On today’s episode of Thriving at the Crossroads, I introduce Louis Etienne-Berube, Head of Sales at Expertus Technologies. We will unravel the mysteries of blockchain, and why it is setting the payments industry on fire.
More details on Expertus can be found here: http://expertus.ca
In the second segment of the show- I will Mike Robertson’s blog post on Buyer’s Meeting Point: Displacing Incumbent Suppliers.
Special thanks to our show sponsors for this Episode:
Art of Procurement– Elevating the role of procurement professionals through thought leadership, podcasting, and 1 on 1 coaching.
Anthony English– helping IT professionals get away from a stab in the dark strategy with prospective clients, and helping clients answer the real “why’s” for better project success.
Get Expertus Help to Unravel Blockchain
Welcome to Thriving at the Crossroads episode five. I can’t believe we’re five episodes in already. Talking about ERP of all things, yes, ERP. It’s what I love and it’s what makes this girl geek’s socks go up and down. I want to take a moment to thank you, my listeners, for joining me so early in the podcast and being so supportive of my podcast journey. It’s been a wonderful adventure so far and I’m thrilled at the fantastic response I’ve received to this podcast. Thank you for listening and tuning in. Thank you so much for sharing with your friends.
In today’s episode, I had the opportunity to record with Louis Berube, Head of Sales from Expertus Technologies. We recorded the interview while I was at the Association for Finance Professional’s Conference in Orlando, Florida. Expertus is actually a Montreal-based company. They’re big in the FinTech space. I finally get an opportunity to get into FinTech and Blockchain in particular. Expertus has been very innovative and moved aggressively into the Blockchain space. They are a provider that already has integrations built with Ripple. You can’t go too far in the Blockchain world without hearing about Ripple.
It’s exciting to hear firsthand from someone I know about, what are they building? What are the opportunities as we move into the Blockchain world? I hope you enjoy being a fly on the wall in my conversation with Louis.
Welcome back to Thriving at the Crossroads. Today’s guest is Louis Berube from Expertus Technologies Louis, welcome to the show.
Thank you, Amber. I’m glad to be here.
For our listeners, we are actually recording live at AFP in Orlando, Florida. We’ll go ahead and jump into our questions. Louis, why don’t you give us a little background on Expertus and some of the new technologies you guys are developing?
Expertus is a FinTech company based in Montreal. FinTech, not a startup. We’ve been around for fifteen years mostly developing. We started to develop what we called Payment Hub for the bank fifteen years ago, for some of the banks here in Montreal. We also established the first service bureau in Canada, the SWIFT Service Bureau. Everything related to payment, that’s the expertise that we developed throughout the years.
When SWIFT opened the network to corporate, that’s when we started to talk to corporate and onboard them on our SWIFT Service Bureau. While doing that, we realized that corporate has similar needs or challenges as the bank, especially on the payment side. We took our Payment Hub and adapt it to the corporate world, so they can provide or do their payment more efficiently. Then, we added some module around that as well to become a TMS system or closer to a TMS system, like cash broadcasting, cash management and so on and so forth. That’s the interesting part of Expertus.
We do sell to bank and we’re still providing payment expertise or payment solution to the bank and then port it over to the corporate. We bring the vision to corporate and then it really flows or segues really well in the new technology like Blockchain, faster payment, real-time payment, everything that’s going on around the globe. We have our hands in there and we can port it to the corporate world. That’s interesting where we fit in the equation.
Payments is such a challenge for a lot of organizations. As you said, there’s a lot of innovation going on. There are faster payments that are happening. There are a lot of real-time channels being developed in a lot of other countries. This big one that’s starting to emerge is more about Blockchain and it’s all over the place at this conference as well. It’s a very hot topic. Why don’t you talk a little about the history of Blockchain, where it comes from? Give our listeners a primer on how does it work in human English.
That’s the first thing we need to realize. Bitcoin is virtual currency, but the technology behind it is Blockchain. We’re looking only at Blockchain technology. We’re not talking about virtual currency. Basically, what a Blockchain is, is it’s a technology to move or allowing you to move assets. Assets can be anything. It can be virtual currency but it can be true currency. It could be fidelity point. It could a lot of things. In a nutshell, what Blockchain is trying to resolve is really to eliminate the need for a third trusted party. Where we move asset, there is always a trusted third party in the middle.
For most people, that’s a bank or someone else.
It can be a market infrastructure like SWIFT, for example. SWIFT is a trusted third party. The Fed is another one. It’s a trusted party amongst the bank. Then you as the corporate, the bank becomes your trusted party, so on and so forth. That’s the first thing that Blockchain is trying to resolve because there is a cost related to that, to pay for that. There’s nothing free. The second thing Blockchain is trying to resolve is to accelerate the transfer of value and reduce the cost. Those are the three drivers or the three things that the Blockchain is trying to resolve.
With the whole moving things faster. It’s a whole other initiative within these whole faster payments. It’s just one more way to accommodate a faster payment.
Definitely. Instant has become the norm. You’re in your car, you listen to the radio, there’s good music going on. You take your phone, you can Shazam what’s going on and realize who’s singing, download, play or mix it. Even for a movie with Netflix. Instant has become the norm and it puts a pressure on the payment as well. Payment has to be faster, especially cross-border payment, two days, three days, even more sometimes to settle overseas. It’s just not normal.
It’s just unacceptable. It’s becoming unacceptable in this real-time world that we’re all being accustomed to because of the B2C that we’re seeing. Now, we want it in B2B.
Totally. That’s what Blockchain is trying to resolve. It can be complex, but I’ll try to simplify as much as possible. Remember, remove the trusted party. We’ll accelerate and we’ll also make it cheaper. To do that, Blockchain, the first concept you need to realize, it’s a ledger, an open ledger where everybody can look at the ledger. A ledger is just a chain of transaction. A transfers money to B, C transfers money to D and so on and so forth. We record those transactions in the ledger and everybody can see the ledger. That’s concept number one. In that concept, the ledger is centralized.
To remove a trusted third party, what Blockchain did is distributed the ledger. You take that ledger and then everybody has a copy of the ledger. Every time there’s a transaction, we have to agree, everybody has the truth and all those ledgers get updated automatically or get an update. It makes it very secure in a way where if you want to crack or hack one of the ledgers, you need to hack all the ledgers.
To simplify, if I want to steal in a house in the neighborhood, I would have to steal or open the door at everybody’s house to be able to steal in your house. It makes it very difficult to hack the Blockchain. It’s all encryption. We won’t go into the detail. Anyway, I’m not technical enough. That’s what Blockchain brings on the table.
Now, the other thing is, like I mentioned, its moving assets. It can be applied to so many things. I have a chart here showing all the startup and all the company investing in Blockchain or offering Blockchain solution. It goes up to legal documentation, KYC, Know Your Customer, identity, trade finance and payments of course.
Trade finance, that was the big announcement with Microsoft at Sibos a few weeks back, about how essentially Microsoft stepped in and took a leadership role and said, “We’re going to go first.” They recognized the challenges in trade finance. Talk a little bit more also about, you alluded to it a little bit, about the transparency factor associated with Blockchain and how that’s a little different than a traditional payment.
The transparency factor, again, we focused on the payment side of Blockchain. The company we think is ahead of the curve is Ripple. I can talk a little bit about Ripple and how it works. The transparency is really interesting. First of all, Ripple, what I like about them, it’s a distributed ledger, but they brought also a concept of private Blockchain. Meaning, it’s just a subset or a group who can participate. It’s not open up to the internet and everybody can view the ledger. I think the bank also like that concept, that’s why they’re having the momentum right now. It also makes it more efficient in terms of volume because it’s limited. You don’t have thousands and thousands of ledgers to update in real-time.
You’ve essentially solved that, “How do I get all these ledgers updated? With the private Blockchain, I have a smaller set of ledgers.”
Exactly. That’s what I like about it. Blockchain for me, to simplify, is API. We’re moving away from batch and now moving in the API, meaning that there are multiple messages going on during a transaction. Back to your question of transparency, what I like about Ripple is you first go out to your bank or banks. It’s bank to bank. The bank will ask, “Okay, I want to transfer X amount of money to another currency. Give me a quote, how much is it going cost me on affects but also on bank fees?” When you get back the quote, there’s a way to configure to accept automatically the quote, but you can also reject the quote. Maybe you’ll say, “Those fees are too expensive. Let me move to another bank. Let me ask somebody else.”
Once you accept the quote, then the ledger or the money on the ledger are blocked, and that’s where the transaction starts going up, back and forth. You know exactly, instinctually how much it’s going to cost you let’s say to transfer US money to Canada. You know exactly how much it’s going to cost you to make sure your beneficiary received the exact amount. There’s no hidden fee. You know it ahead of time, you know exactly how much it’s going to cost you.
That old process of getting a quote, accepting the quote, blocking the ledger and do the settlement is about 40 seconds. The other great thing about Blockchain is the remit information. You know you have a lot more information. It’s settled real-time or almost real-time, 40 seconds. We can almost say it’s real-time. Close enough, and you know the account was debit and credit on the other side. You can reconcile also real-time. I think that’s where it brings the most value, especially on the corporate side.
You start to think about cases where you have time sensitive payments for corporates. This feels like a fantastic application, i.e. “I’m shipping something but XYZ party at the port has to receive money or they’re not unloading my ship.” In those types of situations where, if you could initiate a payment through Blockchain and it would be virtually real-time, that seems like so much of a better way for treasury organizations and services organizations to move those funds for time sensitive payments.
Where now, it can be a little bit of a challenge and you can use existing infrastructures, and you can make that work and that’s fine. But real-time really gives this a whole new set of flexibility, in terms of what you can do with it. As you start to look at how this is rolling out, tell me a little bit about the philosophy for how you guys are going about these integrations with Ripple and the strategy, given that Blockchain is so early in its evolution?
First of all, Ripple is a great company, a very technical IT company. The people working over there are genius. Let’s put it this way. However, I think where we bring value to Ripple and why the partnership is working so well, we’ve been in payment for the last fifteen years. We introduced ISO to Ripple. We proposed them to use a standard that’s starting to be globally adapted, so we didn’t reinvent the wheel on this.
Also, we’re the one also proposing to create a private Blockchain. That’s how we call it. Our expertise combined with the Ripple technology, and they’re great to listen and to adapt their product quickly, I think that’s one of the reasons why they are a leader in this field. Trust is key in all of this. The banks are testing Ripple or testing Blockchain right now. They’re doing pilots. They will do it and they’re doing it with a corresponding bank that they already have a relationship with.
Right, because they know they know they can trust them.
Exactly. Our strategy is really to leverage that. Every time we have a new bank interested in Ripple, Blockchain and our technology, we go out there and knock at their national correspondent bank as well. We’re building that. Ripple announced also like a consortium. We’re building that trust and bringing it at another level. Today, it’s not just piloting the US banks and also Canadian banks, exchanging messages between themselves and really doing payments, cross-border payment among themselves in moving real money. That’s where we are. It’s not science fiction anymore. It’s happening.
In terms of customers, you’ve already got some customers, existing customers that are working on implementing Blockchain. I always talk with my listeners about where are people at. Expertus, you have existing customers. You already have a long history and an existing customer-based and then you’ve got the first, what I called the ABCs, the Alpha Beta Customers, the first guys working on Blockchain. Is anybody live actually moving transactions back and forth? Or are we still pretty much in a pilot phase? Can you talk a little bit more about how that’s evolving?
It’s considered live because they are moving money, but the volume is not there. You cannot say they are totally live because it’s really experimental. The volumes are not there yet. We need to make sure in terms of compliance, regulation. They want to make sure. The bank needs to make sure that they are very secured. The trend we see is a lot of banks out there have multiple entities, an entity in Canada, one in the US. That’s a use case that they are exploring because it’s the same company.
Because of the cross-border fees?
Exactly, but it is the same company. They trust each other, I hope so.
I hope so. That’s two entities in the same company.
I think that’s where we going to see a volume ramping up quickly. It’s with those use case where a Canadian Bank has a US entity and they want to quickly transfer money in between the same account or inside the same bank, because they use the same flow. Even if it’s the same company, they’re still using SWIFT. Most of the time they’re still using SWIFT to transfer money between themselves.
Yes. Usually, because of the banking relationships and the infrastructure between the US and Canada, it’s difficult to do that. There’s a wall. There isn’t one in the border but there is one between the banks.
I can talk with the customers who are using it right now. We first started with the pilot. Then they apply it, they see different use cases that they were challenged with so many years. Now, with Blockchain, they say, “Okay, we could do this. We could do this.” They find use cases where it resolved problems that was there for many years, they couldn’t resolve. It’s moving away from the batch. Banks are really batch-oriented still.
They really are. It’s the, “Send them in and they get processed by XYZ cutoff time.” That’s just the way the system is set up. Even the same day ACH that came out, it’s same day, not real-time. They just added two more batch windows. It’s absolutely better, but we’re still in a batch world when it comes to some of that. That’s where this is really interesting as you start to shift over to an API and get more of that transparency. Your message volume is going to go way up when you’re in an API world because essentially, aren’t you basically putting one payment through each API call?
Is that a good way for people to associate that? Is that a good way to think about it or is there another way they should think about API versus batch?
It is a good way to think about it. After that, we’ll have other ways, you could send a file with all your payment. However, the settlement could be the total and that could be real-time. There’s different ways of doing it. Yes, in a nutshell, it’s really one to one, resolve quickly.
We’ve talked about the basics of Blockchain and the transparency. We’ve got some of the first use cases. We’ve got the first clients coming. Now, if someone wants to find out more about what’s going on and explore some other use cases, what’s the best way to find you, Louis?
Easy, on LinkedIn, I can be found. Our website is Expertus.ca, a Canadian company. Please feel free to drop a note. I won’t spell my email address. It’s very long and it’s difficult. Those French names. Look for me on LinkedIn. I know this podcast is also mostly addressed to corporates, many corporate will ask, “Okay, what’s in it for me?” Right now, Ripple is only a bank to bank application. I think it’s important. Where I see the business case is the bank offering you another vehicle to do payments over their bank portal. You could select, “Okay, I want to do a Ripple payment,” for example, a real-time payment through their portal and you can initiate that payment or send a file directly to the bank.
It’s pretty cool because you’re going to see the dashboard. You’ll see the payment work, each phase in 40 seconds where it’s said, “Okay, I received the quote. I accepted the quote. Everything is blocked and then boom, it’s done. It’s paid.” I think that’s where corporate will benefit from it. Especially for what you said, urgent payment, there’s something going on overseas, the boat doesn’t leave port. You need to pay someone really fast. That’s exactly where the use case I see for the corporate.
Another one, maybe in the future if corporate could join Ripple directly. I don’t know if that’s the direction they are going to take or not, because I think there’s some politics around it. However, being a corporate, having my own tools in my TMS system, I could go out there and ask all my banks to provide me quotes. How much you’re going to charge me to transfer money X to this country, so on and so forth? Then decide the one that offers the best quote. I think that’s very strong. When I talk about that to my corporate customer using my TMS, they’re like, “Where do I sign?”
Yes, exactly. In SAP, I know just because I follow it, being in the industry, did some press release a few months ago. They did some pilots where it was bank to bank transfers with Blockchain. These things do exist and are there and available for people to use. I think that we’ll see it continue to evolve.
It’s coming. Still early stage but it is coming.
Exactly. The one last question I like to always ask is, I love to travel, I know you travel some too. Tell us, what is your favorite travel destination that you’ve ever been to and why?
It’s true, I travel a lot for business. Is your question is for business or pleasure?
Spain would be the one I really like. I’ve been there a few times. Barcelona, I think it’s one of the best cities. Last year, last June actually, I turned 40. A bunch of my friends, we went to Ibiza actually, which was pretty cool. The food is great. The people are great. The architecture is awesome. I love Spain and I would go there every month if I could.
I would say Barcelona ratchet it up on my favorite cities list. I was just there last summer. They’re so hospitable. The food is fantastic. You can be right on the water. I absolutely love it.
They have everything you need.
Yes, they do. Thank you so much for joining us today, Louis. It was an absolute pleasure having you.
Pleasure. Thank you.
Industry Article Review
Now, to our article. Mike Robertson wrote a very thoughtful guest blog for Buyer’s Meeting Point. In his blog, he’s talking about the practicality of managing an incumbent supplier, then how do you know when you actually need to replace the supplier. The reality is for procurement professionals, heck, not just procurement professionals, really anyone in business functions that has responsibility for supplier decisions faces these choices. How do you know when it’s time to replace someone? You get these calls from prospective suppliers, “I can do a better job than XYZ competitor,” yet often you can be left cold.
Even though they’ll come in and they’ll pitch you on something, you don’t really have a compelling reason to make a choice and to do something different. The reality is though, Mike presents three criteria that you can use that will help you answer whether you even should take that call from that potential supplier and whether you really should make a change for your suppliers.
The three questions you should ask yourself. First, do you still feel like you’re getting value for the money from your incumbent? For the time, effort and costs that you’re investing, is the value there? Second, do you feel valued as a customer? In other words, do you just feel like you’re a cash cow? They’re making a whole lot of money off you but you’re not getting a lot for those dollars. It’s important for businesses to feel valued. Trust me, you know when you’re a cash cow. Let’s not pay lip service to it, let’s be honest. We all know.
The third point, does the solution deliver? Are you still waiting for that hardware, software, process update that’s going to fix all of the existing issues? It’s easy for suppliers to say it’ll all be fixed in the next version, but we must live with what we have today, it has to be good enough. If you answer yes all of the questions, you’re getting good value for your money. If you feel like you’re getting value, if you feel valued, if your solution is delivering, you don’t need a new supplier. But if you’re answering no to any of those questions, it might be time to start looking.
One of the best points Mike makes in this article though is that we really have to understand that just because you’re going to make a new decision for the future does not mean that the old decision was a bad one. It can be really easy for organizations to say, “I made the decision on this supplier, so I’m just sticking with them.” No matter what, they just stick with that supplier. The service can be terrible. There can be bugs in the product, it might not work, but, boy, I made that decision. Sometimes people feel like it’s a failure to admit that you need to make a different decision in the future. It’s not.
In reality, I come into a lot of situations with existing ERP implementations where someone else implemented the solution and later I get a call. Someone says, “Can you come in and take a look at this?” When I come in and take a look at it, I often tell people, “You made the best decisions that you knew how to make at that time based on the information you had, your skills, what you knew about the product, and frankly, what your implementation team that you worked with knew about the product.” It doesn’t make you wrong just because you need to make a different decision in the future. You can put that behind you and say, “I’m making a new decision going forward. I have new information or there’s new solution, or there’s just a fresh look that’s needed.”
Don’t feel afraid of the past. Feel like you can turn the page and make a new better decision for your future. Thanks, Mike. This was a great guest blog that I’ve read and had wonderful insightful comments. Thank you so much to our listeners for joining us for episode five. If you enjoyed the show, I would love it if you could go ahead and leave me a review on iTunes, Goggle Play or SoundCloud. Please feel free to refer it on to your friends. Thank you so much for joining us.
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