Money20/20 Europe brings tokenisation, AI and digital transformation into focus

Money20/20 Europe has returned to RAI Amsterdam in the Netherlands this week, bringing together financial services professionals from across the globe to discuss the biggest topics in the industry and to highlight banking technology’s brightest innovations.

Money20/20 Europe returns to RAI Amsterdam in the Netherlands this week

As outlined by Money20/20 chief strategy and growth officer Scarlett Sieber in her opening remarks on Tuesday morning, the conference is this year centred on the theme of “human by machine” which, reflected in over 200 sessions, “will examine our relationship with AI and technology and help us learn how to bring out the best in each other”.

With a level mix of big banks and fintech forerunners filling the floor, day one’s agenda set matters into motion with a dive into central bank digital currencies (CBDCs), digital modernisation journeys, tokenisation and, of course, AI.

Going global

Given that “start-ups have always been at the heart of what we do at Money20/20”, according to Sieber, it seemed fitting that one of the conference’s opening panels, chaired by Techleap leader Prince Constantijn van Oranje of the Netherlands, sought to highlight the qualities necessary for companies to go global.

Joined by OKX president Hong Fang and Nicola Ebmeyer, co-founder and CEO of market intelligence platform Gain.pro, the panel aimed to shine a light on “how to internationalise your business” and “how the business environment is developing in crypto and fintech”, as asserted by Oranje’s opening remarks.

During the discussion, Ebmeyer noted that for fintech specifically, “what’s more important than ever is to have a differentiated value proposition”, and that “mega trends” such as AI “always open up the door for disruptors, new opportunities [and] new players entering the market”.

“I think with any technology, you should start first with pain points, and then see how technology can solve for them and not the other way around,” she added.

Likewise, Fang emphasised the importance of local alignment within expansion efforts, stating that “we need to understand different communities have different needs and different local subtleties”.

She continued: “We want to make sure that there’s enough transparency and visibility, and part of it comes from having a local team being there in compliance with local regulation, being available for the local community and building on that in-person trust and relationship.”

Ethics and AI

In an attempt to keep up with the breakneck speed of industry development, incumbents and new entrants alike continue to embrace technology’s leading trendsetter: AI.

Hosted by CMS partner Charles Kerrigan, Tuesday’s Unicorn GPT session attempted to define the AI tools most worthy of the finance industry’s attention. For this, Kerrigan was joined on stage by Clara Durodié, CEO of Cognitive Finance Group; Vidya Peters, CEO of Datasnipper; and Jamie Hutton, CTO of Quantexa.

Setting the pace of the discussion, an interactive poll launched at the start of the session revealed general concerns across the audience that the ascent of AI is inherently tied to the depletion of skilled job opportunities.

In referencing the practice of job outsourcing that propelled the rise of the so-called “Rust Belt” across the USA in the 1960s, Peters shared her view that “AI is going to displace jobs at an astronomically faster rate”.

“You’re really going to see that happen over the course of the next few years, not decades,” she emphasised. “I really want us to be thoughtful about how we’re using technology and how we’re focusing our people to work on higher value parts of the value chain, and doing that proactively before it’s done for you.”

This point raised Durodié’s views on the importance of championing AI tools that are ethically tuned. “Knowing what you know about the technology you are building, or buying, would you like your family to be subjected to it?” she set to the audience. “We are so behind on the safety and security points, that’s something which keeps me up at night.”

The matter of ethics in AI is largely dependent on the data cemented into its foundations. For Hutton, whose company specialises in data and analytics software, “the key here is to have a trusted data foundation”.

He explained that although large language models have a “brilliant understanding of the world”, their pitfalls come with failing to understand businesses’ internal data.

By means of a solution to this, Hutton encouraged “entity resolution” and the practice of grounding models in both public and private data.

“You need them to be able to reference the actual information that they are making their decision on,” he pointed out. “If you’ve got that as your starting viewpoint, then the large language models have much more data to go on, but also they ground their responses in your actual data.”

Breaking the cycle

Touted as “the tale of the century”, banking innovation continues to follow a particular pattern whereby the supposed limited agility of incumbents’ legacy systems enables fintechs to pioneer new digital developments independently, before they are ultimately brought back into the fold of big banks through a strategic purchase/partnership.

Digital transformation at big banks was in the spotlight on day one of Money20/20 Europe

A panel hosted by Michael Anyfantakis, chief architect and head of product for Capital One UK, on Tuesday sought to discuss this notion and to establish fresh ideas and routines for banks’ in-house technology endeavours.

Anyfantakis was joined on stage by Michelle Prance, CEO of NatWest’s digital bank Mettle; Thea Loch, head of group optimisation for Lloyds Banking Group; and Bankers Like Us author and FinTech Futures‘ resident thought provocateur, Leda Glyptis.

Launching the discussion, Glyptis stated that “the way we learned and the way we changed up until now was way too resource intensive”, which she emphasised “won’t take us to the next bit”.

Developing this, she cited one of the most dramatic realisations of her own transition from working at a bank to working at a fintech was “how fast I could get things over the line”.

“The first time I had an innovation role in a bank, I had to persuade everyone and answer every question from a zero knowledge basis,” Glyptis shared with the panel. “The second time [in fintech], I had a lot of data points from having done it before, I had existing partnerships, I could short circuit and speed up certain conversations exactly the same as when you’re building software on the outside.”

Adding to this sentiment, Prance spoke of her own journey from bank to fintech and back. “It was amazing,” she stated, speaking on her fintech experience. “You could have an idea on Monday, and you would have released it on Wednesday, and by Friday, you were like come on, please take it out because it’s not going very well. And you knew that because you were on top of the data and you could see that.”

For banking incumbents, she made a firm recommendation that “you do need people that are agitated enough to actually drive through change”, as well as innovators that are prepared to “walk in our customers’ shoes”.

For Loch, one of the primarily challenges in innovating the “incredibly complex beast” of banking remains the fact that “you have to change everything”.

“Whether that’s the culture, the technology or layers of the stack, it’s complex to get there,” she continued. “It’s quite tough, but I think where we’ve done well with respect to innovation that I think has worked is in putting it very close to the business.”

Embracing the tokenisation era

Tokenisation is gaining increasing traction within the financial industry. Just this month, for example, the Depository Trust and Clearing Corporation (DTCC), Deutsche Börse’s Clearstream and Euroclear released a joint blueprint intended to increase institutional adoption of tokenisation and digital asset securities.

In an attempt to carry this conversation forward, Money20/20 Europe brought together figureheads from across the industry to analyse whether the technology’s ascent is finally marking a new era for money movement and asset management.

Joining moderator Anthony Day, head of strategy and marketing at Midnight, on stage on Tuesday afternoon to discuss this was Ryan Rugg, head of digital assets at Citi Treasury and Trade Solutions, and Alisa DiCaprio, chief economist at R3.

According to Day’s opening remarks, “we have yet to see what you might consider to be mass adoption, or the prevalence of tokenisation in digital assets in financial services”.

“It’s taken longer than I expected, to be honest, to get to the point where we are in this space,” replied Rugg, who stated that Citi’s pursuit of true atomic settlement through the tokenisation of bonds, equities and other assets has been driven largely by the direct requests of its clients.

“We’re not doing it because we just think it’s fun. It’s actually what our clients are requesting,” she told the panel.

Speaking on the wider array of initiatives across the industry, and specifically those of CBDCs, DiCaprio highlighted the fact that this form of tokenisation is still settled through traditional systems, as opposed to the erroneous belief that it’s in fact settled on the blockchain.

“I think that’s actually really important for a number of reasons,” DiCaprio said. “It’s good because it means that it’s integrating into the existing infrastructure. It’s not taking it over.

“But it’s also a way to move us slowly towards the future. You don’t want to, all of a sudden, fast change everything. So I think that’s pretty cool.”

When questioned by Day as to why an institution would look to tokenise in the first place, DiCaprio reinstated her belief that “tokenisation does a lot of things much more efficiently than we can do today”.

“Because the existing systems are built based on paper. And you can only upgrade a system so many times before it becomes totally outdated. And I think, with tokenisation, what we’re doing is we’re not upgrading again, we’re expanding.”

“If you have tokens, you can transfer them anytime you want,” she continued. “You can’t do that with a traditional system. You can only make that so much faster. But with blockchain, you can make it active 100% of the time, 24/7, 365 days a year, and you can also connect all kinds of different systems.”

Interestingly, Rugg disclosed to the panel that Citi’s current point of focus for tokenisation addresses the “most simplistic asset”: cash.

“Starting with cash, if we can tokenise that into the ERC20 token, there’s no reason it won’t be fungible for other tokens in the future,” she said.