Carolin Horst
Let's look back onto Money20/20 so far
Real people. In person. Live. And all in the beautiful city of Amsterdam. Money20/20 Europe was one of the must-see events the year and it’s clear to see why.
Held between June 7 and 9, its goal was to ‘fuel thousands of conversations, catalyse hundreds of business deals and shape the future of Fintech’, and without doubt they certainly succeeded!
To put it mildly, the event was immense. There were over 4,000 attendees from 1900 companies (who booked 7,100+ in-person meetings) across the banking, payments, and tech industries with more than 100 presentations made by ‘global leaders to new challengers and from tech giants to scrappy startups’.
It’s hard to imagine any other event that can bring together so many global fintech players (up to 90 countries were present, though the majority were European).
The event’s main agenda was ‘The European game is on’ and featured five core themes, ‘back end is out, front end is in’, ‘champions are out, interoperability is in’, ‘acquisition is out, distribution is in’, ‘proprietary is out, standardization is in’, and ‘ownership is out, permission is in’.
There was a lot to get though!
Three days in the spotlight
The first day alone was packed with a ton of highlights. There were talks about open banking, the consumer experience, frictionless transactions. Even a discussion on personal and organizational risk with astronaut, Tim Peake. That (payment) innovation may be great, but user adoption must be part of it. Also, can a pan-European payments system succeed? The answer was yes, but there’s plenty of pain points to deal with to get there (such as single integrations and wallet solutions that enable the integration of multiple solutions). Then there were discussions about the rise of crypto and how not all stablecoins are created equal.
Day two started just as big. Metaverse big. There were discussions about the future of a digital euro (and specifically, central bank digital currency), payments orchestration, and what could be the role for banks and fintech’s in the metaverse. Crypto also remained a big talking point, especially regarding its use in the metaverse and how it still hasn’t reached the mainstream. There were also interesting talks about the customer experience and the customer journey.
Andrew Maat
Vice President International Markets, Testbirds
“My favorite quote about the importance of customer experience: ‘It is proven by fact, that the more seamless it is, that the more customers will buy. The moment, the customer will experience the brand will be also a moment when there’s an exception to be managed. So, the focus should be 1) on the front-end at the time the customer pays, where everything is expected as simple as possible and 2) at a moment where there is a problem – and is has to be super simple to solve it.”
On the final day, we heard discussions about diversity in fintech (for example, only 1.5% of companies were founded by women, and only 6% of CEOs are women), that regulators need to be more forward thinking around pre-empting technologies like Buy Now Pay Later (BNPL) because new and innovative payment or credit technologies are constantly being developed. That blockchain is all about the free transfer of values (building on the free transfer of information). And a big discussion on the what’s next for BNPL (more on that below).
There was, of course, much more. Digital identity was certainly a big topic. As we said, there were over 100 presentations by some truly world-class speakers from many of the biggest organizations! A clear point that shone through was the need to embrace innovation and strive to create solutions that bring true meaning to their user’s lives.
What then created the biggest buzz for us? Ultimately, the one topic that kept coming up (yes, even over the metaverse, which is still seen as very marketing-focused) was BNPL.
Testbirds reactions
“My favorite quote about the future of omnichannel in the DeFi, open banking, embedded finance world: “A lot of choice, a lot of value for customers in way that is personalized to me, in a way that I want to interact. For banks it’s about not limiting yourself to the channels of today, whether it’s metaverse, whether it’s something else in the future. Be ready to unlimit yourself!”.”
Andrew Maat, Vice President International Markets, Testbirds
Our biggest buzz theme of the show
If you’re not aware, BNPL is all about short-term financing that is (often) interest free. Somewhat like an instalment plan, BNPL is offered by a business (specifically those in e-commerce) as a way for you to spread out your payments and purchase without needing a credit card or loan. So, rather than spend 700 Euro in one hit on a new fridge from Amazon, just pay a monthly fee of 55 Euro until it’s all paid off. That makes it clear why merchants also like BNPL and why it’s a great method of enhancing the overall customer experience.
For online shopping, BNPL is becoming increasingly popular, especially with (as noted by Fintech Magazine) ‘consumers that are ineligible for credit cards, live in countries with low credit-card acceptance and availability, or simply mistrust of large financial institutions’. Realistically, it’s a great way for people to get what they want now without immediately paying, taking out a loan, or using a credit card and paying off high interest rates. There’s a reason BNPL is very popular with Gen-Z and Millennials!
But there are challenges, especially when it comes to regulators and new legislations.
This was discussed in one of the final day’s sessions, called ‘What’s next for BNPL’.
The panel consisted of financial expert and author of ‘Go Fund Yourself’, Alice Tapper, Chief Customer Officer at Zopa, Clare Gambardella, and Zip UK Country Manager, Ruth Spratt.
When asked where they see the BNPL space today, Ruth stated, “It’s a very exciting space. It is a growth space. It is a product that customers love to continue to love and continue to use in their millions globally […] it’s not going anywhere.” There’s certainly no argument there. It is also being embraced by companies as large as Amazon and, as was announced at the 2022 Apple Worldwide Developers Conference a day before Money20/20, by Apple itself with their new Apple Pay Later service, which will launch as part of iOS 16 later this year.
Clare continued, though with a slightly less optimistic tone: “We are seeing a situation where a proportion of customer outcomes is not as positive as we would want it to be. And I think that’s really due to issues around affordability, around the transparency of the agreement that the customer is entering into, and also the tools and the education that customers have to manage debt at the point that they take it on, in what can be quite a fragmented environment […] Buy Now Pay Later is a potentially useful product, it’s not going anywhere, but it’s probably time for a Buy Now Pay Later 2.0, which starts to bring what customers love into a more regulated and structured credit model, which is easier for them to manage.”
This led to questions about regulations and affordability checks. One question asked whether BNPL providers should look after the financial wellness and wellbeing of their customers? As Alice answered, “I think that’s unrealistic. And so that’s the role of regulation, in my view. It’s a healthy counterbalance to the potentially lax healthy incentives of Buy Now Pay Later firms and also online retailers as well.”
When it came to a person’s credit history and whether lenders receive a true overview of a person’s credit record, Clare thought that “…affordability checks have two really important roles to play. The first one is making sure that the credit that the customer is taking is affordable. […] the second important thing is that by affordability checking not being done and then credit record reporting not being done in a coherent way, it dilutes the accuracy of credit reports for other lenders. So, when people are issuing credit cards, issuing loans, etc., they don’t necessarily have a full picture of the customer’s credit. That makes it easier for customers to not only take additional BNPL debt, but also to potentially take on other forms of debt that they might find difficult to service.”
Testbirds reactions
“Affordability checks have to work in order to protect consumers from dept they can’t serve – and this needs proper testing. Especially the fact that we can test with real testers, worldwide in real environments and especially with real bank accounts is a huge advantage here – which BNPL vendors can’t cover with their own accounts.”
Oriane Baratte, Senior QA Project Manager, Testbirds
What then should such legislation focus on? Clare felt that there were three key things to focus on: “…affordability, standardised credit reporting, and protection for consumers who get into difficulty.”
Alice then added: “I’d also want to just challenge regulators in general to be a little bit more forward thinking around kind of pre-empting technologies like this because Buy Now Pay Later isn’t new [and] this isn’t going to be the last innovative payment or credit technology and I think it’s important that regulators are a little more on the ball around anticipating how these products might evolve.”
No easy task with the pace of technological innovation.
Overall, the entire session helped solidify our belief that BNPL will grow exponentially in the coming years. And that means increased products and competition. Today, (globally) the industry is worth US$100 billion, but it’s expected to keep growing and become a substantial challenger to both credit cards and digital wallets. Even Mastercard and Visa are entering the BNPL space.
Not only is BNPL now preferred over credit by younger consumers, but it’s also expanding across industries. Look at Klarna, a Swedish BNPL provider (and the biggest in Europe), who recently partnered with Expedia to provide a ‘travel now, pay later’ service. But they aren’t the only ones. ‘Book now, pay later’ is being seen across the travel industry, even for rental cars. Imagine the potential for everyone else.
E-commerce will certainly be driving BNPL into the mainstream, but it will, conversely also drive more people into using online shopping. For those who want (or need) something ‘now’ but don’t have the money at hand (or who would rather spread out the payments), it’s an effective and convenient way to purchase what they want.
In fact, as access to credit becomes more inclusive, democratic, and decentralized, there’s little doubt that BNPL will become a (if not ‘the’) standard method of payment. As seen with Amazon and Apple, we’re already reaching the point that organizations don’t need banks when it comes to their pay-later offerings.
One thing is clear. Industries of all shapes and sizes must get ready to capitalize on this new trend.
Testbirds reactions
“My outcome of the ‘What’s next for BNPL’ session was that there will definitely still be exciting developments, especially in terms of regulations of the BNPL ecosystem towards BNPL 2.0 – bringing what customers love today in a more regulated and structured credit model, which is easier for them to manage.
If strong affordability checks and consistent credit record recording will become part of industry regulations to protect consumers from getting dept that they can’t service – this needs proper testing, from real people, with real bank accounts, across the world.”
Carl Fryer, Country Manager UK, Testbirds
A run for your money
This year’s Money20/20 felt like a step back to normality. There was a clear optimistic feel in the air. Not just of people getting together but in what the industry will be doing in the coming years – with much of it being led by digital innovation.
We’re definitely excited to be a part of what’s to come!
Testbirds expectations
“Money20/20 showed that we were at the right place with our crowdtesting services and can provide real value to companies on the ground. Visitors came to our booth saying ‘we are struggling with our testing (e.g., transaction testing) and need support to keep the quality level of our products at the level our customers and users are used to. We really need to talk because you guys are doing something we can’t do with the resources we have – but really need’.”
Farah Dilla, International Sales Manager – Benelux & APAC, Testbirds
Yes, we’ll be going to Las Vegas, baby!
Here’s looking forward to Money20/20 Europe in June 2023 and Moneys20/20 USA in October this year …
