Hi Guys, welcome to the Fintech Coffee Break, I’m your host Isabelle Castro.
This week we have a recording from my trip to New York in May, where I sat down with Kevin Greene from Tassat.
Tassat provides financial institutions with private permissioned blockchains to facilitate transactions at any time of day, all through the year. Leveraging blockchain technology, the company believes this approach can extensively improve the efficiency and security of legacy rails.
In light of FedNow’s imminent launch, I sat down with Kevin to see how Tassat viewed the introduction of a new real-time payment system and how it would affect the landscape.
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Transcript
Isabelle Castro – Hi, Kevin, nice to have you on the show. Thank you for coming in.
Kevin Greene – Thank you for having me.
Isabelle – It’s really good to connect with you again. We talked a few months ago and really enjoyed our conversation. So happy to have you on the show now. Thank you. And to begin with, I’d like to ask you what gets you up in the morning.
Kevin – What gets me up in the morning as leading Tassat group. We have a mission, which is to empower small, medium-sized regional banks to compete and win the digital economy. So it’s important mission, because the role that these banks play in the US economy, they originate 60% of all small business loans, that 80% of all agricultural loans. They’re integral to the growth and productivity, the US economy, and we’re out there trying to make them as competitive as possible using technology.
Isabelle – Okay, nice. And what brought you to take on the role of CEO
Kevin – right so I’m one of the co-founders of Tassat, myself and a few other investors five years ago, had a vision that said, we really thought blockchain technology would streamline make safer, make more secure payments and financial services between businesses and ultimately retails operate focus on b2b. So I began as an investor and on the board, and Chairman ultimately became chairman and CEO.
Isabelle – Okay, nice. So yeah, the main area that you focus on is blockchains. Right? Blockchain adoption of blockchain by banks. What do you think is the main benefit of private permissioned blockchains in banking?
Kevin – Sure. So the benefit of private permissioned blockchain, there are many benefits. First of all, private permission says very secure, and very safe for participants to use. Secondly, is on the blockchain. Blockchain is a better database, much more efficient, much lower costs much more flexible. And when you put payments on the blockchain, now, you can do all sorts of interesting things, smart contracts, customize finance, all that becomes possible, because the data is now writing on the blockchain. You end up with a permanent immutable record of all transactions. This is very valuable to banks, very valuable regulators. It’s just a superior technology.
Isabelle – Okay, cool. And it’s kind of powering real-time payments, right?
Kevin – Correct.
Isabelle – Do you think real-time payments is…obviously you do think it’s a powerful tool. But why is it such a powerful tool?
Kevin – So everything we do in our lives today, we do around the clock, right? That’s why we have on our iPhones everything we do, except one thing, payments within a bank. So there are retail solutions, Venmo, PayPal, etc. For the b2b markets, very difficult to do that. So we’ve created a platform that allows b2b payments of any size, no restriction on size, no research, no research on number of transactions, you can do them around the clock, 24 hours a day, three and 65 days a year, safely and securely. That’s very powerful. Saves costs. Saves expenses. It’s just, again, better than the existing legacy rails.
Isabelle – Why has it taken so long for the banking world to adopt this kind of approach?
Kevin – I’ve been investing in technology and involving technology for long time, new innovative technology always takes a while to adopt. That’s just the nature of things. On top of that banks should be conservative, right? They’re responsible for people’s money. So they tend to be a little bit slow to adopt. So those are the main things just new technology, not quite so visible yet. Now, as many use cases, we’d like to see, you know, rebuilt more than 20 of them. But what we’re seeing is more and more, really corporate customers more and more demanding real-time payments around the clock to demanding safety and security. They’re demanding more efficient way of doing payments. And our platform satisfies all those needs. So while it’s slow to adopt, we’re starting to see kind of slow but gradual acceleration of adoption.
Isabelle – Are you concerned at all about kind of recent bank failures, how that might kind of go against innovation and banking or anything like that?
Kevin – I’m concerned, but not because it can go against innovation. So a couple of observations.
First of all, the concern I have is I do think the US banking systems that are crossroads. So how are we going to pursue a banking system which is dominated by a handful of banks, much like we have in Europe? No offense to Europeans, but the result is you have much less innovation, and much, much fewer options for smaller businesses. One of the strengths of the US economy has been a very diverse banking system banks of all sizes serving companies have All sizes, say said smaller regional community bank serve, you know, 60% of all the small loans in America. So really important crossroads. Are we going to see banking system it gets more and more consolidated, when the remains very diverse technology we believe is one of the ways to preserve that diversity. Because, again, one of the strengths of blockchain technology is that it’s actually relatively inexpensive to implement. And it empowers these banks to compete with the mega banks. So then, will the current crisis, slower speed, innovation, what happens in most industries is that industries under stress are the ones that innovate, which makes a lot of sense, it’s kind of common sense.
When everything’s going great, there’s no need to innovate. When an industry is under pressure, pressure, from a profit standpoint, there’s more of a need to innovate. So we think going forward, you can see a lot of innovation, because banks can no longer compete just on paying the highest interest rate. That’s not very profitable. They’ve got to look for ways to serve their customers better, provide more customized services, all this can be done on blockchain technology, very difficult to do on legacy rails. So actually think that current crisis will ultimately lead to more innovation, and faster adoption of technology.
Isabelle – Okay, that’s really interesting. So do you think that scales are now kind of tipping from nice to have to need to have?
Kevin – Yes, absolutely. You know, I go back. It wasn’t that long ago that when you talk to bank CEOs about blockchain, they would say what is blockchain? Six months ago, they started to say, we really need blockchain-based technology. Right. And now I think they’re starting to realize that given the investment, particularly mega banks have made blockchain technology, they realize they can’t, they can’t resist anymore.
Isabelle – Well, yeah, I would agree. I mean, we’re talking about real-time payments, especially in banking. We can’t avoid the topic of FedNow. It’s on the brink of being introduced. What’s your opinion on the new technology? And how will it affect Tassat?
Kevin – Yeah, so we’re really excited about FedNow. Very, very excited, because it’s another indication to the market and to banks and to corporations, that real time payments available around the clock, or where the world is going. FedNow we think is terrific. I mean, it’s it’ll get launched in July, like most innovations will take a while to gather momentum. At the same time, it’s just a communications protocol. Ultimately, the banks had to figure out how to integrate to the core banking system had delivered to their customers in innovative ways. That’s where Tassat Pay comes into play. So actually interacting with FedNow is actually better for us. So we’re super excited about it. We’re glad the Fed is behind it. And we think it again is an indicator of where the banking world is going and needs to go in order to remain competitive.
Isabelle – Okay. I’ve read some kind of reports and opinions that in light of the recent bank failures, the introduction of real-time payments on a wide scale could speed up bank runs, and instead of it being like a day, which was fast compared to prior crisis. It could be a matter of minutes, that there’ll be bank runs. What’s your opinion? You’re looking at me very skeptically. What’s your opinion on this?
Kevin – Yeah, I’m not. I’m not convinced of that. Couple of reasons is that he actually, in fact, elongated the period of time in which things can happen. They can’t just happen in compressed periods of time. Typically, when you provide more time, there’s more time to react and more time to respond as well. And like everything else, I mean, like everything else, eventually, the risk management controls and everything will adjust to this new world. So I know people want to make a lot out of that. I’m not convinced, I’m really not convinced. The world will adjust accordingly. There’s some limitation that said to just paying available eight hours a day, that kind of gives the attackers kind of a focus period of time to do it. If you’re operating around the clock, it’s actually a lot more there’s; you can make the argument that it’s a bit more difficult.
Isabelle – Okay. Is there ways that you as a company can kind of avoid these kinds of risks?
Kevin – The beauty of blockchain technology. Private permissioned, blockchain technology solutions that you can build in an infinite number of guardrails, controls, risk management tools that you can’t even imagine when it comes to legacy rails. It’s just not possible legacy rails. The opportunity for Risk Manager and other tools on the blockchain is infinite, unlimited. So I would argue I think we’ll end up with a more secure and stable banking system, not one that’s less.
Isabelle – Okay is would this be kind of using smart contracts and Things like that?
Kevin – Smart contracts will be a part of it. But there are other things you can embed right into the system.
Isabelle – Nice. What are you most excited about for the year ahead?
Kevin – For the year ahead, what we’re doing now, and all the innovation that we see coming. Also, I should mention we recently started. We’ve been supporting a group called technology for youth, which is trying to support students in schools as early as Grammar School in high school, from disadvantaged backgrounds, trying to encourage them to adopt stem, get introduced his stem, technology, engineering math, as students and introduce them to technology. So recently had about eight students in our offices, and we made a $10,000 donation to this group. And we’ve encouraged a lot of the students from that program to become interns at our firm, a couple of have now become employees. So we’re really excited. That’s just one thing we do that we’re excited about. Beyond that we love what we do every day, private permission blockchain operating within existing US banking regulations. We’ve done over trillion dollars in transactions, we’re doing $100 billion a month. Hope that to keep growing. So that’s enough to keep us excited.
Isabelle – What’s a piece of advice that you have been given that you would give to someone else?
Kevin – Like career-wise, you mean?
Isabelle – Advice, any advice? Personal, careers…
Kevin – So what I would say is, first of all, find something you love to do. It’s hard to succeed at something you don’t love doing. Secondly, surround yourself with the best possible people you can or challenge you every day, who inspire you every day, and be part of a great team. Like do those three things you’ll probably do. Okay. If nothing else. You will have a good time.
Isabelle – Great. Okay, that’s a really positive way to look at it. Curveball question.
Kevin – Sure.
Isabelle – In a movie about your life, what would the title be?
Kevin – The title would be they said it couldn’t be done, really. So I’ve done this throughout my life is just take on challenges that seem enormous. Organize a bunch of people to achieve it. It’s a lot of fun. So I like the ideas of “They said it couldn’t be done.”
Isabelle – Okay. I like it too, that’s a great backstory to it as well. How can people get a hold of you?
Kevin – So you go to task.com, you can visit us on LinkedIn. We’re, we’re pretty visible. So that’s where you can find us. Okay. Okay.
Isabelle – Nice. Thank you so much. Thank you for coming on the show. Really nice having you here and have a good rest of your day.
Kevin – Thank you for having me. Appreciate it. Good. Yeah.
Isabelle – As always, you can chat with me on my LinkedIn or Twitter at @IZYcastrowrites. But to access great daily content, check out Fintech Nexus on LinkedIn, Twitter, Facebook, or Instagram. You can also sign up for our daily newsletter, bringing news straight to your inbox.
For more fintech podcast fun, check out the website, where you can find more fascinating conversations hosted by Peter Renton and Todd Anderson.
That’s it from me. Until next time, enjoy your downtime.