Money20/20: Day One Summary
It’s so great to be back in Amsterdam again for Money20/20 Europe.
Today’s packed agenda was anchored around themes related to consumer flexibility, experience and trust as well as how FinTech firms can remain competitive in a financial services and payments world that is increasingly complex and fragmented.
Against a backdrop of high inflation, rising interest rates and squeezed balance sheets, the provision of flexible, secure and reliable financial services is ever more important.
From a consumer perspective, choice is a primary factor, with people needing to feel in control of their finances and wanting to connect the financial services that they love all in one place, while at the same time expecting greater choice and flexibility in how and when financial services can be used.
As a payments company it’s important to stand out, and one of today’s focus sessions looked at what payments providers can do to diversify their offerings and which value-add services make most sense to build their customer base around. Hosted by challenger consultancy 11:FS, the key takeaway was that an innovation wake-up call was on the horizon, with payments providers needing to balance their risk appetite with innovation as issues like security and platform resilience grow in importance. This would need to be a particular focus where firms are looking for investment or partnership opportunities with banks or larger financial services firms.
Last year was a remarkable one for FinTech funding with a 168% increase (to $131.5bn) in FinTech sector investment in 2021 (see the news of our own Series B funding round here). Europe, in particular, was a hotbed of activity, however, with lower valuations and a contraction in funding values the future could prove more complex for firms looking for investment. In a session hosted by Conny Dorrestijn of BankiFi, the panel reflected that as the investment gold rush slows, the market will come back to lower valuations and firms will be forced to think about the right investor and long-term partner for their business and shift away from focussing on their value. For investors, there will be undeniable opportunities, particularly in FinTech, but also for those firms looking for investment, the availability of capital is there but investment runways will lengthen by up to 6 to 12 months.
One important discussion of the day looked at bank and FinTech collaborations, and how banks and FinTechs are working together to enable seamless and consolidated experiences for the customer. If these collaborations are going to work and provide a springboard for an aggregated broad set of services, both lifestyle and financial based, with the added value of embedded payment capabilities then it’s not only banks and FinTechs that need to collaborate. Going forward, FinTechs will need to increasingly collaborate with each other and attract bank partnerships through a consolidated solution to a problem where multiple, and often competing FinTechs work together to create innovative products and solutions that are ripe for scaling.
Cross-border payments have been shaken up in recent years and during the final session of the day the panel discussed the battle that’s raging between the technology revolution impacting the payments industry and the collective commitment to make change. How can the payments industry go further to reduce the cost of cross-border payments? Interestingly the panel, chaired by Deniel Webber at FXC Intelligence, believed that while there had been a lot of progress in moving costs down, the reality of moving to zero cost payments is a challenge too far, particularly in the short-term. While some operational costs and transaction costs can be removed, things like the FX rates are prohibitive to zero fee transactions for consumers and with many cross-border payments players reliant on venture capital investment to keep their lights on competing on price through zero free transfers is not a likely option.
Tune in tomorrow for our day two summary of Money20/20 Europe live from Amsterdam!