Form3 chief executive Dave Scola on why resilience deserves as much attention as speed, and why legacy US banking infrastructure isn’t yet ready for stablecoins at scale.
Scola is chief executive of Form3 in the US, a role he took on at the start of 2022 after two decades in transaction banking and payments, including senior roles at Swift and Barclays. Form3 provides banks and fintechs with a cloud-native, single-API platform that lets them connect, route and orchestrate payments across the expanding range of US money movement options, from established rails to digital currencies and tokenised deposits, without needing to overhaul their existing systems.
In this week’s Five Minutes With…, Fintechly speaks to Scola about his path from custody and corporate trust services into payments, why multi-cloud resilience deserves more attention than it currently gets, the most common misconception banks have about working with Form3, and why legacy US infrastructure isn’t ready for stablecoins at scale.
Can you tell us about yourself and what brought you to this point in your career?
I began my career in banking, initially working in custody and then corporate trust services. In 2011, I had my first encounter with the payments industry when I pivoted to managing the Financial Institutions business at a large bank. This was a really interesting time, as many fintechs were just starting to take off, and I became fascinated by how tech was reshaping the world of finance outside of traditional banking.
As a result, I then moved to the tech side of the industry, working for a major central infrastructure provider before I joined Form3 at the start of 2022 to lead the US side of the business.
What problem or opportunity are you most focused on right now?
At Form3, our main focus is – and always has been – ensuring that payments do not fail. It might sound dramatic, but behind every payment there is a person, business or moment that matters. Whether it’s a salary getting paid, a home being bought or a transaction to pay for an essential service, these payments cannot afford to fail.
This is complicated by the fact that the payment landscape is continuing to expand. In the US, for example, there is a wide array of money movement options, from rails and account-to-account methods to digital currencies and tokenised deposits. What we’re focused on, therefore, is simplifying the landscape for banks. We’ve built a platform that acts as their financial fabric, allowing banks and fintechs to connect, route and orchestrate payments across the full range of rails, networks and payment categories. This means banks and fintechs can best serve their customers and ensure that the payments on which they rely can keep moving.
What do you think deserves more attention than it is getting in your part of the industry?
Whether it is streaming or banking, cloud technology has transformed how things are done. This is brilliant for payments, but we need to ensure that resilience remains at the top of the agenda, alongside speed and efficiency.
Many treat ‘the cloud’ as an abstract and untouchable entity, forgetting that it exists in physical buildings that can be targeted. Overall, data centres run by cloud hyperscalers are remarkably performant, especially when compared with the alternative of banks building and running their own platforms, but it’s important that banks are aware of the risks of relying on just one cloud.
This is where multi-cloud platforms come in, ensuring that things keep moving even if one provider goes down. In an industry like payments, where things cannot afford to fail, built-in resilience like this must be front of mind.
What do people most often get wrong about what Form3 does?
One of the most common misconceptions we hear when speaking to prospective clients is the idea that partnering with Form3 means overhauling your entire internal infrastructure from day one. This isn’t the case. What we do is provide a cloud-native operating layer within a bank’s existing estate, which helps it simplify the complexity of payment processing so that it can move from infrastructure-led payments to customer-led money movement.
Our single API means that banks are then in a better place to manage changing regulatory rules or customer expectations. The incumbent flows remain in place, while routing, orchestration, resilience, customer intent and payment decisioning shift to a more modern layer that works better than a legacy estate built decades ago.
What do you expect to rise up the agenda over the next year?
There is already a lot of discussion around stablecoins, particularly in the US, thanks to incoming legislation such as the GENIUS, Clarity and PACE Acts.
Stablecoins do have the potential to be beneficial for the payments industry, but I think that amongst all the talk, the practicalities of how banks and fintechs can actually use these digital assets at scale have slipped under the radar.
At present, legacy banking infrastructure in the US is unable to support digital asset payments at scale. Banks’ existing technology, built in the 1980s and 90s for batch processing, simply cannot accommodate the processing, monitoring and reconciliation speeds needed for faster, always-on payments.
Layering stablecoins on top of this infrastructure will simply compound these existing problems. To get around this, banks and fintechs need to invest in resilient cloud-based payment infrastructure that can support instant, always-on payments at scale, while maintaining security and liquidity.
What’s the one question about Form3 we should have asked: and what’s your answer?
Why should banks use a third party like Form3 instead of building this payment architecture themselves?
This is one question we are frequently asked, and the answer is that building your own infrastructure is an incredibly complicated, expensive and time-consuming process.
We offer access to our payment infrastructure across multiple regions through a single API, and we have also invested to run across three cloud hyperscalers to ensure the resilience of these payments.
When partnering with Form3, banks and fintechs benefit from our decade of experience and continual investment in building infrastructure that can support critical financial systems at scale and across markets, already meeting the standards regulators are now formalising.
The UK and Europe have moved quickly on regulation to drive payment innovation, and we have matched this pace to build a strong domestic capability in these markets. This experience makes us a natural partner for those in the UK and Europe, but it is also hugely valuable for global clients, especially those in the US, who can benefit from the strong roots we have already laid down.
Regulatory approaches may differ across regions, but our commitment to always-on, resilient payments is global, meaning that clients benefit from the same high standards embedded in our platform regardless of where they operate.
