This year’s Money20/20 Europe reflected the changing dynamic in the financial technology world. We’ve long moved on from the time when banks looked on fintechs as competitors. Instead, banks have realised fintechs can enhance their own offerings. And fintechs have realised they still need the underlying banking infrastructure to function. Collaboration not confrontation is the new order. A culture of innovation continues to dominate the fintech world and this is now extending to B2B payments and the banking sector. It all made for a stimulating conference.
So what were the key findings from a hectic three days in Amsterdam?
A year ago, many predicted that Artifical Intelligence (AI) would be on the agenda in 2018 and beyond. How accurate that proved to be, with sessions on AI proliferating. Interestingly, one stream, AI Deep Dive, was devoted to the subject, with experts declaring the world can be better with a combination of AI and human involvement. Some banks and financial institutions have started using AI, which also includes use of biometrics and biocryptology, not to mention Blockchain, the subject that dominated this conference two years ago.
Fintech expert Chris Skinner’s insightful session revealed the big difference between dynamic companies like China’s Alipay and traditional lenders is that they coin the phrase, “techfin” rather than “fintech”. They have an enormous client base that extends way beyond China, and since being formed, they have been through a number of system changes to ensure they are at the cutting edge. Skinner added that companies in China start with the technology and work out how best to utilise it, the exact opposite of most traditional banks.
Data was one of the dominant themes. An interesting observation was that banks fear the so-called ‘GAFA Group’, Google, Amazon, Facebook and Apple, who accumulate data and can move more nimbly than heavily regulated banks. Banks have five times as many regulations to comply with than technology companies, which implies that money is more important than data - at the moment.
A short session by Citi’s Ronit Ghose reminded us IBM became the world’s biggest company because banks and other companies made them wealthy. Today, technology firms are huge and banks are trying to reinvent themselves and connect with new technology. In order to do this, they need strong, visionary leadership, less complexity, the ability to invest (not open to everyone) and regulatory support of digital transformation.
Ghose’s research revealed that core European banks are less able to transform themselves, but banks in Asia and emerging Europe are better placed to do so.
Banks have, for the last few years, been forming partnerships with fintechs and start-up companies, largely out of necessity. Some believe they have become quasi-technology companies because they’ve made significant investments in technology, but one panel urged banks to “stop pretending”.
Leda Glyptis of Qatar National Bank said banks and fintechs, who are both in the business of making money, rarely discuss money until the very end of the discussion. She added that banks (and fintechs) need to partner with companies that help them make money and shouldn’t come together for PR reasons or to hedge their bets, but to be more successful.
OB is the acronym that everybody is talking about – Open Banking. “We believe in Open Banking, we want fintechs to use our data,” said one leading European bank, who also described OB as the “business model of the future”, so it was clear that banks are confronting this seismic change.
Across the conference, it was clear people are preparing vigorously to meet the OB challenge, with companies developing products that provide the glue between fintechs, APIs and banks. Nobody appears to be in denial about this anymore, fintechs and banks are looking at ways to further collaborate and the future seems to be either “banking as a service” or banks creating platforms that clients can access.
Cryptocurrency was another subject that commanded great attention. A panel with central bankers was a little dismissive of the threat of cryptocurrencies, largely because they are unregulated and the very product that central banks “sell” is trust. Investors are not yet aware of the risks of cryptocurrencies, they said.
Money20/20 was, once more, an opportunity to take stock of what’s happening in a fast-moving market. The speed of progress and the pace of innovation seems to be accelerating. When the dust settles, it will be interesting to see who is still standing after consolidation and rationalisation. We will have to wait until 2019 to check that out.