FinTech companies, banks, government officials, media (well some), investors and myriad consultants flocked to Copenhagen last week to debate the future of money at Money20/20 Europe.
The event has cemented itself as the leading FinTech conference in Europe after the meteoric rise of its US counterpart. Although it has a clear European agenda, leading tech, financial services and business experts from across the globe revealed how new technologies will fundamentally change the way we borrow, manage and spend money.
On stage, in corridors and leaning against various bars across the city attendees feverously discussed a future that will involve everything from robots managing our financial health, the impending domination of biometrics, the ability for AI to personalise the banking experience, driving cash out of the system, and how these various drivers will move us towards a more inclusive, more open and more transparent society.
FinTech as a sector is growing rapidly, with various sub-sectors such as InsurTech, RegTech, PayTech springing up and becoming established in their own right. The conference attempted to cover all the biggest issues: identity, regulation, the blockchain (no self-respecting FinTech conference could be without), mobile payments, financial inclusion, POS and numerous other topics and trends occupying the minds of those building the future of finance.
One of the biggest themes was Banking (R)evolution which focused on the relationship between established financial institutions and FinTech players.
When FinTech first blew up seven years ago or so, it was fashionable to say that a revolution was coming in the world of banking. Plucky start-ups, drunk on near-limitless funding and the ineptitude of traditional banks still reeling from the crisis, bankers bonuses and a litany of regulatory fines, would refer to Bill Gates' 20-year-old quip that "banks are dinosaurs". The thinking was that FinTech was the asteroid strike that would wipe them out. Like publishing, photography, travel and hospitality before it, banking was going to be transformed by technology-driven disruption, destined to Uberize everything.
The reality, while not boring, has been far less dramatic. Customer migration to pure digital players remains limited. Multiple challenger banks in the UK are facing funding and regulatory issues before they even open their doors. A host of others are facing outages and service issues as they struggle to scale. And a number of the FinTech players that have seen success have been bought by traditional players. Visa investing in Klarna was one example of this taking place “live” at the show.
The rise of fintech hasn’t turned out to be quite like the extinction of the dinosaurs. Rather the erosion of bank profitability by low interest rates, increased regulatory costs and changing customer habits has triggered an industry wide response. The response being banks will buy or rent FinTech technology to improve efficiency and the customer experience. In turn, banks provide FinTechs with the resources and customers to scale and grow.
Correspondingly there was a spirit of collaboration at the event. Even almost the feel of a festival. There was mini-golf course, a lady wheeling wheelbarrows of fruit around and a popcorn machine in the corner of each arena.
This made me think - what is FinTech now? And two thoughts occurred which makes me believe there is a lack of identity or purpose to the industry:
1. Competition or collaboration: Yes, the rhetoric about FinTechs eating banks’ lunch has dissipated but the irony is that regulation is going to force banks and FinTechs to compete. The first three of the four key notes from Rabobank, Barclays and BBVA all touched on one of the hottest issues: Open Banking. PSD2 will force banks to open up their infrastructure and provide access to customer data, and effectively customers, to FinTechs. Where a potential threat existed before, we now have a very real and regulatory-driven one set to change all the rules.
2. More than payments: While the agenda the organisers created covered myriad FinTech sectors the exhibition halls and side conversations were very payments focused. Payments is one of the largest sectors in FinTech (and also the hardest to penetrate but that’s a whole other story) but felt disproportionately represented. Where was wealth management? Where was InsurTech? Where was alternative lending? Where was capital markets?
As we hurtle towards the year 2020 - what will FinTech look like (and what will the conference call itself)? Is it an industry holding hands and dancing through wheat fields or will it be a fiercely competitive market spurred by regulation? And will FinTech exist as we know it or will it be simply a catch all term for a group of sectors that have matured and established themselves in their own right?
I suppose only time will tell.