3 takeaways from Money20/20 Europe

Another year, another incredible Money20/20 Europe.

We previously discussed the themes we expected to emerge, and we saw those narratives come to life through three days of keynotes, expert panels and conversations.

Throughout the show, the core narrative was the pivotal role financial services will play in supporting businesses and consumers to navigate the current challenges. Whether that is access to capital, innovative new services or the infrastructure and technology to power those new propositions.

Below we dig a little deeper into the conversations and topics from the event that we enjoyed and inspired us the most.

Collaboration was a phrase echoing throughout the conference sessions and across the exhibition. Partnerships and strategic alliances of all shapes and sizes were announced, far out numbering the fundraising news that has tended to dominate the headlines at this event.

The fintech market is evolving from competition to collaboration. We have gone from an ‘us vs them’ mentality to a market characterised by collaboration, where banks utilise technology from fintech firms, and those firms partner with banks to scale services.

The rise of embedded finance and “every company becoming a fintech company” has catalysed the sector with non-financial brands seeking to embed financial services into their offerings. The opportunity is unparalleled as the market is set to be worth $7 trillion in ten years’ time.

Today, collaboration does not just characterise our market, it is now essential to success.

In that vein, it would be remiss of us to not mention our latest client Allica Bank that we announced at the event. This is another notable example of two firms collaborating to deliver a great outcome for the end customer, in this case to UK small and medium size businesses (SMEs).

Beyond the buzzword bingo, the momentum around services being delivered at the point of need was apparent across the show. There is significant potential to support companies, of any size and in any industry, with the ability to deliver seamless, convenient financial services within their customer experience.

It was clear from numerous sessions that accelerating the adoption of embedded banking, particularly for non-financial services firms, requires two critical elements: the right technology and enhanced regulation. By integrating with a partner’s modern banking infrastructure and relying on their regulatory and governance capabilities, firms can concentrate on accelerating their customer experience and bringing their business visions to life.

Those sessions particularly resonated as we’ve seen the market shift from agency banking services to BaaS (Banking as a Service) and now embedded banking, driven by the demand from brands to integrate increasingly sophisticated and regulated services from a licensed bank into their customer offerings.

While these innovations promise much, recent disruptive events have shown that these models cannot sacrifice broad market availability for resilience. As noted in the panel ‘All About the BaaS: Shaping a New Governance Model’, Emma Hagan, our Chief Risk and Compliance Officer highlighted the need for a focus on governance and ensuring alignment between every party involved before services are made available to end customers.

“You won’t find many people saying we should have more regulation. But looking at existing regulation through the lens of BaaS could help everyone in the chain from a fintech or brand through to the underlying bank provider,” she explained.

While there was talk around decentralised finance (DeFi) and digital assets shaping the future of payments, one topic that continues to draw an audience is open banking. Depending on who you ask, it’s either the biggest revolution in finance for decades, or overhyped and disappointing. So, who is right? If Money20/20 is any guide, the reality is likely somewhere in between.

As Nick Corrigan, European president, Global Payments noted, “it's still early days. You’ve got to remember that we are five years in. Two of those years were interrupted by a pandemic. And I think we've got the building blocks in place.”

Insights on data sharing, bank application programming interface (API) integration and collaborative partnerships highlighted the opportunities for innovation, inclusion and enhanced customer experiences. While open banking has, to date, been an alternative payment method for one off and ad-hoc transactions, the introduction of variable recurring payments (VRP) in the UK can support subscriptions and memberships that should unlock further payments use cases.

On a panel alongside leaders from Amazon and NatWest Group, Francesco Simoneschi, co-founder and CEO of TrueLayer, explained, “cards enabled digital commerce. I'm glad history brought us here. But now we have an opportunity to rewire, reinvent, look at everything we can improve and fix it."

We’ve seen this growth first hand through our open banking partners, where their ability to support instant funding of accounts and wallets is hitting its stride. More merchants are adopting the method, and volumes both in terms of the number of transaction and their overall value continue to grow, with 7 million active users in the UK, compared to 2 million just over two years ago.

It is also no longer a UK or European phenomenon, with 58 countries rolling out open banking technology based on PSD2 (Payment Services Directive 2) or similar legislation. This is just the beginning of a new model for financial data and real-time account-to-account payments. It will be interesting to see when we return to Amsterdam next year how it has developed across the region and whether those active user numbers continue their current trajectory.

Once again, Money20/20 Europe served as a timely reminder of the power of the financial services and was a welcome opportunity to reconnect with clients, partners and the broader fintech community. We can’t wait to see everyone at Money20/20 in the US later in the year.