Money20/20 Europe is back for another year in Amsterdam. Banking Circle is on the ground for FinTech’s biggest conversations – here are the highlights from day one.

Adoption trumps innovation

One key theme emerged from sessions across the day: innovation is great, but it needs to be accompanied by adoption. In a session focusing on how bank and Fintech collaborators are enabling seamless and consolidated experiences for the customer, Gilles Grapinet, CEO of Worldline, stressed that payment innovation alone is not enough – it needs to be accompanied by actual adoption from users.

“In payments, what really matters is not the latest, fancy innovation, but the latest, fancy innovation that will be adopted by the masses,” Gilles said, adding that it is about changing the payment habits of the “average household”. Some of the trends accelerated by the COVID-19 pandemic – including the move away from cash – have actually moved the needle by changing the way that every day consumers pay, Gilles went on to say.

However, he said that what we have learned from the past is that no single payment innovation has come in and totally replaced what already exists.

“Basically, they are sedimenting and overlapping and we need to manage this,” Gilles said, adding that while growth rates will be different for those innovations that are successful and those that are less so, ultimately there will continue to be complexity from the layering of innovations.

A pan-European payments system?

During a panel session looking at whether the European Payments Initiative (EPI) – which aims to create a unified, pan-European payment solution – can really succeed, Martina Weimert, CEO of EPI Interim Company SE, outlined the pain points that the system would address.

According to Martina, many merchants aren’t fully satisfied with the options available to them currently. They have a number of specific service needs that are not being served, and also want to be able to interact more directly with their customers – all while remaining cost-effective, she said.

“Having one integration is also super important, because right now, merchants are having to adapt to [multiple] specific situations across markets,” Martina explained.

Meanwhile, on the consumer side, users are looking for payment solutions that offer ubiquity, fluidity and security. According to Martina, research conducted by the EPI across more than nine countries in Europe found that 70% of consumers would like to see a wallet solution that would allow them to integrate multiple solutions.

“If you look at the international schemes, you’ll see that that is exactly the model that has had success,” Martina said. Pointing to services such as Apple Pay, she went on to say: “You have to recognise that yes, there is a global trend to more services, more integration and more consumer protection.”

Not all crypto is created equal

In just a few years, crypto has moved from obscure to gaining mainstream significance. But May’s collapse of UST has led to much discussion over the future of stablecoins in particular.

“Not all stablecoins are the same,” commented Stephen Richardson, Head of APAC & Vice President, Product Strategy & Business Solutions at Fireblocks, during a panel session on the impact of crypto adoption by FinTechs on banks.

“I think there was this misunderstanding that algorithmic stablecoins and fiat or reserved-backed stablecoins work the same way, and have the same outcomes. We’ve seen that’s not the case.”

Kirit Bhatia, Head of Business Development, APAC, at Ripple, foresees fiat-backed stablecoins benefitting from the collapse in the short-term. “In the long-term… I do hope that we don’t see the last of the algorithmic stablecoin. I think they are a phenomenal innovation and I think it will be super interesting to see more iterations that withstand those kind of events.”

In the wake of UST’s decline, “regulation is absolutely coming,” said Mishal Ruparel, General Manager APAC at Banking Circle.

“From a bank perspective, we are embracing this and welcoming that regulation is now coming into the market,” Mishal explained. “I think the challenge will be: how do you regulate without stifling innovation? In many ways, it’s been good that it hasn’t been regulated because it’s allowed the market to absolutely prosper.”

However, given the scale and the risk to the financial system today, regulation can only be a good thing, Mishal went on to say.

Cyril Mathew, Stripe’s Head of Business Development & Partnerships – Crypto / Web3, outlined the huge potential for stablecoins: “When done correctly, and hopefully with clear regulation, stablecoins introduce a lot of promise,” he said.

Early on in its crypto journey, Stripe launched USDC pay outs, which Cyril said had allowed them to reach customers beyond the limitations of banking rails. “The use cases are endless,” he said. “I look at stablecoins’ ability to really disrupt how value or money is moved.”

Asked whether banks had been slow to adopt crypto, Mishal said: “The short answer is yes – but for a valid reason.”

Pointing to the importance of trust between banks and their customers, Mishal highlighted a number of challenges for banks in entering the space, spanning compliance, risk, monitoring and infrastructure.

“There’s so much that banks have to do to adapt to the crypto world… every single step in entering this particular space involves regulatory oversight. But as long as we get through that process and are working closely with our regulator, that will embody trust…When we go to our FinTech clients and start providing them with these capabilities, they will trust that we have done the due diligence.”

Banking Circle announces it will support interoperability between Bluecode and Twint

Banking Circle’s Chief Growth Officer Søren Skov Mogensen, and Christian Pirkner, Chairman, EMPSA European Mobile Payment Systems Association, announced that Banking Circle has been mandated by Bluecode and TWINT AG to provide cross-system foreign exchange and settlement services based on EMPSA interoperability specifications between national mobile payment systems, making them the first mobile payment systems to become interoperable with one another. Read more on that here.