September 12, 2024 • 23 mins
If you’re curious about the benefits and challenges of cloud-native banking platforms, this is the podcast episode for you. Host Jim Jockle of Numerix is joined by Vishal Dalal, CEO for North America, Europe, and Asia at Pismo. Together, they explore the transformative power of cloud-native banking platforms. Vishal shares insights into the growing adoption of cloud solutions by banks and financial institutions, the benefits, including scalability, flexibility, and security, and how cloud-native systems are revolutionizing core banking operations.
Jim and Vishal also discuss challenges with legacy technology, regulatory concerns, and future trends in cloud adoption. Whether you’re a fintech enthusiast or just curious about the future of banking, this episode offers a deep dive into the rapidly evolving world of financial technology.
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Episode Transcript
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Speaker 1 (00:07):
Welcome to Trading Tomorrow Navigating Trends in
Capital Markets, the podcastwhere we deep dive into the
technologies reshaping the worldof capital markets.
I'm your host, jim Jockle, aveteran of the finance industry
with a passion for thecomplexities of financial
technologies and market trends.
Because this is TradingTomorrow navigating trends in
capital markets, where thefuture of capital markets
(00:34):
unfolds.
Speaker 2 (00:38):
The finance industry has long relied on legacy
systems tried and truetechnology that brings a sense
of familiarity and comfort inwhat is a highly regulated field
.
But recently we've seen asignificant shift Banks, hedge
funds and other financialinstitutions moving away from
these old systems and embracingthe cloud.
Broadridge's annual tech reporthighlights this change, with
(01:01):
over 80% of executives sayingthey're heavily investing in
building advanced cloudplatforms for digital
transformation, which is evenhigher than the emphasis on AI.
In this episode, we'll divedeep into the transformative
power of cloud-native bankingsystems, look at the benefits,
address the concerns and discusshow scalability, flexibility
(01:22):
and security come into play.
Joining us to discuss is VishalDalal.
Vishal is the CEO for NorthAmerica, europe and Asia at
Pismo.
He has led Pismo'sinternational expansion since
2020.
Vishal has over 23 yearsexperience in core banking and
card systems and before Pismo,he was partner at McKinsey,
where he spent a decade advisingclients on core banking systems
(01:43):
and leading the technologystrategy service line for
banking and financial servicesacross Singapore, new York and
Sydney.
Vishal is also a prolificwriter, contributing frequently
to business magazines likeMcKinsey Quarterly on core
banking technology topics.
Welcome, vishal.
Thank you so much for joiningthe podcast.
Speaker 3 (02:00):
Thank you for having me.
It's a pleasure.
Speaker 2 (02:02):
Why don't we start by introducing us to Pismo?
Speaker 3 (02:05):
I think the best way to put it is Pismo is
essentially a cloud-native coreprocessing platform.
Every time you use a card oryou take a loan, or you ask for
a statement or you buy something, there's this huge machine in
the background of a bank or afinancial service company which
essentially does all of thetransaction processing, checks,
(02:25):
balances.
It sort of puts accountingentries into place, right?
Essentially, it's the heart andbrain of a bank, right?
And what we do is we make thatvery, very complicated piece of
software.
The context is that earlierinstances of the software were
essentially built using legacytechnologies built to be hosted
by the bank themselves, and whatwe've done is we've made it
(02:47):
faster and we've put it on thepublic cloud.
Speaker 2 (02:49):
As a cloud native and API based platform.
Can you explain what that meansand also why does that give you
an edge?
Speaker 3 (02:57):
What this means, obviously, is very simple.
One is we do most of ourprocessing right, so all of the
pieces that we talked about youknow, including checking
balances, creating accountingentries, creating new products.
We do it on the public cloudinstead of doing it on premise.
Now why does that matter?
One is the public cloud forcesus to write our logic in a
(03:20):
particular way, right, so it hasto be written in the most
efficient way, typically youknow, using microservers and
APIs, which I'm sure youraudience knows about.
What that does is that it makesit very modular.
Right, I can essentially makechanges to the software very
quickly, whereas in earliermonoliths, what I had to do was,
every time I made a piece ofchange on the software let's say
(03:41):
to add a new product I had totest the whole thing because I
couldn't know what would breakwhen.
And we've taken that away,right.
So I think that's number one.
Number two when you sort of didthis processing on the public
cloud or on a data center, youhad to buy a whole lot of
hardware earlier, right, becauseyou didn't know how much you
would expand, and so you'd haveto spend a whole amount of money
(04:04):
right up front.
You don't have to do that nowbecause, by its very nature and
definition, on the cloud youonly pay for what you use, and
you can buy in real time, youcan scale up in real time.
So that's the second edge, right?
The first one was speed.
You could sort of, you know,make changes on the fly.
Second is, you only pay forwhat you use.
So if there's a bank which iscoming to us which says we only
(04:25):
have 100,000 credit cardaccounts, you don't have to buy
a giant piece of hardware.
You only use infrastructureworth 100,000 accounts.
And the third, obviously, isthat a lot of these cloud
providers like Amazon, microsoft, google they tend to be very,
very good at what they do interms of security, scaling up
(04:46):
and things like that, and sothat headache gets taken out,
you know, from the bank's head,essentially Right.
So those are the most importantadvantages that we see
architecturally.
Speaker 2 (04:55):
So, just out of curiosity, as the way you were
talking in terms of deploymentand upgrades and probably you
know doing continuous upgrades,are you single tenant,
multi-tenant, and how does thatimpact?
You know the banks themselvesin terms of regulatory
environments, protection of thatdata, as well as having you
(05:19):
know information on publicclouds.
Speaker 3 (05:22):
So, first of all, we offer both models, right.
There are banks which, becauseof their size, are considered
critical infrastructure in theircountry and so do not wish to
sort of share infrastructurewith anyone else, and for them
we would offer single-tenantfacilities.
But in general, you know, mostclients are comfortable with
(05:43):
multi-tenant, largely becausetheir data is obviously
completely segregated from eachother using logical segregation.
So in general, that really isnot a problem.
We are very careful about howwe treat data and we always
comply to the local jurisdictionand the local regulation in the
country that you know that bankis a legal entity of.
(06:05):
What that typically means is A.
There are countries where, forexample, regulators will say
it's okay to be on the publiccloud as long as the public
cloud is on soil.
So, for example, let's saycountry X, you can host on AWS,
but that AWS has to be in ourcountry.
Right, that region has to be inour country and you cannot send
it anywhere else.
And we obviously let regulatorsaudit that and say look, you
(06:26):
know, here it is.
Then there are essentiallycountries which say we do not
want any publicly identifiableinformation on the cloud,
irrespective.
There you know, if the bankstill wants to use the cloud.
What we do is tokenized sort ofimplementation.
The account number or PIN nevergoes out on the cloud.
Instead, a tokenized version ofit is used for processing and
(06:49):
then that data is returned back.
So no PIN information would evermake it onto the cloud right,
Because that is the rule.
And finally, when none of thisis allowed we unfortunately have
to tell our clients that wecannot help until one of these
conditions becomes true.
Basically, so in all cases wehave to comply with the law of
the land and we're veryparticular about it.
Speaker 2 (07:08):
So how many countries are you in at this?
Speaker 3 (07:10):
point.
At this point, we are in aboutseven countries, so a lot of
LATAM we're live in India, we'relive in Australia and we've
started implementing in a fewother countries as well.
Speaker 2 (07:22):
Interesting and now just out of curiosity.
Out of curiosity, one of theissues and I'm going back a
couple of years ago at thispoint was the larger cloud
providers were using localizeddata centers in those countries
where data couldn't move out andthere were actually performance
(07:43):
issues associated with some ofthose core data centers.
Performance issues associatedwith some of those core data
centers has that improved overtime?
Speaker 3 (07:49):
Well, I think we've certainly not seen any problems
in terms of performance.
You know, most of ourtransaction interaction is in
milliseconds, right, Not inseconds, and so you know we've
never had a problem with any ofthe cloud providers on that
front right, so I'm sure it hasgotten better.
(08:11):
With the sort of R&D budgetsthat these players have, they
tend to just keep getting betterand better and better, and
obviously that helped us a lot.
Speaker 2 (08:15):
Now, Pinsport was recently part of one of the
biggest fintech M&A deals of theyear.
You know what do you think thissays?
First of all, congratulations.
And what do you think this saysabout the current appetite for
your technology?
Speaker 3 (08:27):
Well, I think we've always been very insistent that
there is a product market fitright.
The market likes this sort oftechnology and we like to think
that, you know, the M&A deal wasa good vindication of that fact
right, which is, you know,there is significant appetite
for this sort of technology,largely because A the technology
(08:48):
is very, I guess, universal.
Apis are becoming the universallanguage of communication in
the world of e-commerce andbanking.
B we're sort of starting todemocratize a whole lot of this.
Earlier, if you were toimplement a core banking system
or a cards issuing system, youneed very careful planning and
(09:08):
thought, and now I'd like tothink we've democratized it to
the level where a fintech, youknow, which basically just has a
credit card, can just come tous and say set this up for me
and we can do it Right.
So we're democratizing it and Ithink there's significant
appetite for that.
We also see it in theincreasing acceptance by large
banks.
We're starting to sort of entervery fruitful conversations
(09:30):
where people like what they seeand we're able to make
significant headway in educatingpeople as to what this
technology can do for them.
Speaker 2 (09:41):
I think you know, as an industry, we've all started
talking about cloud in 2011, 12,somewhere.
Where do you think we are onthat hype cycle at this point in
time and the reception to cloudtechnologies from the banking
industry?
Speaker 3 (09:58):
Well, I think we're still at the very initial stages
, right?
If you disregard the hype for amoment, I'd still say that
about 99% of the world's bankinginfrastructure is still on
legacy technologies, and that'sa fact.
We're barely starting toscratch the surface in terms of
starting to hit the potential.
(10:19):
So, I would say, just in termsof any cycle, this is still very
much right at the beginning andI think, as a lot of what I
would call public facingparameters start to progress for
example, you know, we're ableto configure a product in weeks
instead of months right, we'reable to add a feature, like we
(10:39):
can, for example, today, in amatter of hours instead of like
weeks or days.
As those stories start becomingmore and more common, I think,
at least for the foreseeablefuture, right, the trajectory is
upwards right at least the wayI see it, what would you say the
current trends are, you know,in terms of cloud adoption?
Speaker 2 (10:58):
you know, and how is it accelerating with banking?
You know, it seems that youknow, as we're moving into, you
know, the path of enlightenment,if you will.
Speaker 3 (11:09):
Well, I think, to be fair, banks are already pretty
smart about using cloud right.
The typical adoption cycle fora bank used to be first, they
used to sort of, you know, diptheir toes into the public cloud
gingerly, then, you know, justto see what it was all about.
Then they would start, forexample, taking the simplest use
cases right let's say, internalinformation, not customer
(11:29):
information, or test data right,or analytics right, just to
sort of see what the art of thepossible is.
So they've been doing this forquite some time and you know
there has been no letdown.
What has changed with what haschanged with, you know, adoption
of, like public cloud, nativecore systems like ours, is that
(11:50):
banks are now starting to feelcomfortable putting core data on
the cloud right.
So, you know, core banking dataor core cards data uh, that's
where we are starting to get toright, and I see that percentage
increasing purely in the youknow, purely from, based on the
number of calls that I get everyday saying hey, you, we'd like
to, not necessarily saying hey,we want this now, but you see
(12:10):
the upward trend in terms ofboards calling and saying hey.
Could you just come over andeducate us as to what this is.
Could you just have an honestconversation with us about this
and then typically some bankswill essentially oh look, we
like what we see.
Could we do a small proof ofconcept?
If you really think you're thatfast, here are our most
difficult business challenges.
Could you do a small proof ofconcept and, for example, show
(12:32):
us that you can configure aproduct in one afternoon or you
can sort of set something up ina matter of a week?
Those types of conversationsare sort of significantly on the
uptick and that gives us a lotof hope.
Speaker 2 (12:44):
When I think of the objections of banks, you know,
going back 10 years, it wassecurity, security, security.
You know the cry is cost, cost,cost.
Today, you know.
So what would you say?
The primary benefits are interms of moving these operations
to the cloud, but, at the sametime, how are you dealing with,
(13:05):
you know, the same objectionsthat I hear as well?
Speaker 3 (13:09):
Yeah, so no, I think that's a great question and I'd
like to see this in terms ofthree benefits, right?
One is obviously the speed ofinnovation.
So normally and again, you know, I think legacy systems have
been very, very useful, you know, in terms of what they've done,
but you would normally, wenormally hear banks saying, oh,
(13:29):
it takes too long to, you know,deploy change.
So, for example, if you'retalking about a new product
family, on average we hearnumbers like three months to
nine months, right, uh, you know.
Or sometimes even more, right?
Um, and I think, for somethinglike us, something like that,
we've been a disruptor.
Uh, last year, we deployed 5365changes into production, right?
(13:53):
So if you think about that, ona good day, that's 11 features
every day, right, 11 featuresevery day.
That is blistering in terms ofwhat's possible.
So I think that's one that sortof is important.
Second, obviously, is the scaleup.
Right, you know, you don't haveto buy the hardware and so,
most importantly, in terms ofjust basic volumes, you're just
(14:14):
paying for what you use, right?
So you're not sort of payingfor peak usage, right, you know,
because the cloud automaticallylets you scale up and down as
needed without intervening.
So for the last three or fourBlack Fridays that we've had, we
haven't had to touch the system, right.
It automatically sort of rampedup and then ramped down.
So there's the whole sort ofcost element of it as well,
right, and the third one, whichI think often gets overlooked,
(14:38):
to be fair, but we find itmatters a lot, is what I call
the talent risk.
A lot of legacy banks builttheir technology when I was a
young kid and I'm already past50 now, so you can imagine how
old they are, and so the peoplewho serviced it are close to
retirement age, right.
And a lot of these did not haveuniform documentation
(14:59):
mechanisms, so there's onlytypically five or six people who
know where to hit the spannerin case something sort of starts
working.
Right, the really youngengineers want to work on this,
right, they sort of see this asexciting, and that's starting to
take away some of the talentrisk problem.
(15:20):
Right, you know you're notgoing to have to worry about, uh
, two or three people carryingall of the risk and not being
there when fingers crossed youknow, uh, or you know, god
forbid anything goes wrong.
So, solving those three prettyimportant things right and and I
think it is a bit difficult toyou know, this is going to be a
very gradual education cyclebecause you have to remember
(15:40):
that the people who areevaluating us when they're
taking a buying decision comefrom that world typically right.
So when they last evaluated asystem, they were used to
evaluating a system that workedlike that.
So there is this educationprocess where you essentially
say please look at us verydifferently, right, we're sort
of built very differently.
This is what good looks like interms of evaluating us Right,
(16:02):
and that's an ongoing process.
But, as I said earlier, thenumber of conversations is going
up every day and it's veryencouraging for us to see.
Speaker 2 (16:10):
I remember going to the bank with my passbook.
You know getting so excited andseeing my little balance and my
little passbook.
And if I was going to go outwith my friends on a Friday
night, I better make sure I gotto the bank by two o'clock on a
Saturday Exactly the good olddays.
So I guess one of the questionsthat you make me think about.
(16:32):
Obviously you're tacklinglegacy technology, but also in
just traditional core paymentsand core banking.
But you know we do haveemerging asset classes that,
like you know, for example, likecrypto right and what, and
we're seeing an entireinfrastructure grow in a siloed
way.
What kind of opportunity orchallenges does bringing the two
(16:57):
together into core banking,especially as we're now starting
to see the institutionalizationof crypto, regulatory barriers
come down, but also differenttechnologies in terms of
blockchain?
You know, how do you see allthat coming together?
Speaker 3 (17:10):
Well, I think that's a great question, and I'll be
very honest.
You know, I think it's still, atleast to my basic mind it still
feels like there are stages,right.
So I don't know if and when andI think that's a decision we'll
take, depending on and we'll beled by the market If we ever
decide to become like acompletely decentralized ledger,
(17:31):
which is almost the end stateevolution, I don't know where
that's going to happen.
I think we're going to reachthere in stages.
What I see right now is thereare central banks which are sort
of starting to in a few cases,I think six or seven of them
starting to sort of, for example, experiment with CBDCs, central
Bank Digital Currencies.
(17:51):
So for me, the most logicalroute to start off, to sort of
start dipping a toe into this,would essentially be doing the
basics, which is, at leastsupport that currency type.
Today, you know the platformwill support usd eur, all of the
basic currencies.
But the first thing we have todo is now we have to start
dealing in those currency types,right?
So start creating the currencycodes for those platforms, right
(18:13):
?
That's the most logical thing,because if, for example, a
country evolves a real-timepayment system using just those
currencies, right, that's themost logical thing.
Because if, for example, acountry evolves a real-time
payment system using just thosecurrencies, right, and we are
called.
We have to be able to at leasthandle that.
So to me that's the first basiclogical thing to do.
Right, if it goes there, thenessentially, you know, the idea
is to basically get embeddedright and sort of start handling
(18:33):
what I would call decentralizedauthorization.
Now, if you think about it,that at least to me in some way,
and I don't know where this isheaded but I think the
authorization speeds still dohave to catch up.
I think current authorizations,if you think about it, are still
at the nature of millisecondswe typically get about 200
(18:56):
milliseconds to respond to anauthorization request, whereas
uh, confirming a transaction onany of the local blockchains is
still, at this point, measuredin minutes right, and for some
of the newer blockchains,sometimes even more so I think,
uh, my sense is, a lot of theengineering will have to first
be done at that level to sort ofspeed it up, uh, but then
obviously the advantages arethere.
(19:16):
Right, I don't want to crystalgaze, but I think I'd like to
think that we'll keep watchingit and we'll keep making baby
steps to get there, starting offwith currencies, then checking
if the speeds are there, thensaying how do we get ourselves
in, and hopefully then evolving.
Speaker 2 (19:29):
What would you say are the key areas of focus for
Pismo's future productdevelopment and how do you
anticipate these developmentsare going to impact the fintech
industry?
Speaker 3 (19:45):
I think at this point you know the way we've
characterized ourselves.
Speaker 1 (19:46):
We've drawn some very clear red lines around
ourselves right.
Speaker 3 (19:47):
So we are essentially what I would call the
high-speed, high-resiliencetransaction processing engine.
We're not a risk processingengine, so we don't yet, for
example, underwrite, right.
We don't sort of take riskdecisions.
Our job starts when thedecision to open an account has
been made, and then we sort ofstep in and basically do
whatever it takes to processtransactions, do accounting.
(20:07):
So I think the first thing thatwe will do is essentially
obviously strengthen our productoffering right.
So, for example, doing manymore complex types of loans
right, we didn't do lendingearlier now we do so, you know
managing many more complex typesof loans, you know, managing
mortgages and things like that.
So that's one axis.
The second axis is, you know,sort of getting ready, for
(20:28):
example, for a bewildering arrayof local payment rails.
So you'll see, for example,countries like India, brazil,
like, going very rapidly downthe path of account to account
payments, achieving huge, youknow, adoption rates, to the
point where it's changing thevery nature of the economies,
right.
So us getting ready for thosesort of rails, right, is, I
(20:48):
think, basically the secondthing.
The third is, you know,obviously, as I said, we do
something and we do somethingvery well, right, well, right.
So the third thing is we'regoing to sort of increase the
array of partnerships, right.
So, for example, you know, wewill always be on the lookout
for sort of great partners, forexample, let's say, and a lot of
that now is coming because ofour acquisition by visa, right,
these already has it.
(21:08):
So, you know, great sort ofpartnerships in terms of aml,
kyc systems, in terms ofcollection systems, uh, in terms
of, you know, the new productsthat Visa has launched, like,
for example, flex, right.
So, integrating with ourpartners.
I think those three thingsshould sort of, you know, keep
us busy for quite some time.
Speaker 2 (21:25):
Sadly, we've made it to our final question of the
podcast and we call it the trenddrop.
It's like a desert islandquestion.
So if you could only watch ortrack one trend in cloud and
banking, you know what wouldthat be?
Speaker 3 (21:39):
My favorite trend is, I think, the one that you
mentioned right.
I sort of again in my own time,actively track the usage of
CBDCs.
Right, it started off, you know, five or six years ago with
just two or three very smallcountries, but I see a lot of
countries now moving towards it.
Doing pilots right, and thenature of the pilots is very
(22:00):
different, right even the reasonfor them is very different
right some of them are sort ofgoing at it right from first
principle, saying we want todecentralize everything.
Some of it are basically justdoing it because they want to
lower transaction costs and passon those costs, right and and
take away those costs fromcustomers.
Some of them are basically justdoing it because they want to
see how far the technology wouldgo.
(22:20):
What can they tokenize, right?
Could this be the beginning ofsomething which changes the
entire nature of the economy?
So I enjoy tracking that and,you know, in my spare time, just
trying to think of what itmeans for us, right, and it's a
very fun exercise, I can assureyou right.
And it's a very fun exercise, Ican assure you right.
I wouldn't mind being strandedon an island, at least for some
time, just to do that.
Speaker 2 (22:39):
Vishal, thank you so much and I'd be remiss if I
didn't mention you're a prolificwriter and thought leader in
the industry.
Where can people follow you andengage with your writings?
Speaker 3 (22:50):
A lot of what I do now is on LinkedIn, but you know
, there's a whole lot of papersI've sort of written in my
previous life which I think arefloating all over the net.
Once I manage to find some time, I think I'm going to get back
to some more regular writing onMedium or something, but right
now it's basically LinkedIn anda whole lot of other papers
around this area.
Speaker 2 (23:09):
right, that's all I really know.
Speaker 3 (23:10):
And that's what I've really stuck to.
Speaker 2 (23:13):
Well, I'm going to be sure to follow you after this
call, vishal.
Thank you so much.
Congratulations, and you knowwe wish Pismo continued success.
Speaker 3 (23:23):
Thank you so much.
That's very kind and it's beenan honor, thank you.
Welcome to Trading Tomorrow Navigating Trends in
Capital Markets, the podcastwhere we deep dive into the
technologies reshaping the worldof capital markets.
I'm your host, jim Jockle, aveteran of the finance industry
with a passion for thecomplexities of financial
technologies and market trends.
Because this is TradingTomorrow navigating trends in
capital markets, where thefuture of capital markets
(00:34):
unfolds.
Speaker 2 (00:38):
The finance industry has long relied on legacy
systems tried and truetechnology that brings a sense
of familiarity and comfort inwhat is a highly regulated field
.
But recently we've seen asignificant shift Banks, hedge
funds and other financialinstitutions moving away from
these old systems and embracingthe cloud.
Broadridge's annual tech reporthighlights this change, with
(01:01):
over 80% of executives sayingthey're heavily investing in
building advanced cloudplatforms for digital
transformation, which is evenhigher than the emphasis on AI.
In this episode, we'll divedeep into the transformative
power of cloud-native bankingsystems, look at the benefits,
address the concerns and discusshow scalability, flexibility
(01:22):
and security come into play.
Joining us to discuss is VishalDalal.
Vishal is the CEO for NorthAmerica, europe and Asia at
Pismo.
He has led Pismo'sinternational expansion since
2020.
Vishal has over 23 yearsexperience in core banking and
card systems and before Pismo,he was partner at McKinsey,
where he spent a decade advisingclients on core banking systems
(01:43):
and leading the technologystrategy service line for
banking and financial servicesacross Singapore, new York and
Sydney.
Vishal is also a prolificwriter, contributing frequently
to business magazines likeMcKinsey Quarterly on core
banking technology topics.
Welcome, vishal.
Thank you so much for joiningthe podcast.
Speaker 3 (02:00):
Thank you for having me.
It's a pleasure.
Speaker 2 (02:02):
Why don't we start by introducing us to Pismo?
Speaker 3 (02:05):
I think the best way to put it is Pismo is
essentially a cloud-native coreprocessing platform.
Every time you use a card oryou take a loan, or you ask for
a statement or you buy something, there's this huge machine in
the background of a bank or afinancial service company which
essentially does all of thetransaction processing, checks,
(02:25):
balances.
It sort of puts accountingentries into place, right?
Essentially, it's the heart andbrain of a bank, right?
And what we do is we make thatvery, very complicated piece of
software.
The context is that earlierinstances of the software were
essentially built using legacytechnologies built to be hosted
by the bank themselves, and whatwe've done is we've made it
(02:47):
faster and we've put it on thepublic cloud.
Speaker 2 (02:49):
As a cloud native and API based platform.
Can you explain what that meansand also why does that give you
an edge?
Speaker 3 (02:57):
What this means, obviously, is very simple.
One is we do most of ourprocessing right, so all of the
pieces that we talked about youknow, including checking
balances, creating accountingentries, creating new products.
We do it on the public cloudinstead of doing it on premise.
Now why does that matter?
One is the public cloud forcesus to write our logic in a
(03:20):
particular way, right, so it hasto be written in the most
efficient way, typically youknow, using microservers and
APIs, which I'm sure youraudience knows about.
What that does is that it makesit very modular.
Right, I can essentially makechanges to the software very
quickly, whereas in earliermonoliths, what I had to do was,
every time I made a piece ofchange on the software let's say
(03:41):
to add a new product I had totest the whole thing because I
couldn't know what would breakwhen.
And we've taken that away,right.
So I think that's number one.
Number two when you sort of didthis processing on the public
cloud or on a data center, youhad to buy a whole lot of
hardware earlier, right, becauseyou didn't know how much you
would expand, and so you'd haveto spend a whole amount of money
(04:04):
right up front.
You don't have to do that nowbecause, by its very nature and
definition, on the cloud youonly pay for what you use, and
you can buy in real time, youcan scale up in real time.
So that's the second edge, right?
The first one was speed.
You could sort of, you know,make changes on the fly.
Second is, you only pay forwhat you use.
So if there's a bank which iscoming to us which says we only
(04:25):
have 100,000 credit cardaccounts, you don't have to buy
a giant piece of hardware.
You only use infrastructureworth 100,000 accounts.
And the third, obviously, isthat a lot of these cloud
providers like Amazon, microsoft, google they tend to be very,
very good at what they do interms of security, scaling up
(04:46):
and things like that, and sothat headache gets taken out,
you know, from the bank's head,essentially Right.
So those are the most importantadvantages that we see
architecturally.
Speaker 2 (04:55):
So, just out of curiosity, as the way you were
talking in terms of deploymentand upgrades and probably you
know doing continuous upgrades,are you single tenant,
multi-tenant, and how does thatimpact?
You know the banks themselvesin terms of regulatory
environments, protection of thatdata, as well as having you
(05:19):
know information on publicclouds.
Speaker 3 (05:22):
So, first of all, we offer both models, right.
There are banks which, becauseof their size, are considered
critical infrastructure in theircountry and so do not wish to
sort of share infrastructurewith anyone else, and for them
we would offer single-tenantfacilities.
But in general, you know, mostclients are comfortable with
(05:43):
multi-tenant, largely becausetheir data is obviously
completely segregated from eachother using logical segregation.
So in general, that really isnot a problem.
We are very careful about howwe treat data and we always
comply to the local jurisdictionand the local regulation in the
country that you know that bankis a legal entity of.
(06:05):
What that typically means is A.
There are countries where, forexample, regulators will say
it's okay to be on the publiccloud as long as the public
cloud is on soil.
So, for example, let's saycountry X, you can host on AWS,
but that AWS has to be in ourcountry.
Right, that region has to be inour country and you cannot send
it anywhere else.
And we obviously let regulatorsaudit that and say look, you
(06:26):
know, here it is.
Then there are essentiallycountries which say we do not
want any publicly identifiableinformation on the cloud,
irrespective.
There you know, if the bankstill wants to use the cloud.
What we do is tokenized sort ofimplementation.
The account number or PIN nevergoes out on the cloud.
Instead, a tokenized version ofit is used for processing and
(06:49):
then that data is returned back.
So no PIN information would evermake it onto the cloud right,
Because that is the rule.
And finally, when none of thisis allowed we unfortunately have
to tell our clients that wecannot help until one of these
conditions becomes true.
Basically, so in all cases wehave to comply with the law of
the land and we're veryparticular about it.
Speaker 2 (07:08):
So how many countries are you in at this?
Speaker 3 (07:10):
point.
At this point, we are in aboutseven countries, so a lot of
LATAM we're live in India, we'relive in Australia and we've
started implementing in a fewother countries as well.
Speaker 2 (07:22):
Interesting and now just out of curiosity.
Out of curiosity, one of theissues and I'm going back a
couple of years ago at thispoint was the larger cloud
providers were using localizeddata centers in those countries
where data couldn't move out andthere were actually performance
(07:43):
issues associated with some ofthose core data centers.
Performance issues associatedwith some of those core data
centers has that improved overtime?
Speaker 3 (07:49):
Well, I think we've certainly not seen any problems
in terms of performance.
You know, most of ourtransaction interaction is in
milliseconds, right, Not inseconds, and so you know we've
never had a problem with any ofthe cloud providers on that
front right, so I'm sure it hasgotten better.
(08:11):
With the sort of R&D budgetsthat these players have, they
tend to just keep getting betterand better and better, and
obviously that helped us a lot.
Speaker 2 (08:15):
Now, Pinsport was recently part of one of the
biggest fintech M&A deals of theyear.
You know what do you think thissays?
First of all, congratulations.
And what do you think this saysabout the current appetite for
your technology?
Speaker 3 (08:27):
Well, I think we've always been very insistent that
there is a product market fitright.
The market likes this sort oftechnology and we like to think
that, you know, the M&A deal wasa good vindication of that fact
right, which is, you know,there is significant appetite
for this sort of technology,largely because A the technology
(08:48):
is very, I guess, universal.
Apis are becoming the universallanguage of communication in
the world of e-commerce andbanking.
B we're sort of starting todemocratize a whole lot of this.
Earlier, if you were toimplement a core banking system
or a cards issuing system, youneed very careful planning and
(09:08):
thought, and now I'd like tothink we've democratized it to
the level where a fintech, youknow, which basically just has a
credit card, can just come tous and say set this up for me
and we can do it Right.
So we're democratizing it and Ithink there's significant
appetite for that.
We also see it in theincreasing acceptance by large
banks.
We're starting to sort of entervery fruitful conversations
(09:30):
where people like what they seeand we're able to make
significant headway in educatingpeople as to what this
technology can do for them.
Speaker 2 (09:41):
I think you know, as an industry, we've all started
talking about cloud in 2011, 12,somewhere.
Where do you think we are onthat hype cycle at this point in
time and the reception to cloudtechnologies from the banking
industry?
Speaker 3 (09:58):
Well, I think we're still at the very initial stages
, right?
If you disregard the hype for amoment, I'd still say that
about 99% of the world's bankinginfrastructure is still on
legacy technologies, and that'sa fact.
We're barely starting toscratch the surface in terms of
starting to hit the potential.
(10:19):
So, I would say, just in termsof any cycle, this is still very
much right at the beginning andI think, as a lot of what I
would call public facingparameters start to progress for
example, you know, we're ableto configure a product in weeks
instead of months right, we'reable to add a feature, like we
(10:39):
can, for example, today, in amatter of hours instead of like
weeks or days.
As those stories start becomingmore and more common, I think,
at least for the foreseeablefuture, right, the trajectory is
upwards right at least the wayI see it, what would you say the
current trends are, you know,in terms of cloud adoption?
Speaker 2 (10:58):
you know, and how is it accelerating with banking?
You know, it seems that youknow, as we're moving into, you
know, the path of enlightenment,if you will.
Speaker 3 (11:09):
Well, I think, to be fair, banks are already pretty
smart about using cloud right.
The typical adoption cycle fora bank used to be first, they
used to sort of, you know, diptheir toes into the public cloud
gingerly, then, you know, justto see what it was all about.
Then they would start, forexample, taking the simplest use
cases right let's say, internalinformation, not customer
(11:29):
information, or test data right,or analytics right, just to
sort of see what the art of thepossible is.
So they've been doing this forquite some time and you know
there has been no letdown.
What has changed with what haschanged with, you know, adoption
of, like public cloud, nativecore systems like ours, is that
(11:50):
banks are now starting to feelcomfortable putting core data on
the cloud right.
So, you know, core banking dataor core cards data uh, that's
where we are starting to get toright, and I see that percentage
increasing purely in the youknow, purely from, based on the
number of calls that I get everyday saying hey, you, we'd like
to, not necessarily saying hey,we want this now, but you see
(12:10):
the upward trend in terms ofboards calling and saying hey.
Could you just come over andeducate us as to what this is.
Could you just have an honestconversation with us about this
and then typically some bankswill essentially oh look, we
like what we see.
Could we do a small proof ofconcept?
If you really think you're thatfast, here are our most
difficult business challenges.
Could you do a small proof ofconcept and, for example, show
(12:32):
us that you can configure aproduct in one afternoon or you
can sort of set something up ina matter of a week?
Those types of conversationsare sort of significantly on the
uptick and that gives us a lotof hope.
Speaker 2 (12:44):
When I think of the objections of banks, you know,
going back 10 years, it wassecurity, security, security.
You know the cry is cost, cost,cost.
Today, you know.
So what would you say?
The primary benefits are interms of moving these operations
to the cloud, but, at the sametime, how are you dealing with,
(13:05):
you know, the same objectionsthat I hear as well?
Speaker 3 (13:09):
Yeah, so no, I think that's a great question and I'd
like to see this in terms ofthree benefits, right?
One is obviously the speed ofinnovation.
So normally and again, you know, I think legacy systems have
been very, very useful, you know, in terms of what they've done,
but you would normally, wenormally hear banks saying, oh,
(13:29):
it takes too long to, you know,deploy change.
So, for example, if you'retalking about a new product
family, on average we hearnumbers like three months to
nine months, right, uh, you know.
Or sometimes even more, right?
Um, and I think, for somethinglike us, something like that,
we've been a disruptor.
Uh, last year, we deployed 5365changes into production, right?
(13:53):
So if you think about that, ona good day, that's 11 features
every day, right, 11 featuresevery day.
That is blistering in terms ofwhat's possible.
So I think that's one that sortof is important.
Second, obviously, is the scaleup.
Right, you know, you don't haveto buy the hardware and so,
most importantly, in terms ofjust basic volumes, you're just
(14:14):
paying for what you use, right?
So you're not sort of payingfor peak usage, right, you know,
because the cloud automaticallylets you scale up and down as
needed without intervening.
So for the last three or fourBlack Fridays that we've had, we
haven't had to touch the system, right.
It automatically sort of rampedup and then ramped down.
So there's the whole sort ofcost element of it as well,
right, and the third one, whichI think often gets overlooked,
(14:38):
to be fair, but we find itmatters a lot, is what I call
the talent risk.
A lot of legacy banks builttheir technology when I was a
young kid and I'm already past50 now, so you can imagine how
old they are, and so the peoplewho serviced it are close to
retirement age, right.
And a lot of these did not haveuniform documentation
(14:59):
mechanisms, so there's onlytypically five or six people who
know where to hit the spannerin case something sort of starts
working.
Right, the really youngengineers want to work on this,
right, they sort of see this asexciting, and that's starting to
take away some of the talentrisk problem.
(15:20):
Right, you know you're notgoing to have to worry about, uh
, two or three people carryingall of the risk and not being
there when fingers crossed youknow, uh, or you know, god
forbid anything goes wrong.
So, solving those three prettyimportant things right and and I
think it is a bit difficult toyou know, this is going to be a
very gradual education cyclebecause you have to remember
(15:40):
that the people who areevaluating us when they're
taking a buying decision comefrom that world typically right.
So when they last evaluated asystem, they were used to
evaluating a system that workedlike that.
So there is this educationprocess where you essentially
say please look at us verydifferently, right, we're sort
of built very differently.
This is what good looks like interms of evaluating us Right,
(16:02):
and that's an ongoing process.
But, as I said earlier, thenumber of conversations is going
up every day and it's veryencouraging for us to see.
Speaker 2 (16:10):
I remember going to the bank with my passbook.
You know getting so excited andseeing my little balance and my
little passbook.
And if I was going to go outwith my friends on a Friday
night, I better make sure I gotto the bank by two o'clock on a
Saturday Exactly the good olddays.
So I guess one of the questionsthat you make me think about.
(16:32):
Obviously you're tacklinglegacy technology, but also in
just traditional core paymentsand core banking.
But you know we do haveemerging asset classes that,
like you know, for example, likecrypto right and what, and
we're seeing an entireinfrastructure grow in a siloed
way.
What kind of opportunity orchallenges does bringing the two
(16:57):
together into core banking,especially as we're now starting
to see the institutionalizationof crypto, regulatory barriers
come down, but also differenttechnologies in terms of
blockchain?
You know, how do you see allthat coming together?
Speaker 3 (17:10):
Well, I think that's a great question, and I'll be
very honest.
You know, I think it's still, atleast to my basic mind it still
feels like there are stages,right.
So I don't know if and when andI think that's a decision we'll
take, depending on and we'll beled by the market If we ever
decide to become like acompletely decentralized ledger,
(17:31):
which is almost the end stateevolution, I don't know where
that's going to happen.
I think we're going to reachthere in stages.
What I see right now is thereare central banks which are sort
of starting to in a few cases,I think six or seven of them
starting to sort of, for example, experiment with CBDCs, central
Bank Digital Currencies.
(17:51):
So for me, the most logicalroute to start off, to sort of
start dipping a toe into this,would essentially be doing the
basics, which is, at leastsupport that currency type.
Today, you know the platformwill support usd eur, all of the
basic currencies.
But the first thing we have todo is now we have to start
dealing in those currency types,right?
So start creating the currencycodes for those platforms, right
(18:13):
?
That's the most logical thing,because if, for example, a
country evolves a real-timepayment system using just those
currencies, right, that's themost logical thing.
Because if, for example, acountry evolves a real-time
payment system using just thosecurrencies, right, and we are
called.
We have to be able to at leasthandle that.
So to me that's the first basiclogical thing to do.
Right, if it goes there, thenessentially, you know, the idea
is to basically get embeddedright and sort of start handling
(18:33):
what I would call decentralizedauthorization.
Now, if you think about it,that at least to me in some way,
and I don't know where this isheaded but I think the
authorization speeds still dohave to catch up.
I think current authorizations,if you think about it, are still
at the nature of millisecondswe typically get about 200
(18:56):
milliseconds to respond to anauthorization request, whereas
uh, confirming a transaction onany of the local blockchains is
still, at this point, measuredin minutes right, and for some
of the newer blockchains,sometimes even more so I think,
uh, my sense is, a lot of theengineering will have to first
be done at that level to sort ofspeed it up, uh, but then
obviously the advantages arethere.
(19:16):
Right, I don't want to crystalgaze, but I think I'd like to
think that we'll keep watchingit and we'll keep making baby
steps to get there, starting offwith currencies, then checking
if the speeds are there, thensaying how do we get ourselves
in, and hopefully then evolving.
Speaker 2 (19:29):
What would you say are the key areas of focus for
Pismo's future productdevelopment and how do you
anticipate these developmentsare going to impact the fintech
industry?
Speaker 3 (19:45):
I think at this point you know the way we've
characterized ourselves.
Speaker 1 (19:46):
We've drawn some very clear red lines around
ourselves right.
Speaker 3 (19:47):
So we are essentially what I would call the
high-speed, high-resiliencetransaction processing engine.
We're not a risk processingengine, so we don't yet, for
example, underwrite, right.
We don't sort of take riskdecisions.
Our job starts when thedecision to open an account has
been made, and then we sort ofstep in and basically do
whatever it takes to processtransactions, do accounting.
(20:07):
So I think the first thing thatwe will do is essentially
obviously strengthen our productoffering right.
So, for example, doing manymore complex types of loans
right, we didn't do lendingearlier now we do so, you know
managing many more complex typesof loans, you know, managing
mortgages and things like that.
So that's one axis.
The second axis is, you know,sort of getting ready, for
(20:28):
example, for a bewildering arrayof local payment rails.
So you'll see, for example,countries like India, brazil,
like, going very rapidly downthe path of account to account
payments, achieving huge, youknow, adoption rates, to the
point where it's changing thevery nature of the economies,
right.
So us getting ready for thosesort of rails, right, is, I
(20:48):
think, basically the secondthing.
The third is, you know,obviously, as I said, we do
something and we do somethingvery well, right, well, right.
So the third thing is we'regoing to sort of increase the
array of partnerships, right.
So, for example, you know, wewill always be on the lookout
for sort of great partners, forexample, let's say, and a lot of
that now is coming because ofour acquisition by visa, right,
these already has it.
(21:08):
So, you know, great sort ofpartnerships in terms of aml,
kyc systems, in terms ofcollection systems, uh, in terms
of, you know, the new productsthat Visa has launched, like,
for example, flex, right.
So, integrating with ourpartners.
I think those three thingsshould sort of, you know, keep
us busy for quite some time.
Speaker 2 (21:25):
Sadly, we've made it to our final question of the
podcast and we call it the trenddrop.
It's like a desert islandquestion.
So if you could only watch ortrack one trend in cloud and
banking, you know what wouldthat be?
Speaker 3 (21:39):
My favorite trend is, I think, the one that you
mentioned right.
I sort of again in my own time,actively track the usage of
CBDCs.
Right, it started off, you know, five or six years ago with
just two or three very smallcountries, but I see a lot of
countries now moving towards it.
Doing pilots right, and thenature of the pilots is very
(22:00):
different, right even the reasonfor them is very different
right some of them are sort ofgoing at it right from first
principle, saying we want todecentralize everything.
Some of it are basically justdoing it because they want to
lower transaction costs and passon those costs, right and and
take away those costs fromcustomers.
Some of them are basically justdoing it because they want to
see how far the technology wouldgo.
(22:20):
What can they tokenize, right?
Could this be the beginning ofsomething which changes the
entire nature of the economy?
So I enjoy tracking that and,you know, in my spare time, just
trying to think of what itmeans for us, right, and it's a
very fun exercise, I can assureyou right.
And it's a very fun exercise, Ican assure you right.
I wouldn't mind being strandedon an island, at least for some
time, just to do that.
Speaker 2 (22:39):
Vishal, thank you so much and I'd be remiss if I
didn't mention you're a prolificwriter and thought leader in
the industry.
Where can people follow you andengage with your writings?
Speaker 3 (22:50):
A lot of what I do now is on LinkedIn, but you know
, there's a whole lot of papersI've sort of written in my
previous life which I think arefloating all over the net.
Once I manage to find some time, I think I'm going to get back
to some more regular writing onMedium or something, but right
now it's basically LinkedIn anda whole lot of other papers
around this area.
Speaker 2 (23:09):
right, that's all I really know.
Speaker 3 (23:10):
And that's what I've really stuck to.
Speaker 2 (23:13):
Well, I'm going to be sure to follow you after this
call, vishal.
Thank you so much.
Congratulations, and you knowwe wish Pismo continued success.
Speaker 3 (23:23):
Thank you so much.
That's very kind and it's beenan honor, thank you.
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