Behind the Brand®

William Keliehor
===

Jeff Adamson: [00:00:00] Welcome to behind the brand, the podcast that explores how technology, innovation and other forces of change are reshaping age old industries and giving rise to new opportunities. Join me, Jeff Adamson, one of Neo Financials co founders and an awesome lineup of guests to discuss how the world is evolving to meet the needs of customers.

In the next few episodes we're focusing on the financial industry in Canada. This is a space that has been dominated for decades by the big five banks who hold 93 percent market share. There's an incredible number of opportunities for innovation in this space. On this episode, I'll be speaking with William Killehor.

William is the former chief commercial officer at Interac, a Canadian interbank network that links financial institutions and other enterprises to facilitate financial transactions. Previous to Interac, William was the CEO of American Express. For the Middle East and North Africa, William is currently an advisor and [00:01:00] investor at KAI.

We cover a variety of topics on this episode, from how the banking industry differs in Canada from the rest of the world, competition and financial services and the state of entrepreneurship. It's great to have you here. Super grateful to have you on the podcast. Yeah. Thank you, Jeff. Likewise. Let's get right into it.

I'm super excited for this conversation. Um, tell me a bit about yourself. How did you, what was your journey like getting to interact?

William Keliehor: It was exciting to be honest. I always aspired to be a global citizen. And so I, I left, um, Texas and moved to New York and it was a big shock. Um, that was 30 years ago. I haven't lost the accent, but, uh, you can take, um, the boy out of Texas, but you can't take Texas out of the boy, I guess.

But really, you know, moving to New York was a big eye opener and, uh, to work for Mastercard and Mastercard was pre IPO then. So it was a very exciting time. To be at MasterCard and, uh, then moved over to Citibank, which was a very different, you know, view of the world. [00:02:00] And then that really opened up the world in many respects and then ended up moving to, uh, to Russia and, uh, to Moscow specifically and launching the consumer bank there.

And, uh, got a lot of global exposure to, you know, the 54 markets that Citibank at the time issued credit cards in. And, uh, we're, we're dominant in the lending space and then, uh, moved to the Middle East and then looked at Middle East and Africa and Eastern Europe. Exciting. So, um, anyway, then finishing up there thought, how can I bring this global perspective and learning to, you know, the next phase of my career and life and Interact came calling and I was really happy about it because my interactions with Interact had begun, like, I don't know, like 30 years ago.

And, uh, great brand, great name, and love Canada, and when the opportunity came up, was really excited to be able to move to Canada and, and contribute to the success, uh, continued success of Interact.

Jeff Adamson: I'd [00:03:00] say geopolitics is a lot more in the news now than it typically has been, in particular the Middle East and, and Russia.

What was it like bringing A North American bank to a country that is so different than the U. S. and Canada, like when you got to to Russia, for example, did you did you face difficulties like how did you overcome some of the kind of local barriers, whether that be cultural, regulatory, corruption. What were some of those things that you saw and how did you overcome some of those?

William Keliehor: It's a really good question. I think one of the things, you know, being with a global organization like Citibank, the onboarding was, uh, pretty seamless, still a major adjustment for, you know, my wife and two kids and then a newborn, because I took the job in Russia when my wife was six months pregnant.

Anyway, the company really, you know, did a good job of onboarding us and, uh, helping us. I think it's set up. So I could focus on the business, but, um, but really the challenges were a lot of what you would expect. [00:04:00] But when you bring a very global and very structured and professional and non gray way of doing business to an emerging market like Russia, which it very much was at the time, you know, there's a right way and a wrong way to do things.

And I was on the, always on the side of the right way to do things. So met some very interesting, um, oligarchs and. Power players in Russia at the time and had to explain to them that, you know, this is the way Citibank did things. It was very, um, uh, educational for them. Great experience to try and get things done, Jeff, in a very difficult market, which had a lot of barriers and was learning on the fly.

So we were teaching the market how to be a first world market on many levels as it related to, you know, Regulation and transparency so that there was legitimacy in the market and legitimacy globally to be honest with you So it was a great time great experience. I love the country [00:05:00] back

Jeff Adamson: then and love the people But anyway, I feel like a lot of people in North America.

I mean, especially in Canada just It's hard for Canadians to comprehend the way that business is done in other countries, in particular Russia, because of the level of corruption that occurs there. Did you face a lot of pushback when you come and say, hey, this is the city baked way of doing business, this is the American way of doing business, which is, yeah, it's black or white, you don't operate in the grey, there's rules, there's right and wrong.

But when you're coming up to oligarchs, like these guys are not used to not getting their way. So, like, did you experience any instances or any stories that you can share where you're like, someone is clearly just wanting to get you to do something that you know isn't right and you have to kind of stand by those morals?

William Keliehor: Yeah, that's a really good question too. The answer is yes, but I was very fortunate. I mean, you know, there's a Texas saying I won't go into too much, but you just have to be careful who you're dealing with and be very clear on your morals, your ethics, your [00:06:00] values, and what you represent. And fortunately, most of the people in Russia that I dealt with at a regulatory central bank and other places.

Institutions I would say were very respectful because at the time there was a great effort to legitimize A lot of what was going on in russia And so there was a thirst and a hunger for doing things the right way. Yeah, and I tried to adapt I mean, I tried to fit into the culture to some extent but everyone knew clearly where the boundaries were and The team was city bank in russia were outstanding and it's who you surround yourself with I think more than anything and I think Being very clear on what's, what's in and what's not.

Jeff Adamson: And so you, you left Citibank and became CEO of American Express Middle East and North Africa. What was that like? What was that shift like going from quite a different country in Russia then to the Middle East and also moving from. A bank to more of a vertically integrated kind of bank payment network operating in a very, very different environment.

William Keliehor: So [00:07:00] I actually left Russia and Moscow specifically and moved to Dubai with Citibank. Um, and I was there for a while, eased in with a company I already knew and then moving over to. The CEO of American Express for Middle East and North Africa was 18 markets from Somalia to Mauritania, all the way up to Syria.

Wow. So all Arab speaking markets and, uh, very different jurisdictionally. And there were contentious situations, but again, great brand, great shareholders, um, and a great opportunity to bring. An American style of business, which most of those emerging markets were thirsting for legitimacy and product, uh, empowerment with, uh, products and understanding of first world customer service and things like that were very valued.

So, um,

Jeff Adamson: yeah, it

William Keliehor: was a good

Jeff Adamson: time to really grow. Question on that. Will though, because like you covered Somalia and Syria for Amex. Yeah, I'm just trying to imagine [00:08:00] coming to these countries where there is so much, you know, civil unrest to come in and look at American Express. It's kind of more of a premium product.

Like is Amex accepted in these countries? Like, were you able to get them to come in and say, Hey, like, even though Oh, You may have like the Syrian government doing this or that, or in Somalia, they've got, you know, so many challenges. American express was making an effort to kind of come in and bring their company into those markets.

William Keliehor: Yeah. And I think that, you know, again, there's, there's a thirst for American brands, but first world brands, I would say, um, that bring that higher level of, uh, customer service. And, and, um, A lot of these people, the mass affluent were big travelers too. So they were looking for legitimacy when they traveled abroad.

So, you know, if you had a bank issued credit card, for example, from a market in Syria or, or even some Middle Eastern countries, they weren't as widely [00:09:00] known or as accepted as American Express. So obviously there was a prestige. Um, and I'll never forget, there was a gentleman in Bahrain Who had been a credit card holder, um, or sorry, a charge card holder with American express since 1974.

And he was so proud to get that green card out that he still had. He was, he was Centurion. He was a black card holder with American express, but he also had that first green card that he got at university because very true to The strategy he was graduated throughout university to different card products within American Express, but he held on to that green card because there was that affinity and and that appreciation of American Express, you know, taking a bet on him as a college student from the Middle East and giving him a card.

So the loyalty. Was really there and a lot of people still value that experience and it would go down through the generation, similar to Canada, you know, if your parents bank with the blue or red bank or whatever green bank, you know, then the odds are their children will [00:10:00] bank with some of those as well.

So, so anyway, there was a great affinity to American express and, and brands there. But yeah, there were some interesting trips, Jeff, to those markets for sure.

Jeff Adamson: So across the U S Russia, the Middle East, North Africa. And canada what's your assessment at the differences that you've noticed in the banking systems and the and the card networks in these different countries like is there some that you went to and said hey like if you could take one aspect you know the stability of canada you know the desire for growth of some of the other countries.

Combine them all together like what were some of the attributes that you saw in these other countries that kind of stuck with you throughout your career journey.

William Keliehor: I would say I was very fortunate Jeff because for the most part of my career I was with major brands like American Express or MasterCard or Citibank.

So that was a great paver. If you will, are a great way to enter a market. I would say [00:11:00] though, to answer your question directly, is the local willingness and desire to solve problems and to see the economy grow a desperation. Almost, you know, I'll never forget my first time in South Africa. It was about 30 years ago.

And I was on a plane with a, with an Afrikaans farmer, and his name was Eli, and I remember this discussion like it was yesterday. I said, South Africa is such an amazing country. There's so many amazing countries in the world. What's holding it back? And he said, the vision, the lack of vision. He said, you give a choice to a man between an orange and an orange tree, and he'll always take the orange, not the orange tree.

And I, and I see that many times, you know, it takes generations to change generational wealth and to change mindset, to optimism of what's to come. It also takes strong leadership. So in many of these countries, the monarchy has made, you know, a very clear in government has made a very clear commitment to, you know, generational.

Uh, wealth and education [00:12:00] and to promote. Employability and, and bring these countries into the first world. And so whenever you see that commitment. And that vision, people can get behind it, but you know, Jeff, I don't think people in emerging market have the luxury to wait around on regulators to make changes.

They're, they're playing in that gray zone and they're fostering in that gray zone. New innovation and digitally native technologies out of desperation more so than anything. And I think that the western world, you know, at times we become complacent and we could take a lot of learnings I I was interviewing for a job about 15 years ago, and it was pretty senior executive with oddly enough a canadian bank He said, you know, I I just don't know what your global experience and your emerging market experience Can bring to the canadian market and I just said, you know You End of discussion.

I mean, pretty much the interview at, you know, in my mind was over then [00:13:00] because I, apart from, you know, just thinking about, I'm struggling with the word. I don't say the arrogance, but, you know, the lack of consideration for what we can learn from every market in the world. I think that innovation is driven out of desperation at times and you know, people want a better life They've seen what's happening in other markets and jurisdictions and they go.

Hey, I want that and I deserve that And i'm smart enough to get that. I just need you know hand up Versus a handout. And so that's another thing these governments are really focused on is how do we give a hand up versus a handout and how do we retain talent in country? I'm going on a bit of a diatribe here, but I think too, there's talent drain in markets that happen quite often where the best and the brightest and the best educated come to different country.

And they. Set up shop here and they don't look back and I've said to a lot of my very good friends that come from these markets. Hey, would you ever return to your country? Oh, it's just so, you know, there's just such desperation. It's [00:14:00] so help helpless to even try and go back. I just don't even know how it would make a difference.

And so desperation, you know, breeds a lot of innovation. I think at times and I think that's a good thing.

Jeff Adamson: Yeah, necessity is the mother of invention.

William Keliehor: Better said, yeah.

Jeff Adamson: And when you think about Canada, and so you spent five years as the chief customer officer at Interac, um, which I'd say gives you a really, really good perspective on the Canadian banking system.

What have you noticed that's different about the Canadian banking system versus the other banking systems that you've, you've worked in previously?

William Keliehor: I was chief commercial off officer and I, and I make that distinction because Interac was a not for profit association of banks until 2018. And so it was on this commercialization journey where, you know, addressing things like broadening access and access to the system at a, at a fair and competitive rate.

So we were constantly at Interac looking at how we could We could leverage the infrastructure we [00:15:00] had for the greater good of all Canadians. And I think to answer your question, that's part of what I've seen. There's a willingness in Canada to do what's right for Canadians and specifically new Canadians that are coming in, but it just gets stuck.

And to more broadly answer your question, Jeff, I'd have to go back and say, what does Canada want to be when it grows up, you know, I mean, to be a G7 country and not have access to real time rails and not have access to open banking, by the way, I hate that. That word open banking or those words it's open data open access.

I don't know what you call it oda or whatever But basically, you know, I would say canada has enjoyed a very stable secure safe environment Regulators have done a good job. Banks have done a good job. But then you have to question yourself and say Are they doing too good of a job? Are they hampering and hindering advancement?

And are we really providing the sandbox environment, a controlled environment that we can foster [00:16:00] growth that's going to benefit all Canadians? And I think that's the stark difference that I see between Canada and our emerging market. And again, you know, our emerging market is saying, we've got to do this.

We don't have a choice. Canada is saying, ah, things are pretty good. Let's just, you know, Let's just continue on with what, what we're doing, which is a big difference.

Jeff Adamson: I like what you said there, Will, which was, you know, what do we want to be when we grow up? Because I feel like I don't know the answer, you know, and I think if I were to ask a hundred different people across the banking system, I'm going to get a hundred different answers.

Some of them are going to be competing with one another in terms of, Hey, if we want to be that. That is directly against this other answer that someone else gave and what you want to be is going to, it's really going to drive all the different things that you do in terms of the regulations and how you look at competition and you know, if we want to, I think there's a lot, there's an attitude and, and I, even when we first met, uh, first of all, I was really grateful that you took your time to meet with us, even though we were quite small at the time in your [00:17:00] role as chief commercial officer, like you, you're working with obviously all the banks in Canada.

Yeah. And also trying to open things up for fintechs and the attitude you have of, and again, I find this is much more of an American mindset of a lot of the American companies. And even when I was an athlete, a lot of the American athletes I would compete against. They didn't care about good enough. They cared about being the best and there was that sense of pride that came with being representing Team USA and certainly a lot of the Canadians, of course, had tons and tons of pride, but underneath, you know, Team Canada, there wasn't as strong of a sense of, hey, we're number one, we're the best, we're going to be the best, we're going to be the ones By which other people are going to measure themselves and I don't understand why we can't have that attitude across everything that we do and I think that applies to business and I think it applies to banking as well and I think to your point, you know, if we want to open things up and can if we want to actually as a G7 country be a lot better than we are right now.

It feels like [00:18:00] there's going to have to be some changes and I, and I know that you've said this a few times, Will, what's good for Canada? Like you, you kind of, you, you mentioned this and it almost seems like a mantra or a guiding principle. And so when you think about payments in Canada, what is good for Canada?

William Keliehor: It's a really good point and I struggle with this a lot. Um, and I've had a lot of contentious discussions with Zelle and Venmo and e transfer. And I say quite often, you know, Canada's had e transfer for 25 years. So the Americans are congratulating themselves about something they've done maybe 10 years ago.

Canada hasn't kept it going. And, and I believe in this place, and I believe in Canadians, and I believe that the wherewithal and the ability is there. What I want to do is help facilitate it. And, and I think that this entrepreneurial spirit, this innovative spirit, this, I teach my kids, you don't ask, you don't get so, you know, you've got to ask for it and you've got to be willing to have the grit and the discipline to go out there and get it.

But if [00:19:00] you aren't even on the field, how do you know how you're going to perform? And I think that the infrastructure government, I think, you know, industry can do a lot better job in fostering competition, not even competition in Canada, but global competition for Canadian institutions. I mean, that's my belief.

That's part of the reason I came to Canada. Um, because I saw a great institution, I saw a great brand, and I was fortunate enough to come to work here, um, in Canada, and for that brand, and to say, how do we leverage, how do we give, you know, more access, control, disciplined access to this system, to foster more competition, So that all boats rise together.

And, and I think there needs to be more of an approach to that. I've spoken with people too about the investing community. You know, it's like, why don't we invest more in Canada? We raise money, pension funds and others raise money, and then there's placement outside of Canada. Why? Why can't we do more to foster investment in Canada?

So I believe the opportunity is there, [00:20:00] Jeff. And, and I think that Canadians, I know Canadians have the grit, they have the intellectual discipline, the rigor we've seen it in companies like Neo coho, well, simple, you know, we've, we've, we've seen the success. We just got to do more.

Jeff Adamson: Well, first of all, I totally agree, but maybe take a quick step back because I, I sometimes forget that not everyone in Canada is going to understand how payments work.

So maybe, Will, if you wouldn't mind, just give us kind of payments 101 in Canada, like how does the payment networks, um, how does e transfer, EFT, wires, how does that work today? And the follow up to that is going to be, how is that different than other countries?

William Keliehor: I know Hannah Zahidi did a great job of answering this question too, and we've worked very closely with her, and I think she made some really good points in her podcast with you.

Yeah, she's great. Yeah, so I won't, I won't repeat things too much, but um, if I had to draw that distinction, my philosophy in life is, you know, very agile. In that, I'd rather get something to [00:21:00] market, and listen, learn, and then tweak, pivot, and then move. I think that in Canada, we had a transfer, which is near real time, you could argue real time, if financial institutions want to make it real time.

And so, Canada has had the basics of payment. With a transfer for, as I said, 25 years doing account to account, you know, money transfer via an email address and a mobile phone number. That's incredible. Um, and to have had it for so long, it's like, how do you fast follow that with what's next? I think that not to jump the gun a bit, but we've, but we've tried to build at times the next level.

Of product when we've already had a good product that we just needed to do more with and give more access So when you look at settlement payments are two things, right? There's the authorization and there's the hold on the money and then there's the settlement of the money. So it's it's basically two phases Um what online pin based debit always did was real [00:22:00] time access to money Okay, and that's what interact does.

Then you have the other network schemes that, you know, credit cards, for example, it's, it's authorization hold on a credit line, and then settlement happens offline. So real time access is already there. The problem that I see it, you know, that I see is, is who has access and how, and how do we build out that access?

I'm not answering your questions going into the one on one of payments, but basically payments are regulations, the rules of the road, it's authorization. And it's settlement and then it's cyber and security, you know, like how do you secure those transactions? And then if the transaction doesn't work, what type of rights do the consumers have to go back and make sure that transaction was handled the right way?

So those are probably five or six components to payments that need to be addressed.

Jeff Adamson: So what do you think is really holding up the opening of. Payments in canada to to [00:23:00] allowing more access to to the rails, whether that be, you know, interact or e transfer or wires like is it getting caught up in in regulatory is it kind of on the government side is it obviously like interact is.

Fully owned by the large banks in Canada and then everyone else kind of gets permission to use them, but why can't a small startup just kind of get going and then, you know, work with e transfer or interact directly to start moving money between accounts.

William Keliehor: You and I've had a lot of discussions on this and I've been.

You know, a loud voice in the market about this for five years and happy to say that, you know, there, there, there have been things done by interact to broaden access. Um, direct answer. Your question though, is regulation has been slow. And it's not because of voices like yours, Jeff, and others that haven't said, look, this just isn't working.

We need to fix it for the greater good of Canada. Apart from, you know, your company and affiliation, it's just the right thing to [00:24:00] do. Um, it's just, how do you do it? And so there's not a silver bullet. I think that there are a number of different things that need to be addressed, but it does start with regulation and task clarity.

I think Interac is very clear on its role in the market. Um, and it knows what it has to do. It was, you know, awarded prominent payment system designation a few years ago for the transfer system and debit was also announced last year. And so regulation to the network is coming. And, um, that's basically to limit risk to the system, which is very important.

But I think that what you have to do is, is, is you have to understand the risk and how to mitigate. And how to manage the risk and once you do that, then you can open up access in a controlled way. So that's what Interac has done a good job of. Payments Canada via the PSPs and, and some of the other, you know, changes that are coming with payment modernization with ARPA, with ARPOF, um, and open banking regulation, [00:25:00] digital charter that was started, you know, four or five years ago.

It's coming, it's just way too slow. What I would like to see to be candid is task clarity. Interac has a role to play. They play it very well. Payments Canada has a role to play, but I don't think that it's always been clear to them on what role, you know, should they be a for profit? Sure. Should they be another version of Interac?

I've spoken out openly about it. No, they shouldn't. They provide settlement. They provide rules, regulations around settlement. They're a rules body, which is great. That's what Canada needs, but they need to focus on how they can participate, how, you know, new PSPs and other players can participate in a regulated.

And in a very controlled environment, so as there's not risk injected to the system, but that broadening access and opening access can happen. That's my view of what real time rails and the RTR should have provided to Canada. And I think that if that [00:26:00] sandbox was created for those 2, 500 PSPs that are out there, greater access could grow.

But again, it goes back to my point, we have to listen and learn and pivot. We can't just sit around and be scared of the unknown. We don't have that luxury. We've got to get moving.

Jeff Adamson: So, so when you say task, clarity, will, it sounds like, and I remember, like I just listened to the competition bureau was on the beta kit podcast and it was basically talking about, You know, the role of the competition bureau in Canada, and they really are there to enforce the rules, but if the rules aren't changed, they're not going to start enforcing rules that don't exist.

And so if they, if we want people to crack down on competition, it's really not even necessarily asking them to crack down harder. It's more saying, give them the mandate. To crack down harder and it so it sounds like when you, when you're talking about task clarity, do you mean that by saying, listen, if the government says, hey, we, we want to open things up.

If there's that, that [00:27:00] will coming from the government side, then Payments Canada Interact will follow suit, but you're saying that there just isn't that mandate at the moment to really get shit done quickly. Um, it just seems like there's really no, no timelines, there's no deadlines, there's not clarity on what they should do or even what they want to be when they grow up.

Is that kind of what you mean? Kind of, you know, where there's a will,

William Keliehor: there's a way. And, and I've used that saying in many markets that I've been in. I don't like barriers to me. There's no barrier. There's just a way to figure out what we need to do to manage risk, risk based pricing, to manage risk and do what's right.

So again, so that we grow. And I think that what I mean by task clarity is I think historically speaking, payments Canada was trying to be something that they weren't engineered to be an interact. Yeah. And we already got an Interac, and arguably, we're 37 million Canadians, do we need two Interacs? No, we don't.

We just need to do better with what we have. Interac is already a real time, near real time rail. [00:28:00] And there needs to be further development. Interac manage risk very, very well. Uh, manage security very, very well. And there are other needs in the market that would help the market grow that Interac should be partnering with.

Other institutions in the market to explore, foster, and launch. Payments Canada, again, does settlement very well. That's what they're engineered to do. They're a rules making body. They're a rules enforcement body to some, some extent. You know, the Bank of Canada and the Department of Finance are very closely knitted in to the strategic direction of Payments Canada.

Okay, so that's their role. That's the task clarity they have. Why are they trying to become an interact? And in, you know, at times I think that delineation and that task clarity needs to be managed, um, because there's enough work to do. And Canada isn't big enough to have duplicative things that, you know, competition's good, but how can you compete with a quasi government [00:29:00] organization?

You know, it's not like Payments Canada is a for profit going concern. So why would you, why would Interac compete with Payments Canada, which at times that was the perception of market. Also, one last thing on it, you know, having spent five years in Interac and been arguably involved since the beginning with the RTR.

Interac always outperformed on all of its obligations to deliver. That wasn't always commonly known, but systemically providing the transaction exchange Interact was always ahead of the timelines, below budget, and was doing the right thing. Their task clarity was there within the Interact organization.

It was just in other bodies that maybe things weren't so clear. And I think that leadership from the top can dictate and can drive a lot of this. For a regulation but also to just through task clarity and say this is what you need to do and deliver

Jeff Adamson: in defense of the alternate side of the argument with interact being as dominant as it is in canada and [00:30:00] again you can say yeah well do we need.

Two interacts well in some ways like when i think about our own situation where we have to get permission from someone else to use interact because we're not directly regulated by payments canada. I get what it means though is that the prices that we pay. Or that regional banks pay are essentially kind of set by obviously like a, a pricing committee that's in interact.

But at the end of the day, like the executives at Interact, they're beholden to the ownership. And the ownership is the largest banks in Canada. And so when I look at it, how, it's, how the pricing is done and, and, and again, it's there is like volume pricing. The more e transfers that you send, then the lower it gets.

But the challenge is if you're just starting up. If you're a small fintech and I'm not talking about Neo now, I'm more talking about someone who's quite, quite small and you want to create a, let's just say a bank for dog walkers or gig economy workers, basically the way it works though, is that if you have money sitting in an account, let's just say you create a UI UX, you've got an app, there's money sitting in an account, [00:31:00] that money is actually sitting within a schedule one bank, the transaction costs associated with the money sitting in that bank.

So if your users are actually using your product and sending and receiving money, the more they use it, The more costs that that fintech, you know, dog walker bank would incur. And so unless these users are, are sitting on, you know, huge sums of money in those accounts to make up for the, the transaction costs, it essentially becomes unprofitable for a smaller fintech to get up and running because the transaction costs just make it so that they lose money on their customers.

All this to say is that if there was another way to move money, that Was in some way would allow some of those those smaller competitors to get up and running and get going then perhaps it could create a more fair market in terms of giving people access and holding interact a little bit more accountable because you have another way that you can move money instantly and cheaply.

William Keliehor: Yeah, it's a really good point. And I'm not trying to be [00:32:00] evasive, but, um, but it's, we'd have to get into the weeds a little bit, which I think, I think we should just to answer the question because I don't disagree the wholeheartedly agree. Um, that's part of the reason I came to interact because I believe in what you just said.

You know, price competitive access is essential. And when you look at. When you look at what Interac is trying to do, Interac is trying to do the right thing under a prominent payment system designation and the onus that's put on Interac to manage risk to the system. And so in order to do that risk management, you need institutions that are more established and have invested in AML, KYC, analytics.

Cyber security reporting fraud risk mitigants. You need that infrastructure which costs money That's the reason, you know banks, you know charge as for third party access because they're taking on, you know Downstream risk of a new two guys in a basement Programming [00:33:00] and and i'm not saying those two guys in a basement are nefarious actors or bad folks I mean, you know, great startups have begun that way, but it's just like, how do you facilitate, how do you give them access in an economically viable way so they can participate?

But, but my point is a little bit different. I agree with that. My point was Interac had the infrastructure. What we didn't have. At the time was the rule set for those PSPs. So the 2500 I think is what the Bank of Canada says, you know, that are out there. So there's 2500 PSPs. My point is Payments Canada could set the rules for accessing the RTR.

The RTR is a very, you know, sandboxed environment that provides access. And is economically viable and then has the risk mitigation, you know, tools that payments Canada is so good at as it relates to rules and risk mitigation and controls and then they provide the rules and the guidelines and and the set of criteria.

And then the [00:34:00] rails are e transferred, but basically what has happened is almost a duplication of system or a duplicative system that really just adds more cholesterol and adds more cost to the system. That's my point about task clarity. I mean, you know, Jeff, I mean, you know, technology is technology. You could have one version of a technology and then have 15 different flavors around it and I think that's the the brilliance of what interact any transfer has is that you have that ability to have different instances or versions of it to bring down cost to consumer and that's what should happen.

But the cost that's been incurred with launching the RTR I won't even get into the numbers because it just boggles the mind it shouldn't have been that costly

Jeff Adamson: so let's let's talk about real time rails maybe maybe for people who aren't as familiar with it what was the. What's the promise of real time rails?

And people might be saying, well, listen, like I use e transfer all the time. That's, that's how most people think about money movement. They just think of e transfer. But how is, how is real time rails going to be [00:35:00] different? And again, I know that it's not out yet, but maybe just give people a bit of a primer on, on RTR.

William Keliehor: Yeah, so real time rails again, I would, I would argue, I would contest that Interac e transfer is already real time. Um, it's real time within the Interac system. You know, there can be delays within financial institutions as they vet transactions, apply security, and other things that are necessary to maintain safety, security, and soundness of the system.

Outside of e transfer, but in end to end. But real time, Capabilities exist one thing that didn't exist and I think you and Hannah touched on this as well as this batch settlement So, you know, there's a there's a mandate within the RTR for real time line item, you know settlement So specificity that creates a lot of technology development and legacy system in our interaction That you could argue isn't so much needed.

So again, you know, going back to when you said, what are the payments [00:36:00] 101? You have authorization of a transaction and you have settlement of a transaction. So if you're authorized, the settlement can happen later. But to the end consumer, the desperate small business owner that needs that money immediately, they get access.

Then the settlement and the risk associated for non settlement happens on the backend between the two banks. For the two financial institutions that are involved. I don't know if that, I mean, I'm trying not to get into it too much, but, um, because I think we could talk for days about it.

Jeff Adamson: Like we, people have been talking about real time rails for years and the benefits to Canadians are huge in the sense of being able to move money instantly, whether that be, you know, either paying bills or paying your mortgage, moving large sums of money.

Yeah, the benefits to SMBs, it's estimated that the lack of a real time rail in Canada. Outside of e transfer is costing tens of billions of dollars to Canadians. So for something, and again, everyone's talking about affordability right now. It's a huge issue, especially heading into an election. To me, it just seems like such a huge [00:37:00] win to come out as a government and say, Hey, we're going to.

JFK style, put a man on the moon, you know, within this decade, we could make those types of statements with RTR. It's been, it's been talked about enough, tons of work has been done on it already. Why doesn't there seem to be the political will to get this over the line?

William Keliehor: I think the political will is there.

I think at times we're overbuilding the solution. Um, I think that I would have taken a different approach. I mean, again, I would have launched a market. I would have leveraged the assets that we have, and then I would have pivoted and continued to build. I mean, if you wait on, you know, the perfect solution, you're going to be waiting a long time.

So, I know what we continued to do when I was at Interact. Our strategic roadmap, Which was broadening access, which we have done for WellSimple and others, um, that maybe aren't OSFI, you know, regulated, licensed financial institutions, but have other regulatory approvals that allow them to participate in the system as we defined it as a financial [00:38:00] institution.

So, you know, there's, there's been a continuation. That was my philosophy. That's the American in me. It's like, okay, This is the North Star, put a man on the moon or a woman or a person on the moon, but iterative steps to get there. Let's not, you know, let's not wait and jog in place until we get there.

Let's continue the journey and let's get something done as opposed to getting nothing done. You know, it's kind of been my approach. So I think a lot of the access to real time rails could have been addressed through regulation, could have been addressed, addressed through criteria policy and what it takes to participate, ring fence that.

But this is the systemic infrastructure was there is there is just more of the regulation of policy on top which frustrates me because we have what we need we just got to get after it

Jeff Adamson: actually i can i can see where you're coming from in that perspective it seems like it's almost a bit of like a horse designed by a committee at this point where you've got a lot of people giving input you know if you're trying to it's hard enough to get a product to market [00:39:00] even within a tech company but at least within tech companies you understand that like there's a pace.

That you move at and you also have launched so many products and features that you kind of know, you know, whatever you put out, once it kind of gets into into the wild, you're going to realize that you need to make a whole bunch of changes to it. And so then you're like, okay, well, it's probably no point in just overbuilding this, just get it out, you know, obviously, don't don't make sure it's not going to kill your company, or make sure you're not going to put yourself at adverse risk, but get something out there.

So you can test and learn. Do you feel like this is the same thing is happening with open banking or consumer driven finance? Like, do you think Transcribed That we're, we're going through the same path of over engineering this. I think a little bit.

William Keliehor: And, um, to go back to your point, Jeff, I mean, I think you've got to look at the cultural differentiation between a FinTech startup and I've been a part of them.

I've started companies in East Africa. I mean, and then look at government and banks. I mean, you know, I, I've read some white papers of late that have come out talking about innovation and technology and investment in technology [00:40:00] by the banks and by other anchor institutions. Okay, congratulations, but their idea of innovation and tech development is very different than what you guys at Neo or skip develop, um, you know, experience when you were developing product that you weren't paid that way.

You were paid to launch product fast, follow and learn. Banks and, and government don't work that way. You know, they aren't compensated. It's not in their culture. So when you look at, for example, a, what you described to me was agile, okay? Mm-Hmm. , banks and government are not agile. Interact just went to an agile model where they're trying to fast follow and pivot and develop and be quick to market to help accommodate a number of cultures that are out there that they want to be.

As opposed to this legacy being held down held back by the past. So I think culturally You know banks need to be more agile and I think they can be I think they have organizations Within the banks that are agile, but we don't see enough of those [00:41:00] government needs to be more agile I would almost like to see government come out with a Department of Agile.

Yeah. And maybe then things to get moving.

Jeff Adamson: Yeah. And that was kind of what I was saying around the political will and just kind of making that, that statement of saying, cause it, cause I think it does come from the top. And especially if you look at the regulatory bodies, whether that be OSFI or FCAC or FinTrack or Payments Canada, these people who are Setting the rules and in charge of enforcing the rules, but if ultimately those organizations or the government comes out and says, you know, whether people feel like we're ready or not, we're going to get RTR out by this date or we're going to have an open banking framework by this date that sets the pace if you're running organization and you say, hey, guys, we want to be the number one bank in Canada, for example, but then all of a sudden, everyone's showing up at noon and leaving at 3 p.

m. And no one's getting any work done. Everyone's just kind of playing pool and ping pong all the time. Well, you're obviously not, you know, you're not walking the talk. Like [00:42:00] you're not going to achieve the goal. And the goal I think often does set the culture. It sets the pace and it sets how you operate together.

Right now it just doesn't feel like there's anyone saying, hey guys, like falling GDP per capita in Canada, falling entrepreneurship in Canada, high fees. You know, very weak internal competition in Canada, why it doesn't seem like anyone saying, Hey, we need to make a change by this date, just to constrain people, just to kind of to set that culture within these organizations and, and perhaps a lot of people will realize maybe I don't like working in that type of environment.

And you'll get new, fresh perspectives, new people coming in who really care about making those changes because it's often, oftentimes it's different people who like making change versus some people who like, you know, operating or maintaining the status quo and there's neither right or wrong by those people, but sometimes you just need to kind of set that mission to then say, all right, well, what are we going to do?

How are we going to do it? Who do we need to do it? And frankly, it would just be the benefit to Canadians. [00:43:00] By being able to see something like that, that happened, I think would just be a step change in this country, everything that you're saying. Well, I really hope that hopefully you're not alone in thinking this.

I hope that there's others who will listen to this and say, actually, like maybe they're thinking it too, and maybe they'll realize that they're not alone and we can actually get people to make some changes.

William Keliehor: You know what, Jeff leadership starts, starts at the top and you know, the mandate needs to come from the top.

There is tremendous goodwill, bright people, the Bank of Canada, Department of Finance, and all of the regulatory bodies that you've mentioned, but it's, it's mandate. And, and I have spoken with a lot of MPs, I've spoken with a lot of people that are running You know, department immigration, and we've got to put Canadians to work and give Canadians access.

I mean, again, 50 percent right of the GDP that you generated comes from small, medium enterprise in some way or another. And, you know, when you look at some of the stats, I mean, you know, it just boggles the mind, right? I mean, banks [00:44:00] employ 300, 000 people, small, medium enterprise employees, 12 million. You know, we've got to give people access, not just to the financial.

Ecosystem, but to every ecosystem, whether it's telecom, grocery, anything that's regulated, are stifles a lot of what allows Canadians to flourish. And until we do that, and that leadership directive is given, people are just going to be happy jogging in place and jogging in place. Didn't get you anywhere.

It just exhausts you. And I think a lot of times good people are exhausted because they want to do great work, but they haven't been given the mandate. And again it goes back to task clarity. I think if there was some task clarity like you've articulated that says by this date, we want this done. There's a roadmap.

This is fix, fixable. I mean, and you don't need. You know me are are jeff to say it people know it we just got to get to work. I probably said that five five times. I mean, you know, we just got to get it done

Jeff Adamson: when it actually brings me back to what you said at the beginning. Well, and that is what do we want to be [00:45:00] when we grow up as a country with as a system as a network.

And when do we want that to happen? And I, and I really hope that, you know, there's we're on the brink. I feel like in Canada of so many incredible things of opening up the system, giving a better access, having things happen in real time. I feel like we're, we're literally so close. Uh, and so I hope. Folks like yourself and many others can can help kind of bring that change home where can people learn more about you where can people follow you is it is it linkedin is it is it x yeah linkedin is probably best

William Keliehor: jeff i i wanted to come back to one thing and i know we're at time but you asked me a question i didn't answer it.

And it's around open banking. I think we get caught up so much on the tie are, are the, are the term and, and the timelines that it becomes daunting, you know, open banking is open data, open access. I've been doing this for 25 years in emerging market, not because I had the mandate or the authority, because it was the right thing to do.

And then I put the right confines and the right security and mechanisms [00:46:00] around it to protect it. Then I would take it to regulators in emerging market and say, look at what we've done here. Regulate us. I can think of four jurisdictions right now where I've gone to central bank governors and have said, listen, you do not have a classification for what I need to do business.

This is what I've done. How would you regulate this? What would you call it? Let me work with you on putting a regulation class around what I'm doing to give me a license. Okay. To officialize myself so that I'm not bastardizing an existing classification or license, legitimize me, you know, deal with me the way that you should as a regulator.

And I think that when we do that in Canada, you know, then regulators will say, Hey, listen, they've already done all the work. We can understand this. You know, now we can put a stamp on it. We can name it, call it out and regulate it. And that's what we need to do. But we get caught up with open banking and RTR.

We kill ourselves with that. So anyway, I'm optimistic. And I think that, you know, you've got to peel the [00:47:00] onion is, is what I would say.

Jeff Adamson: Yeah. And I think you're right in some sense, Will, that I think we're looking at RTR and open banking as a destination and not a journey or a process. And that could be part of the problem is we're trying to say, Hey, like we want this to happen.

And I know that Abraham has been on the show and has talked about how there's phases to it and tried to do it in some bite sized chunk. I'd say the one thing I'd be worried about is. There often are a lot of big companies that come and say, Hey, regulate us. Even like AI, I think is doing a good job. Like Sam Altman's going around, you know, to the US government saying, Hey, regulate us.

Because that actually is a defensive moat. That is actually a way of making it more difficult for people to compete with them. So I think there's a, there's a balance of, of it being kind of industry driven regulation or, or government. And I'm far from, Qualified to say, Hey, what's the best way to do this?

I just want to be able to have the right conversations happen and actually make some change happen. And for me, in order to do that, we actually have to have some constraints placed on this in terms of when we wanted to actually happen and what the scope of that [00:48:00] is. And right now it just seems like it's just so open ended.

And I think a lot of what you said today makes a lot of sense in terms of being able to say, like, let's just get something out. Let's not try to over engineer it. And let's look at this as more of a Of an iterative process as opposed to this like huge, you know, promised land that's going to occur.

Anyways, I really appreciate you coming on Will, this has been, this has been fantastic and appreciate a lot of the work that you've done and just want to say I'm really grateful that you made the time.

William Keliehor: Likewise, I appreciate you doing this podcast Jeff, I think it's, I think it's wildly beneficial. I, I, I think this dialogue needs to happen, you know, can't be polarizing.

We've got to meet in the middle and look for a solution. And you're bringing that the voices that you're bringing are the ones that need to, uh, need to be heard. So highly supportive of what you're doing.

Jeff Adamson: Thank you for tuning into behind the brand. If you enjoyed today's show, please subscribe and leave a review on your preferred podcast platform. [00:49:00] If you're interested in learning more about neo financial, visit us at neo financial. com behind the brand is production of neo financial and media. YYC, hosted by me, Jeff Adamson.

Strategy, research and production by Philip Burns, Dario Boettcher, and Kyle Marshall.