As quick as it arrived, Money20/20 Europe is over for another year. With thousands of attendees and companies taking part, it was a real cauldron of discussion which delivered plenty of insights into how fintech will shape our lives in the years ahead.
It’s been a very eventful few years in the finance world, and in the world around us, for a range of different reasons. With new innovations coming on stream all the time, and new expectations from businesses and consumers alike, it’s an exciting time to be part of the industry.
The conversations and debates at Money20/20 Europe were lively and wide-ranging - with some standing out more than others. Here’s a round-up of the five hottest topics from the event, along with some guidance on what this means for your business:
The increased transparency of the banking sector, supported by the use of open APIs and open-source technology, is helping deliver a new level of service and personalization for customers.
Banks are increasingly sharing customer data to authorized third parties through dedicated APIs, helping those third parties provide superior products and services that enhance consumer choice, flexibility, inclusivity, and data-driven decision-making. This not only gives users the possibility to view their entire financial portfolio through a single app, but can also help make transactions near-instantaneous.
Given the benefits to both customers and retailers, it’s no surprise that open banking is set to be a real growth area through this decade. As a result, businesses involved in payments need to be exploring open banking opportunities to stay relevant and to deliver superior customer experiences.
Central Bank Digital Currencies (CBDCs)
Governments all over the world are investigating the possibility of introducing their own digital currencies that are underpinned by their real-world currencies. There are already four CBDCs in operation, and more than 100 other countries and authorities are considering following suit, including the Bank of England for the UK and the European Central Bank for the EU.
Introducing these CBDCs represents a major shake-up for finance. While it would open up direct central bank deposits to the whole population, instead of just large institutions, there are also technical and security challenges to overcome. And while implementation of CBDCs in major markets may still be several years away, they will play a major part in shaping the industry’s future. With more CBDCs likely to fall into operation and more countries considering to follow suit in the future, your business can already begin preparing for the long term evolution of the industry. Start by considering how your operations will be affected by the introduction of CBDCs, and from there you can scenario plan what actions you'll take under different circumstances.
Alternative Payment Methods
As consumers look for more choice and convenience in how they buy and pay for things, the payments landscape within retail has diversified significantly. Alongside paying by debit and credit card, it’s now commonplace to be able to pay through prepaid cards, mobile payments, digital wallets, and instant financing. Indeed, ‘Buy Now, Pay Later’ is currently the fastest-growing payment option in the UK, underlining its popularity among consumers.
However, as these alternatives have become mainstream, the issue of regulation has arisen, especially around instant financing and the risk it poses in pushing consumers into unsustainable levels of debt. As a result, one of the key developments in this area over the next few years is how checks and protections can be put in place to support customer wellbeing. So, when considering your payments processes across your end-to-end user journey, it's important to map out how and where security will play a role so these steps smoothly integrate with your customer experience.
Environmental, Social and Governance (ESG)
In finance as in every sector, ESG is right at the top of the global conversation. Some 37% of investors now take ESG into account when considering prospective investment opportunities. This is leading finance businesses all over the world to review their current processes and operations, and work out where changes can be made to support inclusion and sustainability.
On a practical level, this means accelerating the move away from physical data centers and towards the cloud, so that the carbon footprint of data storage and utilization can be reduced. However, this is only a small part of how the finance world can transition to a more socially responsible economy, so there is still plenty of work to do in this area. With ESG being such a hot topic at the moment - and certainly not going anywhere any time soon - every business should be considering their own sustainability practices to determine where industry standards are being met and where boundaries can be further pushed to pioneer development in this space.
With so much competition in digital retail today, it’s the businesses that can provide the quickest, easiest and more flexible customer experiences that will be best-placed for success. To emphasize the point, almost three-quarters of consumers now say that they’re likely to make their purchasing decisions based only on the experience they receive when buying.
Much of the talk at Money20/20 Europe was about how payments can have a major impact on the success or failure of online buying journeys. The alternative payment methods mentioned above have a big part to play in this, so that consumers can use the means of payment that best suits their own financial arrangements. To deliver a best-in-class customer experience, businesses should look end-to-end through their customer journey, identifying areas which create both forces and frictions along the way. Consider ways technology can be employed to create momentum behind the forces and to reduce the strain of friction throughout your entire customer journey.
Ready to get on board with the future of fintech? At Ciklum, our deep sector expertise and expert engineering can help you create custom platforms for innovation in the payments sector and the wider finance industry. Find out more here.