Money20/20 took place Oct. 27-30, 2019 in Las Vegas. The conference was a veritable explosion of innovative energy, networking, and groundbreaking announcements.
The event continues its legacy as one of the top events in the industry; the conference had everything from an important announcement about Uber Money to discussions with high level executives about the future of financial services.
Major themes at Money20/20
An event as large as Money20/20 has multiple different tracks with hundreds of individual sessions, so it’s impossible to cover everything. However, a few major themes resonated through each day of the event. Here are some of the day by day highlights.
Day one: Financial inclusion
Financial inclusion, or the extension of basic financial services to the unbanked or underbanked, was a key theme of the conference. Speakers highlighted the issues that unbanked and underbanked people experience, including the expense of being financially excluded. Many alternatives proposed leverage alternative data sources to build digital identities for the unbanked and use that data to create and issue financial products. One panelist discussed using social network data and bill payment history to score potential credit lines. Another underscored the importance of having an immutable digital identity on a blockchain so people disrupted during a crisis could prove their identity in another country. This immutable digital identity could be leveraged to gain access to the financial system of a different country.
One session discussed leveraging blockchain software over a variety of applications. Some included the idea of digital collectibles (like sports player cards) housed on a blockchain and tied to real events, updating and changing value in real time. Specific in-game challenges attached to these cards could be tied to real-world commerce deals; for example, if you complete an in-game challenge, you get 10% off purchases in a particular store.
The use of stablecoins, digital currencies tied to the price of a relatively stable basket of assets that help stabilize crypto coins, enabled the reduction of cross border remittances. Smart contracts for intellectual property management are another use case that panelists highlighted.
Big tech’s financial opportunity
Grab, which got its start as a ride sharing company, leveraged its platform to expand into financial services in a big way in Southeast Asia; this region is ripe for financial services expansion. The region boasts a burgeoning middle class hungry for opportunities to increase wealth and financial security, additionally, 70% of the region is underbanked or unbanked. Working capital access is needed, and Grab Financial, Grab’s financial services arm, has done a good job capturing market share by offering it to historically underserved people.
Outside of Southeast Asia, the opportunity for tech companies to garner favorable market share is massive. At Money20/20, Uber announced their launch of Uber Money, beginning their foray into financial services. The concept is sound. As technological advancements facilitate easier payments and movement of money, big tech companies with huge customer bases can offer financial products and services in-app. Expect the number of diverse product offerings on tech platforms to expand.
Beware the economic downturn
Speakers reminded attendees that signs of an impending economic downturn are everywhere. One session highlighted the need for small businesses to be resilient during difficult times. Online lenders will play a pivotal role in providing small businesses funding in a crisis, as they operate on fresher real-time data and can more accurately assess risks.
Macroeconomic trends illuminate heterogeneity and fragility in seemingly homogenous groups of credit lines. In other words, economic downturns really screw up projections and models, and people start defaulting on credit lines and loans. This includes machine learning algorithms, which are only as good as the data they’re fed, and must account for macro trends to produce accurate results. Making decisions in times of crisis must be altered to prevent widespread defaults; despite this, continuing to lend helps mitigate long-term effects a downturn.
Day two: Facebook’s Libra gamble
Libra’s impending launch has garnered lots of negative press, particularly as multiple corporate supporters have left the company. The project leader for Libra, David Marcus, resolutely stuck to the company line about the project’s value, acknowledging the challenges the highly publicized dropouts pose to its adoption. While there are many questions about Libra’s usefulness and hangups about potential adoption, speakers highlighted real-time payments and cheap cross border remittances as the platform’s key cases. WhatsApp and Messenger are widely used on a global scale, so pushing Libra through those applications is a valid channel to help boost adoption. It’s important to note here that almost every major technology breakthrough is met with widespread skepticism until it’s firmly established. However, Libra isn’t the first highly public blockchain project to gain mainstream mindshare. The tech isn’t new, and the bubbling cauldron of distrust Facebook has cultivated might prevent people from adopting it. The key to this project is scale; if it flounders immediately after its launch, the likelihood of its recovery is slim.
Financial services as a tool for advancement and social good
PayPal CEO Daniel Shulman’s keynote focused on leveraging financial services as a tool for advancement. For example, PayPal is focusing on providing working capital to areas with a significant number of bank closures. In those areas, Mr. Shulman stated that average sales have increased 22%, illustrating the need for a continuous flow of capital and credit to stoke the fires of regeneration.
Going along with using fintech for social good, one of the most poorly attended sessions at the conference was about investing in companies working to combat climate change. The discussion wasn’t centered around profit generation, but on investing in companies that align with other values, specifically combating human-caused damage to the environment. BNP Paribas is one bank actively shaping its asset management strategy to involve climate change centric investing. They are not completely divesting from fossil fuels, but they try to funnel clients’ money into sustainable enterprises.
Fintech startup pitches
One of the most interesting portions of the second day was the round of startup pitches. Presenters, the majority of whom were founders, had three uninterrupted minutes to present their product to a panel of judges. There were two finalists, and the finals were held on the main stage on the last day of the conference. Some of the most interesting pitches included:
NatureTrak: Pre-packaged risk management for banks and credit unions that enables them to bank with cannabis companies. The cannabis industry is fraught with regulatory difficulties for banks looking to do business with the burgeoning sector. Naturetrak allows them to address those difficulties and bank cannabis companies.
Mostly AI: Mostly AI generates synthetic data sets that remove the risk of using real customer data to build products and train models. The platform enables companies to run simulations on synthetic data sets it generates with the tool, and seeks to remove the issues that accompany traditional anonymization techniques (data deletion, ease of reidentification).
Day three: Open banking in the U.S.
Open banking is considered a European concept, but the banking industry in the United States has started to embrace the concept. In Europe, open banking is driven by regulatory directives, specifically PSD2. In the United States, the market is driving the push to open data sets via application programming interfaces (APIs). Consumers want new and innovative financial products, considering how far behind the United States is when it comes to financial technology. A few sessions highlighted how far open banking is in the States and exemplified that it will only continue to grow.
Neo banks’ place in the financial services ecosystem
One of the most interesting panels during the conference included the founders/CEOs of neobanks Chime, Varo, and Grasshopper. The three tackled questions about the role of neobanks and whether or not the pursuit of a bank charter is the right move for these new financial institutions. Chime mentioned that they would not pursue a bank charter—a process which can take years—while Varo decided it was the right move for them. There is no correct path for neobanks to take, including whether to get a bank charter, as it depends on the company’s goals. Chime maintains close partnerships with banks to participate in banking activities as needed.
Building customer trust
Many sessions focused on the importance of trust. Historically, nice marble floors and a polished presence at the teller desk was enough to convince people to trust you with their money. Now, customers care about how they interact with their financial institution, including the customer interfaces banks roll out; these must be designed with the end user in mind. In the information age, word of mouth travels quickly, and switching costs are lower than ever before. As a result, financial services products, no matter what they are, must focus on the customer experience when launching different products and financial services.
Day four: VC predictions for 2020
The final keynote session of the conference focused on venture capital opportunities and trends. The panelists highlighted banking as a service (BaaS) as the biggest opportunity in the industry. These platforms provide all banking infrastructure, so founders that want to launch neobanks can get up and running with minimal effort. They predicted many more fintech investments in 2020 compared with 2019’s record amount, and pointed to Latin America as a prime example of an underserved market with the potential for huge, scalable projects. Regtech also has huge potential due to the repeatable nature of compliance tasks and the massive operational cost associated with running a compliance department.
The year ahead for fintech
Money20/20 saw some fantastic speakers make big announcements and discuss vital fintech trends in the financial services industry going forward. While no particularly revolutionary tech was unveiled during the conference, we saw more companies working to leverage tech to help the evolution of financial services. Financial inclusion, digital payments, building customer trust, leveraging blockchain technology, and the arrival of open banking were all heavily discussed during the four day event. This coming year will see more strides towards a fintech focused future.
Patrick is the manager for the verticals and tech teams as well as G2's fintech and legaltech analyst. As a G2 analyst, Patrick focuses primarily on the fintech and legaltech spaces in addition to a slate of other vertical categories. Fintech's explosion in popularity has created a compelling challenge to accurately represent the spaces on G2 and produce high-quality, relevant content for external consumption. Patrick leverages his relationships with vendors, the unique data that G2 has accrued via more than 1 million user-generated reviews, market surveys, and product data to produce insightful reports and thought leadership content within his two focus spaces.