Hugo Scott-Gall:  Today I’m very pleased to welcome Martin Bruncko to the show. Martin is the CEO and founder of Schuman Financial, but his journey spans far beyond the boardroom. A serial tech entrepreneur and investor, Martin has shaped the future of digital finance as Director for Europe at Binance, and helped steer national policy as Slovakia’s Innovation Minister and Deputy Finance Minister. 

And if that wasn’t enough, Martin holds a double major with honors and university distinction from Stanford and made history as the first Slovak to graduate from Harvard. We’re thrilled to have him here to talk about innovation, leadership, and the future of finance. Martin, thank you for coming on the show. 

Martin Bruncko: It’s great to be here. Thank you, Hugo. 

Hugo Scott-Gall: Great. We’ve got lots to talk about. But I want to start with really, how you got to here. You’ve worked in government, you’ve worked in tech, you’ve worked on flying cars, you've worked on really deep, technological challenges. What drives you to be an entrepreneur and what drives you to have such an eclectic range of working experiences? 

Martin Bruncko: Thanks for that. And I think the short answer is I like to do things that are really changing the world or the society or at least the part of society that I’m a part of, at a large scale. And I think that would be the one common thread between the – both the government jobs, actually, for that matter, in non-profit, and for sure all the entrepreneurial stuff I have done over the past 15-20 years. 

Hugo Scott-Gall: If you look at countries like Singapore, they have a very open door between the private sector and government. They have obviously pretty – I don’t think it’s an exaggeration to say clearly very talented people in government. Do you think governments in Europe would do better if they had more interaction between the two sectors and more movement of people?

Martin Bruncko: I think they would be better if they got better people in the government, with respect. Some countries like UK, for example, which is very high-quality public or civil service. I think probably Nordics would be the same. But there’s many countries that would definitely benefit from much better people in the government and in fact, when I was in the government, inspired by Singapore, we launched a scholarship for students from Slovakia who would get in the world’s best universities like the Harvard’s and the Princeton’s of this world.

And we would pay the full scholarship for them to study at these universities in exchange for them then coming back and getting senior roles in the government. Unfortunately, not all the governments in Slovakia have been this enlightened. And we’ve had a populus left-wing government that came after us and they just shut down the scholarship. For sure, I think it’s this is the right approach.

Everything that you do depends on the quality of the people that you surround yourself with or rather even, people who are actually executing and delivering. 

Hugo Scott-Gall:  If we think about Europe, most countries have a growth problem. If you think about most modern democracies in a post-industrial age, they have growth challenges. Do you think there’s enough – and we’re going to talk about one of your solutions to this in a minute – but do you think there’s enough urgency when you look across the European landscape, of the need to innovate, to generate growth? 

Martin Bruncko: I don’t think so. I can’t judge for Europe generally speaking. I live in France right now and it’s quite horrifying actually, how little or no urgency, and no focus there is on growth. Their whole focus is on redistribution. And I think this is the problem of Europe. That we’ve become more fat, more lazy, we as a society, as governments certainly. And then again just sitting here in France, the public spending in this country is 57% of GDP, as opposed to less than 40% in the U.S. and less than 50% in some of the most – or the fastest growing European economies, including those in central and eastern Europe.

Hugo Scott-Gall:  So, you’ve got, I would argue, a highly innovative solution to pain points and also an enabler, a catalyst of growth. So, let’s talk about Schuman Financial. What is it? What’s the problem they’re trying to solve? What’s your product? 

Martin Bruncko: So, we are the largest ecosystem with the largest independent European euro stablecoin. We’re regulated out of France by, effectively, the central bank of France, audited by KPMG. And effectively we are – we have an EMI license, electronic money institution license, to issue stablecoins and to provide related e-money/payment services directly related to the euro stablecoin. And the problem we’re trying to solve is actually very simple. We do deeply believe that our national services are moving on chain.

And they will end up – most of the financial services will end up on chain. Just as most of the non-financial services ended up on the internet simply because just as internet is a much better technology for storing and moving information, the DLT, digital leisure technologies of the blockchain is just a much better technology for storing and moving financial value. And we’ve still been until now in the very early stages of the development of the technology. But as the technology is becoming more and more mature, more and more financial services will move on chain.

Now given that Euro-denominated financial services, globally are roughly a third of size of the dollar denominated financial services. Obviously it depends on different specific markets/services, but given how huge they are globally, if financial services and when they move on chain, the euro denominated financial services will need to be executed, be willing to settle against euro on chain, which is basically euro stablecoin. And that’s what we’re building. We’re building this infrastructure, the core infrastructure for the future of finance. Which we are convinced will inevitably end up on chain. 

Hugo Scott-Gall:  So, let’s do a quick 20 seconds teaching on stablecoin. 

Martin Bruncko: So, what is a stablecoin? A stablecoin is effectively a token, a digital token, issues on the blockchain. And it’s backed one-to-one with a specific fiat or government issue currency. So, a euro stablecoin, it’s basically a version of the euro on the blockchain. Where for every single euro stablecoin that was issued, the issuer collects one actual euro and keeps it in reserves in order to guarantee the peg. So, in order to make sure the value of the stablecoin is stable, that it’s always one-to-one. And again, the way you can guarantee that is by making sure that you always have one – at least one fiat currency per every stablecoin issued in your reserves. 

Hugo Scott-Gall:  When it comes to the use cases, is it payments, is it cross-border settlement? What do you think are the obvious use cases? 

Martin Bruncko: I mean, it will be all of the above, right? Where the most initial use case, that’s actually quite taking off, is in payments, in particularly cross-border payments. Because it’s just a much faster and much more efficient way of executing payments. Because if you’re just the wallet-to-wallet – digital wallet-to-digital wallet payment using a stablecoin, it settles effectively within a few seconds between these wallets no matter where the holders of these wallets are. So, if you’re sending one euro from France to Slovakia, sometimes it can be instant, usually it’s not.

Usually it takes longer. But if you’re sending one euro from Namibia to Peru, I bet you it’s going to take at least a week. With a euro stablecoin it’s going to take a couple of seconds. 

Hugo Scott-Gall: Blockchain has been talked about for quite a while as a technology to produce rapid transactions, almost friction free at much, much lower costs. But it’s taken time. What do you think now that there are euro stablecoins, obviously there are dollar stablecoins, but what are the adoption barriers? What’s stopping this from becoming highly used and therefore exponentially growing? 

Martin Bruncko: The main barrier still is that the actual underlying financial services are not really, massively moved on the blockchain. They’re still executed using the old legacy systems. Dollar stablecoins are quite large as a market, simply because the dollar stablecoins have historically moved, and until now, essentially almost uniquely, for use cases related to trading of crypto assets. And the trading of crypto assets had been denominated historically in the U.S. dollars just like some commodity markets, etc.

So, because of that you have a very big market of dollar stablecoins. But again, that market is still tiny compared to how large that market will be and the stablecoin market overall once the financial services traditional, normal quote unquote financial services start to move on change more expansively. 

Hugo Scott-Gall: And the adoption path, how much of that is contingent upon regulation and how much is actually adoption by key uses?

Martin Bruncko: So, I don’t think it’s really regulation. Regulation is critical in the sense that it provides clarity in terms of what you can and cannot do with that product. So, but that’s in place. Europe has actually been the global leader in this with their MICA regulatory framework, which came to force a couple years ago, and parts of it last year. But overall, I would say that the real blocker is really the state of technology. Just like with the internet, right? The internet was sort of there already in the late 90s, but people hadn’t really figured out all the things, all the tricks of how to provide that normal quote unquote services on the internet.

Because it required a lot of innovations in other areas where it was logistics, delivery, etc. Mobile phones didn’t exist. And I think I we’re in a similar stage right now with blockchain with stablecoins. That all of these relevant and related aspects of providing financial services on chains, people are starting to really figure them out. And I expect that within the next couple of years there will be an exponential growth of these financial services on the blockchain, and therefore also of stablecoins. 

Hugo Scott-Gall: How much of a driver is the desire to get out of a dollarized system? So, dollar debasement, U.S. fiscal position deterioration. Or is that the wrong question? The right question is, if Europe doesn’t do this the euro will just become a lot less relevant. 

Martin Bruncko: Yeah, I think that’s a much, much better question. And the first question is a good question, especially conceptually speaking it’s a very interesting question. I don’t think that’s actually a really big driver right now. Simply because, again, the real driver is the underlying financial services being provided on the chain. And it doesn’t matter in what currency. But indeed, the second question is a really, really interesting one. Which is, because indeed most of the financial services will be provided on the chain, and Europe is a laggert in this technology.

They don’t have advanced infrastructure to provide euro denominated financial services on chain. Then indeed Europe will become a global laggert. And global laggert literally, the euro globally will be declining. Right? Because there’s a lot of countries where euro-denominated financial services are in use. One example could be parts of western and northern Africa. If the euro on chain, so to speak, doesn’t really advance properly particularly if it’s blocked, for example by regulators; then indeed, dollar will come in and the role of the euro, globally, will decline. 

Hugo Scott-Gall: Is there a benefit to thinking about incentives, clearly not becoming irrelevant – the theory of irrelevant should be an incentive, but for governments and how they finance themselves, do you think stablecoins make it easier for governments to finance themselves and maybe even change the course of capital?

Martin Bruncko: Oh, for sure. And I think this is definitely one of the reasons why the U.S. current administration has been so pro-stablecoin. Because indeed, effectively in the U.S. and certainly in Europe, the regulations say that if you’re issuing stablecoins and you have all these reserves that serve to collateralize your stablecoin, the reserves need to be invested in highly liquid and low risk assets. Which effectively is government bonds. And you can already see it in the U.S. where Tether, which is the largest issuer of stablecoins in the world, they’re dollar denominated; is also one of the largest buyers of government debt.

So, if this asset class grows by a couple of orders of magnitude, which I think it will, that means that it will also create a huge demand for government debt. So, indeed, this is a very positive thing for today’s governments which are very heavily indebted. And actually, sadly, it’s a point that European leaders certainly have not quite grasped yet. But on the flipside, I think once they start to realize, “Oh. Here we have a really nice storage of government debt financing.” They’ll probably open their arms much more widely to stablecoins and stablecoin adoption.

Hugo Scott-Gall: Can we talk a bit about AI? That in a world where there is genuine agentic AI, everyone has an agent, and the agent does an awful lot for them. It’s concierge, assistant, advisor, curator, and all the rest. There must be a role for stablecoins as payments in that world. And obviously you’d be reliant on the technology to deliver it and to get AI. But once it’s here the use case really increases for blockchain technology stablecoins.

Martin Bruncko: Yeah 100%. I’m a big believer in that as well. Simply because stablecoins, unlike normal money, stablecoins are programmable money. So, you can really program this money to execute based on a preset set of criteria. And indeed, as these agent – digital automated agents start to interact between themselves, it’s a natural way of executing payments for these services. Particularly between them. Right? In an automated and pre-programmed way. 

Hugo Scott-Gall: So, I think what I’m driving at is, I just asked you a conceptual question. But in that agentic AI world, maybe we all have one agent that we trust, maybe we have several. Whatever. It’ll change very, very quickly. If you think about how quickly Facebook got to a half a billion users, open air, etc., these things can happen very, very fast. So, if you combine the benefits to government plus the use case of a fully digital agentic experience. Then the growth could be really, really rapid and therefore the pressure on governments to make sure that they don’t get in the way for this to happen would be quite considerable, particularly if there are clear benefits. So, I don’t want to paint too bullish a picture, or lead you down too bullish of a path, but this could really look very different within five years.

Martin Bruncko: It’s like with mobile phones, right, or smartphones. They had been around. All kinds of manufacturers, Nokia, Blackberry tried to create these smartphones. It was sort of working, but definitely wasn’t world changing until basically Apple came up with a very nice version of the smartphone. That was the catalyst. And then, five years later, each single person almost on the planet, well, at least in the western world or the northern part of the planet; had a smartphone.

And things for which we required different devices from GPS to digital payments. Suddenly we had them all in our pockets. So, I think that’s in the same way there are these drivers that could be a massive catalyst for the huge growth of the stablecoin ecosystem, as stablecoins as an asset class. So, it just remains to be seen when and how quickly it will happen. But we’re quite bullish. I think that we are at the cusp of this quote unquote revolution. 

Hugo Scott-Gall: So, let’s say that the revolution is coming. It’ll be digitized, not televised. Who definitely loses? 

Martin Bruncko: Good question. I mean look, it’s one of those technologies where if existing companies adapt and those that are most at risk of losing, they could continue being winners. So, it means effectively legacy companies in financial services, whether it’s banks or card networks like VISA, Mastercard. So, it could be a huge catalyst for them or if they don’t adapt then yeah, it could be quite disruptive. The same way as the first fintech version was disruptive for certain financial institutions. I mean, one good example is brokerages, right? 

With those and notably, Schwab, which was not really a digital brokerage, but they managed to adopt this technology effectively and fast. And they are still a massive global player and possibly much bigger, notably speaking, than they were before. There were those brokerages that never adapted to the – none of the internet. And they’re presumably gone by now. 

Hugo Scott-Gall:  For sure. Do there need to be moments of great stress on the system that it comes through strongly to prove the use case? Do you think there are all these moments of maturity where the system is stressed, and it performs versus not performing. Has that happened, or do you think that needs to happen? 

Martin Bruncko: If we take the existing system, is it performing versus is there a new technology which would perform? I think financial services, traditional financial services, and the systems we’ve had, the legacy systems; they’ve developed over such long periods of time, decades even – even more than that. I think–and they’ve been regulated and looked at from so many areas that I think they’re pretty resilient. So, in that sense I’m not sure if there’s an obvious type of crisis where these legacy systems would fail.

And that this blockchain-based technology would prove that they are so much more superior. To me, again, it’s more akin to the internet where it’s just the better technology for a certain aspect of economic activity. Again, in this case, just a much better technology for moving and storing financial value. And people realize and over time build up newer and newer applications and eventually–like with the internet. You look around, everything is on the internet so to speak. So, I think, 10 years from now, personally 20 years from now, when you look around everything will be on the blockchain. 

Hugo Scott-Gall: Where do central bank digital currencies fit in? 

Martin Bruncko: So, I think they have some use cases possibly for wholesale finance. Particularly transferring between the central bank and the individual banks. Personally, I’m not a huge believer in CBDCs. The main reason for me is that it partly – these national currencies on the blockchain – partially they are infrastructured, but they are also very embedded in the quote unquote application layer. So, it’s not one of those technologies you build it and then everybody just adopts it. I think it requires –  for people to start using euro or dollar on chain in traditional financial services; it requires a lot of business development.

It requires a lot of hand holding. It requires building up a lot of customized infrastructure for these providers. And I just don’t see how, whatever European central bank would hire a whole army of biz dev and account managers to work with the private sector on developing and spreading this technology. So, to me it just seems much more obvious and natural for private companies to do that and push this technology forward. And again, do it via euro on chain or digital euro on chain in the form of a stablecoin. 

Hugo Scott-Gall: When you see meaningful shifts in technological capabilities and then the diffusion of that new technology, or improved technology, business models get created that you wouldn’t necessarily predict. When the engine is creating 4G, they didn’t say, “We’re doing this enable Spotify.” No, but that’s what happened. What business models do you think are on the come up as a result of what’s changing now?

Martin Bruncko: So, this is a great question. And it goes back to the discussion we had before about the spread of this technology. How quickly or how close we are to a mass spread of this technology. I think we’re quite close to it, because this equivalence of Uber and Spotify will appear in financial services. The problem is precisely that we don’t know who they are. They are known unknowns, I suppose. Just like people couldn’t guess in 2000 that Uber and how important it will be. Yeah, there are these use cases which by definition we still don’t know who they are.

But I think it’s fair to say that there will be an equivalent type of use cases and once somebody figures them out and starts pushing their adoption, we’re all just kind of holding our heads and, “Oh, my god. This is so obvious. Why haven’t I done it?”

Hugo Scott-Gall:  Yeah, I agree. I don’t think anyone in the 1980s/1990s said, “Why don’t I have in my pocket this thing can enable me to stream any video clip, any bit of music that’s ever been created?” But it turns out as soon as it was there, they knew they needed it. So, I think it’s fascinating as an investor when you have periods of faster diffusion, you know things are going to change, you don’t know exactly how. But you can peel it back to some things you do know for sure, which may well be that under any scenario company A, B, and C just won’t exist.

Or they certainly won’t be able to be as profitable as they are now. That’s one of the things we wrestle with. For you that’s less of a concern, because you’re more of a – we’re dealing with public market companies that have probably – well, to define them is how they respond, how they adopt. Great incumbents adapt; sterile incumbents die. And that’s the question for us. You’re more on the other side. 

Martin Bruncko: Yeah, I think actually in all fairness I don’t think we will have such dramatically visible examples of disruption like Uber or Spotify. Because these are consumer use cases. And a lot of the finances is consumer facing, but I think the technology is really an underlying infrastructure type of technology. [00:24:35]. And so, yeah, the consumer – I’m sure there will be use cases that will be obvious and highly visible to consumers. But I think most of the disruption and revolution will be coming at a B2B level and basically a lot of savings and a lot faster services B2B, which I personally, or ultimately will also translate into B2C. 

Hugo Scott-Gall:  Check points on networks have always been nice places to invest, whether that’s physical networks or whether that is virtual digital networks. So, I guess there is some risk around that or some risk of failure to adapt.

Martin Bruncko: Yep. 

Hugo Scott-Gall: Let’s finish up with just a few questions more about you if you don’t mind. You’ve worked cross-border, you’ve worked cross-industry. How have you evolved as a leader? And I’m always interested in asking people how they make decisions and have they got better at making decisions? 

Martin Bruncko: Well, I think I’ve become more chilled over time. So, that’s definitely one way how I evolved. Number two, I think I’m definitely a faster decision maker than I was before. So, yeah, I guess that’s number two. And number three, this is one of those truisms that you hear from your first business/management class in university, how it’s all about people you surround yourself with. And so, yeah, I think I now pay even more attention to what people I surround myself with and the teams I build. Because the better team you build the less hard you have to work yourself to deliver the same outcomes. Or at the same level of working hard you get much better outcomes. 

Hugo Scott-Gall:  It’s interesting you say that as you got more and more deeper into technology, more and more it’s the people that are really crucial. Have you got better at judging talent? Have you got better at assessing talent? Have you got better at evaluating talent? 

Martin Bruncko: Yeah. I’ve definitely gotten better at judging talent. I’m not sure if I have a better scientific method at judging talent. So, I think it’s just almost more intuitively I can tell usually, obviously not always, that like, “Yeah. This is going to be a great person to work with. This is the person I want to have on my team.”

Hugo Scott-Gall: Okay. Final question. Give me a book or a thinker that has, really I guess, influenced you, and how you’ve lived your life, and the choices you’ve made. Or several if you want. 

Martin Bruncko: Yeah. So, I studied literature at Standford. It was one of my two degrees. And so, the best book I’ve ever read until now, is a book that’s very hard to come across in English, it’s called The Etruscan, or actually the original title is The Immortal Turms, by a Finnish author called Mika Waltari. It’s a historical novel but it’s just a phenomenal book that probably has had, I think, the most influence on my life in a way. And then, in terms of thinkers, I guess when I was young but still on the one hand it’s Nitsche.

But the other person who also had a lot influence on me, which will be seen now as exactly the opposite side given today’s political divides, is George Soros. Who actually, by the way, also almost ended up getting a PhD in philosophy. And his tutor, I think, slash advisor was Carl Popper, who is a philosopher of science. And so, Soros was very influenced by him and so, I can say that Popper is also someone that has a lot of influence on the way I think. 

Hugo Scott-Gall: Fantastic. Well, that’s a great place to finish. I really appreciate you coming on the show. It’s been great. One of life’s true luxuries is to meet very smart, very interesting people. And you’ve checked that box. So, thank you for coming on. 

Martin Bruncko: Well, thank you, Hugo. My pleasure, really. I really enjoyed the conversation. Thank you. 

Hugo Scott-Gall:  Thank you for listening to today’s episode of The Active Share. The Active Share is available on iTunes, Google Podcast, TuneIn, and Spotify. And if you’d like please leave us a review. To hear additional insights from William Blair Investment Management, visit us at im.williamblair.com.  And follow us on Instagram @williamblairim. 

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