Behind the Citi-Pismo partnership

Welcome to the Tearsheet Podcast. I’m Tearsheet’s editor in chief, Zack Miller.

Joining me on this show are Stephen Randall, Global Head of Liquidity Management Services in the Treasury and Trade Solutions business at Citi, and Ricardo Josua, CEO and founder of Pismo, a banking and cards platform. The two firms are working to strengthen Citi’s corporate demand deposit accounts (DDA) to clients worldwide

We’ll be talking about the partnership these two firms struck, how it fits into Citi’s Treasury and Trade Solutions’ tech strategy, and how it will impact Citi clients. Pismo’s Josua explains what a microservice-based ecosystem is and how it behaves. We also chat about the importance of having core expertise and knowledge in cloud-based banking and payment capabilities like Pismo has. 

Here’s my discussion with Citi’s Stephen Randall and Pismo’s Ricardo Josua.

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The following excerpts were edited for clarity.

Stephen Randall, Citi: Citi's Treasury and Trade Solutions works with leading global corporates, fintechs, financial companies, e-commerce companies, and others. We power their growth through partnering to navigate through the digital reality and the changes that are coming through the industry.

With our network and our solutions, they get on the ground experience in over 95 markets, which gives us a real global platform for payments, liquidity, trade, and working capital. And that really ensures that our clients do better, faster business, and it doesn't matter wherever they're located in the world. We're where they're heading in that direction with them.

We work from the small to medium business up to much larger organizations that are truly global in nature, which is why our global network really helps support them with their global ambitions.

Ricardo Josua, Pismo: We're a platform for infrastructure and banking. We currently provide services for large financial institutions. And this can be, of course, banks, and also fintechs, but also some market infrastructure companies like stock exchanges and other companies when we provide the cloud native infrastructure for these companies to leverage and build their own products on top of.

So, for example, we provide banking for large fortune 500 banks, where they use our platform to set up current accounts and all kinds of deposits or lending operations. We also deal with payments. So we enable payments through a number of different rails from Faster Payments in the UK, to Pix in Brazil, to UPI and RuPay in India. We currently operate through six offices across the world.

The partnership

Stephen Randall, Citi: Yeah. The partnership is really part of TTS' broader technology revamp. And as we think about transforming our technology platform, migrating our solutions, services, and our infrastructure, one of the themes that we're seeing is payments and liquidity continues to move -- not only in an almost real time spectrum, but also, it's an always-on world that we're living in. And so that's why as we develop our strategy, we're really thinking about our always-on capabilities to make sure our clients can use that for their clients. And that allows them to improve that overall experience that they have with us here at Citi.

What Pismo and its technology platform bring is it helps us strengthen our core corporate demand deposit accounts, and bring that to our clients. It allows us to quickly build that into our solutions to meet that market demand of always-on capability.

The power of cloud in banking

Ricardo Josua, Pismo: Being always-on was something that even five, six years ago was not as much as a concern for banks. Cloud was still largely a fringe decision. And now, fast forward to 2023, and I think currently, every major financial institution and bank in the world is talking about migrating to the cloud. It's become a reality. Some companies are going to be slower than others -- I think Citi through TTS is making a huge move, just accelerating the process of migrating to a business solution.

Being always-on is critical, because we can set up and we are setting up for Citi multiple availability zones, as we call them, at the same time, interconnected and active, so we provide very high availability. There's no batching processes, everything's real time, in essence, but maybe as important as this, it also allows the creation of components that can be changed and adapted to new realities and new demands that may not even be clear today, without downtime, without rewriting the whole thing, because these are based on microservices or smaller components. And each one has its very clear structure and very contextualized services.

What that allows, is, for example, a company like Pismo currently deploys about 400 deploys every month, and new pieces of code, and everything is done without downtime. So there's no maintenance times and there's no huge lead times for products. We can continually deploy with very high degrees of safety.

We're doing about $250 billion currently in transactions in real time, every year, and increasing that as much as 100%, depending on the market, every year. So it's very exciting technology, and I think the necessary technology to leverage all the other opportunities that will all arise from Cloud and AI.

The market for cloud banking

Ricardo Josua, Pismo: We're at the edge of technology, and we try to rebuild and revamp our system continuously. We also are fortunate enough to have had the opportunity to migrate and operate larger operations already. So there are just a lot of projects around. With our clients, we manage over 80 million accounts, and we're doing more than 4 billion transactions every year and answering about 250 billion API calls. So it's something that is running at scale. We had the opportunity to debug a lot of the system and make sure it's very robust. So that I think is one key differentiator for us.

The other one is that the approach we have is not trying to solve for all the problems of our clients, because we understand that trying to do so you often become a bottleneck for clients. So instead, what we're doing is working in tandem with them by providing some of the infrastructure that is, in essence, universal.

People ask us, oh, how can you be operating in, say, Australia, India, Brazil, Chile and Europe, in the UK? How can you operate in these very different landscapes? And of course, for a company like Citi, it's daily business, but for fintechs, it's a very hard threshold to pass. I think the answer is that we focus on components that are universal for all those markets. We are an important but one of many components that Citi TTS will use to deploy services to their clients. That's a solution. So we are composable. And we are very open to integrations and operations in tenant with our clients.

Citi's clients in wake of the partnership

Stephen Randall, Citi: Our clients are looking to make sure that they can manage their payments liquidity in an always-on environment. We're partnering with Pismo to help us accelerate to get to that target state where Pismo's capabilities help complement Citi's strategy.

What our clients will benefit from is our ability to leverage that cloud-based infrastructure and connecting and integrating that into our solutions and capabilities, which means we will be able to develop and expand those capabilities to our clients far, far quicker.

Ricardo Josua, Pismo: It also allows us to together prepare or pave the way to new products for those clients as well. That's a conversation that we've been having, as well -- as we work together, what are those opportunities? What are those potential other synergies over and above the work that we're doing today?

Micros services and financial services

Ricardo Josua, Pismo: Maybe I can start by giving you a very concrete example of what we see when we are migrating our infrastructure from legacy players into the cloud. Of course, providing something through the cloud is a fairly easy endeavor these days where you can lift and shift any sort of pay workload to a cloud service -- even a mainframe can be operated through cloud and we know a bunch of players that do that. You can layer up some of your services through a cloud-enabled service.

Now building something from scratch changes the game completely. Imagine you have a deployment of a new feature and you need to implement that feature for deposits in the US. Or you know, whatever other solution, maybe a core solution that requires different types of tokenization, or cross border transactions, or even a CBDC, or a central bank digital currency. Whatever the case is, the ways systems have been built in the past, even when they are interfaced through cloud micro services, in the end, it requires what we call at Pismo, an archeological dig. You need to go down to very large chunks of code and try to find out what that does, and which portion will be affected by the service. And this is usually the hidden part of the lag that some incumbents face to get to market with new features.

Now, when you have a microservice structure, among other things, you have horizontal growth. You can set up as many pieces of infrastructure as you need for certain workloads. So if there's an event, or if there's a market expansion, you can horizontally grow the number of servers that you'd be using for that demand, which is natural to everyone that uses micro services. But I think more importantly, the context of each micro service is very clearly defined by its payload -- what information gets from micro services and what information it exports. As long as those are very well defined and designed, you don't have that kind of interconnection that becomes troubling when you deploy new features.

And one of the reasons we deploy several hundred times a month is because we know that as long as the contracts are safe, you can do pretty much everything. And there's little or no risk for the operations. I think that's a major change in the way you manage your services. So you can be conservative in terms of security for your clients, while at the same time trying new stuff and building new stuff that can be rolled out very gradually without downtimes or cascading processes.

Choosing Pismo as a partner

Stephen Randall, Citi: We went through a very extensive process. We set out what the success criteria of a partnership should be. Some of that was about next generation technology and what we were looking for, making sure that we had a partner that we could work with, that could bring us a track record, which set out the volumes that they were processing, but at the same time, making sure they would very actively participate with us, as we were building out this next generation of core DDA platform.

So it was a combination of things that we were looking for -- both quantitative and qualitative, across the spectrum, to ensure that we were able to launch the next generation of solutions with them, and in partnership with them, and move from some of those legacy systems to having some of the most advanced technology in the market.

Future of the partnership

Stephen Randall, Citi: This partnership launched earlier this year -- we formally announced it several months ago. We've been working with Ricardo and team now for some months. And I think it's fair to say that we've really got the cadences. The teams have been working together very well, and there are some items, but in terms of looking forward, we're spending our efforts on our core use case. We're also making sure that we really move together as we expect to, so I think it's exciting in terms of what is coming.