Embedded finance, regulatory dynamics dominate Money 20/20

“Fintech is dead; long live fintech” is a tidy synopsis for the prevailing mood at Money 20/20 in Las Vegas in late October.

Enthusiasm among the more than 10,000 attendees seemed particularly high for models like embedded finance and instant payments, as enabled by emerging vehicles including the new FedNow real-time rails.

Reflecting on Discover’s recent “Global State of Fintech” report, Tom Brown of venture capital firm Nyca Partners suggested that fintech “needs a rebranding to deal with the animosity in D.C.”

Concern with fintech’s image didn’t seem to extend to business fundamentals, however. Enthusiasm seemed particularly high for models like embedded finance and instant payments, as enabled by emerging vehicles including the new FedNow real-time rails.

Credit union representation at the annual showcase was relatively sparse, perhaps because the California and Nevada Credit Union League’s REACH Conference was taking place at the same time a few blocks down the Las Vegas Strip. But those representing the movement made an impact.

Beverly Anderson, nearing her first anniversary as president/CEO at $29 billion asset BECU in Tukwila, Wash., made a compelling case for the credit union difference during a panel on digital remittances. While many fintechs started with a mission of financial inclusion, in Anderson’s view, “When valuations got to 20X it became about making money for a lot of them.”

She contrasted this to credit unions’ inherent dedication to members’ financial wellness, noting “our members still visit us in our branches because they value the interaction.”

Another session on disruption may have surprised attendees who discovered it featured a credit union joining forces with a fintech to do the disrupting.

Prizeout Founder/CEO David Metz explained how he pivoted his startup from a trivia gaming app to an adtech marketplace when he discovered the pain point of providing cashouts to winning players. While he admits to having been unfamiliar with credit unions prior to researching his alternatives, credit unions comprise the majority of Prizeout’s business three years later.

Ami Iceman, chief research and digital experience officer at $7.7 billion asset MSU Federal Credit Union in East Lansing, Mich., saw a win/win in connecting members to local merchants for digital gift cards, many of which are purchased for personal use.

Prizeout, which is in the process of rolling out white-label services through 20 credit union partners, is part of MSU Federal’s Reseda Group portfolio.

The one session highlighting credit unions included Chad Ritchie, chief information officer at $1.3 billion asset Ventura (Calif.) County Credit Union, who believes credit unions’ aversion to self-promotion remains their primary barrier to broader awareness.

Carrie Forbes, CEO at League Data, is in the midst of a core conversion to a cloud-based system poised to modernize the shared infrastructure of 40 member credit unions across Atlantic Canada. She sees open banking—for which the regulatory framework remains pending—as a key opportunity for credit unions to level the playing field with the handful of large banks that dominate the Canadian landscape.

Ritchie agrees that a modernized backbone is essential to changing consumers’ banking perceptions. “You don’t have any reaction if your Amazon or Netflix app updates every week,” he says. “We start warning people about changes six months in advance.”

Regulation was a recurring theme across Money 20/20’s agenda, with a healthy dose of current and recent government officials offering refreshingly candid views. For instance, former FDIC Chair Jelena McWilliams lamented the roadblocks she faced in modernizing the agency’s approach to oversight, citing her inability to attract the needed tech talent.

“For technologists, the cost of entering the regulatory sector is high in terms of time and opportunity,” she says.

Players in the digital asset space seem united in a desire for regulation as a catalyst for market clarity, as a means to differentiate from less-reputable players, and to stem the exodus of valuable innovation to overseas venues.

Multiple speakers noted that crypto has largely avoided Washington’s “hyperpartisan” dynamic, enhancing the chances of legislative progress.

GLEN SARVADY is managing partner at 154 Advisors.