[
  {
    "start": 4.814,
    "speaker": "Manuel",
    "text": "Hello, everybody, and welcome to a new episode of BFRR, the Bitcoin Fiat and Rock'n'Roll podcast that explores the intersection of traditional finance, digital assets, and digital money and digital currencies and helps you to understand how digital money and assets will evolve in the future. I'm your host Manuel. And in today's episode, we are talking about how Siemens is using blockchain technology in cash and treasury management.\nSiemens over the years has been on the forefront of providing but also adopting new technology since decades and since a couple of years has also embarked on a blockchain journey in various areas of the large company. And today I'm talking to Heiko Nix. He's the global head of cash management and payments at Siemens Treasury. And we will discuss the different use cases in cash and treasury management he and his team is working on.\nWe're going to discuss business processes. He aims to let smart contracts orchestrate. And we'll also chat about the pros and cons of blockchains in general, both private and public ledgers. But without further ado, and me talking about you, Heiko, let's include you in the podcast. So welcome.",
    "end": 77.806
  },
  {
    "start": 77.806,
    "speaker": "HEIKO",
    "text": "You\nYeah. Thank you. Thank you for having me in your podcast.",
    "end": 85.124
  },
  {
    "start": 85.124,
    "speaker": "Manuel",
    "text": "Yeah, we are very happy that you joined and this is the second podcast that we're having with Siemens. So a couple of weeks back, we had a podcast with a colleague of yours talking about the bond that Siemens issued, sadly only in German, but nevertheless, we will include that in the show notes as well. If you want to revisit that, that was quite interesting. Henriette Kogel and also a colleague from Sviat about...\nor actually from Deca Bank about the 300 million bond that you settled in Central Bank money. So happy to link that in the show notes. But yeah, we're not here to talk about that project, but rather about what you are doing at Siemens. So Iko, maybe before we dive into the whole blockchain application space, why don't you explain our listeners what your current role is, what your brief history at Siemens is?\nAnd also, what do you do and how treasury is actually organized at Siemens? Because I know there are a couple of pillars and you are heading one of them.",
    "end": 152.27
  },
  {
    "start": 152.27,
    "speaker": "HEIKO",
    "text": "That's true. So I actually started my career at the telecommunication and networking division of Siemens in sales, marketing and product development, I may say, but with my background in computer science. So it was clear that I sooner or later would like to change into an IT department. And from 2000 onward, had the chance to be part of the IT of Siemens financial services, our financing arm.\nAnd in the last seven years in this, and I spent 20 years in that department, in the last seven years, I was overseeing the global treasury IT landscape. And as our group treasurer, Peter Radcape, recognized the central role of technology in cash management and payment, so he invited me five years ago to join the team here at Treasury.\nAnd now I'm leading the global cash management and payment product. And I would actually see my role primarily as a change manager in treasury.\nTreasury is organized, the Siemens Treasury is organized as you said it in products and verticals. We have cash management, have if, if X and risk management, trade finance that includes also guarantee management, capital markets as you already said it, and insurance and pension as verticals. And we have a regional finance center, so-called RFCs and operations as horizontal.\nproviding services and coverage to the end-to-end responsibility of the products.",
    "end": 266.222
  },
  {
    "start": 266.222,
    "speaker": "HEIKO",
    "text": "The special role, I think, of cash management is that I see us as vertical and horizontal within the treasury at the same time as we're also providing our infrastructure, which we are setting up globally to the other products. So we are on the one hand, end to end responsible for cash management and all the payments, incoming and outgoing within Siemens.\nBut also we support our colleagues from the other treasury departments with functionality and features they can use in their products as a settlement in trade is also a payment at the end.",
    "end": 309.996
  },
  {
    "start": 309.996,
    "speaker": "Manuel",
    "text": "And I think that's the beauty of payments and cash management, It's always included because clearly you always need to pay or get paid and therefore then manage those out and in going flows. So maybe why don't you give our listeners also a little bit of an overview what the, you you might say typical day in the life or like the job, the task that you and your team need to need to do look like.",
    "end": 319.255
  },
  {
    "start": 319.255,
    "speaker": "HEIKO",
    "text": "Yes.",
    "end": 338.158
  },
  {
    "start": 338.158,
    "speaker": "Manuel",
    "text": "because I think there's lots of smoke and mirrors about treasury and corporates and cash management. If you may, or if I may ask, what do you actually do? So what are the dominant roles that you guys are playing for the wider business, as you explained?",
    "end": 355.214
  },
  {
    "start": 355.214,
    "speaker": "HEIKO",
    "text": "Yeah. Maybe give you a little bit of an KPIs what we are doing and that this explains what it is. So we are about 60 colleagues in the operative cash management globally. And we are working in six hubs from Beijing to New York. We're executing about 25 million payments a year, 50 % internally and 50 % externally mainly.\nYeah, we are managing the bank accounts of Siemens. We have in the moment 1,000 bank accounts globally for all the entities. And when we are talking about entities, we are supporting 400 illegal entities worldwide. And what we are doing is we are providing all the payment infrastructure which is needed to make payments or to receive payments. So this is all included in...\nin our responsibility.",
    "end": 419.424
  },
  {
    "start": 419.424,
    "speaker": "HEIKO",
    "text": "Additional, we have a group of eight people and they are mainly focused on non-operative tasks. So that is their leading project, for instance, change products. We are performing governance tasks, working on process improvements, and are also in a discussion with our IT department to further development our IT systems, which we using here in cash management.\nSo we have a clear distinction between operative teams and non-operative teams. They are working mainly on change. It doesn't mean that our operative is not involved in change management or not included in projects. That is the case, but I wanted to have it separated. That's why we have these two different responsibilities.",
    "end": 474.33
  },
  {
    "start": 474.33,
    "speaker": "Manuel",
    "text": "Yeah, and you say you operate with the team from Beijing to New York. So, mean, clearly Siemens is a multinational corporation active in all those different areas of the world and all those countries. And I suppose you must have a very sophisticated setup, right? And therefore I can very well imagine that it is worthwhile to have people that are looking into the operations itself and also think about optimizing that.\nI mean, I think it's a perfect bridge to the question. I was wondering, is there anything that you want to overcome or are there any specific hurdles that are clear for basically every MNC that needs to be solved that you guys are working on, especially because you are a multinational corporate? I mean, if you're only operating in Germany, I think everything is much more simple than",
    "end": 532.984
  },
  {
    "start": 532.984,
    "speaker": "HEIKO",
    "text": "Cause",
    "end": 533.784
  },
  {
    "start": 533.784,
    "speaker": "Manuel",
    "text": "working across separate time zones, separate currencies. So which challenges or not even saying challenges, but things need to be taken into account when managing the cash of a multinational corporation.",
    "end": 551.438
  },
  {
    "start": 551.438,
    "speaker": "HEIKO",
    "text": "Yeah, you said it already, right? I would say also, and I would agree to that, that Siemens and Siemens Treasury was always highly developed and on the forefront, I would say, of innovation in Treasury. And in cash management, we have introduced in 2001 already, an homegrown central cash management system called Fiannavigate that is connected via Swift and E-Bix to all our banks globally.\nand internally to all ERP system within the Siemens environment. So Finnavigate can process all payments highly automated and give us also the full transparency about all the bank account balances and with this intraday and end of day cash visibility and transparency. So with this we can really, we're in the position to introduce a highly efficient daily cash management and\ncash disposition. Does this mean we cannot further simplify our payment infrastructure? And I mentioned already 1000 bank accounts globally, is this really needed? Or can we increase the level of automation to gain more efficiency? Of course we can, right? Can further optimize the current set up. But I would say this can be done only gradually. Real changes.\nor challenges I see in the future driven by the evolution, especially in the payment space over the last decade. Let's take the example of instant payments with the broader usage of 24-7 real-time payments. And in the last year, already 30 % of our customer in Germany paid via real-time payments.\nThe traditional way of cash management with reliance on cutoff and cutoff balances, so end of day balances, is not working anymore. I think that cash forecasting will be even more difficult as the payments can be made anytime and within seconds. So our aim is therefore to make cash management independent from forecasting, but",
    "end": 696.44
  },
  {
    "start": 696.44,
    "speaker": "HEIKO",
    "text": "to be able at the same time to react automatically on events. I think only a high degree of automation can handle 24-7 real-time processes. And I do believe that in cash management this is possible because it's mainly plus and minus.",
    "end": 715.116
  },
  {
    "start": 715.116,
    "speaker": "Manuel",
    "text": "And that's so interesting because you already mentioned a couple of things that you have solved with Finavigate, but then also where future growth might come from and future efficiency gains might come from. For example, as you said, by triggering payments based on certain events, right? And I think, or I assume this is also where you aim to use blockchain or where you already use blockchain, right? So,\nWhere do you currently already see the promise of using technology in payments? And maybe you can also outline a bit how you got to use blockchain technology. Is it combined with Finnavigate or is it an alternative? And yeah, where do you see the promise of blockchain technology and payments in general?",
    "end": 759.65
  },
  {
    "start": 759.65,
    "speaker": "HEIKO",
    "text": "I think that most people, when you talk to them and you mention blockchain, they're immediately in the corner of Bitcoin. But Bitcoin for us is one use case out of it. And I have to say, and that's why also I see all this discussion out there, I cannot see the benefits of cryptocurrency itself like Bitcoin. Just making payments via an\ncryptocurrency instead of making it via fiat currency, especially when we are talking about a corporate like Siemens. mean, cryptocurrency in the moment, very volatile and that's why less reliable to store or exchange value. And you also see this in the accounting treatment. I mean, it's an asset. It's actually an object for speculation mainly from my\npoint of view. And I mentioned it already in different...",
    "end": 831.374
  },
  {
    "start": 831.374,
    "speaker": "HEIKO",
    "text": "Podcast, my God.\nYou\nis not in the B2B space. I also have to say that in the B2B space, it's not widely used. But, and you mentioned it, the underlying technology and the features which this technology brings, it's quite promising. And you talked about it already, you mentioned it. 24-7 real-time payments, the programmability feature, tokenization.\nthe issuing of bonds or...\nNow there's some worm in there.",
    "end": 901.432
  },
  {
    "start": 901.432,
    "speaker": "Manuel",
    "text": "Commercial paper, probably, right?",
    "end": 903.246
  },
  {
    "start": 903.246,
    "speaker": "HEIKO",
    "text": "commercial paper and commercial paper in the delivery versus payment model. This is interesting for us. These are interesting feature we can use also in our end.",
    "end": 920.314
  },
  {
    "start": 920.314,
    "speaker": "Manuel",
    "text": "Yeah, and you mentioned already a couple of different use cases. mean, we're going to dive deeper in a minute on the cash management, treasury management use case. But as already stated in the beginning, also other parts of Siemens treasury are looking into adopting blockchain with exactly what you just said, issuance of a 300 million bond. Before that, I think it was 50 million that you issued and now also the commercial paper. So I was wondering, like, what is happening in Siemens? So is this\nindividual people driving this? Is this part of overall strategy, for example, in treasury? Or does even business come into play here as well when we talk about adoption of blockchain for orchestration of certain business process? So is this a centralized strategy to now put Siemens on chain, so to say? Or is it rather, you know, interest in new technology here and there? you know, the people\nthat are driving these initiatives have the freedom to explore there and become thought leader clearly and also clearly also understand where it really makes sense to adopt it. But it's part of a Siemens wide strategy. how do you at Siemens look at blockchain adoption?",
    "end": 995.742
  },
  {
    "start": 995.742,
    "speaker": "HEIKO",
    "text": "First of all, we are not looking at solving problems, but we are also developing future opportunities for treasury business and treasury use cases, but also for our Siemens industry business. This is important to understand that we have a culture and you said that we have a freedom also to try something out, to test something. And usually we start testing if we believe that this technology is promising. So this is a prerequisite to go into such a test.",
    "end": 1029.742
  },
  {
    "start": 1029.742,
    "speaker": "HEIKO",
    "text": "Blockchain technology from my point of view brings a lot of adventures and we mentioned it already. 24-7 real-time transaction, the usage of programmability and trigger also features, trigger payments, providing self-funding bank accounts, delivery versus payment, but also payment versus payment. There's a lot of features which are interesting.\nAnd especially the last one, the atomicity, meaning synchronizing processes with payments or triggering payments based on business trigger or business events. This is something really interesting. So there's a lot of features in it. It's more than one. And that's why you see all this interesting and different projects we are running. So they are connected because we think that with the provision of the infrastructure,\nBlockchain infrastructure can drive a lot of efficiency in the different products I already mentioned.",
    "end": 1099.694
  },
  {
    "start": 1099.694,
    "speaker": "Manuel",
    "text": "That's super interesting. And let's dive maybe a bit deeper on your adoption of blockchain technology. Right. So clearly there's various different flavors and our listeners know that we also favor or look into in favor of looking into adoption of blockchain rather than simply talking about the meme coin and crypto coin here. And where we see adoption, especially in the traditional finance sector, it's rather\nprivate blockchains than public blockchains. So I'd be interested in which blockchain technology are you currently adopting, with whom do you partner, and for what purposes do you actually partner with those, and what do those players that provide you with these services actually provide you as a service?",
    "end": 1151.042
  },
  {
    "start": 1151.042,
    "speaker": "HEIKO",
    "text": "Yeah, I mean, in general, you need to differentiate between blockchain solution and I'm talking about only private blockchain solutions, supervised blockchain solutions with direct or indirect access to blockchain technology. And what does that mean? Direct access means that you have access to the bank account on the blockchain. And this has its own bank account number, it has its own bank account balances, but also funding needs.\nAnd we have been using a solution provider per nexus or former ONIX by JP Morgan for now over two years now. We opened at the beginning, we opened bank accounts in US dollar and in euro, in Singapore, Germany, and also in the US. And so we are able to make sweeps 24 seven as part of a global cash pooling. With the programming,\nwe are able to set up rules to execute sweeps between these bank accounts automatically to, for instance, realize a self-funding bank accounts. And you mentioned in the pilot transaction with the SWEARd asset platforms, we could show that we can provide real-time funding capabilities by combining the Kinexis blockchain bank accounts with the SWEARd asset platform.\nbased on delivery versus payment capability. And this is the interesting feature because from the issuing start, the issuing process until we receive the funds, that was possible within 90 seconds. And that's quite fast from my perspective. Indirect access means that we have no...\naccess to the bank account, the blockchain bank account or the blockchain infrastructure itself. It's just indirect. It works a little bit like a transit account, which is behind the scenes for the temporary transfer or processing between two bank accounts. So we are using this mainly with Standard Chartered Bank and Citi, where they have behind the scenes, they're using their blockchain bank account",
    "end": 1294.922
  },
  {
    "start": 1294.922,
    "speaker": "HEIKO",
    "text": "a structure to provide an additional feature in addition to our current setup. So that eases a little bit the introduction because you don't have a separate bank account for it. You don't have to manage it. You don't have to fund this. There is also no balance on it. It's really used in addition to our current account, which we have currently. So there's no additional setup necessary.\nSo these are the two concepts we are seeing in the market, which we tried out. The main users is definitely on the the Kinexis side and we are step by step ramping up also other payment capabilities with other banking partners too. And this is in the moment a challenge to gain cross banking capabilities. Can we make payments between the ecosystem of Kinexis? JP Morgan.\nand standard chartered or Citibank. So this is something, you know, we're still challenging. We are still bound within the ecosystem of the respect of banking.",
    "end": 1367.012
  },
  {
    "start": 1367.012,
    "speaker": "Manuel",
    "text": "So to summarize also from a different angle, so we are not talking about public blockchains. We're not talking about, for example, a stablecoin. It's definitely not about crypto, but not also about a stablecoin that is issued, for example, on a public permissionless infrastructure. But it's rather bank-centric infrastructure for now that ultimately provide bank accounts using a new infrastructure, using a new account record keeping system.\nAnd then, you said, Kinexis, now rebranded from Onyx, you basically manage the account balances yourself. So you have a regular account, I suppose, with JP Morgan as well, but then also this blockchain account. Whereas with Standard Chartered and Siti, it's rather in the background, you don't really have to manage additional accounts, but they use in the background blockchain technology to move the funds.\nbetween accounts that all sit within those banks. And this is then, if I understood you correctly, also the restriction here, because ultimately you are bound, let's say by, you could say by the balance sheet of each bank, right? Or by the accounts that are provided by each of the banks.",
    "end": 1441.228
  },
  {
    "start": 1441.228,
    "speaker": "HEIKO",
    "text": "Yeah, you can see it as a book transfer between bank accounts within these ecosystems of the respective bank. And as I said, if you have access to the bank account itself, then you have more features which you can use than you have actually only a current account. And via an instruction, you can instruct the bank to use the blockchain infrastructure behind the scenes.",
    "end": 1443.64
  },
  {
    "start": 1443.64,
    "speaker": "Manuel",
    "text": "book transfer.",
    "end": 1471.008
  },
  {
    "start": 1471.008,
    "speaker": "HEIKO",
    "text": "or in the background as you said. Yeah, that's the difference.",
    "end": 1475.012
  },
  {
    "start": 1475.012,
    "speaker": "Manuel",
    "text": "And I think we're slowly getting there, right, to also have this multi-bank capability, right? So I think this is a common and known problem in the industry and traditional finance that for now it's really bound by each bank barrier, so to say, by each bank balance sheet. But what we saw last year, for example, with the new technologies for wholesale settlement trials that were provided by the European Central Bank,\nor the euro system in general, so Bundesbank, of Italy and Banque de France provided solutions. It became clear that not only a blockchain-based central bank money can help there, but also basically bridging the gap between blockchain infrastructure and existing payment systems like Target 2 in the eurozone or TIPS, sorry, Target 2 in the eurozone through the Bundesbank trigger solution, but also TIPS.\nthe Eurozone by the Bank of Italy trigger solution. So therefore, basically connecting existing payment systems that are used for settlement between banks to those blockchains. So I'm quite sure and hope that in 2025 also the Euro system actually provides a solution. We talked about it in previous episodes quite a lot already. So I think that's very near term, hopefully, to also allow for multi-bank settlements.\nBack to the use cases and treasury that you are realizing and you've already touched upon it. So you said 24 by 7 liquidity, real time payments, cash pooling based on programmability, and also this atomicity of settlement between tokens that represent securities, for example, and tokens that represent money. So these three big themes you already mentioned, can you maybe\nYeah, explain a bit further what you aim to do, especially in this large organization that spans across multiple regions and currencies.",
    "end": 1597.838
  },
  {
    "start": 1597.838,
    "speaker": "HEIKO",
    "text": "Of course, mean, you touched on it, 24-7 liquidity and real-time payments, with this feature, we can overcome the cutoff times and restrictions and we can mobilize our existing liquidity to further optimize the working capital, like in a global cash pool. And as a settlement is a payment, and we talked about it, we are also able to make\ndeposits after cutoff times or doing real-time settlements. And it's important for us to do this based on facts, so the account balances end of day and not on assumption like the forecast. With the programmability features provided by the blockchain bank accounts, we can trigger payments based on certain information like...\naccount balances or remittance information, or we have also access to the payment query. So this puts us definitely in the position to avoid failed payments as we can trigger a funding from a different bank account in case the current balances, for instance, is insufficient. But also we can do dynamic cash pooling.\nas we can trigger sweeps from different bank accounts during runtime. And I said, also remittance information can be used, for instance, to do split payments between different Siemens entities. So in general, the programmability features helps us to further automate our cash management system. And the atomicity feature\nmeaning synchronizing processes with payments and the tokenization, we are able to provide the delivery versus payment feature or payment versus payment feature. And this we have used in the Siemens commercial paper transaction last year with Deca and JP Morgan that shows that such a transaction can be executed within seconds.",
    "end": 1736.62
  },
  {
    "start": 1736.62,
    "speaker": "HEIKO",
    "text": "from issuing to receiving the funds on the bank account. And this is an interesting feature because it introduces the possibility for real-time funding. And combining it with programmability, we can do external funding initiated in the moment needed. I think that is very, very interesting.",
    "end": 1764.708
  },
  {
    "start": 1764.708,
    "speaker": "Manuel",
    "text": "So would a use case even include, for example, the issuance of a security token when certain situations emerge that goes completely automatically or more or less automatically? Maybe there's like a four-eye principle still in place, still, mean, programmability allows also then the issuance of security, which might lead to further raising of liquidity based on certain rules that are\nprogrammed in smart contracts that govern this whole process.",
    "end": 1799.672
  },
  {
    "start": 1799.672,
    "speaker": "HEIKO",
    "text": "Yeah, that's the idea. And we have done this pilot transaction. And of course, are also not only challenges on the technology side, it's also to find investors in an ecosystem which can be accessed. I mean, this is so far a problem, right? And we have done this with Deca as the investor. So that was easy, but to broaden it, to enlarge\nYou know, the ecosystem, this is definitely a challenge. We do see this.",
    "end": 1834.49
  },
  {
    "start": 1834.49,
    "speaker": "Manuel",
    "text": "Yeah, and we're going to come back in a couple of minutes, I think, also on the difference between private and public blockchains, because I think also then the private blockchain might come as an increased barrier here or as an additional barrier, because clearly you need to have access to the system, right? I mean, clearly you can also allow other investors, for example, by accessing it via an API. But I think in general, it's different to, let's say, using a public permissionless infrastructure where anybody can\nprovide liquidity or participate then in this transaction. But I not to say we need to discuss this now. I think we're going to come back to that. One interesting thought, we discussed the programmable issuance, for example, of securities, which already goes somewhat into a business process. It's still, of course, treasury or cash management related or treasury related.",
    "end": 1881.038
  },
  {
    "start": 1881.038,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 1884.686
  },
  {
    "start": 1884.686,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 1891.066
  },
  {
    "start": 1891.066,
    "speaker": "Manuel",
    "text": "think, and you mentioned it in the pre discussion we had prior to recording this podcast, that you are also looking into applying blockchain use cases in business processes, right? So where, for example, smart contracts orchestrate certain processes, where then, for example, a cash sweep might happen or a cash payment might be triggered, or for example, also a security is raised or issued. So could you provide a bit more?\nbackground on what you plan there to basically really use smart contract as an orchestration layer, so to say, as an orchestration mechanism for business processes.",
    "end": 1927.907
  },
  {
    "start": 1927.907,
    "speaker": "HEIKO",
    "text": "Hmm.",
    "end": 1931.564
  },
  {
    "start": 1931.564,
    "speaker": "HEIKO",
    "text": "I mean, we have seen the discussion about pay-per-use use cases and micro payments for quite a while. And the implementation I haven't seen so far, especially on the micro payment side. I'm not aware of any implementation in that case. And from my perspective, what we are lacking here is trusted data, because if you use the programmability feature,\nAnd it's very clear in a banking infrastructure because you rely on data like the balance, you rely on this. It is very difficult, right, between partners to come to data which is trusted by every party involved. So that's very difficult to find because you would trigger, for instance, via a smart contract, you would trigger and payment-based\non let's you consumption data. And usually between in the B2B space consumption, the acknowledged or the confirmation of goods received or services received is always for ice principle. You have always these distributed responsibilities, especially in mid-size or large size companies.\nSo this requirement of the four ICE principles. And I think this is one of the challenges we are facing in such a process. you also need some help implement processes. And I think smart contract could be a good solution. And with one of our bigger IT provider within Siemens, we have created such a solution. It's always verifying\ndata amongst parties. And this, I think, can be done via smart contracts as well, based on a bank infrastructure. I would say, why should you synchronize data between, for instance, ERP system of these two partners via a bank infrastructure? And I can say, we are doing it already today, and it's called remittance information.",
    "end": 2077.112
  },
  {
    "start": 2077.112,
    "speaker": "HEIKO",
    "text": "Here we are sending information in the payment, which helps the receiver of the payment to identify the open item, which then can be cleared. So this is and reconciled, right? So it's not a new idea. It's actually what we are doing currently. The question is, can we enlarge this? Can we really synchronize it? Because when we implemented this use case, we saw that we need to start really with the contract.",
    "end": 2087.053
  },
  {
    "start": 2087.053,
    "speaker": "Manuel",
    "text": "And reconcile.",
    "end": 2106.646
  },
  {
    "start": 2106.646,
    "speaker": "HEIKO",
    "text": "It's not just all the information we need mainly for the payment. We also need what costs center are involved in both companies, what are the payment terms and all of this. And this can be synchronized. This can be also stored in such a distributed ledger, which we are using then. And of course, it is a restricted ledger. It's a supervised ledger by a bank.\nthat also increases the level of trust between the parties. Because no one today question remittance information. No one. Right?",
    "end": 2148.374
  },
  {
    "start": 2148.374,
    "speaker": "Manuel",
    "text": "And it's interesting that you mentioned in the beginning that there was so much talk, but not so much implementation. And we also looked in the past on, for example, all the supply chain projects that emerged. And if you look at it, most of them are bankrupt, so they don't exist any longer. And I think, as you mentioned, also the quality of data is so important here. And when you look at supply chains and trade finance, for example, as well, mean, it's such a",
    "end": 2173.368
  },
  {
    "start": 2173.368,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 2178.426
  },
  {
    "start": 2178.426,
    "speaker": "Manuel",
    "text": "perfect market for, in theory, for using blockchain because you have so many untrusted parties or parties that don't trust each other. However, if the data is not correct or is not stored in a structured way or is not digital at all, right? So when we are talking about paper-based trade, where then the big innovation currently is using an OCR to digitize those printouts and then try to",
    "end": 2195.17
  },
  {
    "start": 2195.17,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 2207.438
  },
  {
    "start": 2207.438,
    "speaker": "Manuel",
    "text": "get the data out of it, bring it into a structured database. So I think, yeah, it's still a big challenge, especially from getting the data right. And now you mentioned, for example, remittances. So I assume also the solutions that you are using provided by the banks that you are partnering with also includes then remittances in a structured way in that message. So maybe in an ISO format or whatever, where you can then programmably\nmake use of that data that is transferred in a very structured way, I suppose. Because that is ultimately required in order for programmability features to help you.",
    "end": 2247.182
  },
  {
    "start": 2247.182,
    "speaker": "HEIKO",
    "text": "Of course. So you need actually three components for it. Number one is the value store. So the bank account, we are using bank account, blockchain bank accounts. You need to have the programmability feature and you need trigger data which everybody trusts in that process, right? Something like a power meter at home. So nobody's questioning what's on the power meter. So if it's 1000 watt, then it's 1000 watt per hour.\nSo nobody is called into question. And you need to have the same concept with your partner. So that's why also the usage of such use cases is dependent a little bit on the frequency. It doesn't make sense for a one-time payment to set up such an infrastructure. You need to have, or you need to be part of a peer-to-peer network with strong partners.\nwhere you have a lot of business with, then it makes sense, then you gain efficiency because it's also effort to introduce such a technology in your treasury or in your company, and especially in all partners. you mentioned it, supply chain also, there's a lot of investment in it. So many parties involved, as you said, trust is here, the question mark.\nThat's why you need to have people, you need to have business cases where you have recurrent payments, where you have recurrent business. Otherwise, that doesn't make sense from my point of view.",
    "end": 2347.084
  },
  {
    "start": 2347.084,
    "speaker": "Manuel",
    "text": "And then we are still talking, let's say, about onboarded partners, So individual partners where you have a lots of volume and lots of traffic where it's worthwhile to implement such a more complex solution, clearly. That makes sense. And Hakeo also mentioned localization of bank accounts where smart contracts and triggered payments could help. Maybe you can also explain where you use blockchain in that regard.",
    "end": 2375.256
  },
  {
    "start": 2375.256,
    "speaker": "HEIKO",
    "text": "Yeah, another feature is a decentralized network. That means the ledger is distributed among all the involved parties or it is possible to do this. And what we see is that the provision of a smart contract and to deploy this on the blockchain, direct access to the node, so to a part of the infrastructure is necessary.\nSo what we are aiming for is that we are using nodes instead of interfaces to communicate with the blockchain system. So the idea we are having and we have implemented this year in Siemens is, but it's not productive, I may say, that we have a node which we have direct access, which is connected to the infrastructure of the bank.\nThis is really new that parts of the infrastructure and then distributed among also the clients. So this is a completely different way of interaction of collaboration with your banking partner, where today we're using interfaces like Swift or eBIGS or an online channel to trigger action within the banking infrastructure or banking system.",
    "end": 2466.444
  },
  {
    "start": 2466.444,
    "speaker": "Manuel",
    "text": "And I think this is also a fascinating area I'd like to spend a couple of minutes on. from what you've just said, hear, and this is also how you explained it in the beginning, that you ultimately connect to that blockchain infrastructure that is somewhat a bank infrastructure, right? So it's, you could argue a core banking system where they use the blockchain and the smart contracts to record the balances that\nor the balances of the accounts that they provide to their clients. And you most likely via an API channel connect to that bank system and then instruct payment instructions. And now, if I understand correctly, running a node is then the next step that you might want to take. If you do that, then I think the very interesting situation might emerge where you and the bank are actually operating on the same ledger.\nRight. So also have access to the same database where accounts are stored. And as you said already, usually, or this is how it works today, the bank has a system where it records the bank account and you in your EIP or TMS system also have a local copy of that same bank account ultimately. And those two copies need to be in sync. And this is done through a payment instruction, but then also through reconciliation with them.\nend of day statement like an MTU 940, for example. And when you now operate on the same ledger, this whole concept of let's say two databases that need to be kept in sync changes or might change, right? Because you are ultimately using the same database. So is this also something that you guys are discussing and also thinking about and potentially even adopting? Because that might mean that the account\nrecord keeping system that you currently have in Fenevigate might not be needed any longer or would merge with the blockchain of the bank or very interesting thoughts come up in my mind. So is that something that you also look into?",
    "end": 2595.372
  },
  {
    "start": 2595.372,
    "speaker": "HEIKO",
    "text": "Yeah, I mean, first of all, you need to have access to the nodes via an API in the infrastructure of the bank or you're running the node yourself in your own data center. Then you have direct access. That's the most convenient part. In the pay-per-use or other use cases, right? We think that the payment is the initial event and then\nTo record this, to document this in the ERP system is the subsequent event, which is today the other way around. Usually you have a payment run, these payment runs have four I's principles, then the payment goes out and then it's recorded in the bank statement. And here we're doing it the other way around. And again, it's not something new when we talk about direct debit. Also here,\nthe payment comes first and then we record it and we document it in our books and records. So also here we are flipping it 180 degree, making the payment, the initial event, and then documenting it in the ERP system and in our books and records as this is needed. So this is important. This is one aspect. The other aspect is that, as you said, we are using the same\ninfrastructure instead of communicating via messages, be it on a Swift message or an API message, right? It's just a different channel. But this is a complete different way of the collaboration between the client and the bank. And you could also see it as a little bit like AWS, Amazon Web Services, where they provide in a cloud infrastructure to you.\nwhich you can use in your internal processes. And here the bank becomes an infrastructure provider, giving parts of its infrastructure to its client to have direct access and work on the same ledger. And it's clear that will not be the main ledger of the bank. It will always a sub ledger. That's clear for me. But this is a complete, as I said, different way of interacting.",
    "end": 2738.882
  },
  {
    "start": 2738.882,
    "speaker": "HEIKO",
    "text": "with your banking partner.",
    "end": 2742.136
  },
  {
    "start": 2742.136,
    "speaker": "Manuel",
    "text": "And it's very fascinating because then we are moving away from only a bank centric infrastructure rather to a shared infrastructure, right? Which is the whole concept, I believe, initially of a distributed ledger, Where multiple parties operate on the same ledger. And yeah, I said in the private permissioned infrastructure space, this is still, I would say, novelty. So there are a couple of projects.",
    "end": 2751.096
  },
  {
    "start": 2751.096,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 2769.55
  },
  {
    "start": 2769.55,
    "speaker": "Manuel",
    "text": "You mentioned or we mentioned Sviat. We mentioned Patio, for example. Those are the two that directly come into my mind when we talk about a shared ledger infrastructure and not only a bank centric ledger infrastructure, but the most extreme, for example, would be a public blockchain, right? Because there definitely it's given. mean, everybody that interacts with the public blockchain has one single state, one single source of truth, though, to say.\nAgain, clearly, local databases can be reconciled again, but overall, the whole concept is having one single ledger, one single truth. I'm curious what your thoughts are on public blockchains in general, given that you are currently, let's say, only using private permissioned ledgers. Now, also going into the direction of a shared ledger, not only a bank-centric ledger.\nBut clearly, it's still very different to a public permission this ledger. So are there specific benefits, also issues that you see, pros and cons that you see of those two infrastructures, predominantly public blockchains?",
    "end": 2840.632
  },
  {
    "start": 2840.632,
    "speaker": "HEIKO",
    "text": "Yeah, I mean, in general, have difficulties with an infrastructure that has no owner, especially if we want to store or transfer value on it in such a system. So, and I'm always asking in that context, so what's the telephone number of that infrastructure provider when something goes wrong? And as I said, I was 20 years in IT, so I know that always, and blockchain is a software.\nin the software, always can go something wrong. Building just on the trust of technology is a little bit too... It's not enough for me to make bigger transaction of an corporate life for Siemens via a public infrastructure because of missing ownership.\nSo that's why I see the little bit, know, I don't know where the technology is in the next five years or maybe 10 years. I cannot predict this, right? So technology is evolving so fast. So today I would say I have difficulties to think about it. And a second aspect, I think it's not discussed so far. If you would try to move every financial transaction to one\npublic blockchain, it would not work because the number of transactions you can perform and execute on one day is limited due to its technology. So it wouldn't be possible. So I'm more thinking in the way of maybe global layer one concept or Pardyo, you mentioned it, that connecting different blockchain ecosystems with an\na messaging system or an layer or whatever, you know, could be the better concept. But again, I don't know, you know, technology is evolving so fast. I don't know what is in five years time.",
    "end": 2969.176
  },
  {
    "start": 2969.176,
    "speaker": "Manuel",
    "text": "Yeah, I'm totally with you. It's developing so fast. And I think this whole layer two, layer one area and also where app chains are now emerging, which are layer twos that are then only to some extent reconciled with the layer one might be such a system which is also at some day applicable. another aspect I can imagine is the transparency of a public blockchain, right?\nCurrently on a public blockchain, everything is completely transparent. It's visible to anybody. I would assume very quickly one could understand that the smart contract belongs to you, So to Siemens and therefore then know exactly what Siemens is doing, who it pays, how much money it raises, and so forth and so forth, which might not be in the interest of that corporation, right? I think also technology-wise, we will see",
    "end": 3012.654
  },
  {
    "start": 3012.654,
    "speaker": "HEIKO",
    "text": "Mm-hmm.",
    "end": 3027.578
  },
  {
    "start": 3027.578,
    "speaker": "Manuel",
    "text": "benefits and not benefits, but developments in this area with zero knowledge proof technology and so forth. for now, I would also say the use of public blockchains, at least for transactions where you don't want to provide full transparency is still an issue.",
    "end": 3048.458
  },
  {
    "start": 3048.458,
    "speaker": "HEIKO",
    "text": "And we are missing fiat currencies on public blockchain, right? So this would be another one. And as I outlined it, right? We are very much relying on fiat currency. have blockchain bank accounts in Euro and US dollar, not in Ethereum or Bitcoin. And so that's why, you know, that I have to convert US dollar or Euro into a cryptocurrency to make payments. I don't see the need for it.\nSo that's why the first step is, you know, bring fiat currency on the public blockchain and then let's talk again.",
    "end": 3083.502
  },
  {
    "start": 3083.502,
    "speaker": "Manuel",
    "text": "Yeah, mean, stablecoin providers would argue now also regulated on the markets and crypto assets regulation in Europe that this is now the case, right? So you have fiat on on chain, even on public blockchains, electronic money tokens. And I think a couple of players in the marketplace, big bets on that as well to to make use of stablecoins in the corporate fields. This is actually also been one of my predictions for next year, for this year within the podcast that\nstablecoin adoption might go ahead. I mean, who knows? Nobody knows, right? Maybe it's only in the payments sphere first for wholesale settlements and not necessarily for corporate use. But yeah, mean, clearly, most likely you wouldn't like to use a volatile cryptocurrency here. The alternative would be if banks use public blockchains to record their deposits, right? But I think also\nThe Basel requirements that make it very, very hard for banks to even touch public blockchains and do business on it is also preventing this use case.",
    "end": 3143.086
  },
  {
    "start": 3143.086,
    "speaker": "HEIKO",
    "text": "Yes.",
    "end": 3147.916
  },
  {
    "start": 3147.916,
    "speaker": "HEIKO",
    "text": "Because of the risk they are seeing, right? So I can imagine. And again, I talked about lacking ownership and you have to make sure that your banking infrastructure is working because even worse than losing money is losing the trust in the stability of the financial system. And I think that's where it comes from. It's so important.",
    "end": 3172.174
  },
  {
    "start": 3172.174,
    "speaker": "Manuel",
    "text": "Yeah, let's see where the whole debate is going. And I think also our co-hosts Jonas and Alex both want to spend more time on public versus private blockchain infrastructure this year on the podcast as well. So very much looking forward to that. I think it's a very important topic and I find it so interesting, right? So the crypto space is clearly only talking about public blockchains and they believe private blockchains have no value and are not used. Whereas when you talk to regulated financial sector, but also\nrepresentatives from corporates like you, they have a completely different view. So clearly also volume wise, I think the banking partners that you partner with already transact quite a high volume on those systems. Right. So I would definitely not disregard that development, even though the use case clearly is very, different. Right. So restricting access only for onboarded players, whereas a permissionless infrastructure\nNo whitelist approach, but rather a blacklist approach, meaning only those few restricted addresses cannot interact with the smart contracts and wallet providers. Clearly a completely different concept, right? So very curious how that will develop.",
    "end": 3246.56
  },
  {
    "start": 3246.56,
    "speaker": "HEIKO",
    "text": "Yeah, payment controls are very important, right? So that's why, you know, we have difficulties to in the moment to use a public blockchain for such transactions, especially when we talk about payment.",
    "end": 3259.076
  },
  {
    "start": 3259.076,
    "speaker": "Manuel",
    "text": "Yeah, I could looking at the time, we're already quite a progress, maybe as a last question. So we discussed a lot the benefits of blockchain technology and the benefits that you are already using or realizing. But I think it's still a bit complex, right, to make use of this new technology. So from your perspective, also from the journey that you have been embarking on, what is required for\nLet's say there's another large MNC that has no blockchain experience that listens to this podcast now and now thinks, this sounds fantastic. I really want to do it now as well. Where should the treasurer or the cash manager start? Right. Because it's not the most easy thing I can imagine to do.",
    "end": 3304.59
  },
  {
    "start": 3304.59,
    "speaker": "HEIKO",
    "text": "Absolutely, it's an investment. It's an investment in time and processes and people also, they have the understanding what does it mean to operate on such an infrastructure. So from the technical point of view, number one, from my point of view is API. You need to be in the position to handle APIs back and forth. So this is important.\nThe second one is on the process you need to be in the position to operate on 24-7. So how can you automate something? Can you rely on your master data? Can you rely on all the information you have in your treasury system? Are they combined also with your ERP system and are they synchronized in a way that you can operate on such? So data and data quality is so important.\ntechnical maturity, especially when we talk about APIs. And then you need also to have the business that benefits from it. And you mentioned it, if you have business only in your treasury within Germany, I don't know if global payments makes the difference for you. And also these use cases, especially when we are talking,\nbusiness side, not only the treasury use case, but also on the business side, you need to have use cases in a peer-to-peer network. So if you strong partners you're partnering with and you want to further integrate them into your processes. So these are the prerequisites, the boundary condition under which you could consider embarking that journey. But besides that, it's fun.",
    "end": 3412.314
  },
  {
    "start": 3412.314,
    "speaker": "Manuel",
    "text": "So it's not, I bet it is also the learning curve most likely is very, very steep. That's always part of the, of the fun, most likely that you're talking about. So it's not for everybody because of the business restriction, because of technical restrictions. And I suppose, for example, if you then run a node in your system, then it becomes even more complex, right? Because then likely you will also want to sign the transactions yourself. So you need a custody solution for that.",
    "end": 3414.198
  },
  {
    "start": 3414.198,
    "speaker": "HEIKO",
    "text": "you",
    "end": 3436.238
  },
  {
    "start": 3436.238,
    "speaker": "HEIKO",
    "text": "of things.",
    "end": 3442.634
  },
  {
    "start": 3442.634,
    "speaker": "Manuel",
    "text": "you need to be able to consume the data from the blockchain. So some form of event listener that then puts the data into your off-chain systems and so forth. So it becomes more more complex, but clearly, as you said, also more and more interesting and fun to deploy all this.",
    "end": 3460.61
  },
  {
    "start": 3460.61,
    "speaker": "HEIKO",
    "text": "Yeah, it's a lot of technology, right? And as I said, also don't forget the people. Your team need to understand what does it mean and what requirements. So it's important that you introduce this also from the knowledge standpoint into your teams and that they understand what it means and how we can evolve and how we can benefit from it. It's also important.\nnot just operating and also understanding the benefit and then bringing new use cases into play.",
    "end": 3485.134
  },
  {
    "start": 3485.134,
    "speaker": "Manuel",
    "text": "Yeah.",
    "end": 3493.242
  },
  {
    "start": 3493.242,
    "speaker": "Manuel",
    "text": "But I can imagine your team in that area, treasury management and cash management, is probably very excited about all the change that you are providing. I can imagine, maybe it's just like a prejudice, but cash management or treasury management in the corporate can maybe be perceived as somewhat boring here with all these technology changes. I'm quite sure this is not boring at all.",
    "end": 3518.434
  },
  {
    "start": 3518.434,
    "speaker": "HEIKO",
    "text": "No, it's not that I'm very happy that they are using very easily and naturally today terms like API, like XML and all this. I mean, I'm coming from the IT side. So for me, there was nothing new. But to introduce all these ideas and terms and make use out of this in a treasury organization, especially in payments, right? That was a little bit also of a journey, I would say.",
    "end": 3548.876
  },
  {
    "start": 3548.876,
    "speaker": "Manuel",
    "text": "I can imagine. Heiko, it's been a pleasure and that was a fantastic discussion. Before wrapping up, is there anything else that you would like to exchange or like to discuss in the remaining couple of minutes?",
    "end": 3564.376
  },
  {
    "start": 3564.376,
    "speaker": "HEIKO",
    "text": "Yeah, a general topic which we haven't touched so far is culture, being open for change. Also taking risks. So I think it's necessary to be open for change and not only also thinking in problem solving. There's a problem and here with technology we are solving it. Also think about, can I provide opportunities which then for other departments maybe that...\nbrings a benefit and value add. So I would say not only thinking about a problem which I can solve, also be open to provide something the one I ask for.",
    "end": 3611.074
  },
  {
    "start": 3611.074,
    "speaker": "Manuel",
    "text": "And I can imagine by interacting with a completely new way of exchanging information, exchanging value with various partners, by only thinking about existing problems, you might restrict yourself in specific use cases. So I can imagine that those use cases will also come up by simply adopting it, testing it, getting more experience. And then, yeah.\nnew possibilities and new use cases emerge, which you hadn't even thought of when thinking about specific problems that you were aiming to solve.",
    "end": 3648.952
  },
  {
    "start": 3648.952,
    "speaker": "HEIKO",
    "text": "This is exactly what I mean, providing an opportunity for others, you know, that they can apply maybe in their environment you cannot even think of. So that's the, that's the beauty of the journey.",
    "end": 3660.27
  },
  {
    "start": 3660.27,
    "speaker": "Manuel",
    "text": "Well, with those beautiful words, think we've come to an end. That was a fantastic and very, very insightful discussion. Thanks a lot for all of your insights. Thanks a lot for tuning in. Dear listeners, I hope that was useful. If you liked the episode, please don't forget to rate it, leave comments on your favorite podcast catcher. And please also do not refrain from\nYeah, telling others about this podcast if you liked it. As said, we recently switched to English, so clearly also want to widen the scope and widen the listener base. So we'd be glad if you recommended us and left us a comment. But yeah, coming back to you, Heiko, thanks a lot for tuning in again.",
    "end": 3702.51
  },
  {
    "start": 3702.51,
    "speaker": "HEIKO",
    "text": "Thank you very much.",
    "end": 3705.198
  },
  {
    "start": 3705.198,
    "speaker": "Manuel",
    "text": "Talk soon, bye bye.",
    "end": 3706.286
  },
  {
    "start": 3706.286,
    "speaker": "HEIKO",
    "text": "Bye bye.",
    "end": 3687.81
  }
]