Fintech Insider Podcast by 11:FS
00:16:58 · Ross Gallagher
[00:16:58] S1: And and again, I mean, in terms of shining spotlights, I mean, no bad thing. Conrad, I thought you're, you know, the the slowly and then suddenly all at once analogy and then tying that to, you know, going bankrupt. I think that's an interesting analogy because maybe Aurelien, it'd be interesting to get your thoughts on this. You know, as much as it's exciting to see sort of how this plays out and how it transforms the industry. Of course, there's it also there's potential risks associated whether that sort of bank runs and the potential for all of that kind of stuff happening really, really, really quickly. You know, how much should we be worried about the impact that this could have on the stability of the financial system?
00:17:43 · Aurélien Bonnel
[00:17:43] S4: Yeah, so the system is inherently fragile and was designed as such, right? In the 1930s when you had a bank run, it would occur over the course of weeks, right? Because people had to get off work, they had to line up outside of the branch, and orderly get their money slowly until the bank run had occurred. You know, the past few years, the bank runs that have happened have been over the course of days, because you've had basically API interactions that triggered the money movements. With agents, it's even worse actually because they all get the same signal at the same time. In engineering, there's this concept called the thundering herd. It's basically everyone gets a signal at once and they all rush to do the same thing. That's exactly what's gonna happen with agents. You're gonna have bank runs potentially triggered in seconds, not hours, not days, not weeks, seconds. So it exposes a system that is inherently quite fragile, The fractional reserve system, the fractional banking system that we have right now. Basically banks keep, you know, 10, 20% defined by capital ratios. They keep that as cash and the rest is loaned out. If you cannot sustain the agents all redeeming their money at once because they got an event from Bloomberg that triggered them to do this, then your system is at risk. Right? And so I think we're gonna see an evolution of this system. We're gonna see more narrow banks that do not lend like N3xt, that are coming up. As far as I know, are none in Europe right now. I hope to see some in the next few years. But globally, that this it's the same problem everywhere. It's the same system we're all running on and it needs to change to adapt to be at, you know, agent speed rather than human speed.
00:19:37 · Ross Gallagher
[00:19:37] S1: Merusha, I'm really keen to get your thoughts and I suppose your build on that as well, and I suppose leaning on your your sort of institutional expertise.
00:19:47 · Merusha Naidu
[00:19:47] S3: Yeah. Absolutely. So I think what Aurelien was saying is so true. So the infrastructure is key to keeping all of this together. Right? If you don't have stable infrastructure, which a, the AI agents can tap into quite easily. So access. Right? But also the platforms to actually, you know, service this many transactions within a very short space of time. I think that is absolutely key. So when we look at, you know, the more traditional players, they do, like, was saying, they do run on three or four days. This is like real time payments. You've gotta have the infrastructure, the capabilities, the guardrails in place to make sure that, a, the system can handle it, b, there are rules in place to also mitigate any kind of fraud or agents that are doing, you know, transactions which they shouldn't necessarily be doing. But it's also making sure that from a... Like, for example, from a processing perspective, do you have the right partner who can ensure that you can man... Manage all of these global payments at the same time with all of the guardrails while still making it fundamentally easy for the AI agents to trigger and successfully make these payments. So I think all of those components together is what is gonna make this a success. And I think that's one of the challenges so far that we've seen, you know, with a lot of players who have tried or have started to enable AI agents. They've done it in a way that is very intentional, but intentionally small so they can actually test their own infrastructure and see what works and what doesn't work. The first movers are the ones who are saying, actually, we need to either change a partner out because it's not working, or we need to rethink our overall architecture. And so that's one of the reasons why we see it being slightly slower than I think the market expects it to be. But I think once you get that infrastructure layer right, this is gonna be an area that completely changes how we look at banking and and servicing customers on a daily basis.
00:21:53 · Ross Gallagher, S5
[00:21:53] S1: Yeah. And I think that point that point about testing and learning, and doing that in a controlled environment before you start scaling this stuff out, I think is, is gonna be so key. Alright. Look. I think we have done a pretty neat job of, setting the scene. We're gonna take a very quick break, but we will be back with you very shortly. In part two, we're gonna explore how banks might actually need to reinvent themselves, where the opportunities to make money could actually emerge, and then what a profitable banking model might actually look like in an increasingly automated world. [00:22:29] S5: Launching innovative payment products is only the beginning. Real progress comes from what happens next. Paymentology fuels continuous compounding momentum as a cloud native issuer processor, helping banks and fintechs grow beyond go live with global reach, local know how, and the power of its Loom platform. Powered by more than 500 paymentologists across 68 countries, they make card programs work naturally across markets. Want to keep the momentum going? Head to paymentology.com.
00:22:29 · S5, S0, Ross Gallagher
[00:22:29] S5: Launching innovative payment products is only the beginning. Real progress comes from what happens next. Paymentology fuels continuous compounding momentum as a cloud native issuer processor, helping banks and fintechs grow beyond go live with global reach, local know how, and the power of its Loom platform. Powered by more than 500 paymentologists across 68 countries, they make card programs work naturally across markets. Want to keep the momentum going? Head to paymentology.com. [00:23:03] S0: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini Chrome, that's new. They can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks, Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, setup required, compatibility, availability varies 18 plus. [00:23:31] S1: Welcome back. Merusha, we ended the last segment with you. I'm going to start this segment with you as well. If AI agents increasingly decide where customers save, borrow and invest, how do you think that competition then between those financial institutions begins to change?