The Middesk team joined over 15,000 leaders in fintech, banking, and financial services at this year’s Money20/20 Conference in Las Vegas. The event was packed with insights into the rapidly evolving financial landscape. Here are our key takeaways from conversations with industry leaders and experts:
1. Fragmented Data and the Need for Real-Time Decision-Making
The pandemic accelerated the digitization of financial systems, but many institutions are still struggling with fragmented, siloed data that slows down decision-making. As financial institutions (FIs) and fintechs look to build comprehensive risk, fraud, and compliance profiles, they need to access multiple data points—from customer identity to transaction data—in real-time.
Currently, many FIs rely on multiple data providers and have to pull information from different systems to make quick, accurate decisions about whether to approve or decline transactions. Leaders in the space are increasingly focused on merging diverse data signals, such as identity, phone number/ email verification, device ID, location information and fraud signals, into a unified orchestration model that enables swift risk assessments. Additionally, structured data and the oversight of human compliance officers remain crucial, even as Gen AI tools begin to assist with certain compliance functions. Gen AI offers the potential to supercharge compliance officers, helping to catch fraud patterns faster and replicate their decision-making processes. However, speed must not come at the expense of thoroughness; success will depend on moving fast without sacrificing accuracy and compliance.
2. Embedded Banking: A Lasting Shift with Stricter Compliance
Embedded banking and banking-as-a-service (BaaS) models are here to stay, though they’re evolving under heightened regulatory scrutiny. With recent Enforcement Actions and Consent Orders related to BSA/AML violations, many sponsor banks, BaaS providers, and fintechs are re-evaluating their record-keeping and reconciliation practices. Where fintechs previously relied on their partner banks for compliance oversight, many are now investing in internal compliance expertise, bringing senior, experienced individuals on board to lead policies and procedures.
Embedded banking continues to allow fintech as well as non-financial entities, such as medical offices, travel platforms, and beauty salons, to offer financial products across bill or installment payments, rewards programs, and insurance leveraging other FIs licenses and power the launch of new innovative products.
All fintech partners are now expected to proactively approach their sponsor banks with a deep understanding of compliance requirements and plans to strictly adhere to them, rather than outsourcing these responsibilities. Middesk works closely with and is an approved provider with a number of sponsor banks, allowing their fintechs to meet compliance requirements knowing they’re leveraging best-in-class first-party government business data and fulfilling their KYB requirements.
With stricter compliance and operational controls, the expansion of embedded banking is proceeding at a more measured pace, focusing on enhanced ledger tracking, robust monitoring, and reliable risk safeguards.
3. The Rise of AI Agents in Compliance
AI-driven compliance agents are emerging as valuable tools in reducing manual effort within compliance and risk management, though they currently stop short of making final decisions. Compliance and risk leaders have voiced the need for “explainable AI” models that can pass regulatory scrutiny. Regulators are increasingly sophisticated on the topic and will continue to demand strong governance, model transparency, and evidence of risk management practices.
As one startup CEO remarked, 2023 marked the rise of “AI-curiosity” in financial services, 2024 saw proof-of-concepts across the space, and 2025 is expected to be the year when budgets are allocated for AI project rollouts. However, for now, AI agents remain focused on operations support: consolidating data, streamlining processes, and equipping compliance officers with faster, high-quality information to make critical decisions. Full automation of compliance decisions remains a potential longer-term outcome, with human judgment still central to AI-augmented systems.
4. Automation as a Strategic Imperative
Across the industry, automation is a top priority, with financial institutions from emerging fintechs to national banks exploring automation to reduce costs, improve efficiency, and drive growth. Some fintechs are approaching automation as a cost-cutting measure, while others see it as a way to scale customer acquisition by accelerating customer onboarding and approvals. Whether opening business accounts, issuing corporate cards, or approving loans, providers are eager to offer a seamless, digital, and efficient customer experience.
Critical to this effort is ensuring that institutions are working with fresh, accurate, consistent business identity data providers like Middesk to streamline decision-making and reduce friction for end-users.
5. Escalating Fraud in Both B2B and B2C Segments
Fraud is on the rise, affecting both B2B and B2C sectors. Many fintechs, banks, and service providers are experiencing increasing levels of fraud, from first-party incidents (such as fraudulent chargebacks, forged checks, and PPP-related fraud) to third-party fraud involving synthetic identities, account takeovers, and identity theft. With advances in generative AI and deepfake technology, it’s becoming easier for fraudsters to bypass legacy identity verification systems and liveness checks. Furthermore, the adoption of real-time payments (RTP) allows bad actors to move funds quickly, making detection and prevention more challenging.
Nearly 50 of the 300 exhibiting companies at Money20/20 focused on compliance, risk, identity and fraud management, underscoring the industry’s heightened attention to preventing fraud and bolstering transaction monitoring. Implementing sophisticated fraud detection systems will be critical for banks, fintechs, lenders, and payment platforms to retain customer trust and minimize losses from fraud.
Bonus: The Value of In-Person Connections
Throughout the conference, one theme was clear: the return to in-person meetings has been invaluable for building relationships. Digital tools like email, Slack, and Zoom are essential, but face-to-face conversations remain unmatched in establishing trust. The Middesk team enjoyed reconnecting with our clients, partners and prospects in person, and we’d be happy to meet you over coffee or a meal if you’d like to discuss these takeaways or explore collaboration opportunities—just reach out or book a meeting here!
