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Expert opinion

Money20/20 Europe: The Lab of innovation in payments with some magic boost

Wednesday 12 June 2019 | 10:10 AM CET

As media partner of Money20/20 Europe, The Paypers was there to witness the payments industry at its cutting edge of development

“Where tech, money & magic meet”

This was the catchphrase that welcomed us at Money20/20 Europe Amsterdam, on the 3rd of June, when the event kicked off. This year’s theme was Alchemy, a metaphor that placed the payments industry into the ‘melting pot’ of Artificial intelligence, M&As, Open Banking, fintech, security, and future commerce, to name a few. The event provided a unique and diverse agenda as well as access to an influential network of innovators.

As media partners of Money20/20 Europe, we had the chance to explore how the whole industry is breaking new ground by building new models in financial services, considering partnerships and acquisitions, leveraging AI, cloud, blockchain and quantum computing, and by depicting the future of open banking. With a diverse agenda of topics and activities, here are our main takeaways.

Combustion: Artificial Intelligence at high temperature

Just to picture the potential of artificial intelligence, in 2018, AI companies raised USD 9,3 billion, which is a 72% increase from 2017. The evolution of this high-tech environment shows that the AI powered transformation of traditional operating models is moving towards financial services. Financial institutions are also encouraged to embrace AI and collaborate more and more with companies in this field in order to reap the rewards of granular data on customer behaviour. Applying AI in financial services comes with some challenges when considering the quality of data and the ethical use of data. However, these challenges may be met with cooperation, awareness, transparency and education, as Tram Anh Nguyen, the CFTE’s co-founder concluded.

Of course, the security aspect was also debated, with Pedro Bizarro of Feedzai revealing the way model monitoring, automatic rules management, and deep learning can support financial institutions in better fighting financial crime, particularly transaction fraud and money laundering.

Transmutation: Open banking from an uncertain concept to a great opportunity

The Open Banking topic couldn’t be missed in one of the biggest fintech events in Europe. Gilberto Caldart of Mastercard has announced the first phase of their product rollout which features a single connection for financial institutions open banking functionality to third party providers, offering protection - which is a real-time verification of third-party registration status to reduce exposure to liability and fraud. The product also features centralized dispute and inquiry resolution service.

The success of Open Banking in central standards and infrastructure has managed to enable new scalable business models across countries and continents as well; because Europe is at the forefront, but Asia, the Middle East and Latin America are also coming with regulatory regimes.

Moreover, Open Banking goes way beyond APIs, a whole infrastructure being consolidated in the background. From TPP licensing, consent management and multichannel identity to Instant Payments compatibility to API integration and performance KPIs. Everything needs to be considered, because the future of Open Banking is Platform Banking, where banks will have to collaborate closely and build services and business models that keep pace with the rising stars of payment platforms.

Galvanization: Can Fintech help the traditional banking environment not getting rusty?

If we ask ING, for instance, the answer might be: “We got this.” Ralph Hamers, the CEO of ING Group revealed the progress ING is making in applying blockchain and distributed ledger technology to the benefit of the financial industry and beyond. In order to achieve the best level of customer satisfaction, ING has organized booth camps, has built its own labs and ventures – Yolt and Cobase. And in order to prove they deserve their place on the innovators table, ING Group saved a 300 million venture fund to invest in companies that have their specific technology or business model that is close to their strategy.

In the competitive market of banks and fintechs, Drew Graham of Barclays pointed out that maybe there are too many fintech companies out there - everyone is looking to be a founder, everybody wants to run a fintech company, yet the most important aspect that seems to be missed is the value exchange.

If we look at the fintech perspective, I would find worth to mention an outstanding comparison between fintechs and hospitals made by Conny Dorrestijn of Bankifi - “FinTech and hospitals have a lot in common: they are both complex, they are both centered around technology and data, and both aim and to give you a very personal experience.

I would take as some type of conclusion the remark of Juluis Bar Group’s Olga Zoutendijk’ which stated that without vision banks have small chance to survive and track the young talent.

Catalysis: Innovation boost

I could notice very well that on top of all, the Money20/20 was all about innovation. There have been many announcements related to new solutions, products and partnerships, and presentations on the evolution of platforms and technology. What I found quite outstanding was the session called ‘From spaghetti to lasagna: How to transform a bank's tech platform’, where the speakers discussed the right approach to upgrade a banking platform, the available options and how to deal with customer experience and data.

I would also emphasize Naspers’ Bob Van Disk statement, saying that China and the US will prioritize their investments in a more isolated manner, and we should, in fact, take a closer look at Southeast Asia and South Asia. There is a lot of investment from China to India and from Indonesia to the Philippines. These markets are likely to become an important destination for global capital and innovation.

About Anda Kania

With a high interest in the latest news of the payment and fraud industry, Anda has used her position of senior editor at The Paypers to discover and analyze the hottest topics and to discuss with the top thought leaders in the domain, in order to get the pulse of the fraud and digital identity industry. With a Master’s Degree in International Relations and National Security Studies, Anda is in a constant search for the upcoming trends and the best way to comprise it in words for our readership.

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