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Key points and main themes of Money20/20 Europe 2024 – Fintech Switzerland Digital Finance News
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The Money20/20 Europe conference, one of the largest annual payments and fintech events in the region, returned in Amsterdam from 4 to 6 June 2024, bringing together global innovators, venture capitalists (VCs), banks, regulators and media platforms to discuss the fintech sector’s biggest opportunities and most pressing issues.
The 2024 edition was held under the theme “Human
Featuring more than 350 speakers, the event explored important technological advances and trends, including artificial intelligence (AI), open banking, growing collaboration between industry stakeholders, and business-to-business fintech innovation (B2B).
Optimism persists
McKinsey relationships that despite the funding challenges of the past three years, optimism remains strong within the fintech ecosystem. Funding volumes have stabilized with year-to-date numbers at around the same level as the final three quarters of last year, and industry stakeholders have shown confidence in the industry’s growth prospects, particularly the untapped potential of B2B fintech .
The consultancy firm notes a shift in investment patterns with a larger share of capital earmarked middle market companies rather than just large, high-profile deals. Middle market companies typically refer to companies that are not as large as large corporations but are more established than early-stage startups. In the first quarter of 2024, the share of smaller deals under $100 million accounted for nearly 70% of the total, suggesting investment diversification that should drive greater innovation in untapped fintech verticals, including B2B fintech.
The growth of B2B fintech
Initially, fintech innovation focused on consumer-focused services such as mobile banking, peer-to-peer (P2P) payments, personal finance management and investing apps. However, there has been a growing emphasis on B2B fintech solutions.
McKinsey points out that this year’s Money20/20 Europe highlighted the continued acceleration and scaling of B2B business models. Successful business models are scaling well, especially in B2B, and are moving from exploratory niches to robust growth domains.
FXC Intelligence, a data platform specializing in the cross-border payments and e-commerce sectors, relationships signs of a growing commitment to the infrastructure side of the industry, with more companies discussing payment rails, networks and interoperability. This has led to greater interest in real-time payment solutions, particularly in markets with traditionally slower rails and for applications such as B2B payments.
The ecosystem converges
One of the main themes of the 2024 Money20/20 Europe conference was the convergence of the fintech ecosystem and the collective will to solve problems together. Many conversations involved fintech startups, banks, regulators, platform operators and merchants, all looking for new opportunities.
While all parties have their own priorities and challenges, fintech startups are recognizing that they need banks to achieve their reach, and banks are realizing that they need fintech startups to produce products, McKinsey reports. It is noted that currently collaborative efforts are mainly focused on infrastructure, open banking, digital identity, compliance services, fraud and anti-money laundering (AML).
Cloud migration opportunities
McKinsey reports significant opportunities in cloud migration. Although almost all actors are in a transition phase, significant progress is still needed. McKinsey’s cloud survey suggests that while financial institutions globally aspire to invest more than a third of their IT spending in private cloud systems, they spend less than half of that for now.
Likewise, there has been much ambitious talk about the move to Software-as-a-Service (SaaS) solutions for payments, although further action is needed to fully realize this transition. This offers significant opportunities for suppliers, the consultancy says.
Artificial intelligence is still in the early stages of adoption
Although artificial intelligence was a major theme at this year’s event, research and consultancy firm Forrester relationships that discussions remained mostly at a high level and focused on the operationalization of generative AI (gen AI). This includes conversations about budgeting and generating return on investment, legal and ethical implications, as well as investments in appropriate data and risk bases.
Overall, organizations are primarily focusing on how to realistically use the technology, with proven areas such as fraud prevention currently prevailing over some of the more interesting but experimental areas of focus.
Experts have noted that technology departments currently lead efforts to generate AI, but for significant impact, corporate ownership is key. Seamus Smith, president of the global B2B payments group at FIS, highlighted the potential of artificial intelligence and machine learning (ML) in transforming B2B payments, although noted the early stage of these technologies
Open banking opportunities
Changing payment methods is difficult due to the complex value chain, high standards of security and reliability, and business models that depend on scale. This is why open banking payments have been slow to catch on since the Payment Services Directive 2 was introduced. As of January 2024, only 8.2% of digitally enabled customers in the UK used open bank payments and these payments still constituted a small part of the total payment volume.
However, there was a lot of energy and optimism about open banking at Money20/20 Europe, with practical solutions discussed that could lead to significant growth in open banking payments by 2025, Forrester reported.
In retail, discussions have focused on how payments stakeholders can replicate the success of card schemes. One approach is to separate card services and add value as needed. For example, merchants could offer discounts or rewards to customers who use open bank payments or provide insurance for transactions where customers may want a chargeback option.
Huw Davies, co-founder and CEO of Ozone API, and Marie Walker, open futurist at Raidiam, explored the evolution of open banking into “open everything”, embedding financial services into sectors such as healthcare and transport to create new opportunities market, Fintech Reports on the times. They highlighted the importance of leveraging common infrastructure and industrial collaboration.
Tokenization sees slow adoption
Tokenization, a process that involves converting assets into digital tokens that can be traded on a blockchain, It is increasing traction within the financial sector.
Industry leaders discussed the progress and future of tokenization. Anthony Day, head of strategy and marketing at Midnight, noted that mass adoption of tokenization has been slower than expected, a sentiment shared by Ryan Rugg, head of digital assets at Citi Treasury and Trade Solutions, who expressed surprise at the slowness of progress.
Alisa DiCaprio, chief economist at R3, highlighted that tokenization offers more efficient solutions than existing paper-based systems. It enables continuous, real-time transactions and can seamlessly integrate various systems.
Featured image credit: Money2020EU
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