clients are migrating like, like chunks of data, and they can validate, there’s room to testing, to rolling back and making the transition in a very smooth way.
Peter Renton 14:55
So do the most of these banks, particularly the large ones, I imagine that they’re still maintaining their existing infrastructure right? Are they just using Pismo to launch new products on new infrastructure? I mean, how does it? How do your large customers think about where you fit in their technology stack?
Daniela Binatti 15:12
No, actually, usually they launch new products only to test. And some of them are not even doing that. We are both like pretty much the big ones that are working with migrations, the way that I just described. Like, they just start to migrate pieces by pieces, like chunks of data. And we have for most of them at this point, some of them are already fully migrated, and fully running here. Some of them are using both platforms, the systems that they have internally, and now it’s like separating like client bases, and then migrating new chunks every week. Like they are already processing production more than 100 million accounts. So it’s a, it’s a high volume of accounts.
Peter Renton 15:55
Right, right. What are some of the companies that are using your technology today?
Daniela Binatti 16:01
We started with Itaú, as we said, was our one of our first clients, with a huge amount of data already processing here. We have Citi, we just, like we announced, we announced last year to deploy Citibank Citigroup, to deploy the solution in dozens of countries. We have BTG, which has a full bank running on top of our platform like digital accounts, debit cards, credit cards, and banking as a service. We have the B3, we have Tyro in Australia, we have clients in India. So there’s a bunch of clients running around the world.
Peter Renton 16:39
Right, right. So then when you look at the US market, I’m curious about how you view, obviously there are companies like Marqeta, like Stripe, that do some of the things that you do for the US market. Are you, do you kind of like you look at a developed market like the US, how do you view the companies there, that are doing similar things to you?
Daniela Binatti 17:00
Actually, by the time we started, like, of course, there was a lot of inspiration in other companies. But most of them in other industries, Stripe was one of them, where like the financial services industry. By the time we started, they were not still issuing cards. So they were working pretty much on the acquiring layer, which is a little bit different of what we are providing. But they were definitely an inspiration around not only the technology that they use, but especially on the documentation on their developers portal when we, like there was a lot of benchmarking around what we should develop and what we should put in place, especially. It’s a very hard, not only it’s hard to sell, sometimes it takes a long time to sell a product like this. Like the negotiation, the time, the lead time for, to start talking to a client and proving, like setting up POCs and signing, and launching production, sometimes it takes one year. During the process we were looking at companies especially like Stripe on the documentation, because we sell to CIOs and CTOs. But software engineers are the ones who are using the platform. And there’s no point in like, sometimes it’s hard, you should have the conversation with different players because, if on the executive level, they buy the solution, if the ones we’re developing are not comfortable, it’s hard to kind of move fast and make things work in production. So we started ourselves in Stripe’s set of developer portal and in documentation in order to do that. And of course, in other companies like Spotify, like Salesforce, the way that Salesforce were coding and designing the back end of the solution, was one of our first inspirations here. And the technology that we are using, like containers, public cloud, and goaling and different protocols. Were something that by the time we started that there were not so many companies in using this kind of technology here in Brazil. So we we had like many conversations with other startups and other companies in the US through the, with the help of some of our investors to make the solution the best that we could at that point.
Peter Renton 19:22
Right, right. Okay, okay. I want to talk about Pix for a little bit because, obviously being a massive phenomenon in Brazil, has brought a lot of people into the digital financial system for the first time. The scale of Pix has been truly staggering. I would love to kind of get your perspective on the impact that Pix has had on your business.
Daniela Binatti 19:44
That’s a very, very good question. Actually, for Pismo there’s no negative impact because the way that we built the system, and we spent, I used to say that we are very privileged group because we had the opportunity to build up a processing platform from scratch twice. At the second time we spent like one year with at the dining room, Julie’s apartment just mapping out what kinds of things we couldn’t solve in the previous solution and how we would do different this time. And there are lots of things around the technology but also around how the system was built. And the way that we built the platform, we used to say that there are two different layers, we have one layer that we call the printed one. So the way that we manage the ledger, the balances, and then we process transactions. And how a client is, how we identify a client is something that is secondary, is not the main point of moving transactions from one place to the other. So the same way that you can make a purchase by using your credit card, you can do a Pix, we are also integrated with the back end of the banks. And for us, your client, you can identify yourself in many different ways. It can be an email, it can be a Pix transaction, it can be a credit card, debit card, it can be your fingerprint, it can be whatever you want. So the volumes of transactions for us, it’s just as much a migration from one product to the other because we are able to process any of them. So there’s no forbid, and again, we are a technology company. So we are not, we used to say like we are a techfin, we are not a fintech, because we don’t have any, we are not a bank sponsor, we are not a financial institution. So we only provide the technology to financial institutions to make the product. So there is no difference from, for us from a cards or Pix. We can handle any kind of financial transaction.
Peter Renton 19:44
Right, right. Well, as someone who you know, who is in the the payments technology space, I mean you must have been amazed by what Pix has done. I’d love to kind of get your, just your personal take on the impact that Pix has had on your home country.
Daniela Binatti 22:00
It’s incredible. It’s incredible the way that the impact that it has, and like we live here in Sao Paulo, but it’s a big country and like everybody wants to spend holidays and spend time at the North, like in Bahia or in places where most of the people doesn’t have access to bank accounts usually. Since we launched Pix here, you can go to pretty much every place here you can pay for an ice cream or even for a ride at the beach by using Pix. Like my personal view is much more than a new way of paying, it’s a way to, for inclusion. And when you put together fintechs that are allowing pretty much every people to open a bank account, or a digital account, Pix is a tool. Even the ones who doesn’t have access to credit or debit cards, they can be integrated in this digital world.
Peter Renton 23:04
Okay, so I want to talk about your geographic push. I mean, you’ve got, you mentioned Australia, you mentioned Citi, obviously global big global bank. What is your geographic focus? Do you just, do you try and move out into a different country, or are you just sort of taking inbounds and dealing with companies one by one? How do you how are you approaching it?
Daniela Binatti 23:25
There was a conversation a couple of years ago right before the of course, the acquisition of the company, when we were looking to places that where people would speak English. So this was the first thing and we kind of like three years ago, we started building a fairly sound operation around the globe, especially because right after Latin America, the first client that we start outside of Latin America was in India. So then at that point, we decided to start a team in the UK in order to bridge the gap between timezones from Brazil and India. And then we started looking to places where people could speak English, it was the first thing. But because of the long lead time of signing contracts like this, usually we, even if we’re not actively working, in another specific geographic, would be all the time open to conversations, especially with big banks. Like that our windows of opportunity to core replacement, that happens like every 20 years or 30 years, so we must be open, we are all the time open to conversations, even in regions where we are not actively working.
Peter Renton 24:37
Okay, you just touched on it but I want to dig into the Visa acquisition that just got consummated, I believe just a couple of months, or maybe three months ago. But before we talk about that, when did you first start talking with Visa? Obviously you’re a payments processor, work with credit cards. I’m sure you had conversations with people at Visa very early on, but when did the acquisition talks kind of start, and tell us how that process went?
Daniela Binatti 25:05
As you just said, like we’ve been partnering with them since forever. Since I started my career, like back in 1999, we were already working with them. And many times, there were conversations around partnering instead of just providing and working as subprocessors, like, looking at things that we maybe could be doing together. So we started talking, and we had a view that, of their intentions of acquiring the company, I think about one year before signing, which was in June ’23. I think middle ’22 was a time when we started talking. Like they showed their intentions on acquiring the company, we of course, we had just at that point raised the series B fundraising round, we’re not looking to a deal like that. But after a couple of conversations, we decided to keep talking to see, to explore for a little bit more, how would that be? And we are here now.
Peter Renton 26:09
Apart from the financial aspect, which I’m sure was very positive for you and your family, I’m curious about what Visa brings to the table, obviously a massive, massive global footprint. But what did you see as the opportunity, things you could do with Visa that you couldn’t do alone?
Daniela Binatti 26:28
The main reason why we decided to explore this opportunity was because it’s hard sometimes for a small company to provide stuff. Like we are already processing hundreds of billions of dollars in transactions each month, and we are still kind of a small company from Latin America. So it’s pretty hard, although at the same time, we believe, we fully believe in the potential of the platform. And we believe that we can be the next generation of payments infrastructure. But at the same time, it’s hard to negotiate with big clients, like conversations around liabilities and the volumes of transactions that we are processing, it’s hard. So not only Visa brings to the table access to pretty much every financial institution in the world, but also, like we are now backed by a huge, and strong and solid institution that can back us up in expanding to new regions.
Peter Renton 27:27
Like it’s only been three months, are you, is it business, as usual at Pismo right now? Are there any, like how is sort of the integration going? Are they kind of leaving you to just run your business? Or what’s it like?
Daniela Binatti 27:39
The transaction was closed in less than three months. So we are working in integrating back office systems and things that are kind of HR and things like that, but where we are, we keep our strongly working with an agnostic feel. We are still, and we keep providing services and processing not only Visa but also MasterCard cards, providing we will keep working and operating as a separate, a separate unit, and keeping the management like the four founders, will you still be here. And the whole management teams are still keeping our stronger than ever, looking for the next, this next chapter.
Peter Renton 28:23
Right, right. Okay. So then what do you think this acquisition means? Obviously, it made, it was global headlines when it was first announced middle of last year. But what do you think it means for fintech in Brazil and for Latin America more generally? Has this kind of, obviously, it helps raise the awareness, but I’d love to get your perspective on when you sort of step back and think, look at the whole Latin American fintech ecosystem. What does it mean having Visa acquire you guys?
Peter Renton 28:50
Right. Okay, I’d like to close with really a forward looking kind of question here about, you have these core processing services that you provide, where’s the innovation that you feel like is, isn’t here yet that you’re looking forward to kind of bringing into what you offer? Like, where is all this going?
Daniela Binatti 28:50
I think that are two aspects. One looking to fintechs, who are looking to companies like us to provide their services, I think, not only for the Latin America, Latin American ones but everywhere in the world. Again, there’s this kind of reputation behind like having been backed by a huge institution like Visa. But when you think about the fintech, not only the fintech, but the startup ecosystem in the region, it’s something that was like everybody was talking about last year, because it was a very important deal for the local ecosystem, like it was, like we are providing core processing services to the hugest American institution, a global institution. So this is something that we are really proud of. And I think we can, in many ways, inspire and show to other companies in the region that this can be possible.
Daniela Binatti 30:12
I think that like everybody’s talking about Gen AI and other kind of like artificial intelligence users, I think there’s, there are so many things when you look to huge institutions like that are still a lot to transform. There’s no point in exploring Gen AI when you’re still your back end, relying on the system built in 1960s, so I think there’s a path to transformation. But we’ve been investing a lot in data quality and ways of exploring information and using all of these new technologies available to provide different services to customers. And I think there’s a lot to improve in terms of how we still, like we are still using, you probably have your credit card, you probably saw that sometimes when you run a transaction on a Saturday, it takes sometimes two, three days to see that information in your balance. So this is something that we’ve been doing different since the first time. So there is, Pismo’s there is no batching solutions here. And I think we’ve been challenging our clients to kind of get rid of things that are there. Because they were created in a time where resources were limited, we don’t have any more resources of storage and resource of the bandwidth of networks. So we should keep exploring in order to kind of raise the bar on the backend. So we can, in fact transform all the new technologies that everybody’s talking about in real products to make the lives of the customers better, instead of just doing things laterally, and differently.
Peter Renton 31:55
Okay, well, let’s leave it there. Daniela, thank you very much. I mean, you’ve done an amazing job over the last eight years building Pismo, and congratulations on all your success and all the best for the future.
Daniela Binatti 32:06
Thank you. Thank you for having me.
Peter Renton 32:11
Well I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice and go tell your friends and colleagues about it. Anyway, on that note, I will sign off. I very much appreciate you listening, and I’ll catch you next time. Bye.