Money 20/20 EU: Which comes first, tech or banking?

During the session Kjellén announced two new partnerships with Revolut and Dutch payments provider Adyen.

On the topic of open banking, Kjellén argued that it’s a thing of the past. “It's just that nobody cares about open banking. If you ask the consumer they will say ‘I have no clue, it was just very convenient to switch account.”

Hogg pointed out that people are often focusing on the wrong aspects of open banking: “We should talk about how it is actually working for people. How are people being surprised and delighted because they can do things they couldn't? They feel more in control of their data snf look at what the next challenges are.”

“In financial services the world changes but the needs stay the same. We deserve and feel we should be protected,“ commented Hogg on the continuing role of payment companies like Visa. “So the core of anything in payments has to be the investment in resilience in cybersecurity and in fraud.”

Shifting to cryptocurrency, Hogg posited that this comes back to consumers who increasingly “desire to be participating in this new asset class, and to create wealth. I mean, many people can't buy a house until they're in their 40s […]So the need to create wealth is always going to be with us. The question is, how do we, as a payment mechanism, enable that in in a robust way?”

Hogg furthered: “It's not for me to judge whether or not they should, they should invest. It's for us to try and make sure they do it in the best way possible.”

Kjellén, stating that he provides the “boring plumbing” platform’s perspective, said “you don't need to care about the consumer wants right now. We want to power the pioneers, we want to see innovation, we want to see more competition. We want to see consumer choice.”

The creator-first economy - Only Fans

An unusual guest for a fintech conference, Only Fans, made an interesting choice for a follow-on panel. The subscription platform has been made famous for adult content included on its site.

Commenting on their position at the conference Keily Blair, chief strategy and operations officer at Only Fans stated that the “reason we're here is because a lot of people talk about Only Fans, and we end up often being headline news. There is a misconception about our brand, but it's on us to come out and talk more about who we are.”

Explaining how the Only Fans’ creator-economy business model differs from other approaches, Lee Taylor, chief financial officer argued that their model is fundamentally unique.

“If you look at Netflix,” Taylor noted, “they're a large corporation responsible for curating, creating the content of the shows the films competing in a very saturated market with TVs, Amazon and everyone competing for the people at home. You’re TV viewing, essentially. Only Fans is a product of our creators. We have over two million creators on the platform, who would give complete freedom of expression to as long as it abides by the terms of service, which is a heavily policed area for us.”

However, as Only Fans is mostly known for a lot of the adult content on their platform, Taylor expressed some of the difficulty faced as a result. As Only Fans is mostly known for the adult content on its platform he stated that “not every day is easy. There are a lot of financial institutions who obviously aren't ready to embrace that creative economy side, maybe seeing more of a side hustle rather than genuine business. It makes things hard, and that's why we just have to be a bit more innovative in our thinking.”

“I think anybody who says all press is good press has never had bad press,” Blair observed.

“Last year in August, we kind of broke the internet when we said we were going to change our Acceptable Use policy. That change actually never happened -t was a proposed change,” lamented Blair. “Pretty much as soon as it was announced, we heard this incredible swell of voices from our creator community, but also from the fintech community, from the banking community, from the technology community, or coming to us and saying, ‘hold up, guys, are you sure this is the way you want to go?’”

Regarding the same incident, Taylor added: “Many of our partners came to us to help us take down those barriers and challenges we were facing. Ultimately, if we can provide that end-to-end service to our creators, the hosting the payments and support, then, because we're a creator first economy, we had to protect them, it became very clear very quickly that there was a very strong support for what we are and what we do.”

Reaching profitability as a digital bank

Anne Boden kicked off the afternoon sessions by the challenges that come with making digital banks profitable, something Starling has quite famously achieved. During the session, Boden emphasised that building good relationships with customers was the core of their business.

“We’re coming up to our first financial year of profitability. It's so important considering what's happening in the listed markets at present. If you look at the public market, there is a huge differentiator between those fintechs that are profitable, and those that are not. We don’t have to raise money now because we generate our own capital.”

Touching on Starling’s expansion plans, as the bank begins to move into the Irish market and beyond, Boden stated: “Starling is an organisation that we want to list and try on an international basis. Our international expansion outside of Europe will be by allowing other banks and financial institutions to use our banking platform.”

In this context Boden made reference to their Engine product, continuing to emphasise the position of technology-first, stating that Starling’s vision “will be an international global tech company, that just happens to be a bank”

“We've always decided that we would pursue profitable kinds of relationships, rather than just buying customers. If you just go out and buy customers, and send $10 to open an account, you get a customer base that's not profitable, it’s actually draining your resources. If you pursue that strategy you may have ended up with more customers, but you will never achieve profitability.”

When asked if they would move into cryptocurrency, Boden said “maybe but not yet.”

She explained: “At the moment, crypto is being used by fraudsters. I think we're in a phase at the moment where it is very dangerous, and what we have is a lot wallets being connected directly to payment schemes. I think that we'll move on, and I think when you're interviewing me in a couple of years’ time, I'll be telling you about how we are much more involved in the space. But at the moment, my principal concern with crypto is that we have to protect our customers.”

On a potential Starling IPO, Boden stated that it would likely be next year or early 2024.

What’s next for PSD3?

Hakan Eroglu, global open banking and open data lead, D&S, at Mastercard led one of the final sessions of the day, examining how PSD3 might be able to improve on PSD2.

Nilixa Devlukia, founder and CEO at Payments Solved commented: “There are some challenges, but PSD2 has really set the groundwork for PSD3. Obviously those challenges we have seen need to be addressed.”

Offering an inside look at the process, Charlotte Crosswell, chair and trustee at Open Banking explained: “Convincing nine banks to open up to one standard, and getting that to work seamlessly has been a challenge. Every week I hear of something that’s not quite going right and we have to pick up on those nine banks. We anticipated being further along in the path by now.But we have seen a lot of growth in the last few months.”

Giving a consumer perspective Duncan Barrigan, chief product and growth officer at GoCardless said that he did not expect PSD2 to work perfectly, rather it’s “like a steam train, it takes time to build momentum, but I do think we are now reaching a tipping point.”

Devlukia raised the question over whether open banking, open finance and open data should be included in PSD3, or whether each should receive their own framework. She furthered with a question over whether we can wait for these pieces of regulation considering how long it has taken PSD2. She argued that “if within Europe we wait for open banking regulation, we are going to fall far behind the curve of competitors from across the globe.”

Barrigan countered: “I think if you look back to the planning, people thought this was going to be payment providers disintermediated by merchants, directly connecting with all these perfectly standardised APIs. But I think we’ve seen with things like the remit of the OBIE, we have seen standardisation pushed over quality.

For Crosswell, in order to move forward on this topic we must ask: “What is the purpose and how does it serve consumers and small businesses?”