Crypto, DeFi take center stage at Money 20/20

More than 8,000 industry leaders convened in Las Vegas last week for the 10th annual Money 20/20 USA, a four-day event focused on all things payments and fintech.

My two biggest takeaways from the conference:

1. People are ready to return to in-person industry events.

2. They’re hungry to learn more about decentralized finance (DeFi) and cryptocurrency.

It’s always interesting to see which companies “go big” with their marketing dollars and exhibit hall presence. This year, the crypto and DeFi players placed their tokens on the table and exerted themselves as the event’s dominant presence—quite a change from their marginal visibility at the last in-person show two years earlier.

“When we walked in and saw all these Bitcoin signs I thought, ‘wait, are we at a crypto or a fintech conference?’” says Irina Berkon, chief financial officer of MetalPay, a mobile payments app that fashions itself as cryptocurrency’s answer to PayPal. “It’s great because everyone who wasn’t into crypto is now thinking, ‘how am I going to integrate that into my product?’”

MetalPay CEO Marshall Hayner embraced the role of DeFi evangelist at a series of sessions, suggesting the technology remains in the “AOL stage” of its lifecycle. He sees compelling synergies between DeFi and “TradFi” as the crypto crowd calls established financial systems. He champions the notion of their interoperability.

It’s an interesting twist for a movement whose initial aim was to cut out the middlemen—financial institutions—from financial services. Hayner acknowledges his is not yet a consensus view, but he sees it as the natural path to the mainstream—much like Bitcoin’s increasing integration with establishment players.

Buy now pay later

Another hot topic, buy now pay later (BNPL), was also well represented at Money 20/20. A McKinsey & Co. survey unveiled at the conference found that 30% of BNPL users would have either bought less or not completed a purchase at all if the installment service had not been offered.

Another 39% indicated they simply would have used a credit card. These results provide fodder for both sides of the BNPL divide: those claiming the product generates incremental sales from a unique cohort of consumers and others concerned it cannibalizes credit card activity.

At a session provocatively titled “Buy Now, Default Later?” the founders of customer acquisition platform Klickly and fraud prevention tool Kount each postulated that artificial intelligence will further refine BNPL offerings, better identifying transactions likely to incur losses. 

Meanwhile, an online retailer of fitness supplements worried about overwhelming consumers with choices at the point of sale (“You can spend as much time picking out your wallet as your product”) and introduced another segmentation challenge: “I don’t want to make a BNPL offer to someone who’s willing to pull out their credit card now and move on.”

The timeless topic of trust in financial services also figured into the Money 20/20 dialogue, with some new twists. The aforementioned McKinsey survey also confirmed that banks and the leading card networks continue to generate the highest consumer trust, although disruptors like Amazon and PayPal are closing the gap. Lesser-known fintechs lag further behind.

Nonetheless, Goldman Sachs Co-Head of Consumer and Wealth Management Stephanie Cohen shared new research indicating that three-quarters of consumers believe banks have no impact on their financial success. (Both presenters used the term “banks;” I’m hopeful credit unions fare better.)

Two neobanks focused on underserved populations—each of which partners with a traditional bank for infrastructure services—offered fresh perspectives on the nature of trust.

“Every community has hidden or explicit differences that banks need to provide for,” says Rob Curtis, founder of the LGBTQ-focused startup Daylight, offering estate planning and travel insurance as examples of products with hidden disconnects to fundamental LGBTQ needs.

Mike Render of Black/Latinx bank startup Greenwood stressed the importance of generational wealth. “I don’t just want to make it cool to bank on your phone, I want to educate people to become the cornerstone of family wealth.”

During a Wednesday panel, former acting Comptroller of the Currency Brian Brooks brought the conversation full circle. He opined that the most obvious risk to DeFi’s progress is KYC (know your customer) compliance, but he believes it can be solved through similarly distributed means, such as new identity solutions.

By 2030, he would like to see finance advance to where e-commerce is today, relative to its starting point in roughly 2005.

A conference that began by visualizing what the world of money would look like in 2020 seems a proper venue to track such progress.

GLEN SARVADY is managing principal at 154 Advisors.