Conference Presentation, Panel
Zach Perret (Plaid) & Simon Khalaf (Marqeta): New Applications in Fintech
- The term "fintech" is projected to disappear and be replaced by "embedded finance" within approximately two years as established brands leverage distribution channels to integrate financial technology.
- Credit modeling faces a massive transformation driven by artificial intelligence over the next three to five years, contingent upon regulatory developments in the United States.
- Fraud detection systems face imminent challenges from AI-generated fake identity verification and liveness checks becoming prevalent within months, necessitating a shift toward pass keys to prevent the collapse of current fraud reduction pillars.
- Consumer fraud losses reached $10 billion last year, with loss vectors expanding as fraudsters increasingly leverage generative AI.
- A fully digitized payment card is predicted to displace major digital platforms like social media feeds and search bars to become the primary "open face of the internet."
- Digital rewards will evolve from static rates to dynamically adjusted cashback ranging from 3% to 40% to maximize purchase propensity.
- Every company is expected to transition into a "fintech company" through the massive digitization of money from cash and checks to fully fintech-enabled systems over the coming years.
- ACH pay-by-bank is forecast to remain unsuitable for small in-person retail transactions but will become the scalable standard for large digital transactions such as vehicle purchases.
- Pay-by-bank strategies are expected to gain significant traction over the next 12 months, though adoption will be concentrated in markets where economic logic supports the mechanism or where existing infrastructure lacks digitization.
- The fintech industry will consolidate through increased partnerships aimed at building necessary infrastructure and reducing fraud vectors over the coming years.
- Payment vehicle selection will shift from a static choice to a dynamic, "just-in-time" auction process where wallets or devices select the optimal card at the optimal time.
- Power in payment selection is predicted to concentrate among device-embedded wallet owners like Apple and Google, enabling them to select cards and negotiate directly with merchants.
- The payment industry is currently positioned at an inflection point comparable to the internet in 1996 or the automobile in 1913, marking the beginning of a journey toward digital-native products.
- Merchants are expected to optimize top-of-funnel engagement through payment signals rather than focusing exclusively on optimizing interchange costs measured in basis points.
- Innovation in payment infrastructure will evolve within the wallet size into an advertising exchange where merchants compete to deliver offers in near real-time, replacing point-of-sale advertising with digital checkout or wallet-based ads.
- Section 1033 of the Dodd-Frank Act is anticipated to cement the U.S. open banking ecosystem by forcing banks to provide API access and requiring data sharing, though implementation timelines remain uncertain due to potential litigation.
- The CFPB will enforce rules ensuring consumer ownership of financial data, compelling banks and fintech apps that currently restrict access to provide it.
- Every bank is expected to eventually participate in a "participatory economy" for payment rails, functioning as an aggregator for front-end user experiences while regional banks are incentivized to join due to their role in funding small businesses and farmers.