Money20/20 EU: The 5 Takeaways

We had an incredible time last week at Money 20/20 in Amsterdam! Here is my attempt to recap all the experiences, conversations and takeaways:

1. Emerging Markets are the New Black

This year at Money 20/20 Europe a lot of conversations were focused beyond the European Fintech agenda, on key learnings, important players, and emerging opportunities coming from other parts of the world, with a spotlight directed on the emerging markets of Asia and Latin America.

Chinese and Southeast Asian Tech Giants, such as Tencent, WeChat, Alipay, and Grab are now setting new market trends and staking out their territory in a big way. Many of them have already achieved growth and mass success in their Financial Services offerings, causing the Global Payments community to turn their heads, raise their eyebrows and get the checkbooks ready. A growing middle class, continued penetration of Internet and mobile, and solid GDP growth rates is what makes the markets in China, ASEAN, and Latin America so alluring.

Many notable companies from Asia - Alipay, OVO, SoftBank, - made it on stage to share their stories. And some Fintech leaders are openly sharing their enthusiasm, like Bob van Dijk, CEO of Naspers, who in his keynote session on Day 1 said that “in terms of innovation and progress-Southeast Asia, South Asia, and Europe are in for a good ride.”

2. Cash is not the enemy, it's the opportunity!

According to the World Bank, only 18% of the world population have access to credit cards. At the same time, average Fintech penetration globally, according to the latest report by EY, is 75%. This means we are seeing a massive volume of transactions moving from cash into digital money, completely bypassing the need for credit cards.

Tech giants and local wallet providers are therefore focusing hard to enable cash-dominated world to inter-operably transact. Cash to digital money and vice versa is the high TPV loop of interest.

What we see is a rise of new (or so-called alternative) payment methods that replace cash in cash-dominated markets, and this movement has the potential to bring billions of new consumers into the market.

3. The competition can only survive a PARTNERSHIP MODEL

This year the exhibition floor was full of new players. Someone even mentioned to me that the exhibition floor saw about70% of new companies attending this year. What it also means is that many of the 2018 heroes didn’t make it back to Amsterdam. Clearly it’s an important sign. If you don’t execute, you won’t succeed. Addressing the audience at Money2020 Europe, Stripe CEO Patrick Collision mentioned how Stripe grew over the years making the right partner choices and delivering value. And the secret to success is to build a product that fills a gap in the market, and continue to scale by partnering with the companies who fill other gaps in the market, so that you further improve your product. Don’t reinvent the wheel. Build your core Fintech (or Techfin) proposition, and work with best-in-class partners to take care of the necessary capabilities you may need like KYC, financial crime prevention, automated accounting and so on - this is done by many companies. Or, go bigger and push the boundaries by creating a meaningful product partnership that creates a completely new experience.

Some of the powerful partnerships announced at Money 20/20 included: 

• Alipay announced a partnership with the taxi hailing program called Splyt. Alipay’s Head of Europe, Roland Palmer said that, Splyt can reach 1.5 billion users, and now Alipay users (predominantly Chinese travelers) will not have to leave their app in order to get access to transportation services when they travel.
• Indonesia’s largest mobile wallet, OVO, partnered with Prudential, the UK-based insurance conglomerate, to give subsidized insurance to the middle class in Indonesia, the 4th biggest country in the world by population. “This should be the largest investment in subsidized insurance in Asia and it will change people’s lives,” said Jason Thompson, OVO’s CEO.

And from the set of partnerships that has been there for a while now, one of my favourites is Starling Marketplace, that went further than any other financial institution by offering “All the best financial products in one place”.

4. Digital identity x AI era

Secure digital identity and data protection still seem to be a major issue. European regulators continue to push requirements further, and companies are putting a lot of effort to comply with GDPR and PSD2.

But once the user is onboarded, Artificial Intelligence and Machine Learning can make a real difference. From offering like Amazon Pay to company’s like Feedzai, the need for real-time monitoring and automating of the user lifecycle from onboarding, to transaction management to churn is prevalent. AI only makes your decision-making easier, and your systems robust, hack-proof and smarter.

5. Financial Inclusion has not been 1% achieved: WALK the TALK

11:FS’s famous statement is that “Digital Banking is only 1% Finished”. But it’s even more relevant for Financial inclusion. From banks to startups: everyone unanimously agrees that making payments is expensive to the poor. This “transacting inequality” is a real driver of FinTech innovation. The paradigm shift from commodification of payments to building value-added ecosystems needs to evolve. For example, while companies like Transferwise and Instarem continue to offer low-rate remittances, traditional Banks still continue to focus on the top of the pyramid, and be seen as the corner of safety and trust but only accessible for smaller market segments. Changing the business mindset is crucial.

Fintech companies need to exploit this gap and take baby steps to provide more affordable services for many, further strengthening their core offerings to be low-risk and highly compliant, yet provide scalable solutions to large and increasingly digital audiences in the market. Then they will be truly serving every consumer.

Conclusion:

Europe has strong standards, great product vision, the desire to innovate and the drive to bring forward financial inclusion. But does it have the right infrastructure to get the scale, deliver on the vision and unlock new markets? At Rapyd we feel that we have a lot of ingredients that can help European Fintech open new doors and get access to the under-banked or under-penetrated users around the world. And that will help to connect all the dots together in a meaningful way.