Ep. 149 - Beyond the Border: Fixing the Two-Tier System in Global Money Movement, with Thunes

Grant Evans (0:05)

This afternoon, we're joined by Alex Young, Chief Network Officer at Thunes. Alex, thank you for joining us on the show today.

Alex Young (0:10)

Great to be here, Grant. Thanks very much for the invite.

Grant Evans (0:12)

We always ask the guests just to tell us a little bit about how they ended up in payments and fintech. So what's your origin story?

Alex Young (0:17)

Origin story, gosh, I don't think we've got time for it on this podcast. But in a nutshell, I joined Thunes as Chief Network Officer about 10 months ago. Prior to that, two years with a Chinese payment company, and prior to that, many, many, many years in banking.

Grant Evans (0:32)

Okay, yeah, nice. Always a nice segue into payments if you've worked in core banking, I find. And we want to talk today a little bit about solving global financial fragmentation. We know that domestic payments or moving money within a specific continent now is very, very much an instant thing. When you move into a cross-border sort of environment, it's still a bit challenging for many, many businesses. Why does the innovation speed that works domestically break down the moment we cross a border when it comes to the payments industry? Or are we getting better at that?

Alex Young (1:00)

Look, I think domestic systems have just improved and enhanced so quickly. I mean, it wasn't long ago where we were only talking about 30, 40 domestic real-time payments. Now we're up to about 130 And I think the reason Thunes was founded 10 years ago was really about bridging that gap between the two, right? Because the minute you hit a border, you've got a fragmentation as it relates to regulation, licensing.

It's not a tech issue, per se. It's really more around how do you connect one infrastructure when you leave that jurisdiction or if you leave that subregion to go global.

Grant Evans (1:40)

Can you explain the Two-Tier System to us, like in plain English, then, for someone that's maybe not from our world?

Alex Young (1:45)

Now, of course. Well, look, we're here in Lisbon, so why don't we focus on Europe? So CEPA has been around a long time now. But if you think about the 40 countries that connect, the 40 plus countries that can access CEPA, it's a very quick, now with CEPA Instant, less than 10 seconds, cross-border settlement. It's at an ACH price, very cheap for the consumer, and no deductions permitted.

The challenge remains, though, that if you are trying to move money in or out of the CEPA zone, you're looking at potentially 12 times higher costs and many days of delay. And again, it's back to that whole issue of the connectivity between that infrastructure and the global infrastructure as well.

Grant Evans (2:33)

I think people just don't want to talk in days at all when we're talking about money transfer now.

The wider community of people that send and receive payments have just had enough of those delays, right? What do you think it actually takes to bridge banks, mobile wallets and blockchains into one connected system and obviously we've got stable coins coming into the for now. There's a lot of complexity in terms of all those different moving parts. How do we bring it all together?

Alex Young (2:58)

So from our perspective at Thunes, what we're thinking about is that commonly known payments expression of the last mile, or should I say the last kilometer as we're in Europe.

So what we've said about doing is really kind of building the bridges between the ecosystems that exist for stable coin, for bank, for account to account and for mobile and just building the interconnectivity between those so that these systems do can talk to each other. We reduce the payment time, we reduce the friction and the speed in which the end consumer receives their funds.

Grant Evans (3:32)

And we want to dive a little bit into the elimination of liquidity traps as well. We know fragmentation is exactly where liquidity still gets stuck. Where do businesses actually feel liquidity traps most when they're moving money across borders in 2026?

Alex Young (3:45)

So if you think about thinking about a business, they've got to make sure they've got the necessary funding in that local market. So that perhaps means idle cash, which is really not working for them. And taking out working capital to be able to pre-fund some of this ecosystem.

And then you've got the challenge of not being able to predict the effects during the time of the transaction as well. So I think trap liquidity is a major challenge for many. But using some of the latest techniques in terms of treasury management, you're able to do a lot better forecasting and a lot better local delivery as well.