By Brandes Elitch
CrossCheck Inc.
The organizers of Money20/20 (MTT) said, "In four years, MTT has fundamentally disrupted the status quo, and established an entirely new and groundbreaking scale and standard for payments industry events." This might sound like hyperbole, but here are statistics to back it up:
But there's more: I counted over 400 exhibitors in the exhibit hall, divided between booths and kiosks, and a Startup Row featuring 60 presenters. Indeed, the show dwarfs "traditional" cash management and payment shows I have attended over the last 20 years.
There were 20 separate tracks, over two full-day and two half-day sessions. I don't have the space to list all the tracks, but here are several topics offered, some of which might surprise you:
You'd better have walking shoes on because the show is really big. Also, the Venetian Hotel, where it is held, is cavernous, which is why this show probably has to take place in Las Vegas, as there aren't many other places that could handle the logistics of something this size.
The physical layout was surprisingly compact: sessions were on four floors connected by escalators, so you didn't have to walk miles to get to the next session; you could take the escalator. Kudos to the organizers for getting the ergonomics right at the show. Sometimes at a conference in Vegas, you never leave the hotel/conference center. This was the case here. Distances are deceiving; it is only a 15-minute taxi ride to the airport, but to walk from the Luxor to the Venetian's exhibit hall takes a full hour.
Excitement was in the air, as reflected in commentary, such as this statement from a source who requested anonymity: "We've entered the most profound era of change for financial services companies since the 1970s, when we got ATMs, mutual funds and discount brokers. No firm is immune from the coming disruption, and every company must have a strategy to harness the powerful advantages of the new fintech revolution.
"The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world. The most contentious conflicts will be between startups that are completely re-engineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology and processes."
As you might expect, the focus was on mobile POS, mobile P2P, gateway vendors, digitizing B2B, mobile wallets, the Internet of Things and, of course, blockchain.
John Sculley (yes, that John Sculley, "Cola expert" and ex-Apple CEO) commented about the need for this conference. He said that while most attendees are used to working in "linear times," that is, slow and incremental improvements, we are now living in "exponential times," meaning "rapid and tumultuous change," which will "pass by cautious, short-term thinkers. … This is an amazing time to be an innovator – a disruptive, adaptive, innovator in fintech."
Sculley added that the next five years is the right time for machine learning and artificial intelligence, which will unlock the potential creditworthiness of middle income Americans and disrupt existing bank loan systems to create credit for consumers and businesses that is lacking today.
Sculley also said he was "pushed out" of Apple because he "refused to license the Mac technology," and today he "works with talented entrepreneurs to help them build a company, work on strategy and be a rainmaker." At the conference there were approximately 5,642 other people who would describe themselves the same way, so this space is getting crowded. It reminds me of the definition of inflation as "too much money chasing too few goods."
Not all of the entrepreneurs at this conference will be successful. Some will have a product that is designed to be a part of the core infrastructure of another company, such as a bank. Examples would be startups in the areas of banking technology, fraud detection, analytics, credit scoring, machine learning, open-source, etc. A few years ago, these entrepreneurs were heard to say, "We'll beat the banks," which became "We'll work with the banks," which became, "We want to be acquired by a big bank." A large bank with a next-generation technology can gain market share and brand recognition quickly with the right acquisition.
Then there is the other kind of startup, which stands independently (for example in the areas of regtech, insurtech, wealth management, alternative lending, and payment and remittance processors). These are services-oriented firms with advanced technology not available elsewhere. There are some early stage success stories here, such as PayPal and Uber and Airbnb, which solved a pain point for consumers and made payments easier too. Everybody wants to be the next one of these.
One person couldn't possibly see everything at the show, but here are some interesting things I observed. I liked:
I also liked that I was able to finally meet a potential partner I had been wanting to meet for a few months; I also met other interesting people there just by sitting next to them at lunch or during a session.
Fortunately, there was minimal focus on bitcoin, which I describe as "not a currency, but a speculative commodity." As you remember, bitcoin went from $1 to $1,200 in one year, then, post the Mt. Gox bubble, went to $200, and is now around $600. Incidentally, there are hundreds of digital currencies. If you don't think this is a speculative commodity, I have a bridge to sell you.
At about $3,000 a ticket, plus the cost of staying in Vegas for three nights, this is a significant expense. If you want to attend next year, submit your request to your boss now for next year's travel budget. My guess is that this entrepreneurial space is going to grow more next year, even beyond the $12+ billion dollars in venture capital investment last year. This is about solving pain points for the consumer, not necessarily pain points that are focused on the payment per se, but where the payment is an important part of the experience or transaction.
We have a pretty efficient market in many respects today. Swiping a card at the POS is pretty darn efficient, EMV notwithstanding. Writing and mailing a check with a stub is pretty darn efficient, and I definitely don't want at least a dozen monthly payments to be ACH debited by someone else from my bank account at their convenience – I want to pay when I want to pay.
How many new ways do we need friends to send money to each other, beyond the dozen or so that we already have? But there are some markets that are still inefficient, the medical business being an obvious one. There is room for improvement. Some big successes will take us by surprise, as many of the early adopters did; they seem so obvious now we ask, "Why didn't I think of that?" That is the exciting entrepreneurial spirit of our economy, thank goodness, and that is why people attend Money20/20.
Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has been a cash management practitioner for several Fortune 500 companies, sold cash management services for major banks and served as a consultant to bankcard acquirers. A Certified Cash Manager and Accredited ACH Professional, Brandes has a Master's in Business Administration from New York University and a Juris Doctor from Santa Clara University. He can be reached at brandese@cross-check.com.
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