Money20/20 takeaways: Instant payments lead the way amid industry optimism and AI remains hot topic

As the lights dimmed on Money20/20 Europe, we witnessed another successful event filled with fruitful conversations and unique insights from industry leaders. The show concluded with a notable takeaway: instant payments are seen as the biggest opportunity for growth. 

This is based on a survey conducted by payabl. at the event where 27% of industry professionals felt that instant payments will drive the most revenue growth in the payments sector, outpacing digital wallets, reward schemes, and other growth areas. 
 
Optimism filled the room, as 82% felt excited about the progress the industry is making. Yet, concerns in the industry still prevail. 
 
Instant payments: The next big thing 

The fintech space is smarter than ever, with a focus on making consumers’ lives easier. Instant payments are central to this effort. In a world where speed and convenience are king, the ability to transfer money instantly is transformative.  

We’re seeing instant payments being adopted in both developing and developed economies. However, governments still hold significant influence, and in some areas, regulations may slow down the adoption of instant payments. In the U.S., this regulatory barrier is a notable obstacle to widespread adoption.  

AI is the talk of the town 
 
It was a key theme during Money20/20 last year and this year is no different. Nearly half (48%) of the survey respondents indicated that AI has had the most significant impact on the payments sector in 2023. This trend is set to continue, with respondents expecting AI to remain a major influence in the coming year.  

Businesses are now integrating AI into their daily workflows. From fraud detection to data processing and customer service chatbots, AI is viewed as a means to transform how financial services operate. 

Mixed feelings around cash payments 

Despite the rise of contactless and digital wallet payments, there is still some disagreement across the industry as to whether cash is on the verge of vanishing. 45% of respondents believe that cash payments will disappear within the next ten years, whereas 55% think cash will continue to be in circulation.  

If instant payments are set for significant growth, and CBDCs continue to be explored, it’s likely broader uncertainty about the future of traditional payment methods will continue. 

From competition to cooperation 

It's a win-win situation for everyone as the landscape evolves towards a preference for co-opetition over competition. This trend is evident across the financial services sector, where collaboration and strategic partnerships are increasing. 
 
The show floor echoed this sentiment - payment professionals want to see more partnerships. At the show, it was mentioned that the relationship between banks and PayTech companies is positive; however, the majority believe there is room for improvement. Enhanced partnerships could lead to improved technology, better cross-border payments, and superior services for consumers. 

Regulatory challenges remain 

Despite the enthusiasm around growth opportunities, the industry is not without its challenges. Regulation emerged as the primary barrier, with 41% identifying it as the biggest obstacle to growth. Over the past year, we’ve seen a tsunami of new regulations and updates, such as PSD3, CESOP, and the EU AML/CFT Package, which added complexity to the regulatory landscape.  
 
While regulation was named as the top barrier to growth, respondents also echoed the need for ‘better’ regulation - suggesting improvements are required to ensure alignment with real-world scenarios, rather than a dislike for regulation overall. As embedded finance and instant and cross-border payments grow in popularity, regulation is essential to protect customers. However, enhancements could create a better balance than excessive regulations, according to industry professionals. With the right balance, regulations should be viewed as a friend, not a foe. 

Looking ahead 

Despite the challenges, there is a strong sense of optimism about the future of the payments industry. The aura at the show was positive and leaders expressed excitement about the sector's progress and evolution over the past year. Europe is seen as the leading region for payments innovation, followed by APAC, the UK, Latin America, North America, and Africa. 

With this in mind, we are entering an era where instant, secure and convenient payments are becoming a minimum expectation. To maintain this momentum, simplifying regulatory frameworks, educating teams on the practical implications of regulations, and fostering collaboration and open communication between regulators and the industry are crucial for driving this progress and meeting the evolving needs of consumers and businesses.