Name: Matera at Fintech Meetup 2024 – Core banking modernisation and instant payments
Uploaded: 2024-04-05T09:28:06.950Z
Duration: 829.03

Matera_1.mp4

Matera_1.vtt

ENGLISH

{{00:00:02}}
Hi, I'm Heather Sugg, corresponding for
FinTech Futures here at FinTech Meetup.

{{00:00:06}}
I'm joined by Brad Goad, Chief
Revenue Officer of Matera.

{{00:00:09}}
Welcome.

{{00:00:10}}
for having me.

{{00:00:11}}
It's a pleasure.

{{00:00:12}}
We have a big agenda for
the discussion today.

{{00:00:14}}
We're talking about core modernization,
faster and instant payments, and

{{00:00:18}}
what it looks like to get to that
point, and discussing some lessons

{{00:00:20}}
learned over the last five years.

{{00:00:23}}
Big thing on lessons learned over the
last five years, I'll start there.

{{00:00:26}}
We learned that A full commitment to
digital and better customer and user

{{00:00:30}}
experience is unavoidable at this point.

{{00:00:33}}
That everybody needs to figure out how
to get to that in their infrastructure.

{{00:00:37}}
But they're challenged with the technology
infrastructure they have in place.

{{00:00:41}}
So we'll talk about all of this
and what you've seen, Brad, in

{{00:00:43}}
the marketplace, but why don't you
start off by telling us a little bit

{{00:00:46}}
about yourself and your background.

{{00:00:47}}
Sure.

{{00:00:48}}
Thank you.

{{00:00:49}}
I'm Chief Revenue Officer,
as you mentioned, for Matera.

{{00:00:52}}
Matera is a Brazilian FinTech, or
as we prefer to call ourselves,

{{00:00:57}}
a software company who develops
software for bank core systems.

{{00:01:03}}
That is our history.

{{00:01:04}}
We've been around since 1987
focused on those bank core systems.

{{00:01:11}}
But more recently we've become much
more involved with instant payments

{{00:01:15}}
with the advent of PIX in Brazil.

{{00:01:18}}
So PIX launched around 2020
in Brazil, is that right?

{{00:01:21}}
Correct, November of 2020.

{{00:01:23}}
Alright, and tell me about your
experience there and what you've

{{00:01:26}}
learned in the Brazilian market that
pertains to the North American market.

{{00:01:29}}
Absolutely PIX has been an
astounding success launching in

{{00:01:34}}
November 20, so zero transactions.

{{00:01:37}}
PIX has now surpassed 5 billion
transactions a month, per month.

{{00:01:44}}
So I'll underscore that.

{{00:01:47}}
The PIX system is an account to account
or bank to bank real time payment system.

{{00:01:54}}
And what that success has done is
put tremendous stress on core banking

{{00:02:02}}
systems to maintain balances and
do authorizations real time 24 7.

{{00:02:09}}
So we've learned a lot about what
instant payments can actually do to

{{00:02:15}}
the core banking system and the need
to be prepared for that kind of demand.

{{00:02:22}}
Walk us through what actually happened.

{{00:02:24}}
How did you prepare and how
did you prepare your clients

{{00:02:26}}
for, Something that high.

{{00:02:29}}
Let me start that question again.

{{00:02:33}}
Brad, walk us through how did you prepare
at Matera and how did you prepare your

{{00:02:37}}
clients for something of that high demand?

{{00:02:40}}
It's been a learning experience
for everyone, for the banks, for

{{00:02:44}}
us, for the Central Bank of Brazil,
and everybody within the ecosystem.

{{00:02:49}}
Going from basically old legacy
systems that were batch oriented

{{00:02:55}}
in the way that they process,
transfers, to now being real time.

{{00:03:01}}
Consumers are now transferring money
real time and need to know the balance

{{00:03:05}}
available to do any given transaction.

{{00:03:09}}
So as the volume of picks increased
very rapidly, it became very clear that

{{00:03:15}}
there needed to be 24 7 availability.

{{00:03:19}}
So we provided a stand in solution for
a lot of our core banking customers.

{{00:03:27}}
But we learned very quickly that even
that wasn't going to be sufficient.

{{00:03:32}}
And that led us to where we are now
with one of our flagship products,

{{00:03:37}}
which is a 24 7 light ledger that
can work with a legacy system and

{{00:03:43}}
provide that 24 7 365 availability.

{{00:03:47}}
Microsoft Mechanics to meet those
demands of all the digital channels

{{00:03:51}}
of those real time payments.

{{00:03:53}}
And how are you seeing instances like this
light ledger and other ways to tackle this

{{00:03:58}}
applicable into the North American market?

{{00:04:01}}
So the translation isn't that
we expect the same kind of Uber

{{00:04:06}}
volume and instant payments for
consumers and business in the U.

{{00:04:10}}
S.

{{00:04:11}}
But it is a, an extremely good lesson in.

{{00:04:16}}
Preparedness for digital banking,
digital money transfers, and

{{00:04:20}}
real time money transfers.

{{00:04:22}}
So the translation is, how do you actually
facilitate real time payments in the U.

{{00:04:28}}
S.?

{{00:04:29}}
What kinds of infrastructure upgrades
need to be made in order to support

{{00:04:35}}
new use cases that RTP, FedNow,
or even some of the other rails?

{{00:04:42}}
Huh.

{{00:04:43}}
We're at the point where we're
starting to see those new

{{00:04:45}}
use cases come into fruition.

{{00:04:48}}
We've had the Clearinghouse's
RTP around for a while.

{{00:04:50}}
FedNow has come out with great volumes
and great adoption at that point.

{{00:04:54}}
Where do you see the future of this
going based on your experience?

{{00:04:58}}
So I think the feedback that we get from
customers, and when I say customers,

{{00:05:02}}
I do mean banks of course, but also
other financial services companies,

{{00:05:07}}
and also the businesses, merchants
who want to use real time payments.

{{00:05:13}}
There's always a chicken and egg issue
about who wants to use it, who wants

{{00:05:18}}
to provide it, who's going to invest.

{{00:05:20}}
But there is, The growing excitement is
certainly in the merchant community about

{{00:05:25}}
being able to use instant payments for
sales, for doing consumer to business

{{00:05:32}}
payments, in numerous use cases.

{{00:05:37}}
Difference though is that you're
probably not going to see a sudden

{{00:05:42}}
inflection point of adoption where you're
going to see 5 billion transactions

{{00:05:47}}
a month like you have in Brazil.

{{00:05:49}}
There are circumstances or variables
that are very different between

{{00:05:53}}
Brazil and the US of course.

{{00:05:55}}
Much more complicated here much
more complex ecosystem with

{{00:06:01}}
embedded financial tender types.

{{00:06:05}}
But there still is a parallel in the
need to upgrade core banking systems to

{{00:06:12}}
facilitate those real time transactions.

{{00:06:15}}
And that's where you have to think
about where the bank core systems

{{00:06:19}}
are able to support those existing
use cases for digital transactions.

{{00:06:24}}
And the digital transaction use
cases that a lot of people want,

{{00:06:28}}
like consumer to business payments.

{{00:06:31}}
So on the merchant side, what
type of merchant do you see

{{00:06:35}}
being leaders in this pack?

{{00:06:36}}
What are you seeing happen most right now
and the attention that you're getting?

{{00:06:39}}
Sure the low hanging fruit in terms
of use cases for making a real time

{{00:06:45}}
payment are things like BillPay.

{{00:06:48}}
That is one of the easier to implement
use cases for doing an instant payment.

{{00:06:55}}
And when I say instant payment, as
you mentioned, it's facilitating

{{00:06:58}}
a payment over the Fed Now rail
or RTP or something similar.

{{00:07:05}}
However, when you go and talk to
merchants, big name merchants, you

{{00:07:09}}
think of a Walmart or an Amazon.

{{00:07:12}}
If you want to think big
retail consumer brands.

{{00:07:15}}
They are always looking to
lower their cost of payment.

{{00:07:20}}
So that's a huge deal
for bigger merchants.

{{00:07:24}}
And then for smaller merchants, having
the real time settlement is a critical

{{00:07:31}}
factor in running their business.

{{00:07:33}}
Because they are able
to settle T plus zero.

{{00:07:37}}
They have access to their funds right
now, as opposed to accepting a credit card

{{00:07:43}}
payment where it's no better than T plus
one, and they have to work directly with

{{00:07:47}}
an acquirer, so it's much more expensive.

{{00:07:51}}
So there are different use cases
that are coming to bear, but

{{00:07:55}}
you will see it adopt over time.

{{00:07:57}}
In effect, you're meeting the needs
of consumers and their demands to have

{{00:08:01}}
that process move faster and help them
with bill pay or payments they might

{{00:08:04}}
have been late on and help them avoid
predatory lending to meet those payments.

{{00:08:09}}
And on the business side, it's
helping, one, large businesses meet

{{00:08:12}}
that customer demand, but the small
businesses are getting cash flow

{{00:08:15}}
that they need to survive, and even
more so in today's fast economy.

{{00:08:18}}
That's right.

{{00:08:18}}
And I would even add, Heather, that for
banks and financial institutions, it's

{{00:08:24}}
also a matter Extending or enhancing
their engagement with their customers.

{{00:08:31}}
It's making the, bank experience,
whether you're a community bank ABC

{{00:08:36}}
or a Bank of America you're making
your experience within your wallet

{{00:08:42}}
more of a habitual daily use use case,
where I'm whipping out my bank app to

{{00:08:50}}
actually make a payment at the store.

{{00:08:53}}
I'm whipping out my bank
app to make a, pay a bill.

{{00:08:58}}
As opposed to maybe once a week, right?

{{00:09:00}}
So for the financial institutions
banks, small banks, big banks, it's a

{{00:09:06}}
matter of engagement and making yourself
more valuable to your end customer.

{{00:09:11}}
It's a huge opportunity.

{{00:09:12}}
Yes.

{{00:09:13}}
Very nice.

{{00:09:14}}
I think the big question at
hand is for the next year,

{{00:09:18}}
we're already a bit into 2024.

{{00:09:20}}
How do you see faster payments evolving?

{{00:09:23}}
So I think 2024, when you listen to
customers talk about what's going on,

{{00:09:29}}
24 continues to be a year of connection.

{{00:09:33}}
Yeah.

{{00:09:33}}
There is still a lot of
infrastructure work to be done.

{{00:09:37}}
By that, connection to FedNow, right?

{{00:09:39}}
We have about 500 banks there so
far that are hooked up on bank.

{{00:09:44}}
I think as of a couple weeks ago.

{{00:09:47}}
But remember we have almost 10,
000 different banks in the U.

{{00:09:50}}
S.

{{00:09:51}}
So we have a ways to go before instant
payments defining it by FedNow and

{{00:09:57}}
RTP Participation being ubiquitous.

{{00:10:01}}
So I think, for now, for the
remainder of this year and the early

{{00:10:05}}
part of next year, you're talking
about connection to the rail.

{{00:10:10}}
But clearly, what hasn't been focused
on enough, and you're hearing it more

{{00:10:14}}
in 2024, and in the plans for 2025,
are supporting the use cases that take

{{00:10:22}}
advantage of those connections as well.

{{00:10:24}}
To those instant payment rails.

{{00:10:26}}
Paying your bill, walking into the store
and using your bank app to buy your

{{00:10:32}}
coffee or buy your gas or buy your TV.

{{00:10:36}}
That's the dream everybody's been watching
since Apple probably, and even after that.

{{00:10:40}}
That's right.

{{00:10:42}}
One thing we've learned from experience
with some of the bigger techs is

{{00:10:46}}
that there needs to be a good balance
of security and low friction when

{{00:10:50}}
it comes to these real time instant
payments and consumer adoption.

{{00:10:54}}
So what are you seeing banks
use as they go to market?

{{00:10:58}}
So I think that's where the big
gap is, or one of the big gaps is.

{{00:11:02}}
When we think about how do you actually
go from connecting to the rails to FedNow

{{00:11:07}}
or RTP, and you start thinking about
how am I actually going to use those use

{{00:11:15}}
those rails, you have to come up with a
last mile solution, as I like to call it.

{{00:11:20}}
Like, how do I actually enable my bank
app to How do I make a payment at the POS?

{{00:11:29}}
My customer is standing
there in the store.

{{00:11:31}}
They've opened up their bank app.

{{00:11:34}}
Now they want to do an instant payment.

{{00:11:37}}
They want to pay by bank.

{{00:11:39}}
How do I make that experience on
common or even ground with doing a tap

{{00:11:47}}
to pay with Google Pay or Apple Pay?

{{00:11:51}}
And remember, Apple Pay and Google
Pay are the banes of The small

{{00:11:56}}
bank, certainly, and even big banks
existence because they're competing

{{00:12:00}}
for mindshare, for data, for consumer
engagement with Apple and Google.

{{00:12:09}}
Thinking about that last mile experience,
how do you actually facilitate that?

{{00:12:15}}
We can look to what's
happened in Brazil with PIX.

{{00:12:18}}
When you think about the 5 billion
transactions a month currently.

{{00:12:23}}
And growing double
digits month over month.

{{00:12:26}}
Over 40 percent of those transactions,
so 2 billion transactions a

{{00:12:31}}
month, are initiated by a QR code.

{{00:12:34}}
Huh.

{{00:12:35}}
So it's all secure.

{{00:12:37}}
It's extremely secure because you are
initiating a payment from within an

{{00:12:41}}
authenticated app and scanning a tokenized
QR code that's generated on demand at the

{{00:12:49}}
time of sale to execute that less than
six second exchange from within the app.

{{00:12:55}}
Hey, here's your receipt or your bill.

{{00:12:58}}
Scan it.

{{00:12:59}}
Confirm it.

{{00:13:00}}
Done.

{{00:13:00}}
Settled.

{{00:13:01}}
Money's in the account.

{{00:13:02}}
That is all supported by a QR interface,
a fully tokenized QR interface that's

{{00:13:10}}
actually based on an EMV standard.

{{00:13:13}}
This isn't some crazy Brazilian standard.

{{00:13:17}}
So it's something that we're all familiar
with in terms of a payment payload.

{{00:13:22}}
So that's the translation,
I think, to the U.

{{00:13:24}}
S., is we already have something that's
robust and secure, and it's on par

{{00:13:31}}
with the tap to pay NFC experience.

{{00:13:33}}
And consumers are comfortable
with QR codes now.

{{00:13:36}}
Extremely.

{{00:13:37}}
Brad, it's been a pleasure.

{{00:13:38}}
Thanks for filling us in, and I look
forward to following your progress.

{{00:13:42}}
so much for having us.

{{00:13:43}}
Appreciate it.

{{00:13:43}}
Thanks.

{{00:13:44}}
Enjoy the rest of your show.

{{00:13:45}}
Thank you.

Hi, I'm Heather Sugg, corresponding for
FinTech Futures here at FinTech Meetup.

I'm joined by Brad Goad, Chief
Revenue Officer of Matera.

We have a big agenda for
the discussion today.

We're talking about core modernization,
faster and instant payments, and

what it looks like to get to that
point, and discussing some lessons

Big thing on lessons learned over the
last five years, I'll start there.

We learned that A full commitment to
digital and better customer and user

That everybody needs to figure out how
to get to that in their infrastructure.

But they're challenged with the technology
infrastructure they have in place.

So we'll talk about all of this
and what you've seen, Brad, in

the marketplace, but why don't you
start off by telling us a little bit

I'm Chief Revenue Officer,
as you mentioned, for Matera.

Matera is a Brazilian FinTech, or
as we prefer to call ourselves,

a software company who develops
software for bank core systems.

We've been around since 1987
focused on those bank core systems.

But more recently we've become much
more involved with instant payments

So PIX launched around 2020
in Brazil, is that right?

Alright, and tell me about your
experience there and what you've

learned in the Brazilian market that
pertains to the North American market.

Absolutely PIX has been an
astounding success launching in

PIX has now surpassed 5 billion
transactions a month, per month.

The PIX system is an account to account
or bank to bank real time payment system.

And what that success has done is
put tremendous stress on core banking

systems to maintain balances and
do authorizations real time 24 7.

So we've learned a lot about what
instant payments can actually do to

the core banking system and the need
to be prepared for that kind of demand.

How did you prepare and how
did you prepare your clients

Brad, walk us through how did you prepare
at Matera and how did you prepare your

clients for something of that high demand?

It's been a learning experience
for everyone, for the banks, for

us, for the Central Bank of Brazil,
and everybody within the ecosystem.

Going from basically old legacy
systems that were batch oriented

in the way that they process,
transfers, to now being real time.

Consumers are now transferring money
real time and need to know the balance

So as the volume of picks increased
very rapidly, it became very clear that

So we provided a stand in solution for
a lot of our core banking customers.

But we learned very quickly that even
that wasn't going to be sufficient.

And that led us to where we are now
with one of our flagship products,

which is a 24 7 light ledger that
can work with a legacy system and

Microsoft Mechanics to meet those
demands of all the digital channels

And how are you seeing instances like this
light ledger and other ways to tackle this

applicable into the North American market?

So the translation isn't that
we expect the same kind of Uber

volume and instant payments for
consumers and business in the U.

But it is a, an extremely good lesson in.

Preparedness for digital banking,
digital money transfers, and

So the translation is, how do you actually
facilitate real time payments in the U.

What kinds of infrastructure upgrades
need to be made in order to support

new use cases that RTP, FedNow,
or even some of the other rails?

We're at the point where we're
starting to see those new

We've had the Clearinghouse's
RTP around for a while.

FedNow has come out with great volumes
and great adoption at that point.

Where do you see the future of this
going based on your experience?

So I think the feedback that we get from
customers, and when I say customers,

I do mean banks of course, but also
other financial services companies,

and also the businesses, merchants
who want to use real time payments.

There's always a chicken and egg issue
about who wants to use it, who wants

But there is, The growing excitement is
certainly in the merchant community about

being able to use instant payments for
sales, for doing consumer to business

Difference though is that you're
probably not going to see a sudden

inflection point of adoption where you're
going to see 5 billion transactions

There are circumstances or variables
that are very different between

Much more complicated here much
more complex ecosystem with

But there still is a parallel in the
need to upgrade core banking systems to

And that's where you have to think
about where the bank core systems

are able to support those existing
use cases for digital transactions.

And the digital transaction use
cases that a lot of people want,

So on the merchant side, what
type of merchant do you see

FinTech Futures

Expert Insight

At the Fintech Meetup 2024 conference in Las Vegas, FinTech Futures sat down with Brad Goad, Chief Revenue Officer at Matera, to discuss how banks need to modernise their core infrastructure to keep up with innovations in instant payments.
Watch the video to discover:
• How the US payments landscape has evolved following the launch of FedNow and real-time payments.
• How US banks can ensure they’re prepared for the rise in demand for instant payments.
• What types of infrastructure upgrades banks need to make in order to support new use cases that will run on instant payment rails.
• How Matera has helped its partners in Brazil amid the rise of Pix and the lessons the US market can learn.
