Money2020 Europe Recap
By Chris Oosterveen, consultant Synechron Amsterdam
Co-authors are: Rick Bonhof and Sietse Hulzenga
After a week we are still recovering from our 3-day Money2020 adventure – what an exhilarating ride! With this recap blog we want to spread the energy and inspiration by sharing some of our key learnings and eye-openers. This year's Money2020 Europe edition was in Amsterdam with impressive key-note speakers like Dan Ariely and Steve Wozniak. All 3 days were packed with inspiration, engaging speakers and lively panel discussions. See this 6-minute video for an impression of the event.
7 Key-learnings and Eye-openers.
The Fear of FATBAG (Facebook, Apple, Tencent, Baidu, Alibaba, Google) is Materializing!
Did you know that some big Asian cities like Shenzen are on their way to becoming cashless cities, with WeChat & AliPay being the only method of payment? Also, that Alibaba is currently the biggest SME-lender in China? Or that Grab (a ride-hailing app) is on its way to become one of the largest FIs of Indonesia? The growth numbers are incomprehensible. The new (financial) service extension rate is at a level we’ve never seen before. Their stepping-stone model for geographic expansion is very shrewd (by focusing on Chinese citizens abroad first) and is a sensible counter-strategy of incumbents – we haven’t heard it…
The Bank of the Future is Not a ‘Bank’ – It will be a Financial Platform - Hallelujah!
Ralph Hamers, CEO of ING, rocked the show in his opening speech. CEO Andy McGuire of HSBC had the audience watching his every move. Additionally, CEO Carlos Torres Villa of BBVA had a speech full of extensive information on the future bank; creating a Platform is the future! The Open Banking model is being embraced by all top banks – with a shared vision of banks as “platforms” for all financial services of their clients (BBVA/ING: “We want to support people in making live decisions instead of selling products.”) A single place for all your payments, overviews, insurance & pensions as well as all cool, innovative “apps” that will keep the customers within the “eco-system” of the bank. Sprinkle it with some magic fairy-dust of A.I. and you can service your clients for all financial needs. Whether these banks will really “walk the talk” remains to be seen - especially when it comes to opening up to superior services of competitors – but it was hard not to go along with this hallelujah-atmosphere.
The War in Payments is full on – but the Banks Have Already Lost…
The Payment Fintechs were all-over the event with the biggest stands, prime-time key-notes and energetic panel discussions. Visa & MasterCard tried to stand out and had quite compelling stories to tell on innovation. But one group was clearly absent in this area; the banks! The war for (e-)commerce and C2C payments is full on, and consolidation is about to take place to make a stand towards the AliPay and AmazonPay of this world – but banks will not be part of this new reality.
Having a Pet-project Innovation Centre Doesn’t Make You an Innovator!
The number of new “Beyond Banking” initiatives, accelerators, POCs, innovation centers and programs at the event were uncountable. All were brought with passion by C-level bank executives, trying to convince the audience that their company is leagues beyond their competitors. Some speakers (e.g. Leda Glytpis, CIO of Qatar National Bank and Andy McGuire of HSBC) were quite skeptical in this – making the argument that these “pet-projects” will almost never result in real bank disruption: “We don’t do POC’s” and “We are not an invention company”. Followed-up by a vivid warning to start-ups, who should be wary in working for or with big FIs, especially when the funding comes from Innovation Centre-budgets - “basically a type of marketing budget” - and there is no clear sponsorship on C-level for this new direction envisioned.
Blockchain Has Passed the Top of the Hype Cycle – Get Ready for the Post-hype Era of Distributed Ledger Technology (DLT)
The event was filled with creative stands from CoinWallets, new AltCoins and DLT-tech providers – but they were surprisingly empty of visitors. The CEOs speeches also surprisingly lacked the Blockchain topic - and when the topic was addressed to them in Q&As and panel discussions, the answers were lukewarm to sceptic. Have we passed the top of the Hype Cycle? How will the post-hype era of DLT look like? We saw some cool demos of DLT-applications (e.g. in Trade Finance) but whether these will be fully adopted by the industry (and in what time) remains to be seen.
AI & Data Analytics – Falling of a Pink Cloud?
“I am very frustrated with A.I. as it has not lived up to its promises so far, as implementation proves to be very, very difficult” said Carlos Torres Villa of BBVA. “I don’t see a direct application of AI yet in our front offices” said HSBC Andy McGuire in a main stage of Q&A. Even some of the big Data-based Fintechs (e.g. SME lender Kabbage) agreed that A.I. is not the magic tool in solving all our problems. Followed up by the confession that for loan assessments the clearest indicators are still transaction history and credit history, with extra data sources (such as social media data) only adding small gains in model-reliability.
The main theme within Artificial Intelligence right now seems to be how to store and manage your data - e.g. BBVA is becoming a (personal) Data Bank to manage your data stored at the bank - a new business model?
Next to this, a lot of research is now in the ‘explainability’ and ‘bias’ of models. “Models need to be able to explain why it did not give a credit or why someone is flagged as fraudulent”. According to Pedro Bizarro (Chief Data Science Feedzai) “Models need to be ‘fair’ by using biased toolkits, forever verifiable, allow for anonymous usage and should be transparently intelligent (to be able to explain its outcomes). To get there and to allow for widespread usage, banks need to adjust their culture, and put trust in a machine instead of people!”
Putting all this skepticism aside, we also saw some very cool and inspiring applications of A.I./Data Analytics in personalization, loan applications, transaction monitoring, call center-tooling and virtual assistants. And who stole the show - again? Amazon Alexa – with cool new applications, like ordering train tickets for Virgin Trains. We are still believers!
Our RegTech Accelerators are Ahead of the Market!
We tried to attend every program-item with Regulation or RegTech in it – and almost succeeded!
Key learning #1: RegTech is hot! With lots of FI-representatives hungry for tech solutions to ease their regulatory burden. Key learning #2: Our accelerators are quite ahead of the market. We have a clearly defined view on what RegTech should be about and have the accelerators to back this up. Some simple chatbots were shown, some GDPR tooling, some software for regulatory reporting. But, there is nothing like our KYC Remediation 2.0, FRTB or Intelligent Control Testing accelerators. It was mostly talk on what RegTech is and what it should bring. Even the Angel Investors/ VC gurus did not have a clear view on the topic yet, and saw little investment opportunities yet. Happy to see that we are all in now and ready to help our clients.
To Close Off We Want to Share Some Interesting Quotes for Inspiration and Reflection:
- "It is surprising and painful that after more than 50 years of research in A.I. there is still only one group who can make human-like intelligence – and this in only 9 months!" (Steve Wozniak, Apple co-founder)
- "The only way to really build trust for banks is to show that you are willing to act against self-interest in favor of client’s financial well-being, and I have seen very few examples in this" (Dan Ariely – famous behavior economist & co-founder of InsurTech Lemonade)
- "We never envisioned to be a FI, and I’m still very reluctant in it – but we are focused on happy drivers to make clients happy, so we feel inclined to do what FIs have failed to do till now and provide basic services to this previously unbanked group" (Nadiem Makarim from Go-Jack)
- "We are not here to take over the world - we just want to ensure that our [Asian] users can have the same experience in all places they are travelling or working" (Ashley Go, Head of WeChat Pay EMEA)
News, tweets and good stuff.