Perspectives in Fintech: Notes from Money 20/20 Europe

Money 20/20 is the world’s largest FinTech conference, attracting C-level keynote speakers from leading payments, financial services and technology companies.  The conference has grown rapidly since its inaugural event five years ago and now hosts a separate Europe and Asia conference.  The second European edition of Money 20/20 was held in Copenhagen June 26-28, and where better to gain first-hand industry insight into where the rapidly evolving FinTech landscape is heading.  Here are some key trends that stood out:

Blockchain – Remains one of the most “hyped” topics in FinTech.  However, blockchain has an increasing number of critics and there was a noticeable sense of tedium that the industry proponents were still talking a lot about blockchain but not much has moved in terms of meaningful solutions and deployments.  Personally, I have always thought of blockchain as an interesting solution looking for a problem, a view quite often mirrored by other attendees at the conference.  Having said that, it does appear that blockchain is finally getting close to prime time. The focus has very much shifted away from cryptocurrencies and trade / settlement clearing towards risk and compliance.  There were many vendors using blockchain to perform AML, KYC, client on-boarding, fraud / identity management functions.  Back office optimisation and risk management (together being loosely described as “RegTech”) appear to be the near-term use cases for blockchain that is gaining the most traction.  With the upcoming changes in banking and finance regulation, “RegTech”, is certainly an area to keep an eye on as it looks like it could be the next big thing in FinTech.

Payments – Frictionless and real-time payments are the next evolution.  The concept of entirely frictionless payments was heavily pushed throughout the conference by industry majors.  Google and Square (and others) had some innovative ideas about a world without physical money or plastic cards – for example, imagine walking into a coffee shop, ordering a coffee and not worrying about the payment process as you would be geolocated, identity matched and automatically pay for your order.  I doubt we will see such solutions in the near-term, but it is certainly interesting to see where the world may be going in years to come.

A special side note on Amazon, as it is seemingly a company that can do no wrong in the eyes of its shareholders and its intentions in payments has been widely speculated upon after they announced Amazon Pay.  Amazon views Amazon Pay as simply providing more value to Amazon Prime customers by letting consumers buy other goods online with their Amazon login details (“universal one-click checkout”).  They are trying to make the payments process for all online shopping as simple and fast as the payments process on Amazon.com.  Let’s see how it goes.  They may find that they run into similar issues as Paypal when it was owned by Ebay – competitors to Ebay did not want to use a payment platform owned by its competitor.

Authentication / Security – Remains an area of great interest given recent high-profile hacks and the increasing number of cases of financial fraud.  Numerous vendors of biometric authentication solutions were present, in particular, vendors of multimodal biometrics (face, voice, fingerprint).  Multimodal biometric authentication solutions have been around for a while, but have suffered from accuracy issues.  With the financial industry finally accepting that simple password-based security may no longer be fit-for-purpose and new regulations that mandate two-factor authentication, we think that multimodal biometrics may finally come of age.

AI – The holy grail of computer science, AI was the dominant technological theme throughout the conference with companies touting the use of clever AI and data analytics to trove through vast amounts of payments data, transactional data and user behaviour in the hope of developing new and improved services.  AI has the potential to provide bespoke user experiences and enable more effective fraud management solutions.  Theoretical potential aside, I still tend to cringe a little when I hear AI being thrown around as a marketing buzzword.   These are early days for AI, and time will tell if this technology delivers on its big promise.

Money Remittance – While the large vendors were on the conference floor, not much was said about money remittance at the conference.  Mastercard was pushing real-time global payments given their acquisition of Vocalink (developed real-time payments methods and runs the Faster Payment service in the UK).  The general view was that not much differentiates the remittance players other than currency coverage and fees.  Brand loyalty remains elusive as most customers tend to switch if someone comes along and offers the service for less.  So, this market appears to have become very price competitive, with the various vendors engaged in a race to become the lowest cost provider.

I will leave you with some noteworthy keynote quotes from industry leaders.

“You don’t have to be first. You just have to be best.  I can’t wait for a time when plastic doesn’t exist” – Jack Dorsey, Founder & CEO, Square

 “Millenials would rather go to the dentist than go to a bank” – Carlos Torres Vila, CEO, BBVA

 “As a consumer, my ideal authentication process is nothing” – Philippe Vallee, CEO, Gemalto

 “We’ve been sitting on our network for 20/30 years and it took innovators to come along and realise the vision for it” – Jim McCarthy, EVP of Innovation & Strategic Partnerships, Visa

 “By design, the internet is borderless…but when it comes to online commerce we’ve grafted borders back on the map” – Will Gaybrick, CFO, Stripe

 “If there’s one thing we’ve learnt at Google, it’s that there’s always value in shaving off that extra millisecond” – Garardo Capiel, Director of Product Management, Consumer Payments, Google

 “Immediacy is everything” – Giulio Montemagno, General Manager, Europe, Amazon Pay

Peter Shin

Peter Shin

Peter joined Mooreland in 2016, and is a member of the FinTech, Enterprise Software and Industrial Technologies and Electronics teams, with a particular focus on the FinTech sector. He has broad experience across a range of technology subsectors, with transaction experience in mid and large-cap M&A, private placements and debt financing.