♪ emily: they are brothers from rural ireland who came to america to pursue the entrepreneur dream. together, they created a company called stripe in 2010, making it debt simple for small, young companies to accept payments from all over the world. it has since grown into a giant of valued at $9.2 billion. half of all americans who bought something online in the last year did so without knowing via stripe. the company now works with customers as big as lyft, facebook and amazon. processing billions of dollars toward transactions for a small fee. joining me today on "bloomberg

studio 1.0," patrick and john collison. cofounders of stripe. i have interviewed you both separately many times. and i am so excited to have you here together. we are going to start at the beginning. you were born in rural ireland. what was it like growing up? the brothers collison. >> we grew up in the countryside. so it was like a 40 minute drive to get to school in the morning. none of our friends lived anywhere close to us. when we came home from school, we couldn't run around and play with them. we had to run around and play with each other. we would go read books. we didn't get to the internet until i was a teenager. you got used to browsing websites, to scrutinize the fine print and be like, offer not available in the republic of ireland. the sense was staring through the glass at this amazing world and internet out there and not all of those opportunities being available or equally available.

so, in a way stripe is focused on global access and expansion of global opportunity and all those things. this really was not conscious in anyway. but looking back over the last 20 years of my life, i think in some ways, that mindset was instilled by the experience of growing up in 1990 ireland. emily: how did you discover computers? >> it would be fair to say that we were free range kids. >> i am always struck in the u.s. like people need finer grained counter controls or their kids life. it is like half hour increments are not precise enough. >> in our case, our parents were busy. they were both entrepreneurs running businesses they had started. patrick and i had a lot of latitudes to figure out what we were interested in. and go explore that. you are the one that started with programming. that was not the plan.

>> we read a lot we took the standard routine was we would go to the library. we would go home and read the books, rinse, repeat for the next day. some point, i happened to get a programming book. and read the book. emily: you read about programming before you had a computer. >> i read about the internet before we had the internet. i got a programming book and read it and it seemed awesome. i built my first jankie website. i was very proud of myself. emily: did you follow older brothers lead here? >> yeah. i similarly got into it as a teenager. emily: didn't you hack each other's websites or something like that? >> didn't that happen, patrick? >> i think that did happen. i think it's an important duty as a 16-year-old older brother to help educate the slightly

younger brother. i took that obligation and duty very seriously. emily: you made it to m.i.t. you made it to harvard. in 2009, you both dropped out. how did you make that decision safety in numbers, i suppose. >> patrick has the honor of dropping out of college twice. in 2009, we had just started college at we had been building all sorts of side projects. and internet misses and things this. and i don't think anyone ever -- certainly in our case, you don't set up to start a huge thing. you don't set out to build a large company. he said out to solve a problem. there was this disconnect between the fact that all of these new internet services and businesses were getting started, smart phones have just arrived, and then you went to do anything on the business side and accept money for what you built, it is like back to the 1970's. so i think it was honestly helpful that we were young, we

started out. and two, we were not coming from being industry professionals who had been in the industry for 30 years or anything like that. you can bring a fresh perspective. we started approaching it from the perspective of the people who actually prove to be the most important decision-makers of all, the software of building it. the thing that led us to dropping out was a realization of what we initially conceived of, as being a niche product for developers. the lake was actually an ocean. the character and problems we were addressing in terms of what is the global economic infrastructure for the internet? and why is it not possible? even then a 2010, to accept customers payments revenue from internet users anywhere in the world. emily: how did your mom and dad feel about this?

i know they are entrepreneurs. >> i often wonder if i were in their shoes, how would i react? they asked us to explain our decisions. they didn't rubberstamp. they were always supportive. i think john and i are very lucky to have parents like that. emily: you got into white commentator. you moved to buenos aires to build the company. walk me through the early days of building? >> the early days of building were not that glamorous. it was myself and john, programming all day, everyday. we wanted to get up and running with real customers as soon as possible. we accepted the first real payment on stripe in january of 2010. only had a couple of weeks of working on it. the feedback was, what does this business want? and how will be implemented

that? let's make it happen as quick as we can. when we are ready, let's add a second business. emily: you say no one has to fail in order for stripe to succeed. what does that mean? does it mean you don't think you have real competitors? >> i think there is a desire to set these things up as stripe versus banks. a very large fraction of the time, when people are building businesses on stripe, they are building businesses on white space as opposed to replacing another business. what is very motivating for us that 5% of global commerce takes place on the line today. the other 95% is off line. so, that is what we mean when we say no one has to fail. emily: you have done partnerships with companies that could be perceived as your competitors. like apple, google, like visa. walk me through the strategy. >> we thought they would be successful over time but what has been lacking is a platform for the businesses to manage complexity of doing business online in 2018.

when you talk to businesses, even for table space to get up and running, managing the payments and the treasury and the regulation and the compliance, and all the complexity of doing that, take doing that in the u.s. and then take doing that all around the world. that was a hugely heavy lift before hand. it had this damaging effect where only large companies could do it and they could not pivot quickly. you look at what businesses are doing today. the models are changing, their global, getting more complex like a multiparty interaction. that is what we are focused on. that is why apple pay has been growing like a weed. that is phenomenal. on a global basis, the market site has had the opportunities and they have never been greater. ♪

♪ emily: stripe has been working with smaller businesses for a long time. bloomberg broke the news you are working with amazon, facebook, microsoft, allianz, booking.com, lyft. how does a startup that is growing served such huge companies? >> i think our success with these larger companies is not despite the fact that we started with startups, but because we are working with startups. especially when you are serving startups, you can't bamboozle them with fancy sale materials and this big marketing campaign. they are just not going to be deceived by it. they will assess you on the product merits. what helps them innovate fastest and fulfill their ambitions and goals as rapidly as possible. it is punishing we are forced to build a product that helped them execute as quickly as possible. emily: stripe makes money by charging a small fee on every transaction. you are processing billions of dollars a year for hundreds of

thousands of companies. taking payments worldwide. you are valued at $9.2 billion. you have raised $450 million in funding. some analysts say your valuation is not justified. we have seen companies that have not been able to hit the market cap they raised out. do you have concern you will not be able to hit that mark? >> i think we are certainly always paranoid that we need to execute strongly to meet the potential with stripe. if you are asking if the potential market size support that kind of valuation? absolutely. many times over. again the economy is so vast and so much smaller than it will be if we actually have good infrastructure. emily: do you see stripe as a public company? >> someday. quite possibly. but the way we have always thought about ourselves is that we are in such an expansion

phase, we are so far from reaching the plateau of that when things stabilize and the whole business becomes predictable. i was in asia last week and man, there is such vast opportunity there for every internet business, stripe included. i guess we are so fixated on making sure, how do we ensure what stripe is doing in the u.s., in europe, asia, that we are capitalizing on the opportunities there. and will go to the long-term structure of the company, that we will fit within that. emily: speaking of, what is happening more broadly, we are in a world of great political and economic uncertainty with president trump being elected, with brexit, with facebook and apple and google on the other hand squelching all of the smaller companies. in a way, you could say squelching innovation. could that hurt stripe? given you depend on businesses getting started? >> when you take stock of what

is happening on a global asus, the number of internet connected users and people in the world rises incredibly quickly. and of course, around the world, middle classes are rising to 100,000 people are leaving poverty every. i think on a global basis, the market sizes and the opportunities presented for people who want to do something new or want to build something significant, i think those opportunities have never been greater. there has always been concerned with the particular giants of the day are overly dominant and exercise force. generally speaking, those giants have only prevailed for a particular window. we had microsoft in the 1990's, ibm before that, and so on. there has always been preeminent technology companies. i don't see anything distinctly different about the current

generation. emily: coming from ireland, what do you think of brexit? is it concerning? >> i am concerned by the general trend we are seeing in a number of countries around the world towards more inward looking and e retrenchment. in part because i don't think it is a global long-term trend. it has been a mistake historically to bet against more global integration or to assume there will not be more migration of people, there will not be more migration of cultures, of goods and services on things like that. i don't think things like brexit will change that. emily: you both spent time with president obama. as the trump administration takes things in a different direction, a slide toward protectionism, what are your biggest concerns? >> we benefit from such an amazing set of tailwinds. there has never been more people employed in the u.s. at any time in the past. the global inequality is

falling. there is so much good that is happening, that i think -- emily: yet there are things that are alarming and some bad that is happening, arguably. >> absolutely. i guess where it was going to go, if you really look out at the time series, all the major trends are going in the right direction. so, what concerns me is what are the tail events that could really jolt these off course? it is not clear how much influence a single person, a single country can have against all these broader trends. but, that is what gives me concern. >> our determination was that bitcoin is not a good payment method. ♪

♪ emily: cryptocurrency is all the rage now. stripe initially accepted bitcoin, but recently stopped. are you at all concerned that stripe will be on the wrong side of history but that decision?

>> we are open to revisiting this. at the time we mhe decision, it was trending toward that way. i think that is a valuable thing to have existed in the world. i genuinely wish them the very best. it works less well for our case. this is one thing that where we are looking at the data. it was declining rapidly in uses of payment method. if it starts increasing again as a payment method, then sure, we will go back. emily: bitcoin, cryptocurrency, is it hyped? reality, a bubble? >> our determination was that bitcoin was not a good payment method. which is a very different discussion, with cryptocurrencies generally. emily: because the value was shifting dramatically? >> and the speed of those transactions was the main thing. we remain fascinated by cryptocurrencies from a technology point of view and the general speed of execution of the space. i see tons of companies and people getting distracted by vanity projects of we will put this database on the blockchain.

ople are not weathered intoe the technical details. emily: there is a concern that bitcoin and blockchain pioneers are mostly young and male. this, as tech industry is grappling with a diversity problem. if the tech industry does not do a better job including people of all backgrounds, what are the consequences? >> the tech industry has to be a place where people of any background or any demographic, or whatever origin, can thrive. and, there have been big missteps on that front. they have attracted prominent headlines. rightly so. people are paying a lot of attention to the silicon valley and how it is we do things and it has had a real ripple effect around the world. for myself and john, we try to start at home and if we can't build a company into a culture

and an organization that we can be proud of, and that we can really feel good about, and where people of any background can really thrive, then we have not achieved anything of value. emily: stripe, you guys have some interesting things. you have an open floor plan. people changed desks every so often. gender-neutral bathrooms. you have an interesting email policy where everyone can read everyone else's emails. as i understand it. >> people can choose to make certain email's available. it is an opt in basis. em: susan fowler who wrote the discrimination ultimately resulted in the ceo of uber leaving the company, she works at stripe. what do you see yourselves continuing to work to attract and retain whether it is women are underrepresented minorities? >> there is a whole bunch of specific initiatives.

making sure that people are becoming moms and parents stay with the company. we track those numbers carefully. we are delighted they are as high as they are. there are specific hiring practices and what we do in hiring people, hiring goals, what we set for managers. i think sometimes people leave too quickly to what their checklist is of initiatives. if you are actually going to take this seriously and do it well, it has to be something that really deeply is suffused in the culture and everybody lives every day. again, you can have a good list of initiatives. lives every day. but if it is not really in the culture, it is just going to work. emily: before we go, i understand there is a third brother who as i hear is even more tech savvy than you are? tell me about tommy. >> tommy is a four years my junior.

tommy was very interested in this topic that we talk about, the implications of technology and the fact that more of our lives are moving online. he was really interested in that before it was the talk of the town and before it was the cool thing to be into. he worked at the electronic frontier foundation. which is a very storied nonprofit around digital rights and digital privacy and things like that. he now works for a nonprofit called tor who produces traceless or privacy preserving software. used by journalists and stuff like that. i think he is the one to watch, really. he is taking a very different tack. emily: he was born with cerebral palsy. i'm curious how that impacted your relationship as a trio? >> it affected the whole family environment. as a kid, growing up, whatever circumstances you had, you consider normal. for him, and for our family, it was very no-nonsense.

this is a disadvantage or sort of an unfortunate piece of luck, that's fine, we will figure out the game plan to overcome it and work to make it happen to her he walks, he runs, swims, cycles. again, that took a lot of work. but there was no wallowing in self-pity or anything like that. as john mentioned, both of our parents were entrepreneurs. sometimes people ask us what inspired us to become entrepreneurs? for us, it was the normal thing. i see it as a theme running through our upbringing in general. the no-nonsense way in which both he and our parents approached it. i find them inspiring, honestly. it helps keep it in perspective the challenges of building a fast-growing company. it's like, seeing the work that he has invested over the course of decades, it keeps us all in perspective. emily: what is your advice for aspiring entrepreneurs, or

people who may not look like you who want to do what you do? >> the first thing is you don't have to be here. like,that is very different versus 10 or 15 years. it depends on the company you are building. there are benefits of being here. but you can almost certainly do it wherever you are today. i would take advantage of the community's tools and knowledge that is available and start where you are right now. emily: how do you see yourselves navigating your partnership, your relationship as brothers, as the company grows, and the stakes, if all goes well? only get higher. >> we have survived this long and i am not too worried on the go forward basis. in particular, it is -- after 20

years, we can extrapolate whether we will last a couple more years. emily: who gets the last word during an argument? >> i can't even remember. when you are so focused -- stripe just past thousand people. we are still hiring quickly. there is always the next problem and interaction to go with. one of the things i find enjoyable is when you have a high trust environment, which we do, and we have worked together for a long time, you're not focused on the meta-structure and how to be arranged. you are focused on the next problem. emily: where will stripe be in let's say five years? >> i hope that we substantially completed this work of building this globally unified economic infrastructure. that serves companies of every size. and makes it possible for way more companies to get started no

matter what country in the world they are in. i still think it is absolutely crazy that if you started a business in indonesia, good luck selling to customers in america. if you start up a business in germany, good luck with china. we should be up in arms with the fact that the internet doesn't make its infrastructure available today. that it is not complete and i'm proud of the progress we have made over the first 6, 7 years. but, we have quite a ways left to go. when we are sitting here in five years, i hope, i hope that foundational infrastructure has been put in place and now we're at the point where we can be turning our sites to what comes after. emily: i'm scheduling our catch up five years from now. [laughter] thank you for joining us on the show. it has been great to have you. ♪

♪ >> wells fargo has lurched from scandal to scandal. improper mortgage fees, and after more than a year-and-a-half, the company is a growing at the worst is behind them. >> today, we are renewing our commitment to you. fixing what went wrong and ending product sales goals. >> in a new national ad campaign , they admit they lost customer trust and says they are working hard to earning back. i am erik schatzker and i sat down with wells fargo ceo tim sloan. tim: we have made some mistakes and are taking responsibility. erik: how much further they have to go. ♪

erik: it is unusual for a company as big as yours to say effective we, we screwed up on national television. why draw attention to yourself? attention to your mistakes, let's say by admitting that you lost customer trust instead of just moving on? tim: because we are telling the truth. we have been very clear. it is not the first time we made those statements on national tv. i've been interviewed by you and talk about it. but it is us. it is being honest. look, we have made some mistakes. we have taken responsibility. we are not perfect, but we will move forward because there is a history of this company doing a lot of terrific things which we talk about in the ad.

and we focus on what we are doing for customers today. erik: the reason i ask why is because, if i think back to recent history, for example the financial crisis, there were lots of banks, probably too many to count, that made mistakes that contributed to the financial crisis but i cannot think of a single one that ran an ad campaign to apologize to atone for their role. why is this different? tim: well, i don't want to speak for other companies, but what i will do is speak to us. if we looked at the feedback that we were getting from our stakeholders, they wanted to hear us take responsibility. so we are listening to our customers, team members, all of our stakeholders. i think listening is a good lessons that we have learned

over the last couple years. that is just us. erik: tim, they say trust in financial services is a hard-won and easily lost. how do you rebuild trust with customers while there are still some ongoing issues like the one we found out about last week for example. tim: the issue that was covered last week related to business banking had nothing to do with customers. those were internal bank documents and there was no customer impact or customer car. it's the way we think about rebuilding trust is simple. first, i view it as my number one responsibility. how do we go about doing that? other than listening, it is making sure that we make things right for our customers. it is not only about making sure that any customer that is or was harmed is remediated, which we are doing in retail banking and in mortgage and auto insurance. it is also about providing the right information for customers to manage their financial situation in an appropriate way. i think about the fact that we have the most favorable, customer friendly overdraft

policies today in terms of overdraft rewind and real-time balance alerts for customers. secondly, it is about fixing anything that was broken. we fundamentally changed the organization of the country. go ahead. erik: no. i was just listening to what you were saying and thinking if you were right and you have fundamentally changed, the culture of the company and the way it does business, then what we learned about last week, altering some client information surely has to worry you because that seems cultural, doesn't it? it's not all that far away from creating phony accounts or signing people up to auto insurance that they didn't need or charging them in proper mortgage fees. it seems to suggest there is still a cultural problem. tim: i want to reinforce that we are changing.

we are improving our culture. fundamentally, the culture of it company is fine. the vision of says eyeing customers financial needs and helping them succeed. we have five primary values that drive this company. it is interesting to cut if you go out and google the word culture. in .45 seconds you will get 90 million references. everybody has a different definition. when i think about the culture of this company, our vision, our values, it is fine. the issues we have in the company is how we are operating. policies and procedures to come push our goals. that is where we need to make improvements. when i mentioned axing things that are broken, those are the things that we are axing. we are making a lot of progress in terms of addressing issues. if you think about this tuition last week, which is fair to bring up, the difference is that was discovered because a team member raised their hand -- and we have been reinforcing to our

reinforcing to our team, if you see something problematic raise your hand. that is what happened. it was escalated independently of the business. the business looked into it with our risk partners and we stopped the inappropriate activity and we are moving on. if you compare that to where we were a year or two or three years ago, that would not have happened. erik: i don't need to remind you, but i'm going to. an enormous gap has opened up between the performance of your stock since september 2016 when the first of these scandals erected to today. if you compare it to other large banks, how long do you think, even all the steps you are undertaking, it will take to close the gap?

tim: hopefully not too much longer. when i look at our financial performance in the midst of what most difficult periods in our history, and proud of what we have done. we are one of the few companies in the country that made more than $21 billion in the last five years. if you look at our return on assets and return on equity they are industry-leading. at our stock has not performed as well as we like. i think it is undervalued. erik: one of the things investors have on their mind is this unprecedented depth taken back in february, putting a cap on the balance sheet. in retrospect, should you have done things differently? should you have been more solicitous with you later's? should you have been more aggressive making changes on the board? might the fed have reacted less harshly? tim: i can't speak for the fed, but there are lots of things i wish we had done differently over the last few years. but over the last couple years, the changes we are making in the company to make sure that customers are taken care of, that we are fixing anything broken and that we are building a better company by making these

good long-term decisions, we are absolutely going in the right direction. erik: you have taken pains to explain to your investors and others how this asset cap is going to function and the impact on your business. one thing that does not seem as clear is the degree to which it has forced you to change any of your plans or any of your strategic initiatives. tim: the impact in terms of the asset cap affects ace will number of customers in our financial institutions group. eons that, there is not an how we are serving customers. erik: creating room for the rest of the business to grow, there is no impact on anything that wells fargo is trying to do? tim: not in terms of customer activity. in terms of making sure that we are making the right

investments, hiring the right people, and fundamentally changing how we manage some of our risk, those are the things that are different. that is what we are very focused on so we can meet and exceed any of the expectations of regulators. erik: my conversation with tim sloan continues with his thoughts on the state of markets and the future of banking. ♪

♪ erik: it is getting pretty late in the credit cycle. most people would agree with that. wells fargo has pulled back in some of the higher yielding loan markets like autos, for example. how conservative would you say your approaches to extending credit right now? tim: i would say it really would say it really hasn't changed a whole lot here it i have been with the company for 30 years plus. it will be 31 in august. i have been through a number of cycles while i have been here at the company. i think that is one of the hallmarks of wells fargo's success. we tended to be more conservative than many of our competitors. i think that is one of the reasons we are here.

during the financial crisis we were not one of the banks that created some of the concerns that occurred in the industry. industry. there are some of the markets that we are concerned about her and, we pulled back. i think we have pulled back and now we will be growing that business again. that, we have erik: where else? tim: where are bit concerned about commercial real estate activity. we are the largest commercial real estate lender in this country. we love that business. but there are some transactions there are some transactions that just seem a little bit frothy. i don't think anybody is smart enough, and i know i am not smart enough to pick the point that credit turns. but you have got to be consistent. in terms of how you manage credit and you have to be looking for signals. erik: what are you keeping a close eye on to know when that

cycle has turned? tim: first and foremost, what is a fundamental economic health of this country? most of our business is here in the u.s. are we growing from a gdp standpoint, harvey's -- are we creating jobs? there's a lot occurring because of tech knowledge he that can impact our customers. erik: to that point, there is a lot of concern out there that the yield curve may invert as the fed raises short-term short-term interest rates. in the past it has preceded a recession. tim: well it certainly could invert. if it inverted in the short term over the next year or so i don't think it would be because it is a concern about us having a recession next year or the ear after that. i think it has much more to do with the fact that if you look around the world, long-term rates in europe and japan are much lower than they are here in the u.s.

you can argue if that takes sense from a return standpoint. that is what is keeping a ceiling on longer-term rates. you see the yield curve flattening out a bit. erik: if the 10 year treasury is at 3.1% today, what do you figure it peaks? tim: i'm not smart enough to note that. we have great people at this kind -- at this company that are thinking about that at all times. could i imagine seeing a tenure at 3.5% or 4% in the next six to 12 months, absolutely. we have had a sick again backup of almost 50 basis points in the last you months. -- last few months.

if you believe economic activity in the u.s. and around the world is going to continue to increase, then you can imagine rates getting in that range. erik: now, as rates get higher and the yield curve slopes positively, it is better for the bank. tim: it can be as long as the underlying economy is performing well. from our perspective, a positively sloped yield curve and slightly higher rates are

good for the company, they are good for the industry, as long as underlying economic activity is ill strong. tim: if the pace was pretty quick, that could beat negative for the underlying economy. you could see a slowdown in economic growth. that is i would be concerned about. is the pace of the increase as much as the absolute yield. erik: you have outlined plans to

cut costs by 2019. you are already about $1 billion of the way through. how can you eliminate so much spending, while at the same time maintaining a high level of customer care and manage risk? tim: our expenses were too high to begin with. we are starting th a base that is just too high for the company. having said that, we are investing tens of billions of dollars on health of our customers every day in terms of improving risk management but technology, data, cybersecurity and the like. but our expenses are just too high and we are going to bring them down. we will bring them down in a thoughtful way so that we can meet the expectations of our customers as well as our regulators. erik: you have outlined what that is going to mean for the branch network or you are going from a branch footprint of something this order of 5000. what will happen to the headcount?

is there going to be a commensurate reduction in the number of people you employ here? tim: we have tens of thousands of jobs available in wells fargo today. but there is no question that as we reduced our expenses there will be an impact on a number of team members that work at wells fargo. so far, in terms of our branch reductions, there hasn't been a big increase because most of those branch reductions have been branches that our near one another.

♪ erik: you have made technology a centerpiece of this bank strategy. already, customers can do things today that seemed wildly futuristic only a few years ago. what does taking look like five years from now? does it look like 10 years from now? what is the future that wells fargo is working toward? tim: when i think about what it could look like, it is going to be first a function of what our customers want. for example, they clearly want

to do more with us digitally. over 10% of our checking accounts are opened digitally. more than half were about half of our credit cards are opened digitally. they want to be able to do more of their financial services transactions digitally. that will be them orton. -- that will be important. when we look at our customer base, we have very few digital only customers. which -- erik: you've 70 million customers. how many of digital only? tim: single-digit millions. what we see is that they want to be able to interact with us the way they want to do if they want to call somebody on the phone, they are going to do it. so for example, our new mortgage application process, where you come in, we gather all the information that makes the mortgage experience that much better come our customers love it. we went from 10% of the close

mortgage apps in march to 20% in april and i bet this month, i'm not sure, i bet it will be 30%. half of those customers are digital only. the other half are digital and they want to talk to one of our team members. so, i think it will be more digital and it needs to be seamless in terms of how else our customers want to interact and the quality of the service has got to improve a lot. erik: it is still early days for some technologies like big data or artificial intelligence. how big a role they play at wells fargo? tim: i think they will play a big role. if we can use the data to make our customers lives easier and better and make them more successful, that will be successful. that will be really important.

i will give you an example. real-time balance updates. may of last year we introduce this. it started slow and now millions of times a month, i think it is 20 million times per month we are providing an update to our customers in terms of what their balances are so they can make -- so they can manage their financial situation better and avoid overdrafts. that is an example of using data, call it the data if you want and applying it to our customers. erik: everyone sees a huge opportunity for amazon to get into financial services. on their own or with another institution. have you had conversations like that with any of those companies? tim: absolutely. there are all good customers of ours. we value those relationships. the feedback we get from those

technology firms is that they don't want to get into financial services, they just want to be able to deliver good experience to their customers and sometimes that can be a financial service product. so, providing financing to amazon as they grow their customer base. or having a chat, and having our small business chat box in the apple technology. that is helpful for them. erik: is that because ranking -- banking still has a big moat around it or because those companies and others don't want to disrupt the financial services business. i can see why they wouldn't. tim: it can be very profitable. there is no question about that. i think the industry is doing a pretty good job of disrupting itself and there are a lot of other financial technology firms that are doing a great job of trying to disrupt us as well. i believe their strategies to them, but apple is a great -- i think a great example. they came out with the ability for apple pay.

did they want to get into the credit card business? now they just wanted to provide a convenience to their customers with a great phone to be able to transact on their phone. erik: how serious are you about incorporating blockchain into wells fargo? tim: when you think about octane, i think about it as the technology and not cryptocurrency. i think blockchain, as a technology can have applications in a variety of different financial services transactions. i think we have somewhere between 15 and 20 different projects going on. sometimes they are consortiums with other companies and sometimes they are investments that we are making with a firm. erik: but it doesn't sound to me like it is a priority? tim: oh no, it is a priority but i think a lot of changes going on in technology, it gets hype a bit. that it will change all of our lives and it will happen tomorrow morning.

that is generally not the way it works. but i think this technology can and should have applications in some areas and we are starting to see that occur right now. what i don't appreciate is the value of the technology, because what you are doing is reducing costs and improving security and where the profit is in that, i'm not 100% sure. erik: as you point out, there is a distinction to be in a -- to be made between blockchain and crypto. can you imagine wells fargo exchanging in crypto the way they do in dollars or yen? tim: i could if it was something our customers wanted, and there was a system that allowed for appropriate checks and balances as to whether the underlying transactions were legitimate.

from my perspective come of that is the concern. any of those transactions, not all, are done in cryptocurrency because they are not above board here it. erik: so there is no way to satisfy the second requirement? are your customers asking for it? tim: no. they are not. i did read there were a few cryptocurrency companies that were trying to initiate a conversation with some of the regulators to see if they could get licensed. that would be fine from my perspective. again, we have laws in this country. we have financial laws and have to beat responsible for the bsa, aml, know your customer requirement here it we will not get involved and or transactions we are not comfortable with. erik: from wells fargo stumbles to the digital transformation. that was tim sloan. i'm erik schatzker in san francisco. thanks for watching. ♪

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