If you are like me and attended Money 20/20 earlier this week, you are likely still decompressing and working through your to-do list. This year’s conference started early Sunday morning with an intensity that did not abate. I always look forward to this event and am grateful for the opportunity to see so many of my favorite people in one place and hear first-hand the trends that are shaping the industry. Despite industry headwinds, this was an energizing event. The mood was reflective while also enthusiastic about the opportunities ahead. It feels like it’s time to get back to business.
Here are some thoughts and observations:
- There was and will continue to be much discussion about open banking, open data, and 1033. 1033 will be a massive change requiring the sharing of data historically enjoyed by the largest of banks. Some benefits seem to be proven, agreed upon, and understood such as the ability to use account cash flow data to improve access to credit for consumers who lack credit bureau history. In addition, the industry seems most excited about the potential ability to use real-time longitudinal data to create richer, more personalized, and customized products and services in the future. While it is agreed that consistency and accuracy of data will benefit the industry, some argue that this will come with increased costs for implementation and ongoing compliance – the value should exceed the cost. Technology will improve and it is expected that consumer adoption will continue, thus increasing benefits to product and service providers. With 1033 it is now crystal clear that the consumer owns the data – but infrastructure needs to be put in place to hold the data and protect PII.
- There is bumpiness in the regulatory environment. All eyes – from banks to fintechs – are on regulatory developments and enforcement actions. Compliance should be at the forefront and serve as the foundation for businesses with constant engagement between business leaders and internal risk/compliance. Understand the purpose of the regulation and the customer interest it is protecting instead of getting frustrated by its specific requirements.
- There is an increased emphasis on partnerships – who has a seat at the table with you for mutual benefit such as value creation or enabling infrastructure. Banks are becoming much more active in working with fintechs and it’s not just testing. The ability to problem solve and increase performance helps to create a great partnership. Bank and non-bank partnerships need to be aligned on a solid foundation of compliance.
- There are significant data and automation opportunities to improve access to products and services in small business banking. While banks typically provide a bank account, payments, and working capital, others in the market are providing more services that are needed including payroll, marketing, CRM solutions, and others. Historically relationships with bankers and small businesses were done over a handshake. This is being replaced with access to new sources of data that enable a holistic view of a business’s past and where they are headed – this includes cash flow and merchant services as a start. Expanding into utility bills, supplier payments, lease payments, and other transactions is critical.
- Banks are modernizing, but it is a massive effort that requires investment in time and resources. A best practice is to integrate legacy system owners and the builders of the new architecture into a cohesive team to drive the change needed to support existing businesses and set up the tech stack to enable innovation.
- Fintech has entered a new era with the advancements in technology and data used by good and bad actors. Technology – cloud, the use of APIs, AI – are still rapidly evolving. There will be continued growth in the areas of infrastructure, frictionless transactions and experiences, fraud, and security.
The industry has certainly been through much this year with bank failures, significant increases in interest rates, a pullback in investments, and more recently a war that has directly impacted families and business leaders across the world. Despite these challenges, Money 20/20 was instead focused on the opportunities in the future while recognizing the need for solid foundations in business models and compliance. Crypto was de-emphasized. Businesses facing significant financial challenges were simply not in attendance. It felt great to network and learn from others to get back to business and look toward the future.