January 3, 2023 | Nick Holland
It’s that time of year once again when the fintech industry collectively looks to past events to extrapolate out potential trends and forecasts for the coming year. At Money20/20, this is more of a full-time gig, as we are constantly planning for upcoming shows and events. Predicting how to skate to where the puck is going is pretty much our day job.
Here’s my personal interpretation of where we can see these categories play out in the coming year…
The continued move from analog to digital
If there is any silver lining to the recent pandemic, it’s the realization that some of the things that we have been doing in banking and payments are not just outdated but positively byzantine. Notarizing documents with metal stamps, proving a place of residence with copies of utility bills, writing paper checks – these are the bane of smooth interactions and need to collectively go away if we are to reach the frictionless nirvana we have all been promised. However, for this to happen, financial services will require better forms of authentication, particularly as the arsenal of tools at the hands of digital fraudsters are becoming increasingly powerful (have you seen how good deepfakes are getting?)
Knowing that you are legitimately who you claim to be in an online environment will be fundamental to not only frictionless transactions but to enabling new forms of embedded commerce across industries where payments and banking have formerly found hard to penetrate. This will require significant work from standards bodies to ensure that these very disparate systems speak a common language – unexpected finance will require expected and predictable connectivity.
An increasingly stringent regulatory framework
It’s fair to say that with 2022 in the rearview mirror, some decisions may have been made differently and that regulatory bodies are going to be less apt to turn a blind eye to the “build fast and break stuff” mantra that has been the song sheet of Silicon Valley of recent years. The Crypto Winter we talked of in the first half of the year may well be something more of an ice age given the recent FTX revelations that are still contaminating investor sentiment and are likely to spill well into 2023. Conspicuously absent (or just overshadowed) in the wake of the ongoing crypto meltdown are concerns that were rife around BNPL earlier in the year. Nothing here was resolved and again, these are likely to rear their head once more as the economic downturn highlights unscrupulous lending practices and their personal ramifications.
Start-ups may then find themselves between a rock and a hard place in the coming months, with regulators increasingly placing fintech business models under the microscope and VCs being considerably more gun-shy regarding risk. However, there is a bright side – companies forged in this environment are likely to have far more resilience than their forebears. We expect that Money20/20 will be at the crux of these conversations between founders and partners as they navigate a somewhat more complicated regulatory and investment environment in 2023.
Fintech for Genuine Good
The power of transformative fintech has been proven over the years, whether that be in rural third-world, or within inner city first-world environments. However, “X-washing” of whatever is being increasingly held up to the light. Executing true transformation is not easy and therefore the initiatives that are substantive need to be both acknowledged and amplified – no one said ESG would be easy.
One area that continues to quietly evolve is that of government-backed initiatives that are setting the stage for the future of payments. CBDCs have been seen as relatively fringe, but we anticipate that the Venn diagram of digital identities coupled with the ability to streamline and even retire archaic payment platforms in the public sector will provide compelling reasons to push forward. It’s not just about CBDCs, however. In October, I had the pleasure of interviewing João Del Valle, CEO and Co-Founder at EBANX in Brazil. He highlighted the staggering success of Brazil’s government owned Pix payment rails…
“Pix already has an adoption of over 50% as of now in terms of population above 18 years old that are using the platform already. Pix just crossed a milestone of 1 trillion transactions in one month alone…that's $200 billion.”
Clearly, where public and private sector come together, adoption of digital payments can be monumentally successful. We expect much more to come in 2023…
Finally, if you have experienced our shows, you know that we are not your traditional financial services conference. In the past year, I have been at the heart of a throbbing immersive freak show experience in Amsterdam, lived three days in a podcast booth shaped like a honeypot, hung out backstage with Molly Bloom, raced drones around a conference hall, had a Money20/20 tattoo applied, and had many, many more unusual interactions as the fintech community has collectively come out of hibernation. In 2023, we are more global than ever, planning our new show in Bangkok for 2024, but also taking the Money20/20 party to locations as varied as Stockholm and Sao Paolo.
It’s going to be a trip. We welcome you along for the ride…