Future of Finance – Money and Payments for a World in Transition

What Does the Future of Finance Hold in a Time of Turbulence?

This has been a major topic of discussion at the FT’s Future of Finance conference this year.

The focus of this year’s event hinged around “money and payments for a world in transition” – how the financial sector implements technical changes, how fringe FinTech innovations are driving the industry forward, what financial inclusion looks like, and how companies are navigating the shift in priorities at the heart of global finance after numerous banks collapsed at the start of 2023:

“What does the crisis of confidence in the banking sector mean for Europe’s FinTechs? Do virtual worlds mean big business? And how will Artificial Intelligence (AI) transform financial services?”.

Photo by FT

To summarise the 2-day event (which could fill out multiple blogs!), we wanted to collate what we felt were the most impactful viewpoints and offer our take on them. They were:

• Surviving the impact of a global economic downturn
• The Future of Finance and Crypto
• Metaverse Banking
• AI and Finance
• Is quantum computing the future of finance?
• Inclusivity in Finance
• Consumer behaviours and digital payments

Surviving the Impact of a Global Economic Downturn

Almost every event, talk and point of view was influenced by the fact that we live through a generationally defining and very uniquely drawn-out economic downturn and the importance of financial stability across the international monetary system.

Photo by Daniel Thomas, on Unsplash.

One of the first talks of the event brought together a panel of vaunted speakers – the CEO of Atom Bank, the Global Head of International Expansion at Revolute and the Chief Economist at Vanguard – to discuss this.

For us, a key point of discussion was around financial sector stability, long-term growth, and how firms – especially FinTechs – make money now compared to 10 years ago.

This balancing act depends on how current financial systems are affected by disruption and how the FinTech industry advertises its services. CEO of Atom Bank Mark Mullen skilfully dissected this:

• “How do banks generate most of their revenue?…80% – 85% of the entire show in banking is generated from interest income. Guess what? Banks make money by lending money and by developing a spread on deposits. It hasn’t been an excellent time to generate a spread on deposits.
• As I observe FinTech, I’m looking at the conversation around the 15% left…and let’s ignore the 85% of how we actually make money. That, to me, is almost perverse in strategic terms…I don’t believe FinTech companies are following the money in as disciplined a way as they should”.

The Future of Finance and Crypto

Three events brought together thought leadership around the changing concept and expectations around decentralised finance, NFTs and tokenisation in the financial sector, and the ongoing evolution of Crypto in central banking and capital markets.

The three main talk headlines were:

• Central Bank Digital Currency (CBDCs) – do they have a future in financial markets?
• Combating crime in Crypto.
• Tokenisation and NFTs – what does the future hold?

The opinions shared on CBDCs, regulation, financial stability, and security were the most eye-opening and vital for us.

Claire Conley, Operations & Governance Lead at the Digital Pound Foundation, had significant input on this, especially in legitimising and establishing central bank digital currency and making it safe and understood for customers, giving financial institutions the scope and space to stay ahead of innovation.

“To me, it’s all about innovation…and what is possible with new technologies. If central banks don’t do anything about it…as more and more people look to digital money… it’s all about bringing that lower risk commercial banking to customers…and keeping up with innovation”.

Banking in the Metaverse – Do Virtual Worlds Mean Big Business?

Photo by Hammer & Tusk, on Unsplash.

Even as the metaverse as a concept hits financial sector uptake snags, the idea of metaverse payments and “virtual economies” was fascinating.

Again, regulatory oversight was of chief concern for us, and we know this will impact our clients. The conversations around customer behaviours, emerging opportunities for business, and the idea of “virtual branches” touch everything in finance, from financial interactions to FinTech adoption to banking, audit and more.

The metaverse experiences and finance discussion also had a uniquely demographic flavour. Yemel Jardi, Co-Founder and Executive Director at Decentraland Foundation was evident in his mind about the necessity for metaverse financial services in future:

“It’s about connecting with people and expressing yourself …and I don’t actually believe we need (banking) in the metaverse…but there is a case to engage with a younger audience. 4 million kids born in Europe. 4 million in the USA. In 17 years, they’ll engage with the banking system, and then, you know, who knows!”.

The Intersection of AI and Finance: Do the Opportunities Outweigh the Risks?

Photo by Nick Chong, on Unsplash.

Rohit Chauhan, Executive Vice President of AI & Security Solutions at Mastercard, and Sujata Dasgupta, Global Head (Financial Crime Compliance Advisory) at Tata consultancy, were just two of the incredible speakers on one of the most significant panels of the event, which focused on the impact of artificial intelligence across the financial landscape.

One of the most intriguing moments came when Rohit Chauhan pulled back the curtain on how Mastercard is using AI in their back of the house, specifically concerning the proliferating problem of fraudulent electronic payments, card skimming and selling of card data on the dark web.

Plus how this impacts not only Mastercard but every user and capital market across the entire world.

• “Fraud management is an asymmetry game. Mastercard…are playing defence. For fraudsters to win, they only need to get one fraudulent transaction into the system. For Mastercard to win, we have to stop every fraudulent transaction.
• Without AI unscrambling and solving the problem (of skimmed cards and fraud), it’s dead on arrival”.

Is Quantum Computing the Future of Finance?

Reality vs Potential – this was the main focus of the talk, considering the vast opportunities opened up by quantum computing and how it could impact financial stability and drive economic growth.

For us, the most critical part of the talk was translating the complex science behind quantum and distilling where it will impact finance the most. Ray Johnson, CEO of the Technology Innovation Institute, had this to say:

“Think of the ability to explore simultaneous solutions. This is what makes quantum so powerful. (For example), Monte Carlo simulations…and portfolio optimisation. Supporting “what if” scenarios over a broad space are some of the areas in finance where we’ll see (quantum) applications”.

Building an Inclusive Financial System

To witness how industry leaders see Inclusivity – and financial inclusion specifically – as a global problem to tackle was inspiring.

From improving access to credit and how financial access improves society to how economic systems and capital markets will change in the wake of climate change and the ongoing global financial crisis, it was one of the most important panels of the event.

The section on financial inclusion and overall financial sector access opened our eyes to the importance of economic freedom as a concept in action in a world built on robust financial institutions.

Photo by Greg Rosenke, on Unsplash.

The question of closing the financial gap for those who have precarious access to capital (and tech) was one such point, which Taner Akcok, Head of API Platform and Integration Services at Deutsche Bank, answered:

• “Decision-making must be supported with the right data. If you just rely on historical data, you’re already excluding vulnerable populations.
• With open banking and open finance…the market is becoming more and more integrated, which means the bank is getting more important. Empowering financial institutions and products creates more diverse products…which is creating inclusion for vulnerable people”.

How Are Consumer Behaviours Shaping Digital Payments in 2023?

Finally, the conversation around the digitisation of finance in Europe was one of the best, with many discussions focused on security and expectation setting.

For example, security and API safety within open banking – and how this impacts the end-user – was vital to watch.

A fantastic point by Bianca Zwart, CEO at Bunq, had us thinking more about the decentralisation of customers and their access to financial institutions in the digital age and how incredibly slow legacy banks had been at changing their products to fit the times.

• “35 million people are digital nomads…so you’re seeing a lot of things change. Remote work policies, the housing market is changing…banking can’t stay behind.
• But we do see that happening quite often. Large banks were trying to digitise outdated solutions instead of looking at what people want and need…and how we build an experience around that”.

Photo by NordWood Themes, on Unsplash.

If you want to watch the Future of Finance event, you can access all the talks for free here – registration is free and on-demand, any time.

• If you’re looking for your next challenge in finance, then Send Us Your CV, or Search for Jobs to find out about the roles we currently have available.