Finetics™ Studio at Money20/20: Sean Rodriguez

Finetics Studio | Payments | 1/4/2016 4:13 PM

PaymentEye’s Senior Fintech Reporter, Sarah Gill, sits down with Sean Rodriguez of The Federal Reserve to discuss real-time payments progress and lessons American payments systems can learn from other countries.


Sarah Gill, Reporter: I'm joined by Sean Rodriguez, the Faster Payments Leader for the Federal Reserve System. How about we start off by talking about what your role is at Federal Reserve and what you kind of do on a day-to-day basis?

Sean Rodriguez: Yes. So my responsibilities these days are to lead the Federal Reserve's initiative on faster payments and our look-see with the industry to see what we could do to enhance and upgrade our payment system with faster payments capabilities.

Sarah Gill, Reporter: So why is this necessary? Why does this need to happen?

Sean Rodriguez: So our thinking--we've done a lot of research on this. We've done a lot of work with stakeholders across the board in the United States to figure out this whole notion of a faster payments capability and why we need it, what are the enhancements, the benefits. We're lucky in the US not to be the first country to implement a faster payments capability, so we're in effect not going to be on the leading, bleeding edge of the change. We have a number of countries to learn from--the UK, Australia, South Africa--a lot of other countries have been through this change. So we're learning a lot from those other countries about what's worked, what hasn't, what could we do differently in this country. So we're taking those lessons learned and engaging with a broad spectrum of stakeholders in the US to try to divine a way forward to get to a faster payments capability.

Sarah Gill, Reporter: What are the implications of not having this at the moment?

Sean Rodriguez: It's--in some ways, the implications are not taking advantage of the opportunity to contemporize our payment system in the US. You know, a lot of the capabilities we have in the US are fairly old. You think of the ACH payment system, the check payment system that we have, even the credit cards, debit cards--those are not brand-new systems. And they've been iterated and evolved and all of that and are very useful. But with all the technology capabilities these days, what we're learning from around the world is--and the world we're living in--it's about real time in every way. We should modernize our payment systems to reflect that.

Sarah Gill, Reporter: And kind of looking ahead to, and this is sort of in play, what do you think the main benefits will be?

Sean Rodriguez: So I think there are benefits lots of different ways, particularly for end users, both consumers and businesses, to be able to manage their life, their financial life, in real time, versus, you know, having payments take multiple days to take effect. To transact business in a real-time way, not only personally, but as businesses, to be able to be paid, particularly small businesses, to be paid more timely than they are today with current capabilities is going to be a real enhancement. So I think that's going to be a huge benefit for end users, businesses and consumers. But I also think there's going to be a real benefit to the financial institutions in this country to have this kind of be the moment in time where they take the opportunity to modernize and upgrade their own internal payment capabilities and back rooms to bring those up to date.

Sarah Gill, Reporter: I mean, I guess it's just giving businesses the option to be able to do it, right? Not everyone would necessarily want to have these capabilities?

Sean Rodriguez: Well, I think in order for it to be effective, what we're really focusing on is this notion of ubiquity, that you and I, if we want to make a payment and we had dinner together and we want to split the bill, I want to know that I can effectively split the bill with you and not have to have 55 different apps to be able to interconnect and transact business with you or anyone else. So if I can have some certitude about the capability and it has this ubiquitous feel to it, then I think we've achieved what we're after.

Sarah Gill, Reporter: I mean, it's funny that you mentioned about having so many different apps facing, because I feel like payments is--it's quite busy with different apps maybe doing the same thing, and you think, "It's too busy." or do you think there's still space for innovation?

Sean Rodriguez: Well, one of the things we learned in our research was that part of the problem with our payment system is we have a number of closed-loop networks, is what we call them, where you and I are not hooked into the same payments network. We've got to somehow interoperate, or I've got to join your network or you've got to join mine, for us to do business with one another. And it's really cumbersome when you have multiple rules and sign-ups and authentication and all those things you have to do to be an accountholder or part of a particular network. It's really clunky and burdensome, and certainly doesn't even come close to this thing called ubiquitous.

Sarah Gill, Reporter: For sure. I mean, you've been in the payments industry for quite a long time. What is it that keeps you coming back for more? What is it that keeps you wanting to be part of it?

Sean Rodriguez: Well, the truth is I've been at the Federal Reserve for over 30 years, and I have never seen--and I've worked in the payment space for a large part of that experience--but I have never seen the energy, the innovation, the creativity that's occurring in the payment system and the focus on the opportunities as I've seen today. This conference is a great example here at Money 2020 this year, where we have over 10,000 people focusing on what we can do in the payment space. You know, this wouldn't have happened five years ago. And so the energy around the notion that we could be better in the payment space and leverage all this great technology we have these days, from mobile phones to all the real-time capabilities in other different spheres, it's really an exciting time. So I'm glad to be a part of it and have some role in helping to push the dialogue along.

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