3 key themes from Money20/20 and what our experts have to say about them
Comperemedia’s Andrew Davidson, Chief Insights Officer/ SVP, and Mark Miller, Associate Director of Insights, Payments, attended Money20/20 last week (Oct. 27-30) and are sharing the shows’ big themes, as well as their expert opinions on what they mean for the wider payments industry today and into the future.
Stablecoin, not cryptocurrency
There has been a shift in the narrative from a broader discussion of blockchain and cryptocurrencies to the future and applicability of stablecoins.
Case Study: Libra
Uncertainty regarding the future of Libra has led key backers, including Visa, Mastercard and PayPal, to leave the Libra Association and take a ringside seat, at least for now. In a Fireside Chat at Money20/20, David Marcus, Head of Calibra, the digital wallet associated with Libra, was undeterred by the recent political firestorm regarding the currency and heralded the constructive feedback he has received from regulators. Part of the political problem, according to Marcus, was that Libra has been positioned as a currency rather than a new type of payment rail that can be leveraged by the 2.2 billion consumers who use Facebook, Instagram, WhatsApp and Messenger every day. He also expects to see banks join the association as it matures – in a different panel that included John Muller, Calibra’s Head of Legal, it was reported that many of the payments partners who left did so after facing threats of enhanced regulatory scrutiny even on their non-Libra business if they remained.
What we think:
“Libra is a bold and admirable initiative to transform the global economy but it will continue to face significant headwinds – both regulatory and political – that will slow its development considerably. Regardless of what happens to Libra, it will popularize the concept of a stablecoin backed by sovereign currency, and accelerate the idea of crypto currency as a type of payment rather than a wildly fluctuating investment vehicle. Some form of cryptocurrency will eventually gain traction, with younger consumers particularly interested according to Mintel research. Right now it seems unclear what adoption at scale will look like.” – Andrew Davidson
“As Marcus seemed to admit on-stage, the way Libra was introduced to the public may have resulted in more scrutiny than it deserved. But that should have been expected, given the hubris many equate with big tech companies, and the fact that Mark Zuckerberg has lately had a reserved seat in front of Congress to address concerns around corporate overreach and user data. The biggest roadblocks for Libra are the privacy element – rightly, people just do not trust Facebook, nor do they believe that the giant will be on the outside of Calibra – and the potential restraints on monetary policy that a global stablecoin could create. Nevertheless, I’d bet on the eventual success of Libra or something like it, but am prepared for a lengthy, highly-regulated, and potentially limited rollout.” – Mark Miller
Humanization not personalization
The concept of personalization has evolved to one of humanizing digital interactions through more authentic, relevant experiences powered by AI.
Case Study: Amazon Pay
In a keynote presentation, Patrick Gauthier the head of Amazon Pay, promoted voice as more natural and faster than other forms of communication. He argued that the capacity for voice to be “in the moment” can fuel commerce and build brand loyalty. Amazon is looking for new and novel ways to connect with customers using voice and Gauthier announced a partnership with Paymentus, a paperless billing provider, to enable customers to pay their utility bills using Amazon Pay and Alexa. Gauthier shared how nearly 17 billion utility bills were sent last year with most recipients (70%) not enrolled in autopay because they want control over what they pay and when. With Amazon Pay and Alexa, customers retain that control. Gauthier’s message was that customers are using voice and he challenged financial services brands to get on board.
What we think:
“Smart speaker ownership is now up to 33% according to Mintel research and this announcement will clearly benefit some consumers. However, utility bills are not the most exciting area and I’m skeptical that this development alone will move the needle in a significant way. Given Apple Pay’s emergence as the leading player in US mobile payments, Amazon’s dominance in voice – along with its ecosystem of services – is likely to make it the only legitimate challenger in the longer term, as Amazon Pay becomes further embedded into the digital lives of consumers.” – Andrew Davidson
“A key component of Alexa is the perceived ability to interact conversationally, like with another human. That Alexa could actually initiate “natural” conversation, and provide financial advice or reminders in the process, is a next step in humanizing PFM. However, banks and third-party apps have tried this proactive approach through emails and push notifications, and often come up short. Alexa alerting me about spend or reminding me to pay a bill I’m already planning to pay could be more annoying than helpful. With that said, it’s nice to see the innovation and the push to be more than just a device or service provider. Ally Bank and Discover have both heavily promoted their efforts to treat people as more than just a customer, lenders working with alternative credit portray individuals as “more than just a credit score,” and at Money 20/20 we saw Jason Wilk, CEO of Dave, describe how their application and onboarding was designed to mimic normal human interaction, and Dee Choubey, CEO of MoneyLion, explain how their subscription model was based on actual profile of their target customer.” – Mark Miller
Credit visible not invisible
Initiatives to expand access to credit to the so called “credit invisibles” are finally becoming a reality for consumers.
Case Study: American Express and Nova Credit
American Express announced a partnership with Nova Credit, a cross-border credit reporting agency, to target the reported 2.5 million newcomers entering the US each year, many of whom have good credit histories back home but have to start from scratch when they arrive in the country. The partnership enables newcomers to apply for American Express credit cards using Nova Credit’s “Credit Passport” which is a tool that takes the established credit histories from 5 countries – Australia, Canada, India, Mexico and the UK – into consideration and converts them into a profile that can be used by US lenders.
What we think:
“As someone who immigrated to the US nearly 2 decades ago and even published an article about my personal credit card experience back then, I’ve long considered this to be a missed opportunity for card issuers. Advances in technology and access to new data streams means the card industry can and should do a better job of going beyond the FICO score in understanding the complex nature of the financial lives of consumers, including those new to the US, and targeting them with relevant products.” – Andrew Davidson
“A huge trend in financial services over the past several years is financial inclusion, or more broadly, how to extend credit opportunities to those left behind by the traditional banking system, as a result of a poor or nonexistent credit history.
“Through this partnership, American Express is not only offering credit cards to customers who previously would have been declined, but also giving them the ability to continue to build their credit score in their new home. Newcomer challenger cards from Petal, Deserve, and TomoCredit have aggressively moved into the space, so it’s nice to see one of the bigger names take note. While immigrants with established credit may be the easiest segment of the financially underserved to address, it is hopefully a solid step towards creating more inclusive products for the rest of the pool.” – Mark Miller