Fintech-bank collaborations, blockchain exploration and the banking plans of tech giants dominated discussion at the conference.
Larger conferences often get tarred with the same brush. ‘It’s a bit of a circus,’ people say. This year, in Amsterdam, Money20/20 fully embraced that tag.
There were more than half a dozen ornately decorated stages, including the Big Top Stage, the Trapeze, the High Wire, the Ringside and the Lion’s Den. There were impromptu acrobatics and drum displays. Whirling spotlights introduced tech sage Steve Wozniak to a raucous crowd of over a thousand people, while at other times attendees reclined in the more intimate setting of an indoor tent.
There were also less circus-like displays of garishness – a reminder that this conference is as much about the old world of finance as it is about the new. At the Taste of Amsterdam after-party, the Veuve Clicquot Rich area was filled to the brim, as were the glasses and, presumably, the pockets of the blockchain entrepreneurs.
It’s an all-round overload of food, drink, optimism, enthusiasm, production, technology and money – but beneath the bluster and the showmanship is a rich layer of insight on how financial services is evolving.
These are my key takeaways from the first two days of the three-day conference.
The event organisers earmarked fintech-bank collaboration as one of their key themes, and sure enough it seemed to pop up in almost every panel.
In a banking-as-a-service panel, moderated by Santander InnoVentures partner Pascale Bouvier, a debate raged among challengers about the how banks should think about disruption.
Oliver Hughes, CEO of Russian banking platform Tinkoff, described three scenarios: banks are passive and get disintermediated; banks choose to be the balance sheet supporting fintech customer interfaces; banks combine their balance sheet with a new-age interface.
Tinkoff, which started off as a credit card business, currently has around 7 million customers and sells its own products as well as third-party products via a marketplace. It also wants to go ‘way beyond financial services’, according to Hughes. He described the strategy as the inverse approach to that taken by China’s tech giants, such as Tencent.
Luke Weston from Amazon Web Services said that Amazon wants to do ‘the undifferentiated heavy lifting’ – on-boarding, payments and account opening – on behalf of banking partners, and let them focus on the things that matter.
In a panel about banks becoming ‘dumb pipes’, the audience was repeatedly reminded of the value of pipes, dumb or otherwise.
“Banks are sitting on a treasure trove of data,” said Gavin Littlejohn, chairman of the Financial Data & Technology Association. But Starling Bank’s chief platform officer Megan Caywood said that banks don’t have the technology to leverage that data.
The ultimate conclusion of that panel, however, was that 'dumb pipes' is a somewhat pejorative expression. “Without the pipes, you are nowhere,” said Dr Leda Glyptis, chief innovation officer at Qatar National Bank.
One meeting I had that was very relevant to this discussion was with Tink – an early-mover in the account aggregation space. Tink doesn’t want a banking licence; it feels the real value lies in data and in understanding the customer.
Tink is currently powering Dutch banking giant ABN AMRO’s Grip, a fintech banking app. The meeting was a reminder that banking-as-a-service is very much a two-way street. On the one hand you have major banks supplying regulatory permissions, data access and capital to fintech players, on the other you have fintech players helping banks to leverage their vast reserves of data and to upgrade their customer experience. Tink has both direct-to-consumer and business-to-business strategies, but it’s the latter that is producing the bulk of its growth at present.
Of course, banks and fintechs will always talk till the cows come home about ‘who owns the customer’.
Christoffer Hernaes, chief digital officer at Sbanken (a 17-year old digital-only bank), had an interesting take on this: that firms only ‘deserve’ customer relationships if they are willing to offer products and services that are ‘contextually relevant’. Sometimes, he said, that will mean being placed in the back-seat.
My overriding impression was that although larger companies – banks and tech firms alike – are actively exploring the possibilities of blockchain, most are yet to establish a concrete strategy.
Take, for example, the comments of Ann Cairns, vice president at Mastercard. “We think blockchain is a very interesting technology,” she said, adding that Mastercard has more than 60 blockchain patents and has built its own blockchain from the ground up, on which it could already run the whole of Mastercard’s global business operations. But it isn’t.
Cairns said that blockchain ‘will be used in the future’, but as part of a broader solution. She likened it to cloud accounting and Artificial Intelligence (AI): useful, but not a ‘silver bullet’.
Similarly, Facebook France’s head of industry and services Nicolai Gerard said that while the tech giant has established a blockchain group, it’s ‘not clear yet’ what that group will do.
InnoVenture’s Bouvier began his panel by advising the audience against questions about whether Amazon is going to become a bank (due to the fact that Luke Weston represents Amazon Web Services). The disclaimer is indicative. Nothing gets a fintech audience going like questioning a tech giant on its financial services plans. Bouvier’s introduction spared Weston from the ordeal, but Apple’s Steve Wozniak was less lucky.
Asked directly whether Apple is going to be a bank, the Woz was non-committal, saying he ‘would never try to guess’ at the motivations of the business he founded. He did say, however, that Apple is ‘involved with banks’ – likening the various financial services it currently offers (such as payment services) to apps and the app-store.
Facebook’s Gerard also faced the question. He answered more directly, saying ‘really we do not want to become a bank’. Instead, he said Facebook wants to collaborate with financial services brands to roll out financial services, referencing the firm’s P2P payments via messenger as an example.
Klarna seems to be progressing with its banking plans. The fintech payments giant was granted a banking licence by the Swedish regulator in 2017. I’m now hearing that the firm – which is best known for payments and point-of-sale financing products – is ploughing ahead with plans to launch a D2C banking app.
Finally, note that fintech ‘middleware’ Bud announced the launch of a new exchange at the conference. The platform will allow fintech firms and banks to integrate with a wide range of third-party service providers through APIs, while also giving partners access to transactional data under the Open Banking framework. Bud hopes the new exchange will help it to become ‘ubiquitous’ in the era of Open Banking.