Even by the rapidly evolving standards of the payments and FinTech industries, 2019 was a busy year. It began with three major mergers in the payment processor/banking services space (Fiserv-First Data, FIS-Worldpay, Global Payments-TSYS), continued with Apple Card’s launch and Libra’s kickoff, and reached an autumn crescendo when Google and Uber announced new products moving them squarely into the banking realm.
Now that the peak conference season has concluded, it’s a perfect time to assess the trends shaping the financial services industry. I have long considered Money 20/20 and Finovate to be the bellwethers for FinTech’s direction. For those unfamiliar with these events, Money 20/20 is an annual gathering in Las Vegas of 10,000+ professionals that has become the payments industry’s answer to the Consumer Electronics Show (smaller editions are held in Europe and Asia as well). As such, it has become a natural venue for new product announcements and high-profile keynotes.
My recent webinar highlights the key trends and takeaways, with a particular focus on these flagship events and some of the standout new product ideas.
Finovate curates an impressive procession of 70+ live seven-minute demos (no slides, no videos) of new products over two days. The mix of presenters provides a valuable window into the current thinking of entrepreneurs as well as their target customers. Finovate runs 4-5 iterations globally each year, but my focus in on September’s New York City flagship event.
Here are a few key takeaways from my experience at Finovate and Money 20/20, as well as several other conferences across an action-packed fall:
Deepening collaboration between FinTechs and financial institutions
There are increasing signs that the days of an “us versus them” mentality pitting startups against legacy banks and credit unions is over. A few disruptors will inevitably continue to declare that “banks are dinosaurs” and aim to steal their lunch money, but the prevailing tone has shifted to one of interdependence. The vast majority of Finovate presenters proffered an olive branch along the lines of, “If you’re a bank or credit union, we’d love to talk to you about how we can bring these services to your clients.” The potential synergies — in both directions — are too powerful to ignore.
Moves by Amazon and Google bear watching
The main threat facing financial institutions now originates from Big Tech rather than FinTech. Amazon unveiled a set of Alexa voice commands to retrieve billing balances, compare amounts to prior cycles and effect payment. Details remain scant- and a released date has not been confirmed — but this could have implications for how FIs approach their own voice technology strategies. In a similar vein, Google’s plans for a “smart checking” offer became known soon after, apparently sooner than Google intended. The goal is to broaden Google Pay’s ecosystem — as such, accounts would be opened solely through the app. One bank (Citi) and one credit union (Stanford Federal) have signed on to date, with plans to add more and for applicants to choose their institution. Assuming Google’s rollout proceeds as planned, banks and credit unions will need to assess the tradeoff between distribution and disintermediation.
Libra is playing the long game
Shortly before Money 20/20, the Libra cryptocurrency coalition announced the departure of several founding members, notably most of those with payments roots: Visa, Mastercard, PayPal and Stripe. Facebook executive and Libra spokesperson David Marcus addressed these challenges head-on, indicating that the group plans to advance the effort behind the scenes rather than issuing frequent press releases. He also hinted at bank involvement in the initiative on the horizon.
Uber as a powerful indicator
In my view, Uber’s announcement of a standalone Uber Money division was the most substantive story of Money 20/20. This operating unit will house the ride-sharing firm’s co-branded credit card marketed to passengers, with a retooled rewards program designed to incent greater engagement within the ecosystem, including Uber Eats. Of greater interest, however, is the enhanced debit card offering to drivers, which simultaneously addresses challenges faced by those unbanked while offering benefits (such as Walmart discounts and “overdraft” privileges) that may incent drivers to retain their Uber earnings as prepaid balances on a company card- rather than on deposit at a bank.
I hope you’ll take the time to listen to my webinar for additional information!