Last week I had the chance to attend the yearly "Digital Finance Summit" conference in Brussels. After a pure digital event last year, the event was a hybrid event this year, which allows to network in a much more effective way. Such conferences are always an excellent way to get inspired and take a step back from your daily work to get a better feeling of the bigger picture. 

A number of trends which were already strongly present in the last 2 editions were also a focus area this year, i.e.

• The evolution from disruptive Fintechs to partnerships and ecosystems, where Fintechs no longer compete directly against incumbent banks and insurers, but instead try to partner with them to give the best possible user experience.
• The evolution of Opening up data and services to third-parties is strongly linked to this (i.e. no partnerships possible without at least a minimum of integration). This trend was started with PSD2, but is being extended to other data in the banking and insurance world and also in other sectors. The result is embedded finance, where financial data and services are consumed as an integrated part of the customer's journey (and no longer as a side-step).

Both trends are backed up by technological evolutions like API gateways, migration to the cloud and microservices architectures. These technologies create the foundation for a more open architecture.

But some new trends could also be identified, which were considerably less present 2 editions ago. Obviously there is the impact of Covid, with the new way of working (NWOW) for employees in the financial services industry. The fact this DFS event was a hybrid edition is probably the best example of something which would not even be conceivable 2 years ago and has now become a new standard. But many other impacts can be identified, like e.g. the enormous increase of eCommerce, with the associated impacts like the exponential growth in online & mobile payments and new credit forms like BNPL.

But 4 others trends also were put much more at the forefront than in the last editions, i.e.

• First of all there is the rise of cryptocurrencies and more in general blockchains, which have become mainstream. As a result many start-ups use some kind of blockchain to underpin there business (e.g. Immotokens being a very good example of this) and almost every government and central bank looking into equivalent digital currencies (so called CBDCs). 
• Second there is the trend of the "Metaverse" (or the so-called Internet 3.0), recently boosted by Facebook's announcements, where the frontier between the real and the digital world will further disappear, via augmented and virtual reality. In this new digital world, there will be no physical boundaries, while there might be physical interactions through this digital world (e.g. manipulating a robotic arm from the other side of the world or virtually attending a physical concert in another part of the world). Due to this disappearance of boundaries, solutions will have to be found for our current local limitations imposed by governments, like laws, local currency, identity... There will be a need for a global identity and a global wallet in order to properly interact in the digital world without frontiers. Clearly the "Metaverse" will give enormous opportunities for Fintechs and incumbent banks and insurers to provide new products and services on a global scale.
• Third there is the evolution of AI, which has also increased in maturity. From being a buzzword that many companies were misusing for marketing purposes, the real, business-added value services are clearly coming to the stage now. From the automatic interpretation of documents (like invoices, receipt tickets, insurance claim documents...) to the intelligent assessment of credit risks and AML all the way to intelligent automated financial advise.
• Finally there is the trend towards sustainability (ESG). More than ever banks and insurers are investing in sustainability by providing more info to their customer about the ecological footprint of certain financial products, by offering services to compensate for your ecological footprint, by offering more ESG funds for customers to invest in, but also by adapting risk models to include more scenarios related to ecological impacts (like floodings and other weather calamities). Several start-ups have risen to provide services to incumbent financial players in the form of providing structured ESG data or solutions to neutralize carbon footprints.

Apart from these global trends, there was of course also the Belgian context. Clearly Belgium lags behind on the Fintech landscape, especially in terms of investments and a catch-up movement is required to make Brussels the (or at least one of the) Fintech-hotspot in Europe. 

Luckily Brussels has many qualities for attracting top quality Fintechs:

• An excellent workforce with good knowledge of IT and Finances
• The proximity to European commission
• An excellent quality of the banking landscape, e.g. KBC and Belfius are appearing since several years in top lists of most best banking apps and banks with good innovation
• The proximity to key financial players, like SWIFT, MasterCard, Bank of New York and 
• A central positioning in Europe with proximity to London, Amsterdam and Paris (some of the strongest current hotspots in Fintech)
• Wages and prices for office space which are lower compared to many other European capitals

So clearly Belgium (and the Belgian government) needs to step in order to improve its positioning via:

• Fostering venture capitals both for start-ups as for scale-ups
• Strengthen innovation hubs, accelerators and Fintech communities
• Invest more in education for IT, Engineering and Finance
• Reorganize regulators to make them more supportive for innovation and less protective of the interests of the existing large players

Let's hope these ideas can soon be put in practice.
Overall an excellent edition organized under very difficult circumstances. A big applause for Fintech Belgium for this impressive achievement.