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Apr 6, 2021

In this special episode of COMMERCE NOW we team up with APIs Unplugged podcast to discuss using APIs to succeed as an incumbent in a disrupted fintech space.

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The API Evolution: We’ve Reached Critical Mass

APIs UnPlugged Podcast

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Bruce Diesel
Matt McLarty


Speaker 1:                           00:15                     On today's special episode of Commerce Now, Bruce Diesel from Diebold Nixdorf joins Matt McLarty from API's unplugged podcast. They will discuss a theme around API's to succeed as an incumbent in a disrupted space.

Matt McLarty:                   00:38                     Hi everyone. Welcome to API's unplugged. I'm Matt McLarty, the global leader of API strategy at MuleSoft, and great to have you here as always. Mr Mike Amundsen, what's going on in Kentucky?

Mike Amundsen:             00:51                     Hey, how you doing? Actually we've had great weather in the last week, or so. It's been really enjoyable. I was just out for a walk just before we started our session here which I haven't been able to do, so I'm in a good mood, and I'm ready to go.

Matt McLarty:                   01:04                     Right. We're on the upswing. We're a year into, at least for me, lock down.

Mike Amundsen:             01:11                     Oh, yeah.

Matt McLarty:                   01:12                     I think it's almost... I think it's two days shy of the anniversary, but you never know. Things are looking up. Great. Well today we have a pretty exciting topic, and exciting guest. I feel like we've talked about financial services on previous episodes, but we haven't really done a focused episode on financial services which we're already into the second season which that's amazing because I think that API's are always rightly associated with disruption. So much of the digital economy landscape is being... There's upheaval from disruption happening, and in terms of industries financial services is a big one.

                                                                                And I think we hear a lot about fintech, fintech association with API's, open banking regulations, and so on. So I think... We've got a guest who's going to be talking from, I would say, from both sides of the disruptor and the disrupted in the financial services space, and as a fintech that's been in the industry for a while. Our guest is Bruce Diesel who is a product manager, and API subject matter expert at Diebold Nixdorf. Bruce, welcome to API's Unplugged.

Bruce Diesel:                      02:38                     Thank you Matt. Thank you for having me, and Mike, great to meet you guys.

Matt McLarty:                   02:43                     Excellent. So I mentioned that Diebold Nixdorf's position being what I would call a long term fintech provider as a global company with a big presence in the ATM point of sale, and other financial services spaces. But to start off, we always like to do this, we'd love to hear your background, Bruce. What has been your path into what we call the API economy?

Bruce Diesel:                      03:19                     I come from a traditional engineering background. I studied electronic engineering back in the 80s, and the subjects that really interested me were the software, and the software engineering side of my courses. And as I'm sure most of you know that as the end of the 80s, 90s, that was really the breeding ground of the object to oriented paradigm, and C++ was coming out. And this idea that you would have these component objects software world that really took my fancy, and it was really interesting for me. Coming out of university I started a... I was one of the founders of a software migration company, and a lot of our business was in the ATM's back in South Africa, and we were building a lot of bespoke solutions.

                                                                                I personally had always been really interested in the whole packaging of software concept, and how do we achieve the same things that we do in the digital, electronics world? These integrated circuits, IC's where we... When we look at the acceleration, and the rapid growth that digital electronics have achieved... Look at your mobile device today compared to where we were 40 years ago. And I always believed that that's where software was going to go. We could create these standard interfaces, these standard components that could be re-used, composed into better solutions, and bigger solutions, and that really fascinated me.

                                                                                I think we went through... We all know back in the UNEX days you have these utilities that you connect through pipes, and filters, and your command line, and we went into object orientation, and then compartmentation where we tried to package these things into operable components. Com, Corba, all of those, beams. But they were really complex. I think if we look back at the complexity of putting those solutions together was still to high. There was a componentization side, but also the engineering, the production process. We started improving STLC, becoming agile, and web services started to come around, and finally I think we are now belatedly getting to the point where web services, and API, or restful API's are really starting to become a day facto standard that allows things to interoperable.

                                                                                And I'm really excited about the fact that this could be finally the promise of these composable solutions. I think we've seen the promise a few times before so let's not think too many things about it, but... At DN I came through my knowledge of the industry, became a subject matter expect, but I was... Late last year I was offered the opportunity to take on board a new product portfolio. In fact, completely new product portfolio of being API as a product which I jumped at because to me we have this massive portfolio of capabilities that we jut take... There's so much friction in our ability to bring those capabilities into our customers. Big PS engagements, and that really, I thought... This just was a confluence of so many things in my career that really... I jumped at it, and I thought that this is a great opportunity to actually make a big difference for the organization.

Mike Amundsen:             07:28                     Yeah. You mentioned DN, Diebold Nixdorf. What I find fascinating in what you're telling me is you're in API product management now, right?

Bruce Diesel:                      07:41                     Yep.

Mike Amundsen:             07:41                     Your role is to help bring this API component, this API economy, all the things that we talked about... I grew up in the same space you did. It's fantastic. We've got object oriented, and [inaudible 00:07:54] explained it all. I'm going to pass a message, and it's going to be anywhere, anytime, and all the challenges we ran into, right? So here's the thing. It's taken a long time, so at DN, what is the role that API's are really playing? This sounds like this is a brand new initiative here. Have you had API's for a long time? Is this more about productizing, or it is more about API-afying? What's really going on at DN, and with API's?

Bruce Diesel:                      08:23                     No, it's about packaging, and productizing. It is not API-fying. All of our products have used API's for integration capabilities, and this is where... I call is the Swiss army knife. API's, everything. And you literally have every function of the server available through this API, but they're very complex to consume, and understand, and typically you need to know some of the unwritten rules of the game when you work with those API's. You've got to do this, and then you've got to do that, and unfortunately also we're not totally loosely coupled. We have API's that perform a lot of functions, but the coupling is still quite high.

                                                                                So essentially what this is about is how do we make these services really easily consumable by the outside world? We still see these... We have huge PS engagements, professional services to implement our products, and when a customer wants a certain function the pull-through is really high because it's... Okay, well you need this whole server infrastructure, and to use the server infrastructure you need these clients. And typically things are really quite tightly coupled to each other, and that means a high level of skill to implement them.

                                                                                The thinking is, well, that narrows down our market. That makes it difficult for us because we need a few pieces in place to be able to bring those API's to bear. So essentially the idea is how do we actually leverage what we have? We already have these things, so how do we hide some of the complexity from consumers of those API's, and how do we open up some new markets? How do we actually enable customers that done necessarily have some of our infrastructure in place? How could we bring some of those services to those customers without the "Oh, you want this services from us? Well, you've got to buy this, and this as well." And suddenly that becomes high friction to being able to deliver that service. So essentially to us this is about almost a new store front for our capabilities. The capabilities exist so essentially this is about wrapping them up, and making them easy to consume.

Mike Amundsen:             10:54                     That's very cool.

Matt McLarty:                   10:57                     I think that's a really interesting point because, I think, we've worked with a lot of organizations who maybe are just trying to get things opened up. But it sounds like you've got a level of maturity around there almost to an extreme degree of... It's not so much "we have to get access", it's after we... We have to sort out, and figure out what do we already have access to that needs to be packaged for consumers?

Bruce Diesel:                      11:21                     Yep. No, absolutely.

Matt McLarty:                   11:24                     One thing we did recently, Bruce, and we met a few months back. We did this mind share Q&A which was a fun thing where we had a question set... This was something DN put together around API's. Exploring API's. I thought one of the interesting points you made in there that was enlightening as well is that you're already seeing... This is kind of a customer demand driven thing. You've talked about your passion for componentizing, but this is a real itch that needs to be scratched for customers. I think what's interesting as well that DN is just... The coverage of capabilities that you have, and the presence that's out there around all aspects of financial services from supporting retailers in the payment space, to supporting banks in a number of areas, and even beyond financial services. Is there a particular area where there's that customer demand that's driving the API access needs, or are you seeing it across your whole customer base?

Bruce Diesel:                      12:37                     We're in an interesting position because we're a business to business consumer organization. So very often we don't actually have direct contact to the consumer piece of that equation. We have to deduce market needs, and market requirements from what our customers are asking from us that they need to deliver to their consumers. The whole financial services world is really driven through a lot of regulatory... The procurement processes are all regulated so often we need to deduce the needs by looking at what the RFI'S and the RFP's look like because that procurement process is really tightly regulated. You get onto the list of respondents to the... You almost can't talk to them directly so very often you don't have the chance to talk to those customers directly, so you have to deduce.

                                                                                And what we're seeing is the questions being asked in these RFI's and these RFP's, and you can see the level of maturity. Some of them are... Clearly they are seeing this API management platform trend in the market place, and they're saying "How do we deal with this?" Some of them are broad... "Do you have an API management platform?" Which is a really broad kind of question. It's like "Yes, sure."

Matt McLarty:                   12:37                     One definition.

Bruce Diesel:                      14:14                     Yeah. So what we are seeing though, and in the RFP's is a narrowing down, and you're becoming more specific in the questions. And I think that is a clear indication that our customers are becoming more mature in their need. And we can understand why because banks are... And we'll talk about disruption at some point, you referred to it earlier. But banks need to compose solutions. So what they need to do is lift the bar, and they don't want to be building bespoke solution right from the operating system up. They want to be composition solutions, and creating competitive advantage about composing the right solutions to their consumer base.

                                                                                Looking at what their consumers need, and being able to compose out of pre-existing services a solution that fits that market segment, or their consumer base. So that's really where we're starting to see the desire for this idea of "Okay. API is clearly... Is promising this capability of us being able to pull these solutions together." That to me is what is driving a lot of this demand that... Those composition of those solutions that enable them to address their market need much quicker, and they are asking for it now.

Mike Amundsen:             15:50                     So that leads me to go right back to this whole deal about the role of API's and everything. One of the things I like in that Mind Share piece that the two of you did was you got this line, "API's aren't just going to sell themselves." So that's the classic... That's the answer to the "If you build it, they will come" analogy. This notion that "Oh, I just need to build the API, and everybody is going to like it. They're going to love it." Diebold's got this long history of serving specific needs, and I love that you're listening to the questions.

                                                                                So my question is... That means, okay, fine, they're not going to sell themselves, but that means I still have to discover them. I have to know they're there. Discoverability is becoming an issue now that we're moving into the product space in API. So what's this discoverability story in the financial space in general, Diebold in general? If I want to do what you're just saying which is I want to not do a bespoke, I want to actually... It's a sort of a virtual cots, virtual off the shelf kind of-

Bruce Diesel:                      16:57                     Yeah, absolutely.

Mike Amundsen:             16:58                     What is that like? How does that work right now?

Bruce Diesel:                      17:04                     This is a really interesting thing because... You guys have referred a couple of times to the fintech space, and DN is not... I think if people consider the idea of fintech they consider the idea of financial services delivered through a technology medium. I can go and get a loan origination, or credit scoring capability, those kinds of services that are delivered to technology mediums. DN is... Another sort of phrase I use is we're actually a last mile provider for financial services, so we don't build those kinds of services. We don't build a loan origination platform, or something like that. What we do is we take those services, and we get them to the touch point, the end point. In cloud terminology, the edge. We actually get them into the hands.

                                                                                So we have a slightly different challenge here where, I think, most people... Most people grasp the idea, "Okay, I want some algorithmic solution to a problem, a credit scoring problem", or something like that. "Let me google that, and search or it. Oh, okay. There's a dev portal, and okay, they use this kind of scoring mechanism, or these metrics", or whatever it is. Reasonably easy for people to search and find, but what about our services? Our services are actually... We're like a last mile provider, so we need to make things better for the organizations we sell to. We need to improve their capabilities. So really the question is how do we let them discover what... Sometimes they're not even thinking about what the question is to ask. So this is where I'm really keen to take this dev portal idea which is a tradition way that people can discover, and find out about API's, and actually take it further through the community manager concept where we actually create that one to one single view of the customer, and give them a portal that's a single view of their ecosystem.

                                                                                And they can see, "Okay, I have these services, and these platforms that I've procured from DN. What are the capabilities of these platforms?" So I almost want to be able to give them a window into all the capabilities of our services, and allow them to say "Okay, I've already got these. I see I could actually use that capability to connect into my earpiece system." Whether it's "I can improve my asset management, or track pin pads that are regulatory compliance things, or I can do audits on my regulatory compliance, or..." all of those types of things which are heavily consuming of their time, and impacting their efficiency. What I need to do is give them a window into those services.

                                                                                It's not something that someone's going to google for. I need to create that view of my services to my customer, and that's where things like this community manager which goes beyond the portal idea... It actually creates a discussion environment, or a two way interactive environment where I think a portal is more of a broadcast mechanism, and come and have a look whereas in the community situation we now can get into the two way conversation, and say "Oh, what is the problem you're trying to solve? Okay well this API capability would help you with that." That to me, that is going to be the way I want to bring my API's and my capabilities to my customers. Create that view.

Matt McLarty:                   21:14                     I think that's... I've always looked at that community manager idea from the provider standpoint where customer relationship management... When your developers are customers, it's kind of like CRM for developers, or... Can't really say DRM because that's taken, but developer relationship management. But I think it's interesting to look at it from the customer's perspective of... And this is something, I think... Last season we had Steven Fishman on talking about customer journeys when the developer is the customer. It sounds how you're looking at it which is "We understand all these different customer journeys we have. We want to introduce into those customer journeys the opportunity to use the API's as products where appropriate, and have them naturally, and organically discovered through that process as apposed to just blasting it out hoping people find it."

                                                                                So that's interesting. And you kind of... My next question you've kind of answered part of it, so I'm going to rephrase it a bit because I was going to probe on this idea of fintech. So it's my fault, I keep saying, calling DN a fintech. When I do that, I must admit, I'm taking a little cheek with the fintech providers who act like it's a brand new idea that technology would be useful in a financial services context. On that front, I think part of my opening as well is talking about disruption. There's no doubt that there're all sorts of vectors of disruption happening in financial services. And even following along from the previous question in the discussion there, I think that we've seen these not only fintech's, but digital disruptors in general have a tendency to start by owning the customer experience. So they deliberately intervene, and own the direct consumer relationship as a way of building up their customer base, and network effect, and all that.

                                                                                So I think it's really interesting that you looked at it from the angle of "We're really good at serving these B to B customers, and empathizing with their consumers needs, and providing solutions in that context" which I think is quite a good, and unique way of looking at it. But just in general, what is it... How do you see disruption in the market place? I think certainly historically DN has had a hardware presence, but probably increasingly it's software presence. How are you dealing with this whole digital disruption threat?

Bruce Diesel:                      24:06                     What's really interesting is what I referred to earlier as saying, "Okay well, we're a last mile provider", and what you just described is somebody has taken that last mile, and wedged themselves in there. They've become that last mile. So for us, yeah, that I absolutely a disruption because our traditional customers are being disrupted, and essentially that means we're being disrupted. We now need to look at this and say... We got to look at our customers, and say "What do we do in our portfolio, in our services, to help them deal with this disruption?" And the way that the consumer engagement, the actual consumer touch point is being taken away, and owned by somebody else. And this is... As you say, it's a real, real threat to them, and we have a lot of information around how the younger generation just sees no differentiation between traditional banks. They see no differentiation there whatsoever.

                                                                                So what do the traditional banks do when they look at that market segment that is only growing, and its becoming more and more of the segment that they need to deal with? We need to position our products to support those customers, and one of the biggest challenges they have is that these new disruptors, they come from such a low cost place. They really... Because they've taken that last mile... And it's no longer a physical last mile. It's through mobile devices, it's... They operate off a much lower cost base, and that really is where the disruption hits our traditional customers. They have these infrastructures, they have these branch networks, they have these ATM networks. They're out there, they have these big data centers. They can't wish them away. So part of it is they have to obviously play to their strengths, and they need to use the advantage of having some of that physical infrastructure because the one thing that the digital infrastructure can't do is deal with cash, and that is what we do.

                                                                                I often tell the story about my son who sold his motorcycle, and would only accept cash because when it got down to the real... He wanted those notes in his hands before someone was going to ride away on his motorcycle. And then he has a problem because he came back in after selling the motorcycle, and he said to me "Well, now what do I do? Dad, can I deposit this into your account, and then you transfer the money back to me?" So cash is there, and what we've got to do is we've got to really optimize that infrastructure, and allow that infrastructure to be a lot more cost effective, but still enable those bricks and mortar organizations to have that infrastructure, and those physical touch points.

                                                                                I don't think that humans will go away completely from this physical engagements. The last year notwithstanding. We still crave human interaction sometimes, and I had a good chuckle at my wife today also trying to deal with a specific problem that she had. She was trying to deal with a bot to solve a possible fraud on her card, and she was pulling her hair out. She just wanted to talk to a human. So there's that disruption, but I don't think it will swing completely the other way. And so what we've got to do is we've got to provide solutions and capabilities that reduce the friction, and the cost of those services. We've got to really allow our customers to be far more cost affective in delivering that last mile. That's where I believe, for me, the API play really does start to enable them to become a lot more interconnected at a lower friction, and a lower effort, and reduce that overall threat of disruption that they are facing.

Mike Amundsen:             28:41                     Yeah. We've danced around this a couple of times. DN's been around a long time. We didn't talk about this in the beginning, but I live in the northern Kentucky area which is the Cincinnati market. And the history of Diebold safes and bolts were actually created in Cincinnati in the 1850s, or 60's, or something. It has a long, long history of always being... I think they built the world's largest sage in San Francisco in the 1880s, or something.

Bruce Diesel:                      29:15                     That's right. Wasn't it at the bottom of the Sear's building, or something?

Mike Amundsen:             29:19                     Yeah, I think something like that. They had the thing where... The Chicago fire, I think, was one of their claims to fame. The stuff that was in the Diebold safe didn't get damaged by the fire. So you've been dealing with notes, and papers, and all these things all this time. Disruption is disruption, but one of the things... And you talk about the challenges of these more nimble, or late comers to the market, they don't have the same investments in brick and mortar, and all these other things. One of the things Diebold is good at that mature players aren't good at, have dealt with a long time is that dreaded word regulation. You know how the system works. You're invested. You have all this intellectual property that means you can navigate that space.

                                                                                Also the opposite story which is that regulation stifles innovation, that regulation slows you down, that these nimble players are actually beating you to the customer because they're not paying attention to the regulation. Is that really true? How are regulations now? Things like PSD2, and open banking, how are they playing in this space that you're in now? Where does regulation fit in all of this?

Bruce Diesel:                      30:38                     Regulation has been part and parcel of banking from the beginning. Essentially that's what created the trust, and banking is about trust. Bottom line. Any bank, their biggest brand asset is the trust element, and that's what they focus on. Without trust, banking, or traditional banking just does not happen. So they do have that trust. They do have that position, and that physical trust position that they can leverage. And you see their physical branches. You're kind of "Okay, well. I'm giving you my money, you've got these branches, and everything. You're not going to disappear overnight."

                                                                                But we see the introduction of these regulations, and what is really interesting is that very often... Or the PSD2, you mentioned, PSD2, and that was actually introduced to break up some of these monopolies that the European Union were... After the 2008 financial shenanigans that went on the European Union were saying "We want to create a more level playing field, we want more innovation, we want to open this up a bit, and not be dominated by some of this monopoly players." Ironically, most often these types of compliance... And they're saying "Okay, you must become compliant with PSD2, and strong consumer authentication, and GDPR", and all of these things.

                                                                                The unintended consequence in this situation is that it actually makes it harder for startup environments to get in there. It raises the bar, and very often regulatory compliance has been used as a raising of the barrier of entry. And I think you're seeing that even in the PSD2 world where there are some of these young, or startup digital disruptor banks. But you're seeing that the big banks, they'll take on those regulations, and they'll actually use them to their advantage, and they will create a regulatory framework that really is an expensive obstacle to overcome to be a player on that playing field. And essentially while yes, it creates openness, it also has the impact of really creating a difficult environment for startups, or non complaint players to come and play in. And again, banks will leverage their trust, and they will fall back on "Who do you trust having your monthly paycheck being deposited into?" So I think that these regulations are...

                                                                                And I often compare them to the format wars. You always had... But very often the format wars get won by the big players. It does benefit the consumer though, so I think open banking is going to benefit the consumer. It does provide for more access to that data that was an asset inside the bank, and leveraged by those banks. That consumer data is being opened up, and being made available. But I don't see regulations as being something that is going to enable the young, nimble players to impact the big players too much.

Matt McLarty:                   34:29                     I think that's... I think, Mike, you opened that question well because I think it's evident... A company that can pivot from bank volts to electronic solutions already to software based solutions... I think, Bruce, what you're really reflecting is the ecosystem thinking that's so important in a digital economy. You're already thinking beyond the immediate interface, thinking about what you can intuit around your customers customers, and so on. And I think that's a really interesting point too. The regulations in this case, on the surface looking like it's really planning to opening things up for these third party players, or third party providers. I forget what exactly the [crosstalk 00:35:20]

Bruce Diesel:                      35:19                     It is TPP. Third party providers.

Matt McLarty:                   35:24                     Yeah, third party providers.

Bruce Diesel:                      35:24                     [inaudible 00:35:24], all of that.

Matt McLarty:                   35:26                     But the important thing is that the consumer benefits. I got to do this because I didn't mention this yet, but my background... I cut my teeth in the ATM and point of sale space as a young techy. Even before that my dad worked for software companies catering to that. I had binders of payment software I'd bring to school. Anyway. But early in my career... I think ATM's are such an interesting... If we want to talk disruption, ATM's have been this long-running, very much needed device in our lives that is there to dispense cash.

                                                                                But as a customer channel... I worked closely early in my career at a bank where we had a very ambitious business group who wanted to... Their scope was the ATM's, so that was the one card they had to play, and so they were always looking for new opportunities, new things to build. We actually prototyped a solution around 1998.... It wasn't with DN so it's not going to get DN in trouble. They're another provider... To actually sell movie tickets at an ATM. That was one of a number of functions, but needless to say it was pretty groundbreaking to have the ability to provide an ecosystem solution selling movie tickets from an ATM in 1998.

                                                                                Now behind the scenes what was happening is we were basically printing a message on a terminal that would be read by an operator in an operation center who would phone the movie phone line, literally phone then, and order the tickets. I don't think we ever ran into the situation where they phoned and it was sold out, but needless to say that whole solution never got passed the prototype phase. But I think one of the things it brought up for me was this whole debate around... Was that an appropriate use for the ATM channel? What more can you do at that channel because I'm telling you, if I need 60 bucks to go and buy something, and I'm standing behind someone who's browsing Facebook on the internet, I'm going to be upset.

                                                                                But I think it's interesting that... You alluded to the role of cash, and I think in some ways it's the long tail. We see all these cases of "Well, we're going to go cashless", but there's still this need for cash. So from the ATM perspective, are there new and innovative solutions that match with the need for cash in the digital economy?

Bruce Diesel:                      38:09                     That's a funny question because like you say, there's always been this vague desire that the ATM could be more than it is. It can do so much more, and those things have never really happened. What we were doing in the 80s and 90s with ATM's you're kind of still doing today. Not a hell of a lot happened there, but as we go forward now we'll see that, as you say, this long tail of cash. Cash is declining so the cost of cash by volume increases. You've got less volume so the cost per unit actually increases to actually facilitate the movement of cash, and the management of cash. But what I think will start to happen is that the ATM will become infrastructure like roads, and utilities, and all of those types of things. To me, I think we'll see that the infrastructure will be an environment that banks can utilize and share, and sit on top of.

                                                                                And what we see with banks is that they have two approaches to this cash cost. One is that they say... Okay, a full function very expensive ATM needs a certain amount of volume to become viable, so as the volume decreases we start to see ATM's no longer being viable. So they have two strategies to that. One is that they either reduce... They go with a lower cost ATM, just a cash dispenser. Just really simplify it down completely, and just provide that utility function. The other strategy is... Okay, they're reducing their branches as well, and they need a point of presence. So they need other services on those ATM's as well so some banks will go to... "Okay. I want this to become actually a point of presence." The other was "I just want to cash and dash." So essentially if these ATM's become infrastructure, we as the infrastructure provider, that last mile provider, need to actually cope with almost diametrically apposed requirements.

Matt McLarty:                   40:32                     Interesting.

Bruce Diesel:                      40:35                     One organization is saying "I want this thing to replace my branch, and do all the functionality of a branch", and the other one is saying "I just want cash and dash, and make this thing cost as little as possible." So this is really... And to drag us back into the API play, is where if we have this infrastructure, my view is that what will happen is that our shared infrastructure, the utilization of that infrastructure will create... Each bank will put their own persona, and compose their own solution on that infrastructure. And they will say "Okay. Well I just want a cash and dash so when one of my card holders enters into that infrastructure, or inserts a card in that ATM, they'll just see the simple function, and they'll just do the cash withdrawal because all my other services are digital, and all of that."

                                                                                Another bank might say "Okay. I want to use that infrastructure, but my customer base is still a customer base that wants more physical interaction, more capability. So we have these interactive video tele-solutions where we actually literally have a tele talking to you through the ATM environment. And it becomes a much richer engagement." We've got to cope with both, and that's where I see API's really creating this ability to... I'm sure at some point it will be dynamically composed on a one to one customer basis, but for now certainly a customer group, or a bank group would have an experience composed using API's that fit with their need depending on what that institution is. So really that's where I see things moving towards, but totally new services on an ATM, no. I think it's still going to be... The single bottom line is that it is a secure way to dispense, or receive physical tokens like cash. And that is it's one area that it can't be replaced on, and I think that's the corner stone of what it'll be.

Matt McLarty:                   42:41                     All right. Well I guess I'll just have to get my movie tickets online then.

Mike Amundsen:             42:44                     I was going to say, I think I can still buy stamps on my ATM, if I go to my branch's ATM's. They're at least trying to sell stamps. I don't think I've ever done that, but they still do that. I want to touch on two things, really, because the first thing you talked about is that infrastructure. ATM's sort of represent infrastructure. One of the things I love about the ATM network is that you can essentially just plot a cash box down, plug it into the network. You can put it anywhere without asking for permissions from the rest of the network as long as you've got the licensing and agreements, and everything in the technology works. This is the way I think the promise of API is. I should be able to plop my service into the value chain.

                                                                                I already have agreements, and we already have all of the exchange messages, and details. And I got my 1.5 percent, or my half percent, or tenth a percent, or whatever. I think that's one of the things that fascinates me about this space, where the ATM's represent a half a century of "We can do this. We can actually move money. We can move credit back and forth." Now that takes me to the next thing which you said which really piques my interest, and that is ATM's are still going to be that... Getting you physical tokens, physical money, physical cash. So that leads me right to the other hot topic in this space besides the buzz word Fintech, and that's crypto currency.

                                                                                So that's a whole other disruption vector, and I've even seen photos... Never physically actually seen... Photos of an ATM, of a Bitcoin, or coin based ATM. So where do you see that going? You're close to it than most of us. What's really going on there? Is that going to be a think? Is this going to be a novelty? Where does this all fit in? Where does crypto currency start to have another disruption vector for you?

Bruce Diesel:                      44:52                     We wonder if and when crypto currencies will come about, and I think all of us know that they will. That crypto currencies will become the method for moving value around networks. No doubt about it. It's a good solution, there's no question about it. There's still some problems with the solution. I think we'll see them formalizing, and I think if you're paying attention to the press you'll be seeing a lot of banks are really making noises around adopting crypto currency. I saw a really interesting article about Amazon adopting an internal crypto currency which I believe makes a lot of sense. It's a way that they can almost... It's a common pattern where you have this intermediate form of value that you can translate to all other forms.

Mike Amundsen:             45:54                     Abstract value, yeah.

Bruce Diesel:                      45:55                     Yeah, yeah. Absolutely. Canonical value as such. And I think Amazon are going into that. They're operating in multiple countries, multiple currencies, all that kind of thing. So they're saying "Okay. Why don't we just create a canonical internal value system, then we trade into the different end-point values?" The HubSpoke model. All of those patterns, they're all there. So absolutely, I think that crypto will come there. But will they replace cash? No. I don't believe initially. What I think they'll do is they'll push cash further out into the edge, and if we look at what cash... If we just boil it down, and look at the fundamentals of cash there are a couple of attributes that cash has that crypto doesn't have, or no other electronic instrument does have. And that is it is zero cost of transacting between peer to peer. If I have 10 dollars in my pocket, and I owe somebody 10 dollars, I take that 10 dollars out and I give that to that person. There's zero cost of transaction.

Matt McLarty:                   47:07                     They get zero carbon footprint too.

Bruce Diesel:                      47:10                     Well, that's always... In creating the cash in the first place was there... We can go drill down into that rabbit hole. But ultimately I had a 10 dollar value, I gave you that piece of paper, you had 10 dollars. Nobody skimmed a couple of percent there, nobody took a couple of percent. It didn't cost me anything to give it to you, and you didn't pay anything to receive it, and it's anonymous. Also totally, totally anonymous. If I've given somebody that 10 dollars, there's no record of that, and there's still a need for humans to... There's a strong desire to keep that privacy to themselves, and those interactions are private to those humans. There's a strong social element to that. You can't take that away very easily.

                                                                                So what will happen... The problem of cash is that... And I call it transmisability. It is not transmissible. I can give it to you in a peer to peer, or a micro kind of environment. But for me to move it across the country, or to somewhere else physically, that is where cash costs a lot. It's very expensive to move around, and manage, and secure, and put in volts, and count, and do all of these functions. You have all of this infrastructure to do all of those movement tracking, tracing. All of this stuff. That really is where cash becomes expensive. So what you're seeing is it's being pushed further, and further out into the edge where it circulates in small pockets where it's geographically very small locations, and the cash can circulate. So you're seeing even... Even DN. We're creating cash recyclers.

Mike Amundsen:             49:09                     Really?

Bruce Diesel:                      49:10                     Yeah, absolutely. All of our new... Our entire new hardware portfolio are cash recycling portfolio. So I deposit some cash in there, and what you see is... It's a really fascinating situation because the most inbound cash... Typically, branches are the inbound cash flow, and that typically comes from small to medium enterprises, or vendors. Retailers, and those businesses who accumulate the cash, aggregate the cash, then take it to the branch. The old model was they take it to the branch, the branch would package it up to send it to a central bank, count it and everything, and then disperse it again through the ATM networks. So that whole process, very expensive.

                                                                                So what will happen is moving value around over long distances... Crypto, and those kinds of things I think are still very... They will dominate that space, and we'll push the stuff down into the edge, and those businesses, shop owners, whatever it is, they'll go deposit funds into a recycling device, and then that device will present that cash back to consumers who need the cash. So essentially, I think that it's symbiotic. I don't think that one is a replacement of the other. They have different attributes, and they have different applications. And that's what we'll see. We'll see people anonymously transacting... Because the cost of that transacting is zero, I can give you five cents. It scales down to the smallest, smallest financial transaction.

                                                                                And the ironic thing is... And again, this is the unintended consequence. We talked PSD2, and it's going to open up everything. The unintended consequence of bitcoin is the carbon footprint is started to generate. That it's actually becoming a really expensive form of value movement, and those aren't the idea when they originally get created. Everybody thought crypto currency... I can pay you with a token, and the entire network will update itself, and I don't have this one single, massive data center that costs a lot. All I've done is I've pushed the cost out on a much broader scale. It gets down, and this is where I'm always very thankful for my education from an engineering perspective, is you get taught some of these basic principles like conservation of energy. You just can't violate these natural principles. You think you can, but they always come back.

Matt McLarty:                   52:00                     That's such an industry problem of missing total categories of cost. That's the myth of infinite growth. And you want the cost to scale in concert with the environmental cost. You want the financial cost to... But unfortunately I think they may be out of wack in the crypto space, but more of the... Now Mike and I always talk about how we might think we understand industry ecosystems on the surface, but I just love diving deep, and then finding out about things like cash recycling, and other deep ecosystem value opportunities that are out there.

Bruce Diesel:                      52:43                     Yeah. It the tip of the iceberg that I think we see in other industries as a casual observer, and it's until you scratch below the surface that you realize what it's all about. I agree with you, it's absolutely fascinating.

Matt McLarty:                   52:58                     Yeah, definitely.

Mike Amundsen:             52:59                     Yep, yep. So this has been awesome, Bruce. I'm sure we could keep going, but I think we covered some pretty good ground there. The entire financial services space, we went 20th century, we went 19th century. I think it's been... I've learned, and I think our listeners would have a lot to learn as well. So big thanks for joining us today.

Bruce Diesel:                      53:28                     Well, thank you. Thank you for having me on.

Matt McLarty:                   53:28                     It was fantastic, thank you Bruce.

Bruce Diesel:                      53:29                     Thanks Mike. Thank you Matt.

Matt McLarty:                   53:32                     All right. And thanks to our listeners for staying with us on this episode. We look forward to bringing you the next episode of API's Unplugged. Thanks.

Speaker 1:                           53:47                     Thank you for tuning in for this special episode of COMMERCE NOW. For more information, log onto, or go under the insight section to learn more about our Mind Share series. Until next time, keep checking back for new topics on COMMERCE NOW.