Day two of Seamless Europe at the Messe Berlin convention centre in Germany’s capital continued to bring insightful discussions and thought-provoking presentations on the future of finance, technology and innovation. Here’s some of our highlights from the day.
Future of finance
Emmanuel Daniel, founder of The Asian Banker, gave a keynote presentation that explored the future of finance and the potential disruption facing traditional banking systems.
He drew a parallel between the banking industry’s current state and Kodak‘s past addressing how Kodak’s reluctance to embrace digital photography ultimately led to its downfall. This analogy served as a warning to the banking industry about the need to adapt to digitalisation or face potential consequences.
When the product doesn’t change, nothing changes
Daniel pointed out that the banking industry, despite becoming more digital, still clings to outdated infrastructure and products. He highlighted the risks faced by banks when public perception, especially on social media, can quickly affect their stability and reputation.
The future of finance will be shaped by chaos, nor purpose or order.
He also expressed scepticism about the success of CBDCs, citing various challenges, including regulatory issues, lack of programmability, and resistance from traditional banks and taxpayers.
I’ve spoken to the governance of central banks and countries where CBDCs already live. And the message that I get very clearly is that CBDCs don’t work.
The impact of AI
During the morning sessions, we also hear from fintech expert Linas Beliūnas’ on the profound impact of artificial intelligence (AI) on the financial sector. Beliūnas began by highlighting the remarkable growth of AI-powered applications, particularly GenAI which became the fastest-growing consumer app in internet history in just two months.
He emphasised the transformative potential of AI, citing OpenAI’s contributions as phenomenal and predicting its influence on the financial industry.
GenAI genie is out of the bottle
Beliūnas addressed common concerns about AI’s impact on employment, acknowledging fears of job loss but pointing out that the reality is different from the headlines. He encouraged a more nuanced perspective and emphasised the importance of gaining clarity to navigate the evolving landscape effectively.
The discussion also delved into the importance of AI in finance – it has the potential to unlock approximately $1trillion in additional value for banks annually. This, he said, outlined the need for a holistic approach to AI implementation, spanning different layers of infrastructure, to reap maximum benefits.
Beliūnas also discussed notable applications of AI in finance, including Bloomberg GPT and SpinChat, which are shaping the industry by providing specific financial insights. He reserved special attention for Apple, a tech giant with the potential to revolutionise finance due to its vast user base and resources.
Shaking up the security ecosystem
Höskuldur Hlynsson, chief risk officer at the Central Bank of Iceland, served up a keynote speech focused on the importance of risk management, exploring the vulnerabilities and threats posed by recent blockchain hacks. He also delved into the evolving landscape of cybersecurity, where advances in technology have led to increased complexity and data ubiquity, making traditional security measures less effective.
Hlynsson drew parallels between historical security practices, such as fortifications and defensive structures, and the modern challenges faced by financial institutions in protecting their digital assets. He highlighted the ongoing ‘arms race’ in cybersecurity, where new threats continually emerge, prompting the need for advanced defences.
He advised financial institutions to assume that some breaches will occur and focus on building multiple layers of security with an emphasis on security maturity. Hlynsson also pointed out that AI could enable individual attackers to mimic the capabilities of large hacker groups, making it essential for organisations to stay ahead in terms of security.
The attackers will go for the easiest targets when they see vulnerabilities they can exploit.
Fintech investment trends
In a panel discussion at Seamless Europe, industry experts gathered to delve into the current state of the fintech market. Led by moderator Leitha Matz, the conversation revolved around popular investment trends in the region and offered insights into what the future holds for fintech.
The panel featured Jorge González-Iglesias Baeza, founder and CEO of Gibobs, Roger Berger, head of fintech at BNP Paribas, Joerg Landsch, head central corporate VC at Deutsche Bank, Frances Simowitz, CEO of Weve Accelerator and Gerasimos Papaleventis, VP treasury at FIMBank plc.
These experts shared their perspectives on the current landscape of fintech investments, shedding light on emerging trends and opportunities in the sector.
Key takeaways
- Niche markets: Fintech companies, especially those coming from abroad, may find success in targeting niche markets within the US due to the sheer size and diversity of the market.
- Regulation and licensing: Fintech companies often face regulatory challenges when entering new markets, where state-level regulations can be complex. Obtaining banking licences can be challenging and may require partnerships with established banks.
- Global expansion: Many fintech companies aim to expand globally, including entering the US.
- Interest rates: The discussion highlighted the impact of interest rates on fintech and how higher interest rates may affect funding and business models. It was noted that fintechs must adapt to changing interest rate environments.
You need to focus much more on the problem you’re solving and how it monetises
- AI and deep tech: AI and deep tech were seen as promising areas for fintech innovation. AI can enhance fraud detection, customer service, and operational efficiency. Deep tech, including quantum computing, was also mentioned as having the potential to impact the financial industry.
- Valuations and investment: The availability of capital and valuation dynamics in the fintech sector were discussed, with some emphasis on focusing on sustainable business models and monetisation strategies.
The European VC market is better than its reputation
