Money 20/20 News and Insights

Money 20/20 News and Insights
Posted: Nov 7, 2016
Comments: 0
Author: Paul Castner

CSCU was in attendance and found the following topics of interest to credit unions

Editor's Note: CSCU was on the scene at this year's Money 20/20 in Las Vegas.  Billed as the world's largest payments and financial services innovation event, Money 20/20 attracted 11,500 attendees this year while drawing more than 400 fintech vendors.  As our experts saw it, a few themes emerged such as APIs, blockchain, bots, and the critical need for financial institutions to think and act differently to keep up with the changes in technology.  Following is a recap of some of the sessions and announcements with links to relevant articles.

PayPal and Facebook Partner to Offer Payments in Messenger

PayPal said it is making it easy for PayPal customers to link their PayPal accounts to Facebook and Messenger at PayPal checkout. Messenger users can order a pizza and pay using PayPal from within Messenger. PayPal can also be used to pay for items from Facebook Marketplace. And PayPal customers in the U.S. will also be able to get notifications in Messenger, including receiving receipts for PayPal transactions neatly in one place.


Co-op Joining Early Warning Network to Offer Zelle to Credit Unions

Zelle was launched by several large financial institutions, including Wells Fargo, Chase and BofA, to compete with Venmo by offering a P2P payment service free to banking customers. There are currently 19 directly connected financial institutions, including First Tech CU. Co-op announced that it has formed a partnership with Early Warning, the parent company of Zelle, to offer the service to its member credit unions by the end of 2017.


IBM Pay Launched

The newest form of mobile payment was introduced at Money20/20 by IBM. Its selling points are discounts and loyalty. The solution includes Watson, IBM’s artificial intelligence system. It is assumed that Watson will find the best deals and know which card to use to maximize rewards.


Google Announces Hands Free Payments

Google recently launched the pilot program for its "Hands Free" payment system in certain stores across the San Francisco Bay area. To use the system, users must install the Hands Free app for Android and iOS, where their photos and credit/debit card information are collected. While visiting a Hands Free-enabled business, users' apps will sync with a point of sale system over Bluetooth Low Energy or Wi-Fi. When they need to pay, they simply tell the cashier that they want to "pay with Google." No need to take the phone out of a pocket. The cashier verifies the customer’s identity with a photo in the POS system, then requests their first and last initials to complete the transaction. The success of Google Hands Free depends on merchants’ willingness to install Bluetooth.


Bank of America Unveils an AI-Powered Bot to Help Customers With Their Personal Finances

Bank of America debuted a virtual assistant bot, named Erica. The bot uses artificial intelligence and predictive analytics to learn your personal spending habits and offer helpful advice. Erica is designed to be not just a virtual assistant but each customer’s “personal advocate.” It can tell you about your spending habits, notice if you spend more than usual on a certain product or category of products, present opportunities to reduce debt or save money, and alert you if your credit score dips.


The World of Finance is Living in “Exponential” Times, said John Sculley

John Sculley, former chief executive officer of Apple, offered some words of wisdom to big financial firms: plan for radical change, or prepare for obsolescence. Linear times are marked by slow and gradual improvement, Sculley said, whereas exponential times are characterized by rapid and tumultuous change. Cautious short-term thinkers will be passed by, he continued, invoking a “exponential vs. linear” framework. “If you think in the fintech world that you can live in linear times,” Sculley said, characterizing the attitude as having a “sit-back-and-wait” mentality, “it ain’t going to turn out that way.” “There will be Kodak examples in the financial services industry.”


 Venture Capital Experts Identify Impediments to Blockchain in Financial Markets

A discussion on blockchain's use in capital markets diverged among panel members. While blockchain could enable a 10-minute settlement time for financial trades, advocated by Judd Bagley of, that doesn't mean that would be beneficial for the industry to upend its existing processes. Nasdaq's Yolanda Goettsch pointed out that many parties will be disintermediated by blockchain; those parties are the ones on Wall Street that could try to prevent blockchain from entering their business model.


 Mercator Presents EMV Status Update

The Electronic Transactions Association originally forecast that 100 percent U.S. adoption of EMV would take five years, which is about how long it took European nations to get to the 50 percent mark. According to Mercator, 3 in 5 Americans now own at least one EMV chip card, and they expect that as many as 50 percent of credit card transactions will be chip-enabled yet this year. The American Banker Association (ABA) reports that more than 700 million chip cards have been issued in the U.S., and the entire conversion is expected to be done by year-end, 2018.


Other findings:


  • Card-based fraud is down 50 percent, while card-not-present (CNP) fraud is only up 12 percent, so far.
  • Mobile payments aren’t evolving fast enough to leapfrog EMV.
  • Prepaid cards will start to be issued as EMV.

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