State of play: Money20/20 Europe 2024
Each month, Philip Benton, Principal Fintech Analyst at Omdia, explores a new topic and assesses the “state of play”, providing an analysis and understanding of the market landscape.
Money20/20 Europe was a glimpse into the progress that the fintech industry continues to make
This month, Philip recaps the key themes and trends to come from Money20/20 Europe 2024.
I, along with thousands of other fintech enthusiasts, descended on Amsterdam once again this week to learn more about the latest developments in the European fintech world at Money20/20 Europe 2024.
The core themes were AI, open banking and payment modernisation, which will form the basis of this month’s ‘state of play’.
Human x machine: ROI is about more than the P&L
One of the key topics of Money20/20 Europe was AI in the context of machines working with humans rather than replacing them.
Some fintechs have been vocal about AI replacing the need for humans in certain roles, but the general sentiment at the event was about AI supporting the productivity of humans.
The importance of humans in the loop was highlighted in several keynote sessions featuring the likes of Microsoft, Nvidia, and Mistral AI. Patrice Amann, EMEA regional business leader – financial services at Microsoft, said “Copilot is a very important word, it’s not an autopilot”, with Arthur Mensch, CEO of Mistral AI, adding “our models don’t work 100% out of the box, they need humans in the loop to deploy and test”.
The human element of AI is crucial and was one of the key recommendations Omdia made in its recent report, ‘AI in Financial Services’. It is easy to get swept away with the cost savings of deploying AI, but financial institutions (FIs) that neglect the human element of AI will fail. Customers will quickly get frustrated if faced with an onslaught of AI agents and not having a human in the loop to step in. FIs that understand the importance of integrating AI to enhance the customer and employee experience will succeed.
Measuring the success of AI deployment can’t be defined by traditional return on investment (ROI) metrics, as Kevin Levitt, director – financial services at Nvidia, explained: “I’d encourage every FI to have a scorecard which looks at more than just profit and loss, it’s also about employee retention, customer retention, customer loyalty and customer satisfaction.”
There were plenty of announcements related to AI at the conference as well. For example, Fenergo announced the launch of its AI-powered CLM (customer lifecycle management) product leveraging AWS Bedrock to more accurately identify and mitigate financial crime risk and also reduce the costs associated with KYC and AML compliance. Stella Clarke, chief strategy officer at Fenergo, added that AI investment costs are outweighed by the operational and efficiency gains to be had – up to 72% in some cases.
It’s not just the fintechs who are embracing AI either – the regulators are too. Jessica Rusu of the FCA explained how the UK regulatory body is using the technology for sanctions screening and to monitor potential market abuse.
Open banking to open everything
Similar to AI, the promise of open banking is now gaining momentum by moving beyond simply revenue-generating business models. Marie Walker, open futurist at Radiam, discussed how new use cases have emerged. She said: “It’s not about revenue-generating anymore, it’s about better customer experience, operational efficiencies, better access to credit – credit bureaus have extended the customers they can reach by 30% through open banking.”
Global adoption of open banking, 2024
Open banking has spread rapidly to all corners of the world since its inception and is still growing, be it regulatory-driven (for example, in the EU, Hong Kong, and Australia) or market-led where regulators are encouraging data-sharing (for example, in Japan and Singapore). Some countries have also adopted a hybrid approach to open banking. The US, Saudi Arabia, and New Zealand are among recent countries introducing open banking-related legislation.
Huw Davies, co-founder of Ozone API, believes regulatory indecision could hold back market progress with open data. He says: “The technology is already there, but it’s about creating market momentum. The Middle East is likely to be a leader in ‘open everything’ as they are moving much faster and will overtake the UK and Europe as the region to learn from.”
Payments continues to be one of the leading use cases for open banking. There were several exhibitors demonstrating their open banking credentials at Money20/20 Europe, including Tink, Yapily, Token, True Layer, and Plaid to name just a few.
One of the newer names to emerge is Brite Payments, founded by Klarna alumni Lena Hackelöer, which has built a network that handles the entire infrastructure for account-to-account (A2A) payments driven by open banking, including payouts (i.e. refunds). Brite, unlike many other providers, doesn’t white label its technology, with Hackelöer commenting: “We are both the issuer and acquirer, we can control the risk appetite by owning the end-to-end process and provide protection to the consumer so they can trust Brite as a payment method.”
Payment modernisation driven by embedded finance
Although a plethora of new and innovative payment methods have emerged as an alternative to traditional payments (card, cash, and ACH), adoption has been slow. This is in part due to an inconsistent and unreliable customer experience that doesn’t incentivise consumers to change behaviour. Customer experience expectations have increased across all industries, and payments are no exception. Digital transformation is therefore equally important at the backend as the frontend to drive the adoption of innovative payment services and enable the next wave of embedded finance solutions.
Omdia’s Payment Issuers and Acquirers 2024 survey found that more than a third of respondents view ‘improving customer experience’ as a key factor in driving their payment infrastructure investment. Enfuce, Marqeta, and Episode Six were part of a cohort of fintechs present at Money20/20 Europe providing the capabilities for financial institutions (both traditional and non-traditional) to modernise their payments infrastructure.
At the conference, I spoke with Enfuce’s co-CEO Monika Liikamaa about how the company isn’t just driven by modernising legacy infrastructure, but also aims to make a real difference in the world, with ESG the guiding force. Enfuce made a series of announcements in line with these principles. For example, it is launching a new, virtual commercial card programme for Síminn Pay, the fintech arm of Síminn, the largest telecom service provider in Iceland, equipped with a CO2 calculator by climate action platform Deedster, to help its commercial clients reduce their carbon footprints.
Marqeta recently appointed former PayPal executive Marcin Glogowski as SVP managing director for Europe and UK CEO. Glogowski spoke to me about Marqeta’s European expansion, following the announcement of the opening of a new office in Poland. He says: “We see it as the next wave of growth engine. There is huge potential for embedded finance for Europe, but the challenge is to educate the merchants (about the benefits).”
The cultural and habitual factors of payments are always underestimated, hence why a wider shift to a new payment method initially appears slow before seemingly snowballing. Supporting embedded finance payments is increasingly important for many payment issuers/acquirers. Almost one in four respondents stated it was a top-three IT retail payment product priority in Omdia’s Payment Issuers and Acquirers 2024 survey.
Money20/20 Europe was a glimpse into the progress that the fintech industry continues to make, but the journey is far from complete, summed up succinctly by David Tirado Blanco, VP of profitability and global business at Revolut, who said: “Our DNA is about being a ‘disrupter’, the Revolut motto is ‘never settle’ and ‘think deeper’, which continues to be our focus.”
About the author
Philip Benton is a Principal Fintech Analyst at Omdia and writes analysis on the issues driving technological change in financial services. Prior to Omdia, he led consumer trends research in retail and payments at strategic market research firm Euromonitor.
In this column, Philip will discuss the technological implications and consumer expectations of the latest fintech trends.
You can find more of Philip’s views on fintech via LinkedIn or follow him on X @bentonfintech.
