Banking-as-a-Service is not dead and other lessons from Fintech Meetup

What a few days we had in Las Vegas this week for Fintech Meetup. My voice (and liver) is still recovering. When we sold the Fintech Nexus events business to Fintech Meetup last summer, we had high hopes for this event. It certainly delivered.

It was great to catch up with so many old friends and meet quite a few new people. The energy was high, there was more optimism than I expected, and the general mood was that fintech had turned the corner and better times were ahead.

Having attended Fintech Meetup last year at the Aria, having it at The Venetian this year was certainly a vast improvement. Everything was on the same level and it was convenient jumping from the keynotes to the track sessions to the expo hall. And the meetings took place in one large section of the expo hall.

Meetings. Oh yes, there were meetings. I am not sure of the official total but there were supposed to be over 45,000 meetings taking place. And judging by the vast size and activity in the meetings area I would not be surprised if we exceeded that number.

This is what over 1,000 concurrent meetings look like (hat tip to Kim Gerhardt)

Here are some random thoughts from my time at Fintech Meetup.

Banking as a Service is alive and well – there was a lot of talk about the regulatory crackdown on BaaS banks and the layoffs that have occurred at many of the fintech intermediaries. The consensus from most of these conversations was that BaaS has a bright future but it is going to look a little different. Banks have already become stricter, making it more difficult for startups to launch new products. There are few banks right now that are interested in taking on a new fintech with a small team that has raised less than a couple of million dollars. Those entrepreneurs will have to get more creative or raise more money. But for established companies there are many banks looking to work with you today.

Instant payments is slowly making headway – Mark Gould, the head of FedNow, proudly proclaimed the growth in their network with well over 600 banks now on board. RTP is also growing as the use cases become more prevalent. But we are not at a tipping point yet as ACH still dwarfs the volume running through these networks. We were reminded that it took ACH a couple of decades to gain ubiquity; it will be much faster with instant payments.

Venture capitalists are optimistic but cautious – the venture capitalists in attendance were optimistic that the worst days of the fintech winter are behind us. Good companies are getting funded right now but the VCs still have the upper hand when it comes to driving reasonable valuations. And fintech entrepreneurs are well aware of this dynamic as they continue to focus on driving to profitability.

Do we even need venture capitalists? I need to mention the keynote with Ankur Jain, the CEO and co-founder of Bilt Rewards, who was interviewed by Steve McLaughlin of FT Partners. He holds the contrarian view that most fintech CEOs should avoid taking venture capital unless absolutely necessary. He said there is often a misalignment of interests, and it can be difficult to make the right decisions that are in the best long-term interests of the company. It is a little ironic from someone who raised $200 million recently from some A-list VCs. But it was a conversation topic at the event nonetheless.

Fraud remains top of mind for everyone – there was a lot of talk about the fraud challenges that are rising exponentially now that fraudsters have access to generative AI. One panelist commented that fraudsters have all the latest tools and don’t need to worry about compliance, making keeping ahead of them challenging. But many in the fraud space maintain we are winning the fight right now.

Have I mentioned we have AI? Yes, throughout the exhibit hall, there were dozens of companies touting their latest solution optimized by AI, built from the ground up using AI, or at least an AI-based solution. While I am sure many of these solutions are great, the AI hype was palpable. The regulators are woefully behind here because we need a framework where an AI model can safely give advice and we are not there yet.

I should also mention my keynote session with Kareem Saleh of Fairplay AI and Renaud Laplanche of Upgrade. It was around fairness in lending and how technology today allows for continuous improvements in lending models with real-time feedback on how your model is performing when it comes to approving protected classes. Tweaks can be made on the fly as you adjust your credit box.

I recorded three podcasts at the Fintech Nexus booth. Look out for interviews with Chris Dean of Treasury Prime, Christina Riechers of Square Banking and Tommy Nicholas of Alloy coming out soon.

Christina Riechers of Square Banking
Interviewing Christina Riechers of Square Banking at the Fintech Nexus booth
  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.