Money 20/20: Meeting in Person to Tackle Virtual Challenges

This year’s Money 20/20 conference marked a notable return to large-scale in-person industry events, as thousands of professionals gathered in Las Vegas to discuss all things fintech. It’s unsurprising yet ironic that this group, finally able to meet face-to-face, focused on digital solutions enabling remote commerce.

Here’s an overview of key takeaways from four days of in-depth discussions with clients and other experts in this dynamic sector.

Crypto and Decentralized Finance Move Front and Center

Cryptocurrency is rapidly becoming one of the hottest areas spurring the next generation of bank and credit union innovation. For evidence of this trend, look no further than the standing-room-only crowds attending the Money 20/20 sessions on the topic. 

Many financial institutions we spoke with are watching this space closely to ensure they are not disintermediated by players like Venmo, BlockFi, and SoFi, which offer consumers a path to buy and trade crypto. We expect to see many new offers in the loyalty and rewards space where, instead of cashback or airline miles, issuers add crypto to attract new customers and further engage existing ones.

If consumers begin to accumulate crypto balances at their financial institution, it will create a natural pathway for additional services like custody and payment transactions.

Decentralized finance, also known as DeFi, is another area we are closely monitoring. Ironically, one of DeFi’s initial objectives was to eliminate intermediaries like banks and credit unions by enabling individual borrowers and lenders to engage directly. Yet ample opportunity exists for FIs to harness this same technology to improve their own offerings and create added convenience for the mass market.

While likely use cases are not as fully formed as those for crypto, the rate of DeFi innovation is exploding, and forward-thinking institutions are well-positioned to participate. This also caught the attention of regulators, who are taking a detailed look at their role in balancing consumer protection and supporting innovative technologies.

Buy Now Pay Later: Friend or Foe?

Buy Now Pay Later (BNPL) solutions were another hot topic, with intense competition and a spirited debate on whether the product cannibalizes credit card activity or engages a new category of shopper.

BNPL is viewed as a popular financing option for younger customers, many of whom already tend to shy away from credit card use. Traditional issuers – with the help of the card networks – are exploring avenues to offer similar services. One concept is retail placement, as merchants can choose to integrate the BNPL offer earlier in the online shopping process, encouraging larger purchases and engaging the consumer prior to checkout. While this has shown great success in increasing online conversion rates of online purchases, a recent survey from Credit Karma showed that, of people polled, 34% have missed one or more payments.

Regulation is also heating up, with the CFPB raising questions about the model. BNPL has clearly established its viability as a payment option, but the space remains well short of reaching equilibrium.

The Bottom Line

With technologies like cryptocurrency and DeFi joining ongoing developments like real-time payments and open banking, and products like BNPL altering the landscape, the stage is set for a period of intense innovation over the next few years that will outpace what we’ve seen over the past decade. And despite all the talk of Big Tech and neobanks, strategically savvy established banks and credit unions are well positioned to leverage these technologies to their advantage.