Ten takeaways from Money20/20 US 2023

Money20/20 US, held in Las Vegas, once again recertified itself as the must-attend fintech event of the year. This was our 10th year attending the conference and it continues to deliver, both in terms of the breadth of vendors and caliber of attendees. In this report, we share highlights from our more than 30 meetings, and discuss key observations from our time in conference sessions and on the show floor.

The Take

Money20/20 continues to excel at bringing the full fintech ecosystem together at scale. While there was no shortage of themes on display, running the gamut from regulation and real-time payments to artificial intelligence and open banking, it is difficult to pinpoint a single topic that dominated. In many ways, this indicates the diversity of activity occurring across the industry. What was clear in our meetings is that infrastructure is in focus.

The next chapter of fintech is about solving challenges that exist at the core of financial services — things like identity, data sharing and cross-border money movement — which, over time, will begin to unlock net new opportunities for innovation.

Money20/20 top takeaways

Stepping back from the show, there were countless takeaways on how the market is evolving. Below, we discuss 10 observations that left the biggest impression on us.

Crypto retreats, but blockchain focus remains. Following a crypto takeover of Money20/20 in 2021, it was already evident at last year’s show that the hype was waning. This year, a crypto emphasis on the show floor, during sessions and in announcements was practically nonexistent. What remained was a continued focus on blockchain infrastructure, especially for use cases like stablecoins, central bank digital currencies and cross-border payments.

Ripple, Stellar, Circle and Paxos were all “5 Star Sponsors” of the event, each with prominent booths on the show floor. Attitudes on the rate of blockchain adoption in the years ahead differed, however. Some payments leaders we spoke with positioned blockchain as a technology that has the potential to disrupt the entire payments ecosystem in the next five years, while others positioned blockchain as helpful in a few distinct use cases, but difficult to implement at scale. We think blockchain adoption will inevitably land somewhere in between these perspectives, and we are particularly optimistic about cross-border use cases.

Big tech targets banking. The presence of large technology vendors at Money20/20 was unmistakable this year. Many, including Amazon Web Services, Databricks, Google, NTT DATA Group Corp. (ADR), NVIDIA Corp. and Salesforce Inc., were 5 Star Sponsors and had large teams on the ground. In some ways, we see this as evidence that fintech has reached a level of maturity and scale to become a proper vertical for big tech to target. Databricks CEO Ali Ghodsi keynoted on day one of the show, emphasizing that financial services is now the company’s largest vertical. The vendor counts Capital One Financial Corp. as one of its newest investors. It participated in its $500 million series I in September at a $43 billion valuation. Generative AI was, unsurprisingly, a top theme peddled by big tech. AWS and NVIDIA hosted an AI Summit at the show, including customer demos with fintechs like Ramp, which is using AI to streamline expense management.

Banking as a service hits growing pains. While BaaS has been a darling of the fintech world for several years, something of a dark cloud has emerged over the sector in recent quarters. Concerns about the sector, which include increasing regulatory intervention, customer churn, and risk and compliance shortcomings, were evident in our conversations. Michael Hsu, Acting Comptroller of the Currency, emphasized in his keynote that, to ensure continued trust in banking, fintech sponsor banks must deepen their focus on developing comprehensive oversight programs. We expect this to result in sponsor banks and their BaaS partners increasingly scrutinizing (and in some cases offloading) fintech partnerships in coming years. One bright spot in this sector was the focus on credit among modern card issuer processors. Both Marqeta and Highnote unveiled new credit capabilities in their platforms at the show.

Fraud prevention remains a perennial fintech hotspot. Walking the floor, one could be forgiven for thinking Money20/20 was an event devoted to digital identity and fraud prevention. We counted well north of two dozen vendor booths dedicated to the sector, including large incumbents like Lexis Nexus and Nice Actimize, well established startups like Socure and Fenergo, and emerging players like Unit21 and Sardine. Identity verification was a particularly noticeable theme, in part fueled by news of CLEAR’s push into financial services. The vendor — best known for its role in expediting airport security for its 17-million-plus member network — acquired Sora ID in early October and used its keynote to discuss an expansion into KYC (Know Your Customer). Generative AI intersections were also evident, such as Featurespace’s launch of TallierLTM, which claims to identify hidden fraud patterns in transaction data.

Early Warning Services offers an early look at Paze. Bank-owned fraud and payments consortium EWS used Money20/20 as something of a coming out party for its new digital wallet, Paze. Atop one of the few double-decker booths at the show, EWS held meetings with press and analysts to demo Paze and discuss the launch planned for early 2024. At launch, Paze will support roughly 150 million cards from several large banks such as Chase and Bank of America Corp., with plans to add more banks over time. Consumers will be prompted to auto-provision cards into Paze via their mobile banking apps. Not dissimilar to one-click checkout approaches like Stripe Link and Shop Pay, the wallet is targeted at eliminating guest checkout. While Paze has an inherent consumer network advantage, the challenge will come in building meaningful merchant acceptance. The wallet is dedicated to cards, and there are no plans to integrate Zelle (owned by EWS) as a payment option, although card-based installments are being considered.

Streamlining B2B payments is in focus. The business-to-business payments market is advancing, but is still riddled with complexity and inefficient processes. Most B2B payments vendors we spoke with are focused on streamlining accounts payable and/or receivable processes for businesses and automating reconciliation. Others, such as Jifiti, provide B2B financing, but overall, financing/working capital seemed to be more of a value-added service for vendors that offer it. We also found growing evidence that blockchain, AI/machine learning and real-time payments all have valuable roles to play in the B2B payments process. Some B2B payments companies, such as Deluxe, use AI/ML for invoice matching and recognition, for example. Other companies, such as Tassat, focus on facilitating B2B payments on the blockchain.

FedNow sparks an emphasis on real-time payments. Real-time payments were top of mind in many of our meetings, in part fueled by the July launch of FedNow. The Federal Reserve, which operates FedNow, had a booth on the floor to support its efforts in driving ecosystem adoption of its new payment rail. The majority of vendors we spoke with anticipated an inevitable increase in real-time payment adoption in the US, but some were quick to position it as more of a “nice to have” feature for the time being. Their thinking is that Same Day ACH and services like Visa Direct already fulfil many real-time payments needs, and currently, most banks are “receive only” participants on FedNow (e.g., cannot initiate customer payments). Regardless, we believe the impact of real-time payments, both in terms of business models and infrastructure, must now be considered within the broader US payments ecosystem, given the presence of two real-time payment rails, against the backdrop of global momentum.

Open banking brings more questions than answers. News that the Consumer Financial Protection Bureau (CFPB) proposed a rule to drive open banking adoption broke just three days before the conference. The CFPB’s rule (currently in an open comment period though year-end) looks to drive greater portability of financial data for US consumers, with the aim to “supercharge competition” in financial services. Most vendors we spoke with were supportive of the CFPB’s efforts, although we met with one of the major open banking platforms that was rather cryptic on the expected impact of the rule on its business and the broader industry. Many of our conversations at the event came back to the unknowns: Will the rule have enough teeth to be enforceable? How will liability be established? Where will the Financial Data Exchange fit in?

Generative AI was a prominent (but not overwhelming) theme. Walking into the show, we expected to be blitzed by generative AI narratives in most of our vendor meetings. Although the topic consistently surfaced, it was by no means the focal point of Money20/20 or vendor marketing messaging. Most of the generative AI financial services use cases discussed were rather pragmatic, like customer service and fraud prevention. Although these can best be described as the low-hanging fruit, it is encouraging to see the industry unite around practical applications that can drive near-term business outcomes. Many of our conversations on the topic inevitably hit on the negative implications of generative AI for the industry, especially deep fakes and malicious services like FraudGPT and WormGPT being used for malware and phishing scam creation.

The show floor and booths felt smaller than in years past. Although the dinner events and happy hours seemed as prominent as ever, we did not see anything on the scale of renting out a nightclub with a private Post Malone performance like last year. Macroeconomic pressures are at least in part to blame, and as Andreessen Horowitz’s Ben Horowitz put it during his keynote, fintech is currently in “wartime.” What is also clear is that a growing contingent of companies are ditching a presence on the floor, instead opting to rent out meeting rooms, suites and restaurants throughout the event’s Venetian Resort venue. Noticeably absent in the expo hall were booths from large players like Visa Inc., Fidelity National Information Services Inc., Fiserv Inc. and PayPal Holdings Inc., which held more intimate gatherings in private meeting rooms. In some ways, it felt like an acknowledgement from large incumbents that they no longer need to visibly show they are “here to play” in fintech.

See the Big Picture: 2024 Generative AI Outlook

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