As published in Finextra.
Returning from Money20/20, it’s clear that the future of finance is rapidly evolving, with key trends pointing towards a world of open banking, instant payments, multi-rail ecosystems and the growing prominence of stablecoins. These innovations are shaping how we think about payments, fraud prevention, and compliance. Here’s a breakdown of the biggest takeaways from this year’s event.
Open Banking – It’s All About “More”
Open Banking is gaining momentum globally, spurred by regulations like the Consumer Financial Protection Bureau’s (CFPB) 1033 rule in the U.S. and the EU’s PSD3. Open Banking offers more to both consumers and businesses: more services, more payment types, and a more complex ecosystem. This dynamic landscape isn’t just about sharing data; it’s about empowering users to control their financial information while creating opportunities for financial institutions to deliver hyper-personalized services.
With consumer data rights at the forefront, fintech companies are finding ways to develop user-centric solutions that enhance financial experiences while adhering to new regulations. For businesses, the opportunity lies in building agile offerings for domestic and international markets without worrying about how to receive payments—and without compromising data security and compliance.
Instant Payments – The Need for “Fast”
Faster payments are crucial in today’s gig economy, where independent contractors and service providers demand immediate access to funds. Payment platforms are rising to the occasion by offering fast transactions to keep up with these demands. However, instant payments are not just about the speed of transactions—they are more about faster settlement, faster compliance, and faster fraud prevention. This enables a seamless, real-time money movement, which is increasingly critical in a global economy that values convenience and immediacy.
The Reality of Real-Time Payments – Overcoming the Illusionary “Shift”
Many payment systems give the illusion of instant payments through credits, but true real-time payments require a faster settlement. Solutions like FedNow, RTP (Real-Time Payments), and stablecoins are emerging as game-changers, pushing the industry to shift from “instant” processing to actual real-time settlement. As they say, “It ain’t over till it’s over”—only when funds settle is a transaction truly complete.
For financial institutions, this evolution means adopting infrastructure that can handle real-time processes and the compliance considerations that come with them. The move to real-time payments is reshaping operational workflows, requiring firms to address transaction processing, fraud prevention, and risk management complexities.
The Role of AI in Fintech
Artificial intelligence (AI) has long supported fintech innovation, but recent advancements in generative AI (GenAI), particularly large language models (LLMs) and natural language processing (NLP), are driving new interest as non-technical users are also able to take advantage of the technology. GenAI offers fintech companies the potential to streamline customer interactions, improve fraud detection, and generate insights that enhance decision-making.
Unfortunately, open-source AI models are also big enablers for criminal networks as they don’t have to go through a contracting process like companies do to start using the latest technology. We have seen fintech applications being fooled into opening celebrity accounts through deepfakes and synthetic identities. Similarly in medical terms, where the antidote of a virus originates in the virus itself, more advanced AI models built on these open-source models will capture fraud and synthetic identities and answer the question of whether the identity is verified or not.
Going Global – Navigating a Complex Payment Landscape
As businesses and gigs expand globally, payment facilitators (payfacs) are creating cross-border payment corridors tailored to specific countries and industries. This complex environment, also supported by traditional systems like SWIFT, ISO 20022, and International ACH (IACH), enables seamless transactions across borders, although it will come with its own set of regulatory and compliance challenges.
Cross-border payments will evolve to a multi-rail approach to accommodate bilateral trade and regional preferences and requirements. As fintechs build solutions that facilitate these global transactions, they must also navigate varying standards, security requirements, and compliance regulations.
Risk Is Everything, Everywhere, All at Once
As fintechs create these new technologies, risk management becomes increasingly complex, especially around sanctions and AML compliance. Faster payments mean faster potential for fraud, and a multi-rail environment means tighter workflows and stricter service level agreements (SLAs). Transaction screening solutions must evolve to keep pace with these new realities, adopting intuitive interfaces and intricate workflows to enhance risk detection capabilities.
For startups contemplating building in-house solutions, it’s worth considering the regulatory hurdles. AML technology solutions exist because sanctions and AML compliance are incredibly complex, requiring a depth of expertise that many startups may not possess—especially for cross-border operations. Partnering with experienced providers can help fintechs keep up with shifting regulatory landscapes without diverting resources from core innovation.
Looking Ahead
Money 20/20 provided a unique glimpse into the intricacies of today’s payment ecosystem, where transactions happen in just two seconds, supported by an extensive network of technological and regulatory frameworks. As fintech advances, financial institutions must stay agile, compliant, and ready for real-time, AI-powered, and globally connected financial services. The journey toward a more seamless, interconnected financial ecosystem is well underway—Vegas was just the beginning.