Alex Gluchowski on 24/7 settlement, security and the agentic economy

Ronan: Hello, sir. How are we?

Alex Gluchowski: Hello. Um. Very good. Thank you for having me.

Ronan: Yeah. It’s good to see you again. It’s been a, it’s been a while since we last caught up. Um, why don’t we start just getting a temp check. How are things over at Matter Labs? What’s happened since we last spoke? I think it’s been multiple months.

Alex Gluchowski: Uh, things are accelerating. It’s very exciting. I’m here in Las Vegas just right after Money20/20, and things are exciting because things are accelerating in the financial space overall. Um, the amount of companies working on blockchain and digital asset present at Money20/20, uh, was very impressive. Like I was not expecting that. I thought it’s going to be still a smaller niche. So you can imagine the amount of effort that is being poured into the development of these technologies and how it’s going to translate into the actual adoption and actual shifts that are happening in the financial industry.

Luke Knight: Yeah. What are you, what are you seeing behind the curtain in terms of adoption? Obviously, you know, everyone in the industry is working towards, you know, blockchain and, and that’s great. But, uh, yeah, what’s the, what’s happening on the adoption side for like, I guess, general population?

Alex Gluchowski: Uh, like the banks and FMIs are following in, in full into the, this, this new, uh, area. They have, uh, gotten the message that the upgrade is happening. The old banking system is, is, uh, is being upgraded. Um, and, um, a lot of them are moving now from the pilots already into production. They have figured out what works and they have figured out the, uh, first use cases that they want to begin with. And now it’s, it’s this, like, forefront organizations are transitioning, and this is where we meet them. We, we announced a product called Prividium Commander at, uh, Money20/20, uh, which helps solve this specific problem. Help gives them the control plane for navigating the operational complexity of launching and running a digital asset business.

And, uh, many others are doing it themselves, uh, trying to assemble, uh, the production stack for many different components, uh, themselves, which is of course very difficult because you need to basically run a software project around your actual product launch and product project. And you don’t do that if you, um, if you’re an enterprise, you’re embracing a new SaaS or AI tool or something, uh, you don’t want to be managing the, uh, users and permissions and auditing tools yourself and building all of these integrations. You probably just connected to your Okta, uh, Google accounts and you let it run through the existing established enterprise systems. And for regulated institutions, it’s even more complex because they have a lot of compliance rules and requirements and existing operational rules that they have to follow there. Yeah.

Um, so, uh, yeah, we, we see this happening and, uh, um, we see many institutions, you know, I was on a panel, uh, joined by, uh, leaders from New York Stock Exchange, DTCC, Caring Network. And they shared an interesting common theme. They said, uh, we are following the crawl, walk, run approach to digital assets. We’re going to start small. We’re going to bring one service. If it works, we’re going to test it out and scale to maybe a few other use cases. And then eventually we’re going to scale to, to full production and upgrade all the existing systems.

Ronan: Yeah, yeah. Really interesting. You’re probably talking with a lot of these, uh, senior executives at these, at these world-renowned banks quite often. Is there, and maybe it’s what you mentioned, but is there like a single thing that they’re wanting most to, to achieve next with, you know, sitting at the intersection of this technology? And the reason I bring it up is that, you know, security as of the last twenty-four hours is such a hot topic around banks. We mentioned it earlier on the show with Axios reporting about, you know, agents turning up in, in some places that they maybe shouldn’t have been turning up around. Um, what is, what is the trending narrative right now for these larger, um, financial, financial institutes? What is the one thing they’re all trying to get solved? Is it security? Is it safety? Is it, um, yeah, sort of finding that position in this new world that we find ourselves coming into? How are they feeling?

Alex Gluchowski: Well, the main property they still want to achieve today is the 24/7, uh, operations, settlement and increase in efficiency of, uh, um, of these operations. And of course, cybersecurity is now at the forefront of thinking for everyone. So obviously, uh, um, not, not, not just the direct cyber threats from agents on the existing internal systems, but also the, uh, you know, this scary possibilities, uh, that can affect general cryptography, elliptic curve cryptography, and like, uh, what can come when, when AI accelerates quantum development and then quantum breaks things. Yeah.

So we’ve, in some conversations, uh, we, uh, we saw people very worried about this, and they understand that this is going to be a, uh, not a problem of an individual institution, but rather a matter of national security. Because if, if things get, get broken on a, on a massive scale, you know, you’re not going to be well, if, if you are a post-quantum, you’re, you’re secure on, on your own, because if the system goes down, everyone goes down. Yeah.

Ronan: Yeah. It must be, I don’t know. Every time I look at this, I can only see like, uh, everything you just mentioned there. Security, 24/7. 24/7. Always-on reliability. Seamless. You know, borderless. Uh, it always seems like a bull case for just general cryptography or blockchain services in general. Like how, you know, not to say that, well, there is a silver lining on it in general, but like, what does that mean for blockchain and cryptography? Is that a sort of alley-oop? Is it a “hey guys, you know, we are the solution to most of these qualms”? Like how do you, where does it fit in that narrative?

Alex Gluchowski: Uh, well, you know, I, I heard a friend of mine said, like almost ten years ago, Bitcoin is the best thing that ever happened to cybersecurity. And, uh, I think AI is, is the second best thing that happened to cybersecurity. Like obviously we’re going to go through the, uh, through a period of turmoil and really, uh, heavy roller coaster. And everyone is scary right now. Uh, but eventually, uh, it, it’s, it’s, it’s, it’s finally gonna make the, uh, the equilibrium, uh, really work, you know, like the, uh, uh, AI is the, this type of technology that actually equalizes people with less resources, more resources. Um, and, uh, I think that it’s going to lead to, to like a much more stable equilibrium after this period of, uh, of chaos and experimentation and figuring out like how, how to live in this new world.

Luke Knight: Yeah, there was a, um, there was an interesting thing, this happened a few weeks ago actually, but, um, about the, uh, the potential of a bank run if, uh, agents are able to move money, you know, the speed of light, and their objective is to get the best yield or do what, you know, get the best returns or whatever it is. Um, no one will just have their money sitting in one account. And obviously, you know, the way that banks work traditionally, obviously you know this, I’m sure, but, um, I’d love to understand like what, uh, what needs to fundamentally happen within the banking system, uh, to, uh, you know, I guess, benefit most, uh, within blockchain and AI and all of these fundamental changes that are happening on the technological level.

Alex Gluchowski: Um, so the, uh, you need a champion who will show to everyone else how, how things are done. And, uh, we’ll demonstrate that it’s actually a very profitable, very, uh, uh, very rewarding investment. Uh, and those champions are there. As I said, there are institutions on the forefront who are doing the crawl, walk, run, but they are doing that. They are very committed to actually make it work. And they know exactly the what the, this, this first, uh, use cases are. And once you, and like everyone else has gotten the message, they see the writing on the wall, they see that, that they also need to follow, but they maybe not exactly sure why, how, maybe not very operationally, which is where we meet them and help them with, with both the product and the services. And, um, and consulting, uh, but as I said, this is, this is happening.

Ronan: Yeah, yeah. When we look at, like you mentioned, um, some entities are moving away from pilots now, uh, you know, they’ve had maybe the trial period and they’re seeing value. What is it that’s holding back on the macro scale across everything, like the 5.5 trillion tokenization wave that’s heading for the industry? Like what’s holding that back right now to just be rolled out everywhere? You mentioned some entities doing, you know, moving away from pilots. Why isn’t everyone doing this?

Alex Gluchowski: Uh, look, I think really the major factors that were holding us back are now largely behind us. So the number one most important blocker was obviously regulation, and specifically the position of the US administration on this. Uh, this massively changed. And then since then things were getting better on, on all fronts, technologically, uh, operationally, uh, and also like, from the point of view of education and, uh, um, the understanding in the broader financial community.

But it’s still going to be a slower process. Like I don’t expect this to, to happen over, overnight. Those are heavily regulated, very traditional companies. They operate on a different time scale. They operate on a different, uh, mindset approach. They work a lot with committees. They, the decisions have to be approved. They have to be tested. You know, they’re not kind of, they’re not in a rush to, uh, do, um, you know, revolutionary changes immediately. They’re very risk averse by their nature, by the nature of their business. They’ve went through, they’ve gone through a number of crises in the past years. Uh, and they learned for, like, rightly or wrongly, that the most conservative ones survive better. And so this is going to be the theme for, for the entire industry. But that’s okay, because eventually the change happens. Like once you remove the blockers, and the blockers have not been largely removed.

Ronan: Yeah.

Luke Knight: In terms of, uh, in terms of the agentic economy, uh, and, uh, the fact that I think a lot of these, a lot of actions taken by agents could potentially be, uh, fairly predictable, I want to say. Um, I think, you know, the banking industry, uh, is, you know, obviously is built a little bit on, on inefficiencies in the market. And, you know, humans might have some, some alpha, some might have less and therefore take different actions. Whereas I think agents kind of standardize a lot of that. I’d love to understand like, does that predictability, uh, is that an opportunity for banks or is that a worry for, for, for them?

Alex Gluchowski: I think today it’s largely a worry, because you can expect the, uh, bank runs and, and similar, you know, the exaggeration of the mob behavior that we already observe with bubbles and other irrational biases caused behavior that is happening. Uh, but, uh, I think the, the, the banks will actually be, like, in later stages of adopting the agentic economy. Uh, it’s going to happen mostly on the public permissionless blockchains, where the cutting-edge innovation happens, mostly driven by startups and, uh, and, um, you know, uh, frontier companies, uh, um, that will show everyone else the way, how things are done. And then once those experiments run, they’re, the traditional finance will follow.

Ronan: Yeah, yeah, I know we only have a minute left, but I wanted to ask. I feel like a lot of the conversations we’re having, or a lot of the points we’re having right now, kind of point to this tipping point, or like a new era of finance that we are maybe on the precipice, precipice of, or, you know, an impending new era coming. Not a revolution at all, but a reworking of traditional systems and how that operates. What is that? What is that new era? What does it look like for legacy financial institutions?

Alex Gluchowski: Um, it’s, it’s mostly older things just done a lot more efficiently. And then once we reach there, maybe things get started getting different and changing shape.

Ronan: Yeah. Really cool. Alex, thank you so much for joining us. It’s always a pleasure. We are, we are at time and we have our next guest in the waiting room. Um, always good to catch up. Uh, welcome back on the show anytime. Thanks for spending time with us.

Alex Gluchowski: My pleasure.

Ronan: Cheers, Alex. Have a good one, sir.

Luke Knight: Good stuff.