Transcription:
Speaker 1: (
Trevor's bio is awesome. Read his whole bio but I gave I am giving you the short version. In 2015, he began building current core current's proprietary banking technology which provides stability faster money and cost savings that are passed on to customers and allows current to provide experiences that cannot exist on traditional banking infrastructures. So welcome Trevor. Thank you. Yeah, should clap. Thank you. And then Penny Crosman is like the mover behind the scenes in all of this. She's the executive editor at large for American Banker prior to taking this role, she was editor in chief at Bank Technology News, a technology editor at American Banker and many other publications. So welcome Penny.
Penny Crosman: (
Thank you.
Speaker 1: (
All right. I will just by way of final their session is titled building bridges between traditional and decentralized finance. Thank you.
Penny Crosman: (
So yeah, it's you, meet you again, Trevor. So is everyone familiar with current and what they have been doing? Well, a couple people are, but current is a challenger bank that started several years ago and it's going through some of the same decision making process that many of you are going through. Like, how do we get involved in how do we start adopting blockchain technology or how do we start offering cryptocurrency trading and things of that nature. And they have actually been building something that we're gonna hear a little bit about, but let's start with current and why you started it because when I first met with your founder Stewart, so it was an app for teenagers. Yep, so, why did you wanna do that in the first place?
Trevor Marshall: (
So I think even before it was an app for teenagers, it was a lot of other things. Okay, I guess to quickly give the very brief history. I started my career at Morgan Stanley where Stewart hired me. And so that was, he is been my boss, my whole career my main mentor and the sort of champion of everything that I have done with technology. But when I went to Morgan Stanley, the thing I was really excited about coming out of undergrad in 2013, studying math, computer science in New York was Bitcoin. And I really wanted to go and make a career out of Bitcoin. And that wasn't really available yeah. Available option. And so my thought process was basically where can there be the biggest overlap between what I'm interested in and the real world and real business.
Trevor Marshall: (
And to me that was foreign exchange trading. And that's really how I ended up on a foreign exchange desk. And when you look at a lot of the crypto exchanges, it's no surprise to me that a lot of that comes out of strong foreign exchange background because you're working in very similar types of markets where you actually have peer to peer transactions, institution transactions, no centralized liquidity. And so a lot of the market dynamics are very similar. When Stu left, I wanted to continue to work with him and we ended up doing some Bitcoin trading, some STAAR trading, some foreign exchange stuff. But what we really wanted to do was figure out how we could deliver this massive change in the way that money was working to consumers. We wanted to move away from value transfer and move towards value creation, and actually sort of ride the promise of these smart contracts and sort of in 2014, 2015, these were just promises.
Trevor Marshall: (
But we wanted to take a shot at it. And so we found our way into an incubator. And actually the first things we were building at current were on top of ripple and on top of a few other decentralized ledger platforms. And so actually the origin of current is very much a crypto based sort of idea, what is banking going to evolve into? What is it beyond the way that it exists today? And so those initial prototypes kind of led us into some really exciting engineering experiments but not a ton of value. As we kind of started moving forward, we found that the infrastructure that we were putting in place to support a crypto platform ended up being the same infrastructure we could use to build our own checking platform and our own banking platform. We were coming at a place where there was no FIS Jack Henry, any of these like very robust financial technology platforms. And we ended up building our own and we leveraged that into more traditional finance as well. So 2017, we launched our team banking, but that was after a few years of iteration and finding our way with technology, yeah.
Penny Crosman: (
So how did you get from Bitcoin to teenagers?
Trevor Marshall: (
So it actually really came through the technology. We figured out that we could create our own ledgering system that would allow us to be extremely flexible with where the financial backend lived and what that financial backend was. We basically abstracted away the concept of balance and where that balance sat, whether it sat at a bank or for us from the beginning, sat in a blockchain. And so being able to pull that abstraction into a place that was consumable by, we could put an API around it and be used by consumers, started to get us thinking, okay, well, where could we deploy this? And then in the beginning, we were a little bit of a solution looking for a problem, which is not a good place to be when you're trying to start a company, but we did identify a pretty clear wedge into the market, which was no, one's really serving this sort of teen banking use case.
Trevor Marshall: (
We have a unique way to bridge multiple people in a family together into a unified experience using this core technology let's go and deploy this acquire customers, gain traction and our work our way towards a broader product that could serve hundreds of millions of Americans and beyond at that point. And so that was really, we wanted, we identified that as our wedge, we pursued that strategy, raised some money and immediately began building sort of our, the full individual banking experience, which we launched in 2019. And so that kind of brought us to where we are now C accelerated us to where we are today in terms of our user base, our sort of breadth and distribution as that specter of like, online banking is scary, got immediately eliminated overnight. When you couldn't go into a branch.
Trevor Marshall: (
And yeah, as we look forward, every year we've been asking, where is crypto coming back into the stack? We had a couple of opportunities that were not totally clear and not totally fleshed out, but finally, actually when compounds came out with their protocol and we started to see real world use cases of decentralized financial services, this kind of gave us the signal that it was time to actually start bringing it into our application. So we'll be launching crypto trading, which is just a way to acquire assets with next year bank account and having all those things together pretty soon. But that's just the first step in a much longer journey towards being able to provide that full bridge into these new networks.
Penny Crosman: (
Wow. So, you still running on that core that you built and you said it's blockchain based.
Trevor Marshall: (
It's actually no, it's fully centralized, I'm sure lots of folks in here kind of understand the event source ledger module model and how that comes together. But there are some interesting ways that we're thinking about extending it into open networks.
Penny Crosman: (
So, you offer crypto trading. What might that look like?
Trevor Marshall: (
So the key value prop for us is it's in the same exact place where you're getting your paycheck and it there's instant fungibility between the different assets. You can take a piece of your paycheck, put it towards Bitcoin. Let's say you can round up into that, or other types of features like that. And if you need to sell it and use something, use the money immediately, you can sell it and you can instantly use it on your debit card or any of the other sort of centralized systems that we have.
Penny Crosman: (
So instead of having a coin based wallet and your bank app, it's all in one.
Trevor Marshall: (
Yep. It's all integrated. And really there's like, there's sort of three hurdles that we're hoping to overcome with it. There's this educational hurdle of what is crypto, what are these different things? And we can provide experiences that give incremental exposure to that within our app. There's a technical consideration, even things like Coinbase require you to go and link a bank account and move money and understand, okay, what does it mean if I want to export my Bitcoin? What does that even mean? And it prevents you from accessing any of the higher order applications that are now available in these things like compound or other on chain lending strategies. And then finally there's an economic sort of hurdle, which is, there's a ton of trading fees at many places. If you're doing things on chain, there's a ton of on chain transaction fees that make a $1 money movement actually exorbitantly and prohibitively expensive. And so those are all the things that we're trying to tackle with this product.
Penny Crosman: (
That's, that's really interesting. And, how many users do you have today?
Trevor Marshall: (
You've be just over 4 million.
Penny Crosman: (
4 million. Yeah. Okay. So that's pretty fast growth. Yeah, because like, it's what, in the past about two years ago you had less than a million.
Trevor Marshall: (
Yeah. I mean, we're almost eight years into the company. And so, even though a lot of our growth has come in the last two years it's just a ton of incremental changes to build the platform out, to be able to sustain that type of growth. And then it was just being in the right place at the right time.
Penny Crosman: (
And I think that, about half of your users are black if I recall correctly. Yep. Why do you think, and that's definitely that ratio is much higher than normal. Why do you think that is?
Trevor Marshall: (
I think that's mostly a credit to a combination of our business strategy which is kind of no fee banking and authentic voice and our marketing strategy, which is putting our product in the trusted voices of influencers. And so we're able to reach demographics that are maybe not as directly marketed to, through the trusted voices of the people that we work with. I think that's mostly a credit. I don't think there's anything fundamental to the platform itself because actually what we're building, I think has sort of benefits to everyone, depending it, not respecting kind of who what you look like or where you're from, but it's really around driving an experience that is trusted. I think there are some statistics around sort of the trust in banking from black Americans that, I think the way that we can build trust with our product probably overcome some of that in a disproportionate way.
Penny Crosman: (
So the trust, when you say trust comes through the product, like how can you guys engender trust in a way that a traditional bank?
Trevor Marshall: (
Yeah, it's all, I'm a big believer. And I think it was just mentioned previously in sort of incremental change, which is things like 24, 7 customer support is now an absolute table stake in terms of being able to serve customers in the way that they require having extremely high up times in your app experience, being able to scroll through all of your transactions without having to load statements. These are all small points of places where you can actually lose trust if you do it wrong and places where if you're constantly delivering a smooth and seamless experience, you can earn that trust. And so that's really where I think trust building comes outside of your initial marketing message or your sort of brand equity that you build. It's the consistency, reliability, and security.
Penny Crosman: (
That makes sense. Cuz I know there were some challenger banks that have struggled recently, like particularly with their fraud filters, like setting them too high and then too many people just can't open their account because they're possible fraud when they're legitimate customers and then setting it too low. So people are getting hit with fraud. Yeah. I mean, that's just one example, but for a lot of the challenger banks, when these things happen, they don't have the customer support that they really need to handle all of that. So how have you been able to really scale up and has that meant hiring a lot of people in customer support and engineering jobs?
Trevor Marshall: (
Yeah, I mean, doing it right is really important. Being able to serve customers. Right. I think one of the advantages of having our own core is building out sort of really fine tuned customer support tooling. And so what we have is when customers are coming in, we empower our agents with a lot of control to be able to have high resolution rates on different types of inquiries, whether that might be sort of dispute related or security related or a lot of the time, it's just like, Hey, how do I do this? What, do I need to do? We try to minimize those? Cause that means we're not doing a good enough job in the product, but we wanna make sure that any type of experience that customers can have in the app, they can also get through our support in a relatively easy way. Yeah, so I think that's been a big advantage for us and then just really approaching it with the 24 7 mindset has been important for us to be able to deliver the experience that our customers expect
Penny Crosman: (
Now with this crypto trading that you're going to be to launch. How do you feel about all of the volatility in the price of Bitcoin and in many other digital assets? Like.
Trevor Marshall: (
Yeah, I think my perspective is definitely different than I think a lot of our customers will be as I've been. I bought my first Bitcoin on local Bitcoins in person in New York in 20 end of 2011. I like to, as we just said, I like, I say I got in at the right time and got out at the wrong time. So, I wasn't very lucky when it came to that, but this is why it's important for us actually to start making these opportunities available to people is that we are at the beginning of extreme price discovery for the value that is coming on these networks. I'm a huge believer in sort of the potential of this. It's what I've been working now with current, towards, for almost eight years. And the reality is that there's a new financial system that's being created.
Trevor Marshall: (
And this is an opportunity to put the ownership of that financial system into our customer's hands. Yes, there will be price fluctuations, but ultimately what's being created is the opportunity for our customers to own the means of production of financial products of the future. And so I'm highly convicted in that and, and I'm also like very respecting of actually the financial literacy of our customers. I think there's a common misperception that people who live paycheck to paycheck are not really aware of their finances. Yes. There are some cases of people who have really no idea what they're doing, but a lot of people like figure out those optimizations and actually really have a super tight understanding of what's going on with their money. There's other situations around them that might make them more paycheck to paycheck or more income volatile, but they have done a ton of research. The reason we're launching this is not because we think that, this is the right time. Although we do the reason we did it is because it was the number one requested feature from a large number of our customers. And so we want to be able to serve our customers with what they're asking for.
Penny Crosman: (
So just to push back a little, is it responsible to sell cryptocurrencies to people who are living paycheck to Paycheck?
Trevor Marshall: (
I think it's irresponsible to prevent access to it. So the key thing here is that we are not in the like sort of the paternal position of saying what's right or wrong for our customers, for us. Our job is to make opportunities available. And I think for many of ourcustomers, they've been deprived of opportunities for pretty much ever. And this is a big changing and a turning point in the availability of these types of products.
Penny Crosman: (
Why wouldn't someone in your customer base go to a Coinbase or something like that?
Trevor Marshall: (
The reality is a lot of them do. And that's another sort of quantitative way that we've looked at why we should be offering these things. But when we look at sort of the pain points that they're having with that it's high trading fees and it's time to money. And so we can resolve both of those by offering no fee trading and making money immediately fungible between what you're spending on your debit card and how you're investing with that money.
Penny Crosman: (
But what if you sell a large amounts of cryptocurrency to, it's gonna be Bitcoin to start with, or,
Trevor Marshall: (
There'll be a couple of assets. We'll be more open about it when we launch it. Yeah. But there will be more than Bitcoin.
Penny Crosman: (
So say you sell you sort of, you have customers who start to buy a lot of Bitcoin and then Bitcoin drops 50%. How, how do you envision like handling the calls that come in and the complaints and
Trevor Marshall: (
Yeah, I mean, they're honestly, like in a lot of those cases, we'll find out because we haven't launched this product before we haven't been on the other end. But as someone who personally has been through a lot of that up and down, and also with the respect that I have for our customer base, I think by as long as we're putting sort of the full educational component of this is what this thing is, here's how this thing has performed. These are the things that might be risky about it. And we've really thought a lot about what type of information is important to put into the product. That is what I think will ultimately be into the customer's hands, because at the same time, what happens when Bitcoin rallies to $200,000, right. And there's like, there's been those types of moves on a yearly basis.
Penny Crosman: (
So we you've mentioned decentralized finance and sort of blockchain based finance being the future. Yeah. What are some of the things you picture happening in the future? Like a lot of crypto lending, a lot of people keeping their money in Bitcoin and digital assets. Are there other, other ways that you see people using defi on a day to day basis?
Trevor Marshall: (
Yeah. And I don't think they'll necessarily consciously be doing it because it'll be more like interacting with the opportunities. Like maybe it's the equivalent of a high yield savings account that has all the proper disclosures, but is actually turning dollars into stable coins, lending them, whatever it might be under the hood. I think there's some really interesting projects. Like we spend a lot of time with a Cala, which is a blockchain that's in the polka dot ecosystem and they're sort of laser focused on this idea of everything that a bank can do should be something that the actual roles and responsibilities can be owned by different people. And so really what decentralized finance fundamentally is about, it's about breaking up the sort of centralization and siloing that, that exists with financial products. So for example, banks make loans and they also take in deposits.
Trevor Marshall: (
Yes, they are very robust ways of splitting that out, sort of in practice. But me as Trevor, it's very hard for me to go and make a loan to someone. I don't know. It's very hard for me to sort of interact and benefit from different environments, different opportunities. And so what decentralized finance is about like, okay, you can become a lender, you can become a banker. You can actually be, and put your capital to work in the way that only very small members of institutions can do today. And you can do that in a way that is open fair and lots of other positive things. So for me, it's decentralized finance is really about opening up the responsibilities of banking and putting the control into people's hands.
Penny Crosman: (
So you envision sort of marketplaces where people lend to each other.
Trevor Marshall: (
Yeah. And I don't want to like there's an extremely important role for banks in this transformation. And it's something that we think about a lot. Like we have really strong partner banks. We're purely a technology company. I think challenger bank is just like a convenient way to describe us because it immediately clicks with, what we deliver, but we're not a bank. And all we provide is sort of technology services that acquire customers into the banks that we work with. And so when you look at like, especially the evolution of the decentralized finance products that we'll be offering, there's a role in the both sort of regulatory and structural framework that banks provide from a security and sort of connectivity standpoint. But also when you look at sort of community and regional banks and the place that they have going forward, I am a big believer in them actually being able to leap frog larger institutions, because they have such great relationships with their customers. They have amazing distribution. They have a sort of a physical Mindshare presence with, with millions of Americans. And so a big thing that I'm also thinking through, especially with current, is what we're doing today is bringing this type of technology to banking partners. So continuing that trend is an important part of our journey and the journey of a lot of other companies like us.
Penny Crosman: (
So have you spoken with all your banking partners about this crypto trading project?
Trevor Marshall: (
Oh well, you know how the, the F D C came out recently and there's the whole letter and all the good stuff. So yes, we're in very high communication on these things as you need to be.
Penny Crosman: (
And how do you feel about the scrutiny of rent a charter arrangements?
Trevor Marshall: (
Well, I rent a charter I think is a little bit, I wouldn't exactly say that's what we're doing. Because we're actually very much, very clearly defined in sort of our role as basically a program manager as a technology service provider. We're not presenting ourselves as being the bank to our customers, our banking partners names are all over the place. So, I think that it's important for us to be able to allow our banks to acquire customers that they would not normally have access to. So yeah, I think it's a pretty well TRO path at this point.
Penny Crosman: (
Yeah. I mean, we're certainly seeing a lot of regulatory questioning of, of things like loan marketplaces that people are setting up. And then it's, if things turn out to not go so well, is it the bank bank's responsibility for having been the backbone of this challenger? Or is it the challenger themselves? I feel like we're gonna see more like rules around all of that.
Trevor Marshall: (
Yeah. I mean, one of the really important things for us is that any activity, for example, the way that we're building out trading it, it's very clearly firewalled away from the bank. We're working with multiple partners in different places, and each partner has a different responsibility and role and direct oversight by different regulators. So I think like there there's a growing a growingly clear path to how to execute these things and making sure that your banking partners are fulfilling the responsibilities and roles of a bank and not sort of exceed being put in a position to exceed that. And we've been very conscious about that as we've been building things out.
Penny Crosman: (
And what do you think about the need for customer protections as consumers are consuming more and more defi products from companies that aren't necessarily regulated? Where do you think the consumer protections will come from and where do you think those protections should be?
Trevor Marshall: (
So I think there's some pretty good frameworks. We spend a lot of time with re sort of operating our debit program. And I think, there's been a lot of guidance around emerging technologies like last year. The way that peer to peer transfers are sort of guided to be from a consumer compliance standpoint. So I actually think that regulators have been pretty good about staying up to date with where there are risks. So we will sort of follow those guidelines as we have up until now.
Penny Crosman: (
Hmm. And in the bigger picture we were talking to Mike Cagney this morning and he said that central bank, digital currencies are an existential threat to the financial industry. And I wondered, what do you think of it? Like his argument was basically that, like, if there's a disaster and the government needs to push money out to people, they'll just push central bank digital currencies into people's wallets or whatever that they, if their phones or whatever they have, and then gradually the government will take more and more of a role. And then you really won't need banks as much. Yeah.
Trevor Marshall: (
I can see part of that argument which is direct relationships between customers or just Americans and the us government is kind of an interesting thing of, well, what is there, if there is not that there's quite a lot there's customer service, there is sort of the whole credit infrastructure. There's a lot of products and services outside of just payments, that yes, maybe banks need to change their business models to sort of think through that potential. But I think though there's a lot of other things that happen in banking that, that doesn't really address areas where you have to extend trust to users, for example in the credit world or even just things like cash availability, what happens if, there's an internet outage and you can't use that CBDC, and there's no mechanism to pull payments together. Like there's all sorts of even within payments contingencies that still have financial services required to support. So I'm not sure, I think it's probably an existential threat to certain parts of the business, but maybe not the whole industry.
Penny Crosman: (
And what about the whole stable coin? There's been so much growth in stable coins and then a couple weeks ago we saw Tara us D drop and tether also has been questionable. Do you feel like stable coins have a very healthy, viable future? And is that something that might be part of a company like yours or do you think that they're getting tarnished by some of these unstable stable Coins?
Trevor Marshall: (
I think certainly just from like the fact that this is a question now is an indicator that there's there's risk in particular way that regulators or others might view this based on what's happened and I'm like very much an engineer. And so when I look at there's really like these three categories of you've got Fiat backed or Fiat, like backed in the case of tether stable coins which have different varying degrees of audit associated with them. But if properly audited are in my mind, like one of the most like sustainable paths forward in terms of stablecoin, you have over collateralized, stablecoin where you're taking exogenous crypto assets, like Bitcoin, Ethereum, and other, uh, sorts of value. And you create more than enough to sort of be able to prop up a loan that's taken out against it, which becomes a stablecoin, this is a collateralized de position or there's a couple of them out there.
Trevor Marshall: (
Maker Dow has dye, which is really popular and AALA has a U S D, which is gonna be sort of the polka dot stable coin. And then you have the algorithmic stable coins, which we observed in brilliant flames, pretty recently how that worked and that wasn't like fundamentally flawed. It was a product of extreme central sort of centralized positions actually on anchor in particular and the market moving sort of against it that now was the attack coordinated. It's a whole other like discussion. But I think one of the best things about the, the market right now is that it forces a lot of bad ideas out and it really shines a spotlight on the good ideas. So these types of downturns, and there's been four or five ones like this in crypto in particular always produce a much stronger system, like defi only emerged out of the 2018 crash because it was basically clearly messaged that we need a use case. We need actual value and people built and responded to that. And I think coming out of this will, I'm not exactly sure what the thing is that will come out of it. I think sort of the a big component for me is how identity translates into it and how regulation translates into blockchain will be probably the thing that transforms and pulls out into the next bull run, but price action is just sort of the output of like these cycles of innovation and change.
Penny Crosman: (
So do you see digital identity as one of the good ideas? I think it's one of the most important sort of unlocks for progress. Being able, basically there's gonna be two roads. There's gonna be the fully decentralized Bitcoin and probably not much else in terms of like fully trustless systems or fully regulated and full oversight systems. There's gonna be no room for sort of halfway between, and there's a lot of halfway between right now. And so you're gonna see a forcing function that kind of really clearly designates one side or the other. And I think most of them are gonna end up on the more regulated side and really what it takes to operate safely in that world, which is something that, you know, we're actually pretty directly pursuing is being able to bridge identity on chain. Just the way that we are able to bridge dollars on chain with stable coins, being able to bridge identity on chain is actually a slightly easier problem.
Penny Crosman: (
Well, that makes a lot of sense. And I think there are a lot of people working on that problem right now. What else is next for current, besides this trading, the crypto trading project,
Trevor Marshall: (
Just constant incremental improvements, constant building of trust, listening to our customers and delivering what they're asking for. There's at this point, there are no real silver bullets in terms of product. It's just about continuing to deliver excellent, customer experience and the products that they want.
Penny Crosman: (
All right. Good. Well, I think that's, our time is just about up. So Trevor Marshall, thank you so much for joining me here
Trevor Marshall: (
Thanks everyone. Yeah.