Europe’s biggest fintech get-together took place last week – and boy, did it deliver! It was great to see so many new and familiar faces from the fintech and banking space, plus hear their thoughts on our industry. What’s changed is that the conference has become even more diverse, with more crypto exchange, lending and insurance players popping up on both sides of the stage than ever before. What hasn’t is that we left the RAI full of inspiration and new ideas. Without further ado, here are some hot takes on what’s now and what’s next in the world of money, fresh from Amsterdam.
“Open banking has evolved into embedded finance”
It’s official: embedded finance, also known as invisible banking, contextual banking and banking as a service, has gone from buzzword to unstoppable force in the financial services arena. Exhibit A: it was the topic of three presentations, three interviews and not one but two Big Picture Stage panel discussions this year (yes, I counted). No small feat but not surprising either.
The advent of embedded finance – that is, banking-type services tucked into services offered by non-banks – has been prophesied for years. Most notably by venture capitalist Angela Strange who famously predicted that in the not-too-distant future nearly every business will derive a sizable chunk of its revenue from financial services. For those who don’t already, now is the time to give it a serious thought or risk disengaging customers and passing up on a massive opportunity to drive margins. (Sidenote: should you have missed it, positively do watch Angela’s presentation at the 2019 a16z Summit.)
Exhibit B: Apple Pay Later. As you’ve probably heard by now, at its recently held annual software conference the tech giant announced the launch of its own “buy now, pay later” scheme. The latest addition to Apple’s growing suite of financial services products, the feature will allow consumers to split payments of up to $1,000 into four instalments spread over six weeks, without paying interest or fees. With this move, Apple taps into a market estimated to be worth over $7 trillion in the next ten years, as per Oracle’s calculation. That’s double the combined value of the world’s top thirty banks today, in case you were wondering.
But even more importantly, Wired’s Lauren Goode writes, it’s “tapping into positive consumer sentiment.” For one, by taking the stress out of borrowing and managing large purchases or busy spending periods. Two, by letting users track and repay instalments with ease right from their Wallets. According to Creative Strategies’ Ben Bajarin, Apple Later Pay isn’t a margin booster but an ecosystem deepener for the iPhone maker. He told Wired: “It builds more loyalty and stickiness and value to their platforms. Apple doesn’t necessarily make money, but they increase their engagement points with these customers.”
Climate awareness-raising efforts need a serious rethink
Similarly to Finovate Europe, the question of how to make the world a greener place through banking was widely discussed on stage (and off) at this year’s Money 20/20.
On day two, which coincided with World Oceans Day, Communique founder Gihan Hyde sat down with Tony Verutti, global head of strategy and partnerships at Parley for the Oceans, and Brennan Spellacy, co-founder and CEO of Patch to dissect how fintech innovation can help drive climate action. In another panel discussion, Net Positive Labs’ Gustavo Vinacua, Lune’s Erik Stadigh, Tomorrow’s Inas Nureldin, Visa’s Katherine Brown and Enfuce’s Monika Liikamaa shared their two cents about ethically and environmentally sound banking, greenwashing and “selling” sustainability to consumers – especially those of the sceptical variety.
All brilliant talks with excellent points, but what stayed with me the most was how often banks try promoting sustainable lifestyles among customers and fail for one simple reason. That is, the tunnel vision that blinds them to the importance of the hows of climate change communication over the whats. In other words, churning out push notifications about users’ estimated carbon emissions, no matter how detailed or accurate, will hardly move the needle on climate awareness. In fact, one European incumbent cited a customer survey where respondents downright said they saw no point in receiving such information.
No wonder: to most consumers, emissions data is just that – data.
As Gellért Vinnai pointed out in an earlier post, the fact that the UK’s average carbon footprint is 10 tonnes per person per year doesn’t say much to the average banking app user. If they happen to know that the global average needs to drop to under 2 tonnes by 2050 to avoid pushing coral reefs at the brink of extinction, maybe. But even then, without any context all such data helps to increase is the aspiration-action gap. This is exactly why we designed our carbon footprint tracking module in a way that not only helps customers keep track of their CO2 emissions but also understand how their spending habits impact our planet and how they could change them for the better.
The gist? “Show, don’t tell” isn’t the way to go about climate education in banking – “engage, don’t tell” is.
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