What's up, everyone? This is Anthony Pompeo know most of you know me as pomp. You're listening to the pump podcast. Simply the best podcast out there. Let's kick this thing off. Anna Aurora is a chief correspondent at Reuters in London where she covers the financial technology sector and technology related developments at some of the world's largest financial institutions in this conversation. We discussed PayPal's enters into the crypto industry Central Bank digital currencies macro fin Tech Trends and how covid-19.
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Account today, lastly don't forget that I read it daily letter to over 80,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pomp letter.com again pomp letter.com. All right, let's get in this episode with Anna. I hope you guys enjoyed this one Anthony pump Leon. Oh, he's a partner at Morgan Creek digital all opinions expressed by pomp or his guests on this podcast.
For solely their opinions and do not reflect the opinions of more Creek digital or Morgan Creek Capital Management. You should not treat any opinion expressed by pomp as a specific inducement to make a particular investment or follow a particular strategy. But only as an expression of his opinion this podcast is for informational purposes only. All right guys, bang bang. I've got Anna here. Thank you so much for doing this.
Thank you for having me.
Absolutely. Let's jump right into your background your reporter at Reuters today, but kind of what did you do before?
Before you start writing about fintech
actually. I was I started writing about fintech seven years ago. So it's been kind of most of what I've done I've used to work at a paper called financial news here in London, and it's owned by Dow Jones. It was part of the journal franchise. And when I got hired there I started on the online beat which meant I didn't have a really have a beat and it was early fintech days. So that was up for grabs. The sort of beat reporters didn't think it was much because the deals were small.
And I thought it made sense to cover. I thought it was, you know going to be bigger in finance because like every other industry, you know digital was coming in. So I started writing about that. Then we changed editor the editor really believed in in that area. And so we write start writing more about it and then it sort of exploded and then I'm to Reuters I'd previously interned at Reuters in Brazil forbid where I was covering markets. So it was good because I had the sort of Finance background which I think was a good drift friend chater at the start often you have like fintech reporters who have technical
backgrounds and I think it's important to have the finance understanding to cover this in the right way.
Absolutely and explain a little bit just like when people hear that you cover fintech what exactly does that cover kind of where the boundaries because it's so kind of pervasive
and yeah, when I started I was only doing wholesale fintech so like Capital markets technology that sort of thing whereas now it's like a really everything and ranges from you know from crypto, but also peer to peer lending or
Just you know the tech side of bags and you know the tech operations or trading applications, you know, so the whole of like if you think of finance and Technology, like really all of its kind of incredibly Broad and my remit is now global so it's even broader but it's fun because you can you know, write about you know, Central Bank digital currencies are then you can move on and write about like fintech apps for children. It's just like the whole the whole Space
absolutely and so I wanted to get you to jump on real quick because
You broke the news last week that PayPal is jumping into cryptocurrencies, maybe talk a little bit just about you know, when you started to hear about this and kind of how you got the confirmation that this was actually happening.
So I got the confirmation because he spoke to me it was it wasn't very I've had more more card to get stories in this case. So, you know, I frankly I know there'd been there'd been a story I think a couple months ago from coin desk about it, right so it wasn't
Lee shocking to me but I was still surprised because you know, they're a big company. I've been covering them for a while because I was I mean, I just moved back to London, but I was in the u.s. I would cover their earnings frequently and I remember in 2016 or seven. I think 2017 already 2017. I didn't review Dan Schulman. It was like a sort of came into Reuters and it was lots of reporters and editors and he and he said, you know Cryptid doesn't have much utility yet. So I really didn't think that they were looking at this obviously. It's been many years since
It's but it was still a surprising although, you know, once I heard more about it what they were doing and I thought about it some more I spoke to people it kind of made more sense for them to do something like this.
Yeah and explain kind of what exactly are they doing.
So they're gonna fart for starters are going to allow people to buy and sell crib crypto and it's for right it's Bitcoin Litecoin Bitcoin cash and ether, but that I think what maybe was lost in some people is that they're not going to let you buy Bitcoin and you're actually holding your
Go in and you can sort of move it and do whatever you want. You're buying Bitcoin, but you can't move it away from their wallet. You'll be able to spend within the PayPal Network, which is a massive Network that still you won't be able to just buy a Bitcoin with paper and then send it to your friend who has a point base account, you know, so it's slightly different than what you might expect. But you know, the massive thing as I said is that from start of early next year or like by mid next year you'll be able to shop with their Merchants so that
That could add a lot of utility to bitcoin.
Absolutely and what I didn't understand kind of when I saw the news break is how big pay Palace right? So the numbers I read her suck up that 340 million users. It's got 25 plus million merchants and then it looks like they're either the 20th or 30th 30th largest quote-unquote bank by the number of deposits. And so this thing is everyone knows the PayPal brand but it's just massive when you look at those numbers.
I think that the thing about PayPal is you know, they've been around
First into company they've been around for a long time. So I think people just think of PayPal it's there. I mean, but they've ever since they spun out of eBay. They've been really growing a lot and they have a very interesting strategy of just partnering with everyone and so they have Partnerships with all the bank or the credit card providers and you know, so it's not surprising that they would find another, you know way to fund the accounts. It's part of who they are now like this idea of partnering with more company with more companies and different forms of
Payments and yeah, they're massive. I think I remember when I was writing the story. I wrote that they had done. I think I don't wanna make a mistake but I think it was like around 200 billion in payments volumes in 1/4 and I kept going back to check because I was like billion. Am I that's that's a lot per quarter. We sure that it's not like per year. But yeah, they're gigantic and they're everywhere. So that's another big differentiator right there. Absolutely everywhere.
Absolutely and then talk a little bit about venmo as a part of this I think venmo maybe kind of the the younger generation.
I'm kind of a newer brand but it sounds like they also have some crypto plans for venmo as well.
Yeah, so they're gonna add this capability to them. All again. I think I made by mid-year somebody that but in 2021, I don't remember the date exactly and I hadn't thought about this very carefully immediately as I wrote the story but they've been trying so they bought them more when they bought Braintree. I think them will came with it again. I hope I'm not making too many mistakes, but it wasn't created by them. It was acquired. So and Ben was free and it's been really popular with everyone like it's just everyone has it in the
u.s. But that doesn't make a lot of money, right? So they've been trying to make it generate some Revenue at the same time. They've seen like increased competition from cash app and cash shop has been allowing Bitcoin purchases for a while. So it kind of makes sense. I've been seeing how cash up has been making quite a lot of money from Bitcoin. So it makes sense that they might see this as a way to generate help them more generate some revenue and become a bit more self-sustainable. So it you know, it makes sense and then you have a younger sort of type of profile people in memo. So, you know,
Smart
for sure makes complete sense. And what was interesting to me is kind of you wrote the original article right saying hey, this is happening. Everyone goes wild and kind of the Bitcoin and crypto World which is got to be a unique experience. I'm sure most of your articles don't have these rabid fan base has kind of
sucked. It's very funny. Like when you write a positive like a story that's not even like I mean it's positive for Bitcoin, but I wasn't saying I think was gonna hit the moon like it gets so much for new followers and then if you do spend like,
Six months working on an investigation about a crypto project you just get haters and like your followers decrease. So I think every now and again I'm I'm just supposed to tweet out a very positive story.
Just tweet the word Bitcoin and you'll be a fan favorite for sure in terms of the reaction from the market so not kind of the twitterverse if you will but the actual kind of financial players, it looks like you got kind of a mixed response right because there was articles where people were saying, hey look this is a big deal and this is something to pay attention to but
You also had an article where there were some experts saying like and it you know, it's interesting but it's not really gonna have that material of an impact maybe talk a little bit about that balance.
Yeah. So obviously the first reaction was like this is great for Bitcoin and I imagine that it would send the price higher up because in effect like there's been many big companies that have tried to give utility to bitcoin. So, you know Dell was one that I had spoken to in 2017 and they quietly rolled it back and then you know, they're happen ways to pay with Bitcoin.
But there's this big tension between you know Bitcoin as a way to invest in Bitcoin as a way to spend so originally like the price went up but then I was speaking to sort of experts in digital payments and many of them were saying, you know what it's not clear that this will be great for Bitcoin or it or more not really great for Bitcoin, but great for Bitcoin as a form of payment right because it could still be that first of all, first of all, there's that close group thing that we talked about before right where you're not really able to take it out of the PayPal Network. So it has a limited effect on the
Market, and then also like people might not want to spend it anyways, because if you think that the price is going to go up. Why are you going to buy something with it? Right you're going to keep it but what they were saying is that it might actually have more impact for sort of digital currencies in general and that's what also paper was telling me that they're doing it because they want to get in give more utility to cryptocurrencies, but they also want to prepare for when there are Central Bank digital currencies and that's sort of what the experts were some experts were telling me saying, you know, this is pretty smart because they're positioning themselves ahead of everyone else.
Else if this starts to happen, if you know you see the Euro that sort of crypto dollar the virtual Euro or you know, then they've already have that integrated within their system. So yeah, so it might not have seemed it might not be have that huge impact as you think but I think it's sort of undeniable that it's brought it more. You know, it's making it more mainstream because now people who have a PayPal account, they might have already paid attention to bitcoin, but it just shows up right so it isn't you know
You men just image-wise. It's fine. It's a big deal.
Absolutely and talk a little bit about Central Bank digital currencies right now. You have kind of this unique position in the market where your job is literally to go talk to as many people as possible and kind of always know what's happening. What are you hearing on the Central Bank digital currency side, either from Market participants or maybe even Central Bankers themselves.
So I think they're everyone's really busy and there are many projects going on, but I have sort of this existential doubt. I don't know if it's if it's like the blockchain and
Bryce blockchain projects in early days. I'm trying to figure that out. Is it just you know, everyone saying we're doing something out of like knee jerk reaction from Libre, right the freaked out me Broadway want a private social network who maybe had a hand in like messing up elections to sort of now decide who like to have power over like the Global Currency. So they all said they were doing stuff and there are some projects that are alive, but I don't know. I think it's crucial to see like will they be used and you know,
Even like the bigger currencies. How long will it take and like will they have? Well, they look at all like crypto or not really what they just be something different but there's definitely more people talking about it. Yeah, for sure and it feels
like one perspective of the world and your kind of alluding to this earlier is like somebody like a PayPal event eventually gets everyone a digital wallet inside their system. So whether you're a user a merchant whatever today that's for cryptocurrencies Bitcoin excetera, but eventually if Central Bank did
Currencies become real you already have the infrastructure there and it almost feels like the switching cost between going from Bitcoin to a central bank digital currency and back that friction will be so low and they can use the same infrastructure for
everything. Yeah. I think I think that's the point I think but I think there's no mines the Central Bank digital currencies are working progress. So I don't know how much they can like work ahead to know what infrastructure they'll need. There was a story from think Bloomberg towards the end of Friday or
or maybe Thursday about PayPal buying big go or talking to buy so that's very different right because then they would be custody idea. I suppose that they want to be able to custody these things so that it would be slightly different from you know, what they've set up now, but they've they've said that it's sort of a work in progress and they want to have like interoperability between wallet. So I think it all remains to be seen and also like I'm as I mentioned, you know, I mentioned Libra sort of PayPal was an early it was a founding member and they let they were the first ones to
If so, I wonder how much of this is sort of a reaction to that. Right? So, you know, they believed in the idea of digital currencies, but they didn't like the way that was going. So they've still decided to go ahead and their own way.
Yeah, one of the things I don't know the answer to but but it's interesting to Think Through is Facebook kind of very courageously came out and they were the first company to really spearhead this idea of like a private currency but still centralized in nature in terms of there was a company there you could call in the CEO or call in somebody that was running the project.
T' and it was a brand that is recognizable Wonder because of the government response both the United States and elsewhere if that kind of scared a lot of these companies away and they basically are now saying we probably can't do the private currency thing. So we might as well just use the existing kind of decentralized versions.
Yeah and speaking to sort of Dan Schulman from PayPal. He was very much talking about how they've been speaking to Regulators. We've been working with Regulators. Like he said Regulators very many times and it and to me to be fair. I was quite surprised that there were like,
I think it was MasterCard visa and PayPal where the big Financial companies in that because considering how the project was announced. It was very little Clarity on you know, if they've got an if they'd gotten go-ahead from Regulators which in the end they had it so I was surprised that companies that are already like big Financial companies in are aware of like the sort of massive, you know input from Regulators that you need to have that they just jumped in without checking with anyone before and so in the end, you know, they left so, you know
I think now they'd probably yes as you say they're probably thinking we're going to go ahead but you know, we're going to do it with governments and you know, there are a lot more cautious.
Absolutely you want you don't just write about crypto Bitcoin you write about Vin Tech in general. What are some of the other fin Tech trends that you're seeing kind of play out as covid and all that impact place.
So obviously there's this sort of digital payment side of things which is party crypto, but like more broad, you know, there's been a massive upsurge in in in
Digital payments and digital banking in general because of lockdowns globally. So we're seeing more activity there more companies sort of growing and also reaching big valuations and it's generally one of the I guess the biggest Trends and then also like online trading is also growing, you know, we've seen like Robin Hood and the like have an explosive years that's something else that we're watching and then in general, you know from the bank perspective. Also, you know, they were all
In the process of transforming digitally but now because they've had to shut down their branches they had to and also like their offices if you think about the whole states at wholesale side of the business, they've obviously they're telling us that they've had to accelerate the pace of digital transformation. And if you know things that would have taken them a month or two months they did in like two days. So overall it's like I guess it's been great for fintech generally. Obviously there have been areas that are not doing great with like lending clearly. It's a bit
Rough moment for landing because you know, lots of people are having a very tough time. So, you know, people are expecting more loan lab losses
absolutely and it feels almost like kind of the financialization of everything is upon us, right you're getting kind of any company that touches money, which is almost every company somehow they're starting to play in this like fintech type world and then the fintech companies are also becoming much more pervasive in terms of it used to just be hey, we want to have a Neo bank, right, but now we're seeing
Brokerage Racine cards were seeing kind of that the software companies trying to almost eat the traditional Financial system. How do you kind of Bounce this in your head? Is it going to be where people are going to come from different perspectives, but everyone's going to end up in just this digital Finance world. So it doesn't matter if you're a Wall Street incumbent a technology company a crypto company like we're all headed to the same place.
I think so, I think inevitably slowly it's going to end up being more like that. I think obviously there's always going to need you will always need a little
Ittle bit of a physical presence because I mean for consumers you think less about it, but if you're a small business and you take cash, I mean it's unless cash disappears but for a while you'll still need to have a little bit of an out physical Outpost, right? But yeah, it's I find it interesting that you have like big Tech Finance Tech firms coming in and doing finance things, you know, like apple doing the apple cart with Goldman and then you have like the spin text that were like as you say you had Robin Hood saying we're just a brokerage and then they started launching an account or you know, well from doing the same herself I doing trading, you know.
Just everybody doing everything and it's funny because early days of fintech was unbundling and now I guess they figured out people don't want to have 50 apps on their phone for their financial life. And so we have a big free button thing of fintech and I guess the winners will be who wins the refunding I suppose and some banks the bigger ones in the US who have all the money they need to become more digital that probably still remain winners. I don't see like them disappearing in the short term, but you know, the smaller fintech some of them might not
Be able to remain sustainable, right?
Yeah, it's really interesting to I think to Think Through kind of the geographic boundaries that were really prevalent in kind of the Legacy Financial World those seem to be going away a little bit as well. Because in the digital world. Yes, you start to pay attention to the regulations, but when you don't have to have a physical location that makes it much easier to kind of go other places right and kind of happens like cloud-based
solution. Yeah, it definitely is only I think the regulation is
Don't like undeniable and something that's stops you more than anything, right? Because you know, you need a license to be somewhere else, right and you need to have in that license maybe comes with rules about having people there. So whereas, you know, like other types of tech like ticked off can take over the world and like sweat six my don't even know when they were launched but you know you Robin Hood was supposed to come to the UK but decided not to because I think the step of expanding in another country when you're a financial company or another country when
a financial company is just that much harder, right? So so it's going to happen but I think slowly I think probably what's happening is that globally were all becoming more similar in the types of services. We use like everybody is becoming more like and I guess it depends like developed and developing markets, but you know, we're all using the same types of services but they're more still a bit more localized right? There's the equivalent of Robin Hood somewhere else and and so forth, right?
Absolutely. Yeah.
I think the Jack Dorsey kind of highlighted this the best right? I heard him to one time say what really excites him about Bitcoin specifically is this idea of with square and cash app, if he wants to go into a new country. He has to do all sorts of things around banking regulations getting people on boarded KY caml like, you know, really really in-depth kind of Legacy type stuff is like what Bitcoin it's immediately available in that new country, right? And now yes, there's probably going to be more regulation over time around it, but I think that was really unique perspective.
Effective from somebody who's kind of playing in both worlds, right? He's a big proponent of Bitcoin, but he also understands kind of the bureaucracy and pain of moving a legacy company kind of country by country for
expansion. Yeah. I mean, I'm kind of like pretty, you know, having covered Finance also broadly for so long. I just think that if the regulatory part is inevitable and like if the more like, you know widespread you get the more you're gonna have like controls around it if you see in the UK, they've now like you can't I
It's with derivatives. You can't retail investors can't touch group to derivative. So it's just the way of things right because you need to protect some consumers and not others. So I think it's true. I think maybe crypto has sort of given people the impulse to realize that stuff needs to be a bit more Swift and quick and you need to have better ways of doing things whether that translates in the existing cryptos taking over the world or just new forms of like payments improving then you know that
That remains to be seen I guess
absolutely before I let you go. I asked everybody the same two questions and then you'll get to ask me one to finish up. The first one is what is the most important book that you've ever read?
Oh, no, this is very hard.
Oh, I don't know I can do I can say which ones I like that I keep thinking. Okay. I don't know
even two or three of them just once they
come to town. I'm so bad with questions like this is when they ask me like what are you working on? I don't remember.
I love I mean, these are not like business books those wrong answer. Okay, everyone's gonna be like really banal but I loved Americana like so one of my favorite books. Why did you like that one?
I just love that. I just thought I was like so smart and that could touch on like really important topics, but it was just like love it was just a lovely read also on top of everything very well written. Yeah. Yeah.
I loved I don't remember the name. It was the one about a journalist and he need started working in Silicon Valley for a bit and he was doing content. I think it was disrupted. Maybe it was called. I don't remember the name, but I remember now that's really bad for book recommendation. And I'm so bad with remembering things, but it was great because it was just like I think being a journalist. It was like looking inside sort of the startup World from within as a journalist. So it makes me think will I ever want to work in?
Startup, I don't know because look at this guy what happened? Like it was just I just thought that was very funny. Obviously, if I remember the name, it was better. I remember the cover but not the name and then I think I also liked one of them and just general Michael Lewis book. So I think the early ones that stick. Yeah. I just I just like those they're fun, but they're also about Finance. So you learn things. Yeah. Yeah.
He's one of the best for sure second question is a little bit more fun, which
Is aliens are you a Believer or non-believer?
I don't know. I am
a believer. I'm a believer.
I'm a non-believer until I see evidence because I haven't seen sufficient evidence to believe. I also don't really think about it very much. I'm like too worried about everything going on in the world and
their world that that's probably the best reason to not be worried about what's going on offer threat as we got enough. Yeah, no problems here. Yeah. I love it. You get asked me.
One question of finish up. What do you got for
me? What would be your dream guest like the one you'd like love to have but is almost impossible.
Oh
and it will obviously have to be somebody who's dead. I would say.
One of the people I've been fascinated with my whole life and I don't know where this Fascination came from is John Rockefeller. I think that would be really interesting conversation especially in if we had all the hindsight Clarity that we have now about what he did how he did it what he built how important oil became kind of you know, all of that and then to be able to ask him like Hey man, tell us it all this stuff. I why did you do this? How did it work? You know what you go back and change anything those types of questions. I think will be really fascinating for somebody who
You know one amassed a great Fortune but to did it in a very kind of it did it in a way that I think today a lot of people try to emulate in terms of like standardizing Industries and kind of building these very powerful almost monopolistic type type of companies.
Do you think you'd be a Bitcoin believer?
Yeah, I tend to think
that a lot of those early people weren't weren't the biggest fans of kind of centralized planned type of currency. So, yeah, or maybe that's my bias. Just telling me that they would be but but yeah him JP Morgan Etc. I think you know, they tend to be a little bit more disruptive and Innovative than yeah.
We're on where can we send people
to find you on the internet or find some of your
work so you can follow me on Twitter at and neighbor
- Wait, I'm last name and then my stories are on Border stop calm, but I'll put a post everything. So it's whatever is the easiest way.
There's the best one. All right. Listen Anna. Thank you so much for doing this. I think that people are really fascinated with the PayPal news. And obviously you got the story out first, which is always as well. So thanks for doing this and want to do it again.
Thank you.
