Observations from Money20/20
By Alex Johnson
The numbers I heard were 13,000 official attendees and another 7,000 or so unofficial hangers-on. So roughly 20,000 … 20,000 fintech enthusiasts all walking around the hallways of the Venetian Hotel.
And honestly? Those numbers don’t do justice to the experience.
The venue was absolutely packed, and both the sessions and networking events were overflowing with interesting people and ideas. Here are a few things I picked up:
1033 Rulemaking … Finally!
The big news from Money20/20 was the Director of the CFPB, Rohit Chopra, taking the stage to give an update on the bureau’s rulemaking on Section 1033 of the Consumer Financial Protection Act, which will obligate financial institutions to share consumer data upon consumer request.
You can read a copy of the Director’s remarks here, but a couple of things jumped out to me:
- The CFPB is moving fast on this. There’s quite a process to go through before the bureau’s rules on 1033 can be finalized, but based on the timeline that Director Chopra laid out, it will be finalized by early 2024. That is fast and suggests that the bureau is trying to get this buttoned up before the 2024 Presidential election.
- Focused on transaction accounts, to start. The CFPB isn’t going to shove banks into an open finance future all in one go. It’s going to be incremental. The first iteration of the rules will cover what Director Chopra described as “transactional accounts” – deposit accounts, credit cards, digital wallets, prepaid cards, etc. This is a broader focus than what they have mandated through regulation in the UK, but it is also missing some important categories like non-credit card lending, investing, and payroll.
- More competition is the goal. You can really tell how much Director Chopra’s time at the Federal Trade Commission shaped his philosophy on regulation when you read his remarks on 1033. A lot of it is framed around competition and the role that consumer-permissioned data sharing can play in promoting competition and enabling consumers to “break up” with their banks more easily. This seems to be, in the view of the CFPB, the chief virtue of open banking.
- Rent-seeking middlemen are bad. Along those same lines, Director Chopra also made it clear that the CFPB does not want to see the infrastructure for open banking wind up in the hands of a few large firms. Instead, it wants open banking to be enabled by a “decentralized, open ecosystem”. This would seem to be both a shot fired at legacy gatekeepers like the credit bureaus and newer infrastructure providers like Plaid, Finicity, MX, and Akoya.
- Screen scraping is coming to an end. The Director’s remarks make it abundantly clear that screen scraping is coming to an end. APIs are more secure and reliable and basically better in every way. The CFPB is signaling very clearly that it would strongly prefer for everyone in the ecosystem to adopt them and end the practice of screen scraping.
Dealing with a Hangover
I had the pleasure to speak on a panel at Money20/20 with Dan Kimerling and Ally McCloskey – “How Early And Growth Stage Capital Is Flowing Today”.
The central question of the panel was how are early-stage VCs and founders navigating the fundraising process right now?
It was a great conversation (minus the brief interruption we had when what sounded like a Scottish marching band started playing right behind the stage), and my main takeaway was that the fintech ecosystem is dealing with a hangover, two to three years in the making.
Between 2019 and 2021, money was just too readily available. A lot of tourists – founders looking to get rich quickly and generalist VC firms sitting on massive piles of cash – wandered into fintech and screwed stuff up. A growth-over-everything mindset took hold and encouraged all of us to overlook some bad behavior (one example – the alarming amount of first-party fraud that has been tolerated by neobanks in recent years).
And now we are all suffering through the hangover.
On a related note – the amount of crypto this year was FAR LESS than it was in 2021. Last year, there was literally a crypto guy who was detained by law enforcement agents at Money20/20. This year? Crypto was much less visible, and the crypto stuff that was here was all fairly boring and institutionalized.
This makes sense (crypto is far less exciting when no one is investing in it), and it is probably for the best (as an industry, crypto desperately needs to grow up), but it made for a less exciting event, if I’m being totally honest.
A Quiet OCC
One thing I heard from a few different folks is how unusually quiet and unresponsive the OCC has been in recent weeks, including this week when a lot of other regulators were very actively engaging with the industry.
I’m not sure what this means, but given all the focus at the OCC recently on BaaS, one does wonder if they have something cooking.
Something to keep an eye on.
BaaS & Embedded Finance
Oh, and speaking of BaaS, there were a lot of companies talking about Banking-as-a-Service and embedded finance at Money20/20.
Two specific announcements caught my eye:
1.) Marqeta for Banking. Marqeta announced a slew of new APIs to enable its customers to offer banking products and features, including demand deposit accounts (DDA), direct deposit with early pay, ACH with Plaid integration, cash loads and fee-free ATMs, bill pay and instant funding capabilities. This move puts Marqeta more directly in competition with BaaS platforms such as Unit and Synctera.
2.) Adyen Capital and Accounts. Adyen announced a similar expansion, adding cash advances, business bank accounts, and card issuing for its platform and marketplace customers. This is, from my perspective, an overdue adjustment to bring Adyen closer to parity with its most significant competitor – Stripe.
Invest in Female Founders and Founders of Color!
One of the objections that I heard from a few VCs, after I wrote about how VCs should be doing a lot more to invest in female founders and founders of color, is that they would love to, but they can’t source enough deal flow of startups with underrepresented founders. It’s a pipeline problem.
I spent exactly 20 minutes walking around the exhibit hall at Money20/20, and I managed to meet half a dozen diverse founders working on a range of interesting problems in and around fintech. The good folks who organized the content at Money20/20 (👋 Zach) managed to find a bunch as a part of their awesome “America’s Got Access” pitch competition, which was won by Zirtue and Remynt, both of which have diverse founding teams.
If you have a dearth of female founders and/or founders of color in your pipeline, you’re not trying hard enough. It’s that simple.