Western Union’s $100BN Bet

Malcolm Clarke  0:00  

I think the one that is the most exciting is probably the digital asset network. I think nobody has that, that capability of not just the retail, but we have 300 digital banks, either side, for funds in and funds out. We have cash, like we have a true payment global network that we're now exposing to other partners in the industry that can use it, so I get very excited about that as well, and it brings in hundreds of millions of new customers to Western Union Filmprint.

Sy Taylor  0:30  

Welcome to Tokenized, a show focused on stable coins and the institutional adoption of tokenized real world assets. My name's Simon Taylor, I'm your host for today, author at Fintech brain food and head of market dev over at Tempo, and I'm joined, as always, by my friend and co-host on the Stable Coin Stories version of tokenized, Rang Goldie, aka Goldie, the one and only SVP of payments and network over at Fireblocks. How you doing, Goldie? I'm good, I'm good. It's good to see you again, Simon. I haven't seen you in, I don't know, maybe a week since the last conference in Amsterdam, maybe, and yeah, that's where we met our guest, by the way, as well. Whoa, small world. How about that? Well, that's it's a great timing, but Golden, before we bring our guest on, do you just want to remind everybody what Stablecoin Stories is? And then we'll, we'll jump into, we'll jump into our guest today.

Ran Goldi  1:21  

Yeah, you're right. So, I mean, look, everyone knows this, and you've been listening to every tokenized episode, I hope, with every spin-off of a program, but everyone is talking about stable coins, right? The world is filled with them. We have tons of use cases, people are talking about this new reality of stable coins everywhere, but we want to tell you, what are the stories behind the coin? What are the untold stories that actually create the tectonic shifts that's happening right now in the world, and I think there's no, you know, better company talking about tectonic shifts than the company that invented, maybe almost 200 years ago, how we move money through something called Telegraph, and the story about, again, the world's oldest money transfer company that's with us today. So, Simon, if you want to unveil our client, our guests,

Sy Taylor  2:12  

yeah, of course, the history of the Telegram is very associated with one little company called Western Union. And joining us today is Malcolm Clark, who's VP of Digital Assets over at Western Union. How you doing, Malcolm? Yeah,

Malcolm Clarke  2:23  

great to be here. Yeah, I'm excited to chat with you. Anything, Goldie, we spent some time last week at another conference in Mexico City, so that was.. that was a lot of fun catching up there, and happy to tell the story.

Sy Taylor  2:36  

I feel, Malcolm, like you've been everywhere, also in the last, you know, probably the last year, almost like I go to Money 2020 in Vegas, in Amsterdam, in Bangkok, Bitso Conference in Mexico. You know, there's more, more and more coming, obviously. Fintech Brain Food also having some stuff soon, like we're going to talk about this. How, how did you become the go-to person in the, in definitely in the Western Union ecosystem. We'll definitely touch on that, but we will get into that. But just before we do, Goldie, I've got to remind viewers and listeners that views and opinions of our contributors today are their own and might not reflect those of companies they represent. Please don't take anything we say on the show is tax, legal, or financial advice. Always do your own research. And, of course, this podcast is made possible by Fireblocks and Visa. Goldie, you were just talking about the Western Union story there. I mean, look, Malcolm's got quite a, quite a background. I know, Malcolm, you've spent more than 20 years at the intersection of payments, blockchain, and identity helping build Zelle from the consortium side, very interesting story in its own right, that probably deserves its own podcast, but now leading at digital assets at Western Union, there's lots of arcs of kind of innovation there, so talk to me about what's the through line for you, how do you get from Zelle and payments innovation to Western Union and stable coins?

Malcolm Clarke  4:07  

That's a great question. So I think they all intersect. So if we take like a moment backwards, my first plane to blockchain was building a digital identity network in Canada, so using Hyperledger and really solving, how do you tokenize or digitize a consumer's identity that's owned in an institution like a bank, and then share it with relying parties in a secure, irremutable format that you know is actually useful, and solve some of the use cases of fraud and those things. So you're at TD Bank, running the payment engineering team, creating that network. The natural evolution from that is then, how do you start applying payments or money movement or monetary movement against that identity? So if you have a strong identity, then you solve fraud, you. Solve identity theft, you solve these things that is most prevalent when money is moving, and no more so than in the blockchains and in the ecosystems, digital assets. So, moving from there into Zelle, and building out that capability of part of the Zelle network, and then just moved away from the industry for a little bit. I spent time at Disney building out identity at Disney and consumer profile, so really honing the skill set around. Okay, how does a consumer go through a very complex ecosystem like Disney with multiple different brands and different capabilities, but still have the same experience and have the same data set. And then ultimately ended up in Western Union, where the story playing out, as you've seen, is how do we take what we do today, which is moving money globally between individuals. We do it in real time today. It happens in real time. So, from a stable coin point of view, we really do it. I could Goldie sends me money, it appears straight away, but behind the scenes we have multiple processes, we have multiple banks, we have multiple layers, and that actual money transaction takes days in some instances, some instances it's quick, but a lot of the time there is just a lot of process and a lot of steps and intermediaries to move that money, so we take risk or we take credit risk or we take parking risk on the actual real time, so it's all from the same ecosystem of identity digitization into money movement, so it could all just slightly fit us together at the end of the day,

Ran Goldi  6:27  

and I'll take a follow-up on that, Malcolm. Like, when you joined Western Union to lead this, what was the mandate like? I guess, how did you think about this opportunity that's in front of you, because it's, you know, a person like you at a time like this could go probably to any fintech, any, you know, neobank that wants to come in and do stable coins or any type of digital assets. You decided to go to Western Union. How did you think about this opportunity? So, I think

Malcolm Clarke  7:00  

I look at it from from a couple of places, so I start with, if you're not solving a use case, whether that be consumer or internal, with any technology, you're essentially trying to build the stage and hoping people show up. So Western Union has an incredible set of assets that, frankly, are perfect for these use cases, so we move hundreds of millions of dollars, hundreds of billions, sorry, dollars around the world globally using corresponding banking layers, so we all know the corresponding bank layer, everyone's spoken about the speed of it, and how it's unavailable 24/7 and so on and so forth, so in that movement of those billions of dollars there? Is cost and operational efficiency, so additional asset or a stable coin works perfect for that use case. So it allows us to remove the requirements, part capital, and those correspondent banking layers. So that's a great asset. And then on the opposite side of that is the consumer, so a lot of our consumers live in regions where holding a US dollar denominated value is actually beneficial, so if I can hold US dollars, I can remove the risk of FX or local fiat cost or movement of that interest rate. I receive money as a receiver today, and I don't really get to decide what I do with it. It's really, you can go to the store and pick it up. In some regions, we have banking and we have systems of digital, so solving for that consumer to say when you receive money, you can actually hold it as US dollar denominated value and then spend it in a Visa stable card, that's actually solving a use case. So we have hundreds of millions of global users, so if you take those assets together, you actually give yourself a really good opportunity to use the economics of the internal money movement with the consumer use case. So I think you have to pare that back, and then the last thing Western Union has, which is sometimes overlooked outside in the industry, we have 500,000 retail location footprints, so to put that into context, we have more retail locations than probably most of the biggest businesses that you know on the street. That means any Western News and Western Union customer or an extension of that network can get cash immediately from that store, you know, different values, different denominations, different access. That network is incredible. So, if you put those three together, the stable coins and the digital assets really lend themselves to, you know, move things faster in that flow. So, that's why, you know, I think Western Union has a really good opportunity to make big differences with its use cases and storage commissions within partners.

Sy Taylor  9:41  

You have a massive distribution advantage by default, and I think that's something that the stablecoin industry is learning. I see. I remember, sort of five six years ago, I'm sure you'll remember this, Goldie, there was this view that stable coins would obviously remove the need for somebody like a Western Union and. Western Union was clearly cooked, and actually far from that, you've adopted it as a technology, and it seems to be benefiting you more than anybody. And what the stablecoin industry is desperate for is distribution and last mile access, and that's where the barrier is, and it's where Western Union's historically been strong, and you know this is what moving 100 billion in fiat, plus 150 countries, 500,000 physical locations. There's something quite poetic there, but how do you think about both the legacy and the innovation? Is that is that legacy helpful to you, and that brand helpful to you in the markets where you operate, or is it sort of slowing things down and making your job like harder to innovate? How do you think about that tension?

Malcolm Clarke  10:48  

So, it's, it's almost a double-edged sword. So, I mean, I can tell the story. We were in Mexico last week, as we mentioned, and it's my first visit to Mexico, wearing the Western Union hat, and there was a couple of realizations I had, and I've been to other regions, I'd been to Europe and other places in my nearly years tenure here. The Latin America footprint, they've grown up with Western Union, so that footprint and that region, like many others, Western Union is a household name, it's a name that is trusted and they rely on to take money, receive money, get money, so having that is actually incredibly valuable, because in an industry where crypto has gone through its growing pains, its learnings, you know, some of the connotations around the digital networks, and it's a coin like Bitcoin that goes up and down, it's crypto bros. There isn't true real brand names there that are supporting it for the regular individual. So, Western Union, we have this great opportunity to not actually move a stablecoin to the user, move monetary value, and they receive it in the same way. It's backed by stable coins, so some users don't care whether we send stable coins or dollars or rainbows, don't care, they just need it in a set way, so that trusted brand is incredible, and I think that's one side of the sword. The other side that comes with that, we have all these legacy processes and internal things that have grown up over 175 years, so KYC, fraud analysis, understanding risk, understanding money movement risk licensing, you know, ability to play in countries and have regulatory approval in countries, that's actually incredibly valuable, and that's your mo, so all of that is positive. Now, the opposite side of that, in the legacy companies, sometimes innovation can take time. What you know, I've been able to do here is, you know, we partner first, so we partner with people like Firebox, we partner with people like Anchorage, we partner with people like Rain, and some others that we could go on. The intent is move fast with partners and then build those critical infrastructures over time within the company. You know, replacing some of those legacy things, replacing some of those settlement processes, those financial processes. So it's really a balancing act of saying, how do we go fast with partners, build the culpability, and plug it in where it plugs in, and then over the next number of years start replacing those physical infrastructures and those legacy infrastructures, and legacy, you know, everything's legacy out of the year anyway, so we're not talking about 175 year pieces of components, you know, with the new digital process, it's real-time settlement, so it really is a double-edged sword here, and you know, actually playing with that sport is it's a lot of fun. I think I'm, you know, I'm very blessed that I have both of those things at my disposal to really launch this. I think you know we have a great head start versus some others, and in some ways, you know, we're slightly behind as well, because of legacy,

Ran Goldi  13:41  

yeah, and Malcolm, I guess. How was it like before you got there? So, I mean, I can only imagine that at a company that has been around since 1851 there's probably some veterans that are now, they should be now again, as we said, like 173 years old, and they're, and they're coming to you, and you're telling you, Malcolm, you're destroying our brand with this, you know, Crypto Bros, as you mentioned, this Crypto Bros fraternity you're creating here, but really, before you got there, did the CEO, the executive team, which, which, which you joined, did they already set the scene? Did they bring you to execute? Did they bring you to think about this again? I'm trying to get the backstory of how was it like when you got there. Did you have to discover this for them?

Malcolm Clarke  14:33  

I think it's still a learning, so like I think Western Union have tried some digital asset crypto things. In the past, the strategies were potentially not clear. Again, we use the analogy before you're building a stage and hoping people come to the stage. You start with what are the problems you're solving, as I mentioned, and what are you trying to achieve with strategy, and where are you going? And how are you using the assets you have, so starting from that, from a strategic point of view, it starts at the top. So Devon was very clear, you know, the organization has to evolve, innovation has to take place, and Devon's a CEO here. We have to look at this as an opportunity, not a risk on the business, which it was previously looked at, and then being given, you know the ability to start executing that strategy, the key at Western Union, before I got here, and I'll tell you a story about one of my treasury colleagues in a moment, it has to be integrated in everything we do, it can't be built on the side of a desk, and it can't be built as a crypto bro culture that runs out of New York, so growing a team and a group of people over now over 100 people working on this in different groups in the organization, whether it's what we would, you determine the legacy business or a compliance business or a risk business or treasury business, they start with you at the journey right at the door, and they've been building and learning through that journey as we've, as we've been evolving, so a good example is the person running treasury at Western Union, now running the digital asset treasury. The gentleman has been here 20, I think I'm gonna get it wrong, seven years, so that's the treasurer, and you know, he's called Patrick, and he's an exceptional guy. His evolution into digital is actually not that big, so today he goes to OTC. He buys spot on FX. He does all of that. The digital asset is no different. It's a swivel check. Yes, he's in between two systems. He now has additional asset wallet where he has USD PT, the stable coin, and he distributes it to agents using that mechanism. But his role has not changed, you know. He still is looking for the best rate, he's still looking for the thinnest margin, he's still looking to support our agents, he's still looking to pre fund and receive funds. So, it's really interesting that we have this opinion that the digital assets are changing everything substantially in companies, they're not, they're plugging in natural systems, and they have to, otherwise, again, it's a side of the desk program that is destined to fail, so you know that's kind of some insight, and how I've thought about it, and how leadership has, you know, given the ability to implement that. And look, again, we are still learning, like we're at the start of this journey, we're hitting bumps everywhere, and regulations in countries are a lot of fun. We have, we're a regulated entity in every country we play in, so the disadvantage of the legacy, as we called it, or the licensing, is we can't just launch something in a country as a BS company and be like it doesn't matter, like some fintechs, because the regulator can actually hurt us in other ways, so we have to go through regulation, we have to talk to regulators, we have to get some form of approval, sometimes we have to be more deliberate in what we do, instead of just turning things on, so that can again slow things down. But the other side of that is you have that regulatory buy-in, or you have that local buy-in before you do things from regions. So I think it's an interesting insight into how we, how we look at things.

Ran Goldi  17:59  

So, no, that's super interesting. How again they've, you've sort of fit in there, and from the side you've bulldozer this entire move, and I don't know, less than a year, but I know there's a whole team, obviously, which they're behind you, but but I do want to put you on the spot. I do want to focus on you for a second, because, like, again, like Simon said, in the beginning, you're a very interesting person. This is not your first rodeo in payments. You're not, you know, you're not an amateur here. What's your stable coin moment, right? Like, for you personally, when did it shift? When did it move from, oh, this is an interesting technology to, you know, what I'm going to do my next career move with this technology was a specific transaction a corridor of customer like what served as a catalyst really for you,

Malcolm Clarke  18:47  

so I think it's two things I always look at it like again, I'm a, I come from payment engineering and you know complex product technology, I'm a narcissist in terms of I like really complex problems to solve at the moment was the second you have a framework from a regulatory point of view you remove a bunch of risk so the genius act giving a framework to say if you go and throw all your eggs into a stable coin basket somebody's not just going to turn come along and shake that basket up with a regulatory approach, so you've seen in Brazil recently, my knowledge is very thin on this, so I may get it wrong, but in Brazil they've taken the approach that US dollar denominated inbound is no longer permitted in a regulatory framework, so we have to pivot because of regulatory change, and I think you're going to see that in the stablecoin industry internationally, where countries are going to be concerned about US dollar nominated coming in, and they're going to make great inventory moves, so we have to plan for that. As we're building in the US, you couldn't do a stable coin if that was a risk, you just couldn't bet the business on it in some senses. So I think that was one of the big moments for me, where this has now become a. Technology, which is mainstream, because you have the regulatory approval. I think the second part of that is you're just seeing the industry grow. So, Circle and Tether, you know, Circle is a great name. The coin circles around the network, the exit, you know, they want you to hold it because they want to earn name. They're searching for use cases at the moment, they're searching for vertical claims, creating use cases to make it more liquid, you know, solve those payment things. Tether, the name says you tethered coin, like you're tethering to the network. It's designed to stay in the network again. They're moving out to your sta, they're moving out to other things, you know, to try and get those use cases. Western Union, in that stable current moment, is if we can remove pre funding and the capital costs, we go from a negative of percent to a positive percent without changing the world, like you think of another technology that you can bring into a business where you can, in some cases, swing 9% into from minus six to plus three, that's that's the state of common moment, I mean, you really draw it out in your, my whiteboard is a mess of drawings, and you look at that value chain, you're like, hold on, I can swing 9% on a value chain by bringing in a technology that isn't going to cost me 15 years and $100 million and really not change much of what we do, other than some components. That's an incredible moment to have, of being like, okay, I see the complexity and I see the solve.

Sy Taylor  21:22  

I want to ask about USD PT. If I can, this is the US dollar payment token. You launched this on Solana, and you've been quite deliberate about the payment token language, so I'm curious about the decision behind the name, and I'm curious about what it took to get an institution this age to issue this digital dollar, so walk me through the journey from like idea to live product.

Malcolm Clarke  21:49  

So the name is an interesting journey. So we had, we have a very strong brand, as you indicated with Western. So there was a lot of debate and deliberation around should we call it Wu Token or W USD, USD, should we call it global remittance coin? At one point, was something we considered, and GRC, for me, coming from banks, is actually a process of looking at global risk governance and compliance. I'm like, I think we should call it global risk coin. So we went through multiple names, and then again, when you peel back to what we're trying to solve, so USDPT, or US dollar-denominated payment token, is really one of what could be many tokens, so if you have regulatory change in a country and they determine that you can't bring in the US dollar denominated token, or you want to do a micro coin, then that USD changes to whatever that nomination is, so MX or Euro, or pick your currency, your favorite currency, the payment token stays the same. So again, this is designed to support payment use cases, it's designed to support treasury use cases, designed to support consumer money movement. So payment token, it just makes sense, like it is a payment network. We are a payment network. We're a real-time payment network. We're continuing to move that way. So, that's, you know, the story of how we decided to call it that. The reason we didn't use Western Union is we have a set of brands, so we have Intermex, which is a company we bought, you know, that is a, you know, supports Mexican money movement. We're not going to rebrand that to Western Union, so now we can use payment token in Intermax without having to worry about Western Union branding and consumer confusion. We have Vigo in parts of Latin America, we have many, many brands that we support, so not using the Western Union denomination, but using the coloring and the treatment of it, you still are able to use that token elsewhere, and then further from there we move large sums of money to big partners. It's no secret, Letra is one of our biggest partners, Bank Haste, and others. If you brand it Western Union, it deliberately becomes part of your ecosystem internally and externally, and it's very difficult for partners to pick up, so no partner is going to pick up a denominated coin branded by another company. Those companies are now looking at it and saying, "Okay, how do we mint and burn your SDPT? How do we use in our ecosystem? It's trusted because it's Western Union, it's not a rug pub, it's not something crazy. Our users in our country understand Western Union, they already know who that is, so there's some brand affiliation there, so it allows it to become more liquid, more usable by others as well. So again, this isn't just for Western Union usage, it's a token that can be used in the market. We've been deliberate about our economics and about how we do mint and burn, and how we do allowing people to join and do direct mint and burn programs, and how we should have loyalty on the token, there's some very deliberate approaches there. For that reason,

Sy Taylor  24:44  

I think that's so fascinating that you don't always get the credit for the tokenomics and the design of the architecture. People saw Western Union did a stable coin and didn't necessarily really understand the level of detail and thought that's gone into it, so my. I want to thank you for explaining all of that as well, and you spoke a little bit about the partners there, but there's also the consumer-facing spend layer in Mexico, Argentina, Colombia, and the Philippines, and I'm interested in what you've launched so far with USD PT excites you the most. Is it the last mile problem, is it the kind of consumer side, is it the internal stuff, or is it some mix of all of that?

Malcolm Clarke  25:30  

You know, it changes every day, because I mean, there is lots of firsts happening at the moment, and there are four very discreet programs, so we obviously have the token as a program, we have the Treasury Bridge, where we're working with our agents and our partners, and using the token and pre funding, post funding, removing a ton of cost and layer, and just operational efficiency. Then you have the digital asset network, which essentially is opening up our retail and digital payments capabilities to partners in the ecosystem of crypto and others, so you know, if you're this Alfred, and we're going to give them a call out because they were the first to the market, right there, yeah, they deserve it, Diego is my man, he did, he did his job, I'm having coffee with him today, so I'll tell him I gave him a shout out, but, um, yeah, so they're the first ones to implement Western Union within their application stack. So, what that really means is, once you've done your trade in the crypto asset or the stable coin, and you have the cash balance, you can send it to any Western Union property and pick it up in cash for a very small fee. So, we've now enabled all of those wallets that Alfred have, and we have a really long pipeline of others coming in, so not only do we now have a new consumer base, but they have access to last mile cash with a simple API and a simple onboarding process as a partner, that's really exciting to me, because we've now taken our stores, which are really traditionally Western Union customers going in there and transacting, to now other customers being able to access and get money, and we know the last mile is the challenge in the industry. So, I get excited about that. And then, stable card that we launch in the coming weeks, that's really for the first time, other than where we have digital wallets, that's giving us sometimes the first receiver digital banking like product in regions where they don't have banking like products, so the use case of I send gold in money, and this is a really bad example. I've never sent golden money for obvious reasons, but if I send gold in money, he now has an option to say I can pick it up in store or I can move it to a digital card that is instantly spendable on any visa via accepted merchant, and that deprecates usdpt, and by holding usdpt, I can take some earning the loyalty as well, which is allowed under the current genius contracts that opens up receivers to actually now become true customers of Western Union digital friends, and what's really good with that is it goes to 40 something markets when we launch, versus, you know, you have to go market by market with digital products, and some markets are just very difficult to get to sometimes. So, again, I get very excited about all of them. I love all my children, as they say, but at different times they achieve different things, so I love them more. But if you're going to pin me, I think the one that is the most exciting is probably the digital asset network, I think. Nobody has that capability of not just the retail, but we have 300 digital banks, either side, for funds in and funds out. We have cash, like we have a true payment global network that we're now exposing to other partners in the industry that can use it, so I get very excited about that as well, and it brings in hundreds of millions of new customers to Western Union Footprint.

Ran Goldi  28:47  

Yeah, and I think of Malcolm, you're talking about the network and the token itself, and maybe just last question about USDPT itself is something to ask, is the stack right? So you built a stack, and this is, you know, it's not that I want to do advertisements for companies who didn't pay sponsorship for the podcast, but like you build a stack with Anchorage as the, you know, the OCC regulated custodian that that issued it with Fireblocks to do treasury management with Rain to do the stablecoin cards, and specifically also with Solana as the blockchain. Now you know there's a lot of blockchains. All the blockchains are amazing. All the blockchains are unique in their own way, but yeah, you chose this stack. Was what was the thinking? And again, I know what you chose, Fireblocks. That's that's great, but why did you choose, for example,

Malcolm Clarke  29:44  

how can I send right to that?

Ran Goldi  29:47  

Send me, but by the way, on the point of you sending me money, just, you know, send me one bitcoin, I'll send you two bitcoin, right? But, but specifically, like, were you thinking about Solana? Or long term, because of kind of confidentiality, or what drove you there.

Malcolm Clarke  30:06  

So, look, the Solana question comes up often, and you know, I try to be consistent in my answers, but we're getting into a little bit more of what's behind the scenes here. So, first and foremost, we're a public company, we do things from an RFI point of view, and we look at it from a, you know, a fit from a vendor, from a not just a technology stack, and you know, where's it been, where's it going, you know, what is its future? A cost basis is really interesting to us, the innovation side, you know, then you know the partnership, and what do they bring to the table as a partner, so again, you said all the blockchains, you know, we know the individuals, we know the blockchains intimately. There are a few things when we pick Solana, and time has moved, by the way. Like, we picked Solana seven months ago, and in seven months, quite a lot of things happen in this industry. So, you know what they had as innovation back then, many have now. So, you know, the reasons I picked Solana back then, people are going to look at and go, "Well, all those, they didn't have them then, and they didn't have the pioneers, so Solana brought three things to the table, and they brought it very clear and articulated it very well. So their ability to develop and innovate with their developer platform was very critical, and they were very clear on how they're going to roll that out. So if you take what I wish to do in the future and some of my thinking on roadmap things like on-chain privacy. If I'm moving big money between me and another partner, that specific transaction I may want private, and the ability to do that in the 2022 token and really program that up at the smart contract layer is very important. Now, again, others have moved that way. I'm not too worried about between blockchains. How do I take privacy from this blockchain to that blockchain. I'm talking very specific institutional use cases here, where I'm sending money from institution A to institution B on a daily basis at volume that from a public point of view as a public company can indicate how much volume you're doing between the corridor sometimes. So that is critical to us. So that was very interesting, the ability to maybe in the future build on chain effects, like if we're going to have multiple denominations of payment token, I may want to do on chain effects, so being able to develop that myself, so that innovation piece was very, very unique, their, you know, willingness to do things in their economics around paying for wallets, you know, I don't want to pay for wallets on blockchains, so their openness around how they're evolving from an economics point of view was very clear. And then just the network itself, it's designed for fast-moving payment transactions, which is exactly what we needed. We will go to other blockchains because you can't have a single layer of failure in anything you do other than you use just the user and send a Mastercard, so ignore that bit, but you, you tend to have multiple, so that's the reasons behind it. And then the other thing they bring is they have this really great cohort away from Solana, which is communities, pods, there's multiple names for these things, which are in regions that we play that actively look, how do they build on Solana. How do they leverage the coins on the chain, and how do they create innovation in those regions, in those communities? That frankly, I don't know how it works in an African country, and what they need from a, you know, an innovation point of view by being part of that, and being able to encourage it, fund it, partner on it, provide Western Union is the upfront, do those things you actually drive innovation in places that you naturally can't touch, and equally you get some really good ideas that you can bring back in and say, okay, how do we, how do we give average that, how do we use that partner, that new vendor, that new innovation, and bring it elsewhere? So that in itself was was awesome, like that, you know, I think blockchains have started to do it, but that was really critical to us.

Ran Goldi  33:43  

I'm sure you'll find the right tempo time to bring over blockchains. Yeah, so give me Simon, I know the blockchains are available and

Sy Taylor  33:54  

they innovate faster, and they were there first. Long credit to you for making sensible choices and for making a great answer, and look, honestly, it's really great to see somebody that is able to take a risk and achieve something and deliver real value for customers, and I think we're all in it for exactly that reason. Very briefly, forgive me, I do have to thank our sponsors. This podcast is, of course, brought to you by our friends at Fireblocks. Tokenized is also sponsored by Fireblocks. Fireblocks is the stablecoin infrastructure of choice for global businesses, from Visa to WorldPay to Bridge to Revolut. With over $100 billion in monthly stablecoin volume, Fireblocks powers stablecoin strategies at scale with infrastructure that enables PSPs, fintechs, remitters, and banks to issue, move, hold, and manage stablecoins. It's all done securely at scale with secure built-in compliance. With Fireblocks, you get complete control to build your own stablecoin orchestration layer, create payment accounts, manage liquidity. And access on and off ramps in over 60 currencies makes it easier for you to build and scale and expand your business globally. Learn more@fireblocks.com And thank you so much to Fireblocks once again. Look, I just want to ask one last question to you, Malcolm, because I'm conscious of the time. I know all of us are going to run shortly, but one of the structural problems that USDPT solves is pre-funding. This is the requirement to park idle capital in destination markets across time zones to ensure that transactions will actually settle, but that's trapped liquidity. Can you help me quantify what this change looks like in practice, and how different the working capital picture is versus the legacy model that you had before, and it's programmable now too.

Malcolm Clarke  35:54  

Yeah, so there's a couple of things to unpack there. So, if you take the current model, which potentially won't go away. I mean, we, you know, we're making a very deliberate approach to no longer fund in fear and funding stable coin, but in some regions that's not going to be possible. So, the process that we go through is at a weekend or a holiday period, which tends to be the busiest for money movements, as a holiday in pick your favorite country, we'll pick on Mexico, because we were there last week. They, there tends to be a big money movement around holiday time. So, what that means is the Treasury team, and Patrick, we mentioned before, they spend a great deal of time and effort planning for buying or moving working capital into the region, so there's cash in the draw for agents, so that's literally what we're talking about. At the end of this chain is an agent as big as Bank of Theca and as small as a Bodega individual, and they need cash in draw, so that when Simon turned up with his NTCN, they have liquid funds available, so that working capital, and you know, I'm not going to give exact numbers, but let's call it around the 6% to 8% annually sits within pre funding or purchase currency from central banks in Africa and Gabon and others that we talk about the stable coin. If you remove 100% onto stable coin, now we know the mechanisms of stablecoin, I park $1 in my treasury account held earning T bills, and then move the value to the agent. The agent then uses the local networks of OTC or exchange, or in some cases ourselves and direct banks that mint and burn to then get liquid with that coin. That money sat in treasury starts earning T bills for the period of time that it sat within regional circular region, so I've gone from let's call it a 6% capital costs, who are now two and a bit percent yield on that same capital, so that changes that cash available in that economics quite substantially for a company like Western Union. If you consider we send over $100 billion like that's that's not small amounts of change in terms of capital cost and operational efficiency, so you know that that is where we see it. I think the challenge that we're facing, and I think others are facing, is the last milestone. So you know, for our agents, because we are part of the end to end chain today in our traditional business and our current business, making sure that when they send usdpt to an agent in Bolivia, the exit rate they get for Bob in the exchange and down to their bank is not this is no different than what we would have sent them, which they otherwise they have no incentive. So you can give loyalty and earning and all those things to incentivize, but really those thin rates are still very important, and working with those exchanges and those OTCs and things to make sure they stay very thin and very liquid. The other challenge I see in this industry, which is very interesting, there are a lot of players now. So, if you talk about, we want to remove the corresponding bank layer, it's, you know, the layer that's slow, there's lots of parties in that layer, there's lots of people playing that layer, they're all taking a little bit of cut of your coin, if you look at the USDPT and the stable coin layer, there are a lot of parties in that layer as well. There's lots of vendors involved, there's lots of OTCs, there's lots, and everyone takes bits, so there's, there's like the BIP, you know, off the value is really a thing. So over time, reducing the amount of people who we work with in the vendor stack, down to critical vendors, critical people, and not just taking bits up in transaction. Here's what we need to do, otherwise the economics are not going to work, and that's where I'm struggling with that messy picture at the moment of how do I make sure these economics work.

Malcolm Clarke  39:38  

Yes, I can take capital from pre-funding, both my agents at the end have to pay a higher cost because of the economics and the BIPS and the margining and the effects rates. It doesn't work like you fail at last mile, so it's a very complex, messy picture. Still, I think there's still some big solves to take, you know, in this industry, and I'm excited to, you know, kind of figure out how to build those, and there's. As Goldie suggested,

Ran Goldi  40:02  

yeah. Well, yeah, you're the real deal, Malcolm. And again, I wish we could talk for hours, but really, like last closing question, I swear, you know where I'm going to ask you what we asked for our guests, and really try to answer like one word, even like you know 20 years from now at Western Union stable coins, are they just a story of what Western Union did in 2026 or are they a fat part of the ecosystem of Western Union?

Malcolm Clarke  40:29  

So, the way we're punning it, they're a fact, like this is integrated in how we behave and how we work, like it's not an innovation play.

Sy Taylor  40:40  

Amazing, we could go on with Malcolm forever. I want to sit at the learning tree and learn a lot more, because how you're thinking about treasury, the scale of your business is what everybody's trying to figure out right now, and so you're in the middle of it. This is why I love this show so much. So, I want to thank Malcolm so much. I want to thank everybody for watching and listening, and Malcolm, if people do want to find out more about you and everything you're up to, what are they going to do there?

Malcolm Clarke  41:04  

So they can come to Western Union. We have a USDPT site. LinkedIn is always fun. Yeah, there's.. we post a lot on LinkedIn. We have USDP now on X, so you can follow along there and encourage you to do so, and reach out. Like, we're happy to happy to sell you USD PT.

Sy Taylor  41:24  

Heck yeah, Goldie. How about you?

Ran Goldi  41:26  

I'm at linkedin.com/brian Goldie, or at Brian Goldie. Look at me and Power book.com as well.

Sy Taylor  41:32  

You'll find me at S Y Taylor on all of the socials, screaming into the void of Fintech Brain food.com and of course at Tempo dot xyz. And if you haven't already, you'll find a lot more of this podcast if you go ahead and subscribe. It really, really helps us. I know some of you like just dipping in and dipping out. You can subscribe anyway and still hear the episodes. It really genuinely helps the show. And also, if you want to help us, then leave us a review. It's a great way to say thank you. And I want to say thank you to Goldie and Mark. I appreciate you guys, and catch you next time.