M20/20 Recap: Fintech's Dominating Themes

FinTech's relentless rise hit a fever pitch at the recent M20/20, leaving me exhilarated, yet exhausted! Here are top-themes dominating the ecosystem, at least the ones I was able to capture.

(1)? Fintech's Thriving, Recession-free, and Unstoppable. The resounding FinTech anthem: extend your cash runway, but not at the cost of growth. Startups and investors I spoke with held steadfast – no compromise on growth for the sake of cost-cutting.

(2)? 1033 – The CFPB Rule ‘Personal Financial Data Rights’. CFPB's new rule, demanding banks to share consumer data with their consent, is sending waves of excitement across Fintechs. Fintechs cheer for newfound access to data, while Financial Institutions (FI's) quiver. For Fintechs, it's a goldmine unlocking restricted data sources, once off-limits due to bank reluctance or the lack of APIs. But for FI's, it's a race against time – tech upgrades, increased fraud prevention, and strict compliance within six months. FI's might unite to forge common data standards, but it's the consumers who'll bear the cost. The rule's scope? Checking accounts, prepaid cards, credit cards, and digital wallets. Data aggregators like Plaid, MX, and Finicity may find themselves under the Fair Credit Reporting Act (FCRA) spotlight.

(3)? BaaS At Risk of Disintermediation As Fintechs Go Direct to Banks: Two hard-hitting truths (i) Regulatory heat turns up the pressure on banks, pushing them to tighten the reins on fintech partners for compliance, data, and reporting. Some are unloading Fintechs. (ii) Fintechs, hungry for BaaS-enabled services, strain tech teams with relentless API issues. One CEO reveals a staggering 40+ API calls per loan application! It's a tech turmoil, far from sustainable. While BaaS sparked opportunity and speed, it's now an unsustainable tech nightmare. Banks pivot, either forging direct fintech alliances or paring down their BaaS footprint, staying true to their core roots."

(4)? Embedded Everything - Banking, Payments, Insurance, Wealth, Tax, and Advice All in One! - The conference buzzed with the drive to seamlessly integrate banking into non-banking realms like Automotive, Retail, and Healthcare. A new model is on the rise: merging Professional Services with Embedded banking, making it a breeze for non-bank customers to infuse banking into their products and workflows.

(5)? Compliance is Hot Again! - Recent consent orders rocked the BaaS world, and the spotlight's only getting brighter. Regulators are watching closely, focusing on BSA/AML, reporting, and reconciliation – especially those using 'middleware' providers. With costs on the rise for Banks and Fintechs, strengthening compliance and using tech-savvy solutions will be the key to meeting soaring regulatory demands.

(6)? A2A Is Making Debit Cool Again - Fintech, payment giants, and banks are hitting consumers with higher fees, sparking a rebellion. Consumers are realizing those 1%-5% cashback rewards come out of their own pockets. They're ditching rewards for efficiency and experience, opting for digital wallets. With FedNow, RTP, Zelle, and Paze in the mix, Debit is about to make a serious comeback!

(7)? GenAI: The 'Wait-and-See' Fintech Game: Surprisingly, M20/20 crowd didn't buzz with GenAI excitement. It seems the FinTech world is sifting through 'hype' and 'pragmatism,' searching for scalable use cases, innovation within a regulatory framework, and customers willing to pay for the 'wow' factor. The potential of GenAI to automate tasks and generate content sparks enthusiasm, but the consensus is clear – it's not an instant game-changer.

Other Key Observations: (i) Investors and PE heavyweights flocked to the event, possibly due to surplus cash from decreased investments. (ii) High M20/20 prices frustrate many, forcing even industry leaders to rent venues for client entertainment. Some startups forgo booths for exclusive social gatherings. Suggestion to M20/20? Implement tiered pricing for broader access, enriching the dynamic FinTech ecosystem.

Feel free to share thoughts and/or reflections?