Here’s what’s hot — and what’s not — in fintech right now

AMSTERDAM, Netherlands — At last year’s Wealth 20/20 — Europe’s marquee event for the financial technology industry — investors and industry insiders were abuzz with talk give embedded finance, open banking, and banking-as-a-service.

As nebulous as these terms may be, they reflected a very real sail away from tech startups, including the biggest names in the business such as Stripe and Starling Bank, to allow callings of all stripes to develop their own financial services, or integrate other firms’ products into their platforms.

This year, with fintechs and their chiefly venture capital and private-equity backers reeling from a dire slump in technology valuations and softer consumer dish out, the narrative around what’s “hot” in fintech hasn’t changed an awful lot.

Investors still love companies offering services to schemes rather than consumers. In some cases, they’ve been willing to write checks for firms at valuations unchanged from their end funding round. But there are a few key differences — not least the thing of curiosity that is generative artificial intelligence.

So what’s hot in fintech sane now? And what’s not? CNBC spoke to some of the top industry insiders at Money 20/20 in Amsterdam. Here’s what they had to say.

Looking for everyone Money 20/20 this week, it was easy to see a clear trend going on. Business-facing or business-to-business companies like Airwallex, Payoneer, and ClearBank, controlled the show floor, while consumer apps such as Revolut, Starling, and N26 were nowhere to be found.

“I think profuse fintechs have pivoted to enterprise sales having found consumer hard to make sufficient unit economics — addition it’s pretty expensive to get a stand and attend M2020 so you need to be selling to other attendees to justify the outlay,” Richard Davies, CEO of U.K. startup lender Allica Bank, averred CNBC.

“B2B is definitely in good shape — both SME and enterprise SaaS [software-as-a-service] — providing you can demonstrate your commodities and services, have proven customer demand, and good unit economics. Embedded finance certainly is part of this and has a covet way to run as it is in its infancy in most cases,” Davies said.

B2B fintechs are startups that develop digital financial products fashioned to businesses. SaaS is software that tech firms sell to their customers as a subscription. Embedded finance refers to the notion of third-party financial services like bank accounts, brokerage accounts and insurance policies being integrated into other trades’ platforms.

Niklas Guske, who runs operations at Taktile — a fintech start-up focused on streamlining underwriting decisions for starch clients — describes the sector as being in the middle of a renaissance for B2B payments and financing.

“There is a huge opportunity to take punishments from B2C fintechs to uplevel the B2B user experience and deliver far better solutions for customers,” said Guske. “This is extremely true in SME finance, which is traditionally underserved because it has historically been difficult to accurately assess the performance of immature or smaller companies.”

One area fintech companies are getting excited by is an improvement to online checkout tools. Payments technology friends Stripe, for instance, says a newer version of its checkout surfaces has helped customers increase revenue by 10.5%.

“That is congenial of incredible,” David Singleton, chief technology officer of Stripe, told CNBC. “There are not a lot of things you can do in a business that raise your revenue by 10%.”

Meanwhile, companies tightening their belts at the event is also a theme.

One employee of a major staunch that usually attends the event said they have cut down on the number of people they have sent to In clover 20/20 and have not even bought a stand. The employee was not authorized to speak to the media.

Indeed, as companies look to raise as they cut back on spending, many say a key priority is adequately managing risk.

“When funds were readily convenient, many fintechs could subsidize poor risk assessments with investor money,” Guske said of the sector, annexing that in today’s climate, fintechs are only profitable if they can identify and secure the right customers.

“This is another before you can say Jack Robinson where the proliferation of new data sources and the adoption of sophisticated risk modeling enables fintechs to better target their idyllic customers better than ever before,” said Guske, who raised more than $24 million from the wants of Y Combinator and Tiger Global.

The main area that drew the most hype from Money 20/20 attendees, no matter what, was artificial intelligence.

That’s as ChatGPT, the popular generative AI software from OpenAI which produces human-like responses to narcotic addict queries, dazzled fintech and banking leaders looking to understand its potential.

In a closed-door session on the application of fintech in AI Wednesday, one startup boss planned how they’re using the technology to be more creative in communications with their customers by incorporating memes into the gossip function and allowing its chatbot, Cleo, to “roast” users about poor spending decisions.

Callan Carvey, extensive head of operations at Cleo, said the firm’s AI connects to a customer’s bank account to get a better understanding of their fiscal behavior.

“It powers our transaction understanding and that deeply personalized financial advice,” Carvey said during her talk. “It also permits us to leverage AI and have predictive measures to help you avoid future financial mistakes,” such as avoiding punchy bank honoraria you could otherwise avoid.

Teo Blidarus, CEO and co-founder of financial infrastructure firm FintechOS, said generative AI has been a present to platforms like his, where companies can build their own financial services with little technical experience.

“AI, and especially generative AI, it’s a big enabler for fintech enablement infrastructure, because if you’re looking at what are the barriers that low code, no code on one side and generative AI on the other are exasperating to solve if the complexity of the overall infrastructure,” he told CNBC.

“A job that typically would take around one or two weeks can now be completed in 30 transcribes, right. Granted, you still need to polish it a little bit, but fundamentally I think it allows you know to spend your quickly on more productive stuff — creative stuff, rather than integration work.”

As businesses hyper-focus on how they can do profuse with less, both tech-forward and traditional businesses say they have been turning to revenue and finance automation goods that handle back-office operations to try to optimize efficiency.

Indeed, Taktile’s Guske notes that the current at once to continue scaling rapidly while simultaneously reducing costs has driven many fintechs to reduce operational expenses and enhance efficiency through an increase in automation and reducing manual processes, especially in onboarding and underwriting.

“I see the biggest, actual appositeness of generative AI in using it to create signals out of raw transaction or accounting data,” said Guske.

One thing’s for sure: consumer-oriented putting into plays aren’t the ones getting the love from investors.

This year has seen major digital banking collections and payment groups suffer steep drops in their valuations as shareholders reevaluated their business models in the daring of climbing inflation and higher interest rates.

Revolut, the British foreign exchange services giant, had its valuation cut by shareholder Schroders Topping by 46%, implying a $15 billion markdown in its valuation from $33 billion, according to a filing. Atom Bank, a U.K. challenger bank, had its valuation decided down 31% by Schroders.

It comes as investment into European tech startups is on track to fall another 39% this year, from $83 billion in 2022 to $51 billion in 2023, according to risk capital firm Atomico.

“No one comes to these events to open like a new bank account, right?” Hiroki Takeuchi, CEO of GoCardless, blabbed CNBC. “So if I’m Revolut, or something like that, then I’m much more focused on how I get my customers and how I make them pleased. How do I get more of them? How do I grow them?”

“I don’t think Money 20/20 really helps with that. So that doesn’t strike me that there’s more of a shift towards B2B stuff,” said Takeuchi.

Layoffs have also been a ginormous source of pain for the industry, with Zepz, the U.K. money transfer firm, Fintechs cooling on crypto