Fintech Leaders
00:10:50 · Kamran Zaki
[00:10:50] S0: Would love your perspective on this as well. So, hopefully, is a dialogue. You know, the way I've always tried to approach things, and I think we do as Iconiq, is what's the problem we're trying to solve? And then, hey, is stablecoin the best technology or solution to solve it and or could something else do it? And I think that's where sometimes people get really excited about a thematic area, right, be it crypto or stablecoin or AI nowadays. But the key is, you know, what are those use cases or problems that are really large and can add a ton of value. And then if we work backwards, how are these the right technologies or enablers for doing so? And so to your point, I think in general, but especially the last couple of weeks, there's a lot of attention on stablecoins. And I think that's how I'm trying to think through it and actually talking to a lot of companies, but also a lot of potential end users that what are these use cases. Right? And ones that often come up are cross border money movement. Right? And then if we break it down, the question is, so in what corridors, right, are those large corridors? Are they B2B, B2C? You know, which country corridors might be the problem? Is the problem technology or is the challenge really regulatory? Right? Because in a certain country, if you're wanting to hold US denominated stablecoin, one of the first questions come to my mind is, can you hold a multicurrency denominated bank account, right, in USD? If not, is that sort of one of the big hurdles you're trying to solve? And so just think through it step by step and and sort of identify where these sort of, unmet needs are and then sort of work backwards and say, this technology, in this example, Stablecoin, the one best suited to solve it? Things start overlapping a lot, right? Because I think people have been working on solving the cross border money movement challenge for a long time, right? There's some great companies like Transferwise that are attacking this problem. There's also Revolut to some extent. You also have a whole generation of new remittance companies, right, that have targeted specific corridors or use cases. Then now I think you have a large number of companies that are building on top of stablecoin and blockchain in general to solve it.
00:13:05 · Kamran Zaki, Miguel Armaza
So then I think it's back to, do we think that is a large opportunity or market to multiple people are trying to attack it? What might be the best way? Or is it a combination of those? And then what's the best team we think that is going to solve it? [00:13:20] S1: Yeah. I think the interesting part for me to come out of stablecoins so far is that it kind of goes against what crypto fanatics really wanted because the most successful stable coins are backed and pegged to the dollar. Right? So it's only strengthening the US dollar dominance in the world. Right? And I think that there are some platforms I've seen specifically in Latin America where they're building neo banks on top of US denominated stable coin rails. And they're popular, especially in places where inflation has been crazy. But to your point, it's not everywhere. Right? It's specific use cases. I'm watching it also closely. I know quite a few people building an infrastructure for stable coins. Certainly, I don't think they're going away. It's probably just a new category of payments, right? Yeah. And that's why I
00:13:20 · Miguel Armaza, Kamran Zaki
[00:13:20] S1: Yeah. I think the interesting part for me to come out of stablecoins so far is that it kind of goes against what crypto fanatics really wanted because the most successful stable coins are backed and pegged to the dollar. Right? So it's only strengthening the US dollar dominance in the world. Right? And I think that there are some platforms I've seen specifically in Latin America where they're building neo banks on top of US denominated stable coin rails. And they're popular, especially in places where inflation has been crazy. But to your point, it's not everywhere. Right? It's specific use cases. I'm watching it also closely. I know quite a few people building an infrastructure for stable coins. Certainly, I don't think they're going away. It's probably just a new category of payments, right? Yeah. And that's why I [00:14:26] S0: think to your point, I try and look at the end use cases and then work backwards and say, again, what are these underlying enablers that are gonna help us solve it in a better way? Faster, lower cost, and better customer experience. And to your point, I think stablecoin or blockchain could well be part of that long term infrastructure, but sometimes it's challenging. You're just building infrastructure and not quite sure how to align those things. I think definitely a lot of interesting things going on in the space and definitely trying to get smarter on it because there's a lot to learn.
00:14:26 · Kamran Zaki, Miguel Armaza
[00:14:26] S0: think to your point, I try and look at the end use cases and then work backwards and say, again, what are these underlying enablers that are gonna help us solve it in a better way? Faster, lower cost, and better customer experience. And to your point, I think stablecoin or blockchain could well be part of that long term infrastructure, but sometimes it's challenging. You're just building infrastructure and not quite sure how to align those things. I think definitely a lot of interesting things going on in the space and definitely trying to get smarter on it because there's a lot to learn. [00:15:01] S1: Related to this, Kamran, the problem, the challenge of identity in financial services is cat and mouse game. Right? Where... Frosters against the rest of the industry trying to do things well. I mean, I I think every day, I either hear of a new company tackling the problem... Challenges of identity or, you know, someone struggling with it. How much time do you spend thinking about the future of identity in financial services?
00:15:37 · Kamran Zaki
[00:15:37] S0: I think it's even broader than financial services, right? And I think identity is one of those interesting things where depending how you define it, identity could fit into infrastructure, right? Where identity is a big part of security companies, right? Where you're solving sort of for permissions and authentication. I think then there's identity when you get to financial services, which is those things, but you also get into sort of KYC or KYB and ongoing sort of verification or validation of your customers. So the way I look at it is there's still in this day and age, despite all the progress we've made, a lot of friction in commerce. When you're trying to buy something from a website or an app, if you need to authenticate yourself or if you're a small business on a platform commerce or before you can start selling, you need to go through all these different steps and nobody solved it perfectly. And I think to your point, one cat and mouse is between fraudsters and and legitimate users. The other, I think, of chicken and egg issue from a payments or identity standpoint is somebody has to either be willing or a government has to play this central role, right, where, you know, if I'm gonna KYC Miguel, okay. I've done it once. I now have this information. Everyone else who wants to do it is going to have to go through all the same steps. So Miguel has to go through it 10 times. Could you get a central body that is able to say, I've already done it once and I can passport it to you? And then same, let's say for whatever reason, something gets triggered annually or every three years when I need to ask you to update your social security number or your passport copy. Today, you have to do it across multiple entities, whether if you're a consumer or small business. Again, could we centralize those aspects? And I think some of that gets into, again, who is that entity? Is it going to have to be government or government? Or can a private entity take on that responsibility? Will everyone else trust them? And how do you do it in a way that's compliant with data privacy, which also varies in different parts of the world.
00:17:37 · Miguel Armaza, Kamran Zaki
[00:17:37] S1: So you think it's probably going to be country by country issue where in some countries it's going to be maybe a private sector entity being the centralizing agent and then others being at the government level? [00:17:54] S0: I think that's what you're seeing today. Right? I think you're seeing in parts of the world where the government is stepping in, India or Pakistan or parts of Eastern Europe and issuing this unique ID card, and on the back of it then saying, Hey, if you want to authenticate against that or verify against that, then you're pinging directly or through somebody, the the government or the central, repository anyway. I think in other cases like The US, you're seeing that it is private entities. Right? I use CLEAR all the time, and it's expanding to more and more places. Right? And there are a few other entities. So I think it is evolving over time. Maybe it becomes one flavor, but today it's multiple. And so there's probably still value in somebody sort of concatenating all of those. So at least if I am a global offering, you can give me access to all of those, but that's more of a gateway play. Over time, how can you add even more value to it potentially?