What Fintech Missed in the Real Economy

Transcript

[applause] >> I know nobody really wants me to speak and ramble for the next 20 minutes. So, we'll love to try to make this as interactive as possible. Um show of hands, how many of you have used Robinhood? All right. How many of you use an AI agent day-to-day in your banking, finance? One person, all right. Has anybody used HSBC here? Okay. Uh JP Morgan Chase?

All right. Has anybody used an obscure local bank on top of stablecoin wallets and FX platform manual checks and a separate debit card all to do one transaction? All right. So, the good thing is most of you have not. The bad thing is unfortunately, 99% of the world operates that way. I think if you look at fintech and banking in general, it almost seems like they've missed the real economy. And when you think about the real economy, people

think, "Oh, AI startups, high growth mega cap you know, A16 backed companies, public companies etc." And fintech was built in San Francisco. You know, if you've if you're in the US, you have to consider yourselves extremely lucky. Not just to be in the US, but to have world-class financial infrastructure, to have instant ACH, Stripe built out of the box. You have more options and more rails than you need.

For everyone else, it's the complete opposite. And things start breaking, no offense to anybody in Canada, but things start breaking as soon as you go to Canada. And then you go to India, you go to Nigeria, you go to Singapore, and it just gets progressively worse. You look at a manufacturer in Singapore who waits 5 days for a swift payment to clear, and then there's knock-on effects. The manufacturer can't clear their payments. They delay the shipment to their end recipient. And it creates this giant bottleneck in everything. The exporter who's selling coffee in Colombia in Medellin, they're hedging against a currency that fluctuates 20-30%.

And every day we get to use the US dollar, and that's something they consider a luxury. Even crypto native has not had it that well. If you're If How many of you have a crypto foundation or work for a foundation? Again, very lucky. If you worked for a foundation or you ran a crypto foundation, you had a layer one or a layer two, in 2020, 2021, 2023 and four and five, you couldn't bank anywhere. If it was the Cayman Islands, if it was in BVI, Singapore, Switzerland, you had the most obscure kind of patchwork of banks and finance platforms. That was the only way you

could actually run your operations. And when we talk about who fintech has been building for, they've been building for AI agents, because the new thing is we don't want to actually touch our money. We want to give it to AI agents that'll do everything day in and day out. They build for the Anthropic's of the world. They build for the global companies of the world. And by global, I mean the NASDAQ-listed, publicly-traded companies and banks. You know, I spent nine years between JP and City, and we built for the same crowd. We didn't really care about the local manufacturer or the local business or even a middle-market business that much.

We cared most about the large multi-hundred-million-dollar deposit holders. And fintech, again, has clustered. You know, now it's cool to bank crypto-native companies, and you see neobanks pop up left and right. If anybody is terminally online, you'll probably see six neobanks pop up by the end of next week. And they all target stablecoin-native crypto treasuries and crypto companies. But, as big as big as crypto is, it's still, you know, infinitely smaller than the regular businesses that proliferate the world.

And then we build for startups and enterprises. >> [snorts] >> And again, fintech has served crypto, too. You know, when I was at Mercury for three years, week after SVB, no other bank wanted to touch crypto. And my thesis was crypto is very underserved. We should support these companies. And we did. And now it's cool to be in crypto. It's cool to bank crypto. JP Morgan's coming out of the woodwork. You've got every local bank coming out saying, "We would love to take on crypto deposits." But even then, they're really going after Solana. And they're really going after companies that have hundreds of millions in their treasury.

And the neobanks that are going after crypto they honestly have never been in banking. They've got compliance teams that don't really exist, and they try to pitch, you know, no compliance as a good thing. But in reality and in banking, it's not. You know, not having a compliance team is kind of a death sentence. And then, all this time, we saw that these banks were building these clustered local rails, and they were making money on FX fees, they were making money on transfer fees, fees left and right, because the large companies could afford it. And then, we realized over the last couple years that the fastest way to move money was actually not to move it at all. It was to have

access to a standardized currency, which just happened to be the US dollar, that you could access at any time. But, stablecoins may move money movement, but they don't really solve operations for most companies. And I know one of the clichés in crypto is how do we increase crypto adoption? How do we increase the adoption of stablecoins, of DeFi, of crypto infrastructure? But, the problem again is we've been building for the same customer base that already has Robinhood. You've already got instant settlement on your trades, and you've got money that shows up on Zelle as soon as you hit send. And we continue to build for those same types

of customers, and then we kind of scratch our heads and wonder why adoption isn't going through the roof. And if you look at stablecoin adoption, 90% of it happens overseas. And it just it never clicked why we never built for complex use cases overseas until you start looking at what the companies are actually building. And you look at what's missing. Like, if you're sending a payment via stablecoins, do you have an invoice attached? Do you have an ISO memo attached? Is there FX conversion to local currencies?

Uh, are you sending money to Nigeria and expecting your recipient to hold it in US dollars indefinitely? Which there's an argument to be made for that. Or are you expecting them to figure out an off-ramp, or go to somebody who just happens to want USDT? Are you delivering to their local banks? Do you have partnerships at a local bank to be able to offer a first-party accounts? Are you able to do 30-day payment terms? Are you able to offer a credit? Credit, you know, in the US is something we take for granted. We can spin up a credit card, we can get a line of credit. But again, as soon as you leave the US, none of that really exists.

Have you guys made any payments using stable coins for your business? Maybe your consultant, you paid somebody overseas. Did you pay them in USDT, USDC? And how did you Did you have to explain to them how to off-ramp? Or did they already, you know, did they already know? Did you offer Did it go directly into their bank account? Or did it go into the wallet? What What was that? Sorry.

Oh, so you get exactly what I'm talking about here. Yeah. And And thank you, cuz companies like that are actually trying to, you know, fix the problem. The majority of people think, "Okay, I'm going to make stablecoin payments. Let me just send money to this, you know, Privyr Turnkey wallet that this customer has spun up, and they'll just hold it, and they'll get a Ring card, and they'll spend, and everything will be fine, and you know, this is This is what crypto was about." But in reality, these people have to pay rent, these people will have to pay bills, these people have to pay for transportation, and all of that happens in their local currency.

If you look at a business, which is a complete, you know, complete separation from consumer, the needs just amplify from there. The tire manufacturer in Singapore had They're using HSBC. And they're using HSBC not because HSBC is a world-class product, which if any of you have used HSBC, uh you know. But they're using HSBC because it's become the default for global banks. They need multi-currency accounts, they need to be able to hold in different currencies at any time, and in live currencies, not static.

They need multi-entities, so they have a Singapore entity, they've got an entity in the Cayman Islands and BVI. They've got one in the US, and they need to be able to manage everything in one. They need trade finance, right? So, they've got hundreds of millions in receivables, and they need to borrow against it. And of course, we have no concept of that because we can go to JP Morgan and say, "Here are my receivables, can I just borrow X amount of dollars?" And they need local off-ramps. They need real credit, and they need real compliance.

Not just, you know, we do our KYB and KYC checks and we approve your account, but compliance that actually understands the industries, compliance that doesn't say, "Oh, you're in crypto, you're high risk. We are not really just going to bank you, or we'll bank you today and we'll kick you out 6 months later." And and it doesn't exist today because we have neo banks that are spinning up without true banking DNA. We have, you know, and it's they serve a great purpose to make it easy for spenders to spend globally, but that's still a fraction of the global economy. We've got to get neo banks that actually have banking DNA and infrastructure who understand that

stable coins aren't a replacement for banks, but stable coins amplify banking infrastructure and fill the gaps. And they don't build a full stack, right? Again, it's really easy to spin up a rain card and allow people to spend stable coins. It's infinitely harder to offer local bank accounts, multi-currency, hybrid rails, and credit. And if you've built this from scratch today, you essentially have to build from scratch. You've got to form local partnerships. You've got to be super tight with licensed entities in the jurisdictions you want to support. You need to understand invoicing. You need to understand user permissioning. You need to understand that even outside of

wallets, there's a whole gate of permissioning that happens for business payments. If you have an owner that decides, I need to send a million dollars, they're not just going to give anybody the ability to send a million dollars. You're going to have three levels of approvals. And that is complex, and that takes time, and that takes an understanding of a user's pain points. And that is truly what we're missing. We're missing the ability for these neo banks that honestly can change global finance to go and really sit down with the customers that maybe aren't as profitable today and maybe have you know, workflows that seem too, you know, high cost of capital to solve right now. And so, we're going for

you know, the crypto KOLs, and we're going for the crypto native folks on Twitter who spend a lot, and that's that's what they want to offer. What we're building at Flex Global, and this is not a launch product. So, if anybody has feedback and you think I'm you know, my ideas are left field or I'm completely mistaken, I'm happy to take that feedback. But what we're building is we're thinking of stable coins not as a product. This is not a product that we're expecting to sell. This is not something we're going to go door-to-door and sell stable coins as a product or crypto neo bank as a product.

How we're thinking of stable coins is to augment the years of banking rails and infrastructure that we've built and the years of credit expertise that we've gotten by servicing 20,000 plus middle market customers. And it's how How take that winning recipe, and you take a phenomenal product, which are stablecoins, and you add that to be able to solve real pain points for global payments for customers who've traditionally been underserved, right? As fintechs build for OpenAI and they feel build for AI agents and they, you know, rebrand as the banks for AI agents, we want to be there to serve the

customers that are actually moving, you know, last year 100 trillion or close to 100 trillion dollars uh in a year. And we're going to be doing this with local currency accounts in 100 plus countries invoicing treasury FX and credit built in, so actual credit on chain, and stablecoin rails integrated natively, but not the selling feature. You don't have to use stablecoins. They're a point of redundancy and a point to make um payments faster.

And we're opening up our waitlist and most importantly, we are talking to a ton of design partners. So, if you have any complex workflows or if you think, you know, your products can be additive to ours in any way, you know, feel free to connect with me on LinkedIn, Telegram, Twitter. I'm random bank guy on Twitter. Um so, feel free to connect me there and I'm always happy to grab a coffee and just chat about what you're building, what we're building, and how we can honestly build a better product that increases adoption for crypto.

And hopefully, if I get one message across, it's I hope we don't continue building for people that are already on chain and that already have world-class products, and I hope we start building for people where this kind of product would honestly be a luxury. You know, if you look at somebody in Nigeria and you off or Argentina and you offer them just the ability to hold US dollars, to them, that's a luxury. And there's companies that are charging insane on-ramp fees just to get on to US dollar.

And so, I think as an industry, we should be building for companies that are actually driving the global economy and don't have access to these products. Um All right. Thank you for coming to my TED Talk. >> [applause]