Now in its seventh year in Europe, Money 20/20, held June 6–8 in Amsterdam, brought together more than 8,000 attendees spanning the financial technology ecosystem and representing over 90 countries to discuss the intersection of finance and technology. Companies of all sizes were represented, from card networks and large global banks to fintech startups.

The mood at Money 20/20 Europe was buoyant despite a challenging first half of 2023 for the European fintech industry. The halls were packed, and embedded finance companies jostled for space. 451 Research has believed for some time that the embedded finance space is oversaturated, and Money 20/20 only served to reinforce this view. Unlike previous years' events, there was no one unifying buzzword, although generative AI featured prominently. Cryptocurrency and blockchain fintechs were few, and consumer-facing fintech and payments companies, particularly buy now, pay later, were conspicuously absent. This year's event was overwhelmingly focused on business-to-business and infrastructure. Also prominent was a spirit of cooperation — bank-fintech partnerships have become entirely normalized, as have collaborations between card networks and fintechs. A number of banks chose to highlight their partnerships with fintechs. Additionally, many early-stage fintechs were primarily there to pitch to banks for new business.

Everything is embedded

Embedded finance was everywhere at Money 20/20 this year, as was the suffix "as a service." Embedded finance fintechs from across Europe and North America, including Thredd Group Ltd., Enfuce Financial Services Oy, BlueSnap Inc. and Edenred SE, were keen to tout the nearly boundless opportunity they saw in providing financial products and services at the point of need. The customers targeted by these vendors were diverse, running the gamut from vertical software-as-a-service (SaaS) platforms and fintechs to banks and retailers.

However, there was a growing sense that a shakeout is coming amid the decline in fintech funding and the saturation of the competitive landscape. As one founder at the event said, embedded finance is not going anywhere, but the herd will likely thin — as happened with the early 20th-century automotive industry when over 2,000 US car manufacturers producing cars on the eve of the Great Depression dropped below 50 during the downturn. As with cars, embedded finance can be expected to be everywhere in the future.

All signs appear to be pointing to a wave of consolidation in this space. M&A has been increasing, as evidenced by Qenta Inc.'s April acquisition of Apto Payments, Fifth Third Bancorp's May acquisition of Rize Money Inc., and Fidelity National Information Services Inc.'s June acquisition of Bond Financial Technologies Inc. But not everyone will find a soft landing, and failures are inevitable moving into the second half. Either way, the lineup of embedded finance players attending Money 20/20 next year could look very different.

Banks and fintechs bury the hatchet

One thing that was abundantly clear was that the theme of "banks versus fintechs" has been put to rest. The narrative of fintechs threatening to render banks irrelevant, which dominated the early years of Money 20/20 Europe, had completely evaporated. Instead, a spirit of collaboration prevailed.

It was widely acknowledged throughout the show that there are certain things banks tend to do better, such as managing risk, and certain areas where fintechs have superior capabilities, such as creating digital experiences, handling certain aspects of distribution — particularly embedded finance — and making sense of the vast amounts of data that large financial institutions sit on.

Bankers were keen to spotlight fintech collaborations and partnerships. Dutch lender Rabobank announced a partnership with German B2B embedded finance platform Banxware GmbH, which it says will make it easier for established, stable small- and medium-sized businesses (SMBs) to access credit. Similarly, Enfuce announced a partnership with Iceland's Kvika banki hf. for modern card issuing capabilities. This news followed a similar partnership between Enfuce and SEB's backend-as-a-service (BaaS) business unit, SEB Embedded.

Numerous small, highly specialized fintechs were at the show to court new business with European banks. These included New York-based ID R&D, a developer of biometric authentication that helps banks protect themselves against deep fakes, and Toronto-based Boss Insights, an open banking specialist that connects banks with the data of their SMB clients to surface insights in real time.

Fintechs were also selling into other fintechs at Money 20/20. While some of the best-known names in the European fintech world, such as Adyen NV and Revolut Ltd., have a culture of building everything in-house, this year's event showed that this way of doing things is the exception rather than the norm.

The majority of fintech companies are either buying expertise in areas such as know your customer (KYC), anti-money laundering (AML) and regulatory technology (RegTech), or leveraging the capabilities of BaaS providers to access local payment rails or piggyback on banking licenses. Even BaaS providers are partnering widely, with Treezor SAS and Modulr Finance Ltd. both leveraging the card issuance capabilities of issuer processor startup Thredd, for example.

The promise of generative AI

There was excitement at Money 20/20 about the possibilities afforded by generative AI, but also a ripple of anxiety. One bank executive described the possibilities for financial services as "exciting and terrifying." But for the most part, examples of real-world use cases for generative AI were relatively prosaic. Most were around lightening the load for call center workers and relationship managers by automating certain processes, for example, creating more intuitive chatbots.

Generative AI could free up a lot of human capital, HSBC UK Bank PLC CEO Ian Stuart said during a fireside chat. Relationship managers in particular are "like gold dust," and HSBC is eager to relieve them of the most humdrum tasks so they can focus on speaking to customers in situations that require a more high-touch approach.

ABN AMRO Bank NV is running a ChatGPT pilot in its call centers, according to Annerie Vreugdenhil, CCO of personal and business banking. Call centers in banks can "look like dealing rooms," with agents working from multiple screens in order to view different product pages, Vreugdenhil said. ChatGPT can bring up a summary of a product instantly so agents can focus on the client, rather than clicking through multiple screens.

But there were also concerns. For Dirk Mourik, global director enterprise strategy for Ekata at Mastercard Inc., generative AI is a powerful tool for fraudsters and may help entry-level criminals operate in a more sophisticated manner. One example was that ChatGPT could be used in a phishing attack to create the text of a convincing email thread between a bank's CEO and a staffer.

Fintechs and payment services companies should not panic about the threat posed by these newly empowered fraudsters, but they do need to go further than just verifying ID, Mourik said. Identifying unusual behavioral patterns — an uptick in logins on a certain account or a change in transaction activity — has never been more important when it comes to fighting fraud.

^{This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
451 Research is part of S&P Global Market Intelligence. For more about 451 Research, please contact 451ClientServices@spglobal.com.}