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AFC Series: Avoiding the Next Synapse: Lessons in Risk, Regulation, and Responsibility
The collapse of Synapse shook the fintech world. A year later, have banks, fintechs, and regulators done enough to prevent another disaster? In this episode, we explore the crucial steps to ensure stability—shared responsibility, smarter due diligence, and evolving regulations. Tune in to learn how the industry can avoid repeating history and build a safer, more resilient financial ecosystem.
Host:
Rachel Morrissey, Money20/20 US
Phil Goldfeder, CEO, American Fintech Council
Guest: Peter Hazlehurst, CEO, Synctera
Investors for Synctera include: Lightspeed, Fin Capital, Diagram, SciFi, NA Ventures
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Welcome to the Money Pot. My name is Rachel Morrissey and I am here as the head of content for Money 2020. I am here with Phil Goldfeder, who is the CEO of the American FinTech Council, as part of our series with the American FinTech Council, to try to unravel a bit of what's going on. I mean trying to say we're unravel of what's going on. I mean trying to say we're unraveling what's going on in Washington. Sounds like we're biting off more than anyone could chew at this point, but trying to unravel a little bit about what's happening with fintech in Washington and what we can expect going forward and some of the different stories that have fed into what is happening for the next little while. So hello Phil, how are you doing?
Phil Goldfeder:Great. Thank you so, so much for having us, Rachel. This has been a great series and I'm excited for today's episode.
Rachel Morrissey:Me too. This will be really fun. We have with us here just a total unknown, somebody that you've never, ever heard of before. If you guys can't hear the sarcasm in my voice, I'm obviously not laying it on thick enough, but joining us today is Peter Hazlehurst, who is the CEO of Syncterra. How are you doing, peter?
Peter Hazelhurst:Great Nice to see you, it's so nice to see you.
Rachel Morrissey:We're so glad you could join us today. So, to get things kicked off, I'm just going to throw it to Phil and he's going to kind of put us out and start this discussion. But we are going to be talking about something that everybody wants to talk about openly and talks about in every dark corner for the last year, which is what happened with synapse and how that has affected the whole system, and especially how that has affected the system in the nature of what we can expect from regulation or moderation or what we think is going to be coming down the line as far as behaviors of bank and fintech partnerships. So, to kick us off there, we're going to go to Phil and why don't you go ahead?
Phil Goldfeder:Thanks, so so much, rachel. Again, peter, thank you for doing this and, more importantly, thank you for not putting any parameters on the type of questions we can ask. You said we can ask him almost anything. So, as you know, the American FinTech Council is sort of unique in that we represent as members both innovative banks and FinTech companies of all kinds, and so we think a lot about bank and tech partnerships and the regulatory structures. So let's reflect for a moment on the title of the podcast Avoiding the Next Synapse. So how do you think Cigterra and other similarly situated fintech companies can reestablish the trust from their bank partners in the post-synapse world, and maybe also sort of ask that question, similarly to regulators and how do you rebuild some of that trust that may have been lost?
Peter Hazelhurst:So I think the challenge that the whole industry has is the level of understanding of what it takes to actually do these types of programs and successfully run them. And in the late sort of 2017 to 2020 time period, there was a bit of a gold rush. There was a whole bunch of banks that said I want to do banking as a service I don't really know what it is, but I want to go do that. And then there were a whole bunch of people that saw that demand on the investor side and said we'll fund anybody that can say banking as a service. Go. And it was quite frothy. As many of you remember and I don't know, 17, 18 startups, including us, were funded in that time interval. We were one of the later entrants, partly because I had previously been at Uber and was running payments over there and we had worked with kind of everybody from the Marquettas of the world to the Green Dot banks and everybody in between. And obviously when COVID hit the payments, part of the universe of Uber got shrunk in terms of complexity and stuff like that, because there was less riders and so on, and I thought it would be an interesting thing to sort of capture that knowledge pool of how hard it is to build a digital bank for drivers, turn it into a platform and turn that into a company, and that's what was the origin of Syncterra.
Peter Hazelhurst:The challenge, though, was everybody was going really, really fast, and not everyone knew what the rules were, and or, if they did know what the rules were, chose not to follow them, and or, if they did know what the rules were, chose not to follow them, and I think when anything is going quickly, people cut corners and do that sort of stuff. We built rather slowly, and so we've generally weathered the storm in terms of probably not being as aggressive as we could have. We could have onboarded a crap ton more fintechs and put, potentially, one of our banks at risk. We chose not to do that, and the general theory is that the people coming into the business weren't as educated as to what they were getting into as they should have been both banks and fintechs and platforms like us. So if you want to avoid it, obviously hire people to do these sorts of businesses.
Peter Hazelhurst:That kind of know what the business is and payments and banking is a domain-specific skill set. You can't just say I'm an expert on text messaging, I'm going to go and become a banking software company or I know everything there is to do with supply chain. Banking has. Supply chains must be the same. The reality is there's tons of complexity just in the tech stack and then there's layers of complexity that many companies have never thought about, like I saw a person posting on Twitter say I've been told I need to do a SOC 2 audit. I got an estimate from Vanta. It was really expensive. Is there a cheap free version? I'm like probably.
Peter Hazelhurst:But your regulators are probably not yeah, and I'm like, yeah, legit, but this is what was happening. People sort of heard that there's a gold rush. People needed a debit card to spend money. People sort of heard that there's a gold rush, people needed a debit card to spend money. Or they saw Google Wallet or Apple Pay launching payment services and said I can go do that.
Peter Hazelhurst:And on its surface it looks like it's just a technical problem. You just code some shit and magic comes out the other side. But the reality is it's a complexity of relationships. So you've got at least three players. There's a platform like us, there's the FinTech or the brand, there's the bank, but in reality there's also a state or federal regulator. There's FDIC or OCC or pick your governance system of the week. Then there's the FTC if you do something really silly, and there's a whole bunch of commitments and stuff like that, and just understanding who the participants are is a complexity, and the reality is like back in those days there weren't organisations like yours, phil, that would make it really obvious how to do this, and so people just made it up.
Peter Hazelhurst:And the problem with making it up is you go into an ecosystem of banks, in particular, that kind of know how to do community banking, which is great. So they have branches and they work with their local small businesses and consumers. But if you said, hey, first National Bank of Osage, iowa, are you ready for 10 million Chime users? And they're like well, we're like a one branch bank. You know, I'm not sure if we really know what to do with 10,000 users, let alone a million. How should we deal with that?
Peter Hazelhurst:And you have relatively unscrupulous players. Let's say, come in and say, well, don't worry, we got it, you just sign this paperwork, it'll be fine, no big deal. And when they were signing the paperwork they didn't read the bits about you can go to jail for not doing KYC and AML properly. And it was really unfortunate because if they'd read the basics, they wouldn't have got into the business without actually creating a plan. And if you see what's happening today, bank demand is off the charts again, but they're all asking for what's the plan? How do I do it? I don't want to get in trouble like the other guys did. What should I do differently? And that's what's transformed.
Phil Goldfeder:Rachel, if I can just add on to that question and sort of Peter as a startup right, and so I appreciate number one, that you were a bit behind. Yet your instinct still told you to take it slow and be thoughtful about what you were doing. Was there fear, as you were starting up, that maybe you were falling too far behind? I think I would argue I think there's. Some people were unscrupulous and nefarious in their activities and I think we are seeing the remnants of that today. You obviously took a much different approach. How did you think about that approach and was there an inherent fear just because you thought maybe you'd fall behind?
Peter Hazelhurst:There was the latent fear from our investors why are you treating this like a marketplace? Marketplaces are harder. My answer to that is always marketplaces always be bespoke. And if you look at taxis in New York, uber came in as a marketplace and said look, we'll start with the black cab drivers and we'll help them find a better distribution system, and so on and so forth. It's very expensive to do and it takes a lot more effort to build a marketplace, but once the marketplace is in place, it's much more resilient.
Peter Hazelhurst:And our investors came back and said well, why don't you just do it like Synapse did? They just partnered with Evolve and they tell Evolve what to do. And I'm like, because I've been on the other side of that trade, I've had the calls where a bank banker has called me and I've been moving 15, 30, 50, 100 million dollars a day and they said, well, the regulators are coming in and said cease and desist, you have 30 days to move your traffic. And I was determined never to be in that place again, which means always having two possible partners for any particular deal, always making sure that the people we're working with understand the risks they're taking and this risk this is not a risk-free game and, like all things in banking, you price risk and some banks want to take the risk and want to earn the higher premiums and other banks don't, and that's okay.
Rachel Morrissey:I mean this is a little off, but you're obviously pulling very much from your experience with Uber. Did the fact that you had that experience, you had that much under your experience with Uber, did the fact that you had that experience and you had that much under your belt, did that change the nature of feeling behind? Because I think people get this sense that they're behind and, oh, we're late to the market. But if you've been in something and you've kind of seen the long game, I wonder about whether that perspective changed the nature of feeling behind her. You're like, no, there's plenty of space here, we don't have to rush.
Peter Hazelhurst:So first things first. The market is huge and there's no one player that's going to win Stripe and Addian. There's at least two. Don't tell Perentry, there's probably three. There's at least two. Don't tell Perentry, there's probably three.
Peter Hazelhurst:And my assertion in the market was there's no need to rush unless you've got investors that are giving you tons of pressure. And we were lucky. We had long bed investors with Lightspeed and Finn and Syfy and others and they basically came to us and said do it the right way, we don't want to be in trouble six months, 12 months later. And if I hadn't had that and we hadn't sort of thought upfront, how much money is it going to cost to build this stuff? And in my head I knew it was going to be like a hundred million dollars.
Peter Hazelhurst:But it's like saying out, hey, at the seed stage, hey, I need a hundred million. You'd be like laughed away. But you actually have to have some level of real conversation and say this isn't a $5 million investment. You can't get it done. And by doing so and by being straightforward up front, we knew that it would be a game of leapfrog and we also knew that a number of the players that thought it was a $5 million game were just never going to win, because they'd go in and bank a whole bunch of low-funded startups that would cause the problems that inevitably happened, and so it was causal. If you try and do it on the cheap, you'll build something that's ineffective or not complete, which causes you then to go and hire and get customers that aren't really ready and banks that aren't really ready, and that mismatch of technology to product is where you get in trouble in trouble.
Rachel Morrissey:So, as you're looking at the landscape now and we've obviously had this blow up where one of your competitors at the best acted imprudently, like, at the very most generous way of putting it they acted very unwisely. We'll put it at that, just to say at our core, whether we believe it's that way or not, that's the nicest way we can put it. It's had this ripple effect about the way that the whole industry is seen and, as you just said, a bank fintech partnership is actually a partnership between many entities. It's not simple, as there's one bank and one fintech and there's this partnership between the two of them. It's sort of like you're marrying into a whole slew of a family that is all interrelated and you have to deal with them if you're going to deal with one. So what do you think, what do you see of the future for bank fintech partnerships and fintech involvement with the banking and the regulators? How would, if you were to design it or you were to make it optimal, how would you do it If?
Peter Hazelhurst:you were to design it or you were to make it optimal, how would you do it? So I think the best way to think about it is you've got a number of incumbents the FISOs, the FISs, the Jack Henrys, the Finastras of the world that at their core pun intended are a ledger. And look, when I first came to the US, one of the first parts of the core banking system I built was passbooks for tellers, and a passbook is the prototype of a distributed ledger, because literally the piece of paper is the ledger and the core banking system doesn't really even know what your balance is or any of your transaction history. And we sort of evolved from there into modern technology and so on, running the system. What we do in fintech banking is no different to any of that stuff. It's just how you think about the organization of the information, the reporting, the reconciliation, the day-to-day banking services.
Peter Hazelhurst:And I think the best thing that could happen is whoever sits in the room at FISA and FIS from a regulatory point of view, says hey, we think companies like Singterra are systemic enough that we're going to place a person in their office. Not that we have an office. They can join an empty WeWork if they want to, but virtual office and we'll happily answer and go through how we do business. And we've not as a fintech today we've never heard anything from a regulator directly and they can regulate us. They have purview over the work we do under the Services Companies Act. They just don't, and I think it's a question of systemic impact. So how big are these programs? But China's a big place, right. There's a lot of users that are involved and there's no reason why their tax stack shouldn't be also subject to review by regulators or bankers. And ultimately, where it gets most efficient is a combination of what I'll call public-private partnerships. So the public side is the regulators come in and say we'd like to do this. The private side of it is just like PCI we come up with our own set of standards of it is just like PCI we come up with our own set of standards. We all suck it up and pay KPMG or Accenture to audit us for the thing. We just told them what it was, which they'd never had before, but they come back and independently verify.
Peter Hazelhurst:Does Syncterra do what it says it's doing? And that's going to build the trust. So you said how do you get trust Banks? Don't fear will Fiserv or FIS work? They don't like the contract and they don't like seven-year commitments and all that sort of shit, but they're not afraid that the tech won't work.
Peter Hazelhurst:And we need that support coming from private and public to basically bolster people's confidence, because fundamentally, the tech is a core banking system. That's basically what it is, and bankers in the community banks in general don't actually know how their core banking system works. They use it, but if you said how does reconciliation work, they'd be like I have no idea, but I log onto this screen and every day it tells me whether I'm in balance or out of balance and how to chase it. We are the same. We're doing the exact same technology lift and all we need to do now is get people back in the saddle of feeling confident that it's moving. And I can tell you observationally, the inbound demand right now is crazy. We're back. It's almost pre-2020 type timeframe and it's made more fun slash, interesting by all the sort of announcements on crypto, which I think is really interesting. I, in fact, hold the one Libra coin that exists and this is a beautiful. Oh, you have one too. Oh, you have a Bitcoin, but I have a Libra coin.
Rachel Morrissey:Mine's rarer oh you have one too. Oh, you have a Bitcoin, but I have a Libra coin, mine's rarer.
Phil Goldfeder:Yours is rarer. I remember the Libra coin and I didn't know if anybody had one of those. Let me ask you and I apologize for jumping in for a moment you said something interesting and I've heard you say it before. I think we were together in Philadelphia Fed and I heard you say something interesting and I think a lot of people agreed with you. We oftentimes sort of at the American FinTech Council. We oftentimes talk about standards, but how do you think about core competency? Right? The bank comes to the relationship with a certain core competency. Syncterra comes to the relationship with a certain core competency. The FinTech company comes with a certain core competency. To the relationship with a certain core competency. The fintech company comes with a certain core competency. Do you think by engaging directly with the regulator, changes that strengthens that or in any way kind of upsets the apple cart, the way the ecosystem is currently built?
Peter Hazelhurst:I think it can only strengthen things because if, at your core, you argue that regulators' job is to keep consumers safe and the ecosystem safe, banks and supporting infrastructure, by definition they would want to know how the system works and who are the parties and how the participants are. And you go to basic stuff like what is an R10 on an ACH and everybody agrees that you've got 60 days. In the old school day, if you wanted to really complain, you'd go down to the local police office and say I file an affidavit, someone stole my checking account, I want my money back. But we've all agreed that those are the rules and they're designed in ways to help consumers and businesses. The rules aren't different because it's fintech banking. They're the same rules, and what we've sort of tried to do is pretend that somehow those rules don't apply or that they're different.
Peter Hazelhurst:And then you ended up with various agencies saying well, I'm going to introduce extra rules to possibly create more controls, because people are avoiding the existing rules, and the reality is no one was testing for the existing rules, so adding new rules on top of it doesn't help anything. So I can see I'm not pro regulators doing more. I'm just do what your space tells you you're supposed to do that would be great. And then we in industry can come by and say, well, that's really good, but we're going to hold that would be great. And then we in industry can come by and say, well, that's really good, but we're going to hold ourselves to a higher standard, just like PCI says, I'm not going to let your pin get sold into the wild.
Peter Hazelhurst:Or your credit card pan shouldn't be shared between businesses and merchants directly use tokenization and it's that sort of stuff. And the trick is for the community, bankers that are involved in this space, or bankers in general, forget community or otherwise. Do they understand what it feels like to actually operate these businesses? And that's where the whole industry is now working a lot better at explaining. Here's what's going on. This is how it works. This is why you need to care about this. These are the risks you're taking and price the risk appropriately.
Phil Goldfeder:So you just spoke about sort of opportunities that present themselves now. Once again, we think it's not because of deregulation, because we think there's, I think from at least from the American FinTech Council's perspective is that we're going to a time where we're removing kind of political ideology from financial services regulations, go back to more common sense approach. You talked a bit about the way in which you were founded, which kind of enables you to sort of set yourself apart and to set Singtera apart from others. But the last two years, regardless of who you were, have been rough right, reputationally, operationally, I mean, in many ways. So what's enabled you to sort of weather this storm and be able to come out today and seize on the opportunity that exists and that's presenting itself?
Peter Hazelhurst:So I think it's a combination of things. One is the marketplace is, despite two years of chaos, is relatively healthy, meaning that we have banks that want to take deals and want to work with partnerships to expand their footprint, whether it's international customers, domestic customers, interesting types of credit use cases and so on customers, interesting types of credit use cases, and so on. And I think, at its heart, fundraising has been quite challenging over the last two years. I'm very grateful for all those folks that bet on us because that, just pragmatically, we had money to pay the bills. That was a hard part for many of our players. We also did a pretty good job of underwriting and choosing to partner with certain fintechs.
Peter Hazelhurst:Like everybody, when we launched in late 21, early 22, we were keen to see all the different possible use cases and we onboarded I don't know 20, 25 early stage startups who were relatively poorly funded, but great founders, people coming up with cool ideas. In my heart of hearts, I knew most would not survive, but the reality is, giving them an opportunity to see who would survive is part of the model that we're in, provided they don't take any risk that's unnatural in order to get there. So, out of that cohort. Three or four of them did awesome and one of them's our biggest customer now, which is crazy. And if we hadn't said yes to them then when they were really early, and if we hadn't said yes to them then when they were really early, who knows what would have happened? And so we got lucky I wouldn't say lucky. We were thoughtful about onboarding customers of different styles and shapes and sizes and we were lucky in terms of timeline, in the sense that when we launched in 22 or end of money 2020 in 21 and then first customers in January of 22, we had that curve of growth that facilitated us then being able to fundraise again. That would allow us to continue the momentum and never say never.
Peter Hazelhurst:But the nice thing about the last raise we did is it gets us to a pretty good place in terms of being able to hit break-even, and I'm sure we'll raise more money after that in order to continue to grow, because there'll be opportunities to do some M&A and there'll be lots of really interesting ideas that come into the market. But being able to project to your customers and to your sponsor banks hey, I know it would be nice if we had 300 million in checking. We don't. But here's the curve and it stops curving downwards. At this point in time, let's go. And so I wouldn't say it was just one thing. I think it was a bit of confidence building. I would say we planned our product offering in a good strategy. We got consumers, small business, we got a nice mix. I think we were lucky in the sense that the majority of our customers, early on and to date, are corporate or small business who have, generally speaking, been beneficiaries of the downturned economy in terms of PPP money and all of those sorts of things as well.
Rachel Morrissey:So I had a wicked thought. As we've been discussing this, we know that this caused a lot of concern around the entire model of banking as a service and what it would do for the entire industry. We really worried about the reflection of that. But I am wondering slightly if the very attention because scandal always brings attention if the very attention allowed for people to investigate it and understand it more deeply, to understand it better. And the actual bounce back from that is that companies like yours might have actually had extra interest because they weren't making the mistakes or they weren't making the choices that some of the fallout that created the fallout from Synapse's decisions in the first place. So I had this really wicked thought Was the negative publicity possibly just a net positive for the nature of banking as a service industry as a whole, like that part of the ecosystem? Is it better off now?
Peter Hazelhurst:So I will say that shining a spotlight on how this should work and how it should be done is always good, and it makes everybody transparently understand what's going on. How does it work, what are the risks, and all that sort of stuff. I I can't think of any possible goodness that came out of this for a consumer, though yeah, so I think the real people that have been impacted by this are the humans on the other side of this trade, who basically just got hosed by Lots hundreds of thousands of dollars.
Peter Hazelhurst:Yeah, and I think much of it avoidable, almost all of it avoidable. You have a bank that many and I'm not going to pick on a particular bank, but banks in this space have a general sort of purpose which is, at the end of the day, how much money does Phil have in his checking account? If I look somewhere digitally, I won't say in the vault, because it's not in the vault, it's not in Fort Knox because the gold's not there. But if it was, someone goes there and says, yeah, I tick and tie, I can find Phil's money. And when Phil goes to the ATM machine and says, hey, I need $200, money should come out. Or it should say sorry, phil, you only have 75 bucks, that's all you got.
Peter Hazelhurst:And to have banks not do the most basic that, yeah makes all the rest of it sort of downstream derivative, and I I want all of our partners that we work with as banks, and all the bankers in the game, to step up to that minimum basic bar. Do you know where the money is? And it's hard to know because there's all these different things. There's credit card swipes, there's charge cards, there's ATMs and ACHs, and I get it. But that's why you pay technology providers like us to give you those dashboards and tooling and infrastructure, because if you try to build this yourself, you'll fail. And if you look at the ecosystem at large, various folks have said there's 140, 150 banks that have done some sort of fintech banking as a service-y type of thing, and I would posit a guess that the majority of those have tried to do it themselves with one program here or one program there, thinking I can stick it on my core banking system and technically you can. But it doesn't have all the bells and whistles that you need to do reporting, reconciliation, operational controls and all that sort of stuff. There's no third-party KYC tools. There's no KYB tools.
Peter Hazelhurst:Like most banks have no idea how their debit cards get to their consumer, they've never thought about mailing delays and they've never thought about tracking a high-risk customer and did they get their card on time? And yet that's what's required to be in this game, which is to care about those things and then assign responsibilities of who's going to look after what bits. If you're a fintech, you're pretty motivated to make sure the debit card gets there. So if you want to yell at the card printer, by all means do that. If you want to change policy on KYC, you need to justify it. What other service quality aspects have you done to make sure that this customer is a good customer and they're not going to be a bad customer? But if you can't keep track of the money, everything else falls apart it's kind of the name of the game yeah, and I think that was part of our response.
Phil Goldfeder:I think sometimes with regulators, with policymakers and I say this as someone who served in the state legislature it's what we call reactionary regulating or reactionary legislating, where, oh my God, we have to solve for this issue of reconciliation and the FDIC. What was it six months ago? Sort of put out this new proposal, custodial accounts.
Phil Goldfeder:Exactly right when banks sort of raised their like, sort of shook their head and said, but this is what we're supposed to do, right, like we don't need a new rule for this. This is our job is to ensure that we're reconciling at the end of the day, and so, sadly for any bank that woke up and said, ooh, this is a problem for me, they should really rethink, kind of what they're doing in this ecosystem, whereas I think a lot of our members sort of reached out to us and said, yeah, we embrace this, we understand it, this is part of our responsibility in this relationship, and so I think that's a big part of it comes back down to understanding what your role is and making sure you're doing it the best it can be done.
Peter Hazelhurst:That's right. And look, sinterra is far from perfect. Things break all day long. Every now and then some weird transaction gets posted. There was one this morning and I was like, oh, I've never seen one of those before and I've been doing this shit for 32 years and you'd think you'd seen everything by then. Forget it Like.
Peter Hazelhurst:It baffles my mind how we've modified transactions. Bear in mind push to card and all of that stuff. Those were all illegal because they were fraud transactions. They were just an unpurchased refund and Visa changed the rules, chase followed along and, amazingly, we created a new category of push to car, which is cool. But imagine 10,000 systems out there all expecting refunds to have a purchase and they all broke. And so you saw all these problems with AFTs and OCTs of banks saying, well, it's fraud, but it wasn't fraud. It was just a new type of transaction and nobody knew about it. And innovation beat the technological distribution. We don't have to operate that way. We can operate with integrity above and beyond that and start with the first principles of I want to know where the money is. My duty of care is to the person's money, not to the bank per se or to Sinkterra. We owe it to the consumer or to the business Don't lose their money, and everything else sort of falls out as a responsibility after that.
Rachel Morrissey:Yeah, that is sort of the basic right. You should always know where the money is. Yeah, and we're like a year and a half. Oh, that is sort of the basic right.
Peter Hazelhurst:You should always know where the money is. Yeah, and we're like a year and a half, that's not true. We're a year and a month or so into this bankruptcy for Synapse and we don't know where the money is. No Like literally don't know, and it's kind of wild.
Rachel Morrissey:No, I know we had this really interesting discussion with Yelena McWilliams at the show and and sense. And yeah, it's wild, she can't, she can't find where all.
Peter Hazelhurst:Yeah, she's super smart.
Rachel Morrissey:She's really good at finding where it is. She can't find where it is, so it's pretty interesting. Anyway, I think this has been a great episode. Our time is up, so we're gonna end here, but thank you so much, peter, for joining us today and talking through all of this. I think that this is really invaluable for the whole industry to think about and to know, and I really appreciate you being you joining us today my pleasure.
Peter Hazelhurst:Look, I think the market is definitely on the upswing. We've beaten most of the bad actors out of the ecosystem now, which I think is good. It's not perfect and there will always be a transaction that goes bad, or a bad actor or KYC will fail, someone will be on a FINRA screen and all that sort of stuff. But as long as we think about it, with expecting that to happen and build resilience in the infrastructure whether it's multiple banks, multiple fintech providers, all those sorts of things to move past that, we're going to create a thriving second stage for banking as a service.
Rachel Morrissey:Yeah, and, like you're saying, there's a vast difference between mistakes that happen and there's little things that are almost unavoidable, as you're trying to do things and you're building basically a new stack that is attempting to accomplish something a lot faster than what the old stacks did, but there's a big difference between that and acting irresponsibly and and leading to something inevitably difficult. Um, and I think you're right, I think, like, like I was saying, I, I, uh, it's hard to call it a blessing, but there is something about having the bad actors um, exposed and and um, and just kind, of laid out what the bad behavior will do.
Peter Hazelhurst:I believe it was something somewhat controversial. I don't think any of the bad actors were unknown.
Phil Goldfeder:That's fair, it's funny Again, I've heard you say that and a huge credit, I would agree. I think you know, unfortunately it was too easy right and some people look for the easy opportunity, and I again it goes back to where you started this conversation of being extra cautious, extra thoughtful. Sort of what we think about all the time is the longing right. We're trying to build a foundation. You can't build a foundation on wobbly standards and practices and I think, unfortunately, some people attempted to do that and, quite frankly, it's all the more reason why we appreciate sort of your voice in this conversation and the ongoing thoughtfulness to what you bring to the ecosystem.
Peter Hazelhurst:Yeah, I mean, this is a game of reputation, that is banking right, Yep, and I'm sure I've done transactions that I regret in my past, but I've owned up to them and we've said, oh, that was a bug or that was a mistake, we figured it out. And as we go forward, the sum of our good actions obviously we hope would outweigh things that we make mistakes with and we're tipping over into that really good spot now and I think it's really good. And what I'm excited by is that the market is coming back to a place where, with controls and with process, you can actually run these things effectively, scalably and safely and so much opportunity for great things to come to market that in the past we've sort of said, oh, it's too complicated or it's too much risk or I don't know how to build that. My team's job is to help people absorb those complexities, absorb the risk and still build a thriving business, and I'm super bullish it's going really well right now.
Rachel Morrissey:I'm with you. I think that that's exactly what's happening. All right, thank you so much. And Phil, thank you so much for joining me as co-host. I really appreciate it. This has been fun.
Phil Goldfeder:Thank you. Thank you so much, Rachel.
Rachel Morrissey:And I just want to say thank you to all of our listeners. Please feel free to leave us a review or to send us ideas for episodes that you think would be good on the Money Pot, at podcast at money2020.com, and we will be seeing you at the shows. Have a great day.
