What is the future of money in Europe?
0
This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.
The following article is an excerpt from The Future of European Fintech 2025: A Money20/20 Europe Special Edition.
In the European payments space, emerging technologies are taking the lead to define what the next big thing will be in banking. Where is the future of payments leading, and how will it benefit the consumer and propel the industry forward? The answer is manifold, as new forms of AI, digital assets, and quantum computing are modernising banking.
What does the future of money look like?
As decentralised finance (DeFi) has become more prevalent, there has been calls for further supervision and regulation on DeFi activity. According to Reuters, DeFi protocols spiked to $7.3 billion in January 2024, the highest since 2023. Market capitalisation of DeFi rose to $77 billion from $72 billion in December 2023. DeFi is expected to grow at a CAGR of over 46% between 2024 and 2032, and was valued at $14.35 billion in 2023.
DeFi refers to financial activity facilitating by smart contracts and blockchain, without a centralised system to mediate asset custody. DeFi has major potential in revolutionising payments using blockchain capabilities, as due to the open nature of the accounts it allows for flexible liquidity. However, accounts do not need to be verified on DeFi transactions, meaning that payments and asset movements can remain anonymous. This leads to uncertainty and security risk, which is why guidelines and regulation are essential to keep DeFi in check.
Ahmed Badr, chief operating officer at GoCardless, commented: 'DeFi and the introduction of digital currencies has the potential to be transformative. CBDCs, in particular, may drive the next level of simplification, for example allowing for more transparent and efficient exchanges of value directly from one account to another.'
Julija Fescenko, head of marketing and communication at Magnetiq Bank, said that there is no doubt that 'the future of money in Europe is digital', furthering that progress being made on CBDCs in Europe is a stepping stone between traditional banking and DeFi.
Fescenko stated: 'DeFi and CBDCs are transforming the very foundation of money. While DeFi provides borderless and programmable financial services, it also brings concerns regarding security, compliance, and systemic risk.
In contrast, CBDCs could enhance the effectiveness of monetary policy and payment efficiency, but they must be designed to protect privacy and coexist with commercial bank money. Fintech companies will need to adapt to this dual landscape by investing in compliance technology, interoperability layers, and digital asset management solutions to stay competitive.'
Smart contracts are increasing in usage, utilised by retailers to manage supply chains and by individuals in trading. Smart contracts are digital contracts stored on blockchain, they automate the execution of a predetermined agreement. The actions that a smart contract can execute are numerous, from releasing funds to sending notifications. Like most DeFi tech, smart contracts do not require a third party to review the transaction, actions are carried out according to the agreement made by the two parties. The automated aspect of the transaction make it immediate, and therefore instant, and by operating on encrypted blockchain it ensures that the transaction is secure.
Another key innovation is crypto payments. According to the Payments Markets Report 2025, cryptocurrency payments has surpassed 560 million users in 2024, and 60% of those surveyed stated they were interested in using digital currencies for payments. Quantum computing is also on the horizon for becoming the next big trend. Quantum computing is expected to make waves in four key sectors: chemical, pharmaceutical/life sciences, financial services, and transportation/mobility, estimating a $2 trillion valuation by 2035. According to McKinsey, the quantum computing market could reach $173 million by 2040, having seen £42 billion in investment globally.
What is the role of predictive analytics and AI in the emerging payments space?
Predictive analytics and AI are drivers of the payments revolution, and can be implemented throughout the transaction process accomplishing a significant reduction of risk and enhanced customer experience.
Tom Moore, head of financial services at Moore Kingston Smith cited how AI be implemented in multiple areas of payments: 'When it comes to the user experience, AI can help optimise contactless payment processing by predicting peak transaction times and allocating resources accordingly, to ensure smooth and efficient operations. For digital wallets, analysing these spending patterns could enable companies to offer personalised offers and discounts or provide users with insights into their spending habits and future payments.'
As Moore illustrated, AI integration in personalisation and customisation can improve user experience. Furthermore, AI can be used to process large datasets to detect fraud, find fraudsters, and identify unusual spending patterns. AI monitoring of BNPL can analyse transaction and social media history of an applicant to determine credit-worthiness.
Carl Slabicki, executive platform owner, treasury services at BNY Mellon noted: 'In contactless payments, AI can help detect and prevent fraud in near-real-time through enhanced anomaly detection techniques. For Buy Now, Pay Later (BNPL) services, AI could be used to help assess credit worthiness more accurately and predict repayment behaviors, which could in turn lead to more inclusive lending and reducing default rates. Overall, AI and predictive analytics may make payments more secure, efficient, and tailored to individual needs.'
Vibhor Narang, executive director of structured solutions cash management and transaction banking at Standard Chartered Europe, mentioned that corporate payments will be transformed by the integration of AI, in allowing treasurers to forecast cash flow, liquidity planning, proactive risk management. Narang highlighted that AI can analyse diverse data sets to predict market shifts and how to navigate economic volatility.
Narang detailed: 'Algorithmic models are redefining FX trading and crossborder payment execution. Adaptive FX algo strategies manage currency exposures and optimise trade execution, cutting costs and operational friction. Adoption of enriched data standards like ISO 20022 amplifies AI's impact by providing richer, structured payment data, fuelling deeper insights and automation across the payments value chain. In this new era, the future of corporate payments belongs to those who transform predictive intelligence into strategic foresight-turning treasury and payments functions from cost centres into engines of competitive advantage.'
Wendy Reedshaw, chief digital information officer at NatWest Group, commented on how NatWest is employing AI: 'GenAI tools are helping reduce the number of times a colleague needs to intervene in a transaction. As these tools mature, we expect they will underpin smarter, safer, and more seamless payment innovations, delivering simpler, more personalised services at even greater scale.'
How can FIs navigate the regulatory complexities that accompany innovation?
'It's important to ensure that these innovations align with national and European financial regulations. Lawmakers and regulatory bodies play a crucial role in this journey, thoughtfully creating legal frameworks that prioritise security and compliance.
By doing so, we can truly unlock the full potential of AI while safeguarding personal data and ensuring financial security,' postulated Fescenko.
The European regulatory landscape is defined by age-defining regulations such as DORA, MiCA, and PSD3 that create a foundation for growth in a controlled environment, that outlines the risk involved. These frameworks are designed to provide clarity where before there was confusion, and to provide step-by-step guidance on adoption for financial organisations seeking to integrate new technologies.
European governments are taking the lead in driving growth, as seen as the adoption of CBDC pilots for the Digital Euro and Digital Pound, and push for digital finance to be held up by governments.
Conor McNamara, EMEA CRO at Stripe, commented: 'Compared to other parts of the world, the EU offers diverse local payment methods, and it's a great example of how regulation can boost entrepreneurship. We've seen this first-hand with PSD2—a regulation that enabled many global leaders in fintech, built from Europe. That said, this isn't a time for complacency. Digitalisation will change money movement drastically in the coming decade. And we generally support more choice and competition in the market and a variety of payment methods. Stablecoins are one of them, and a digital euro could potentially be another. The one thing we'd say is that speed matters— stablecoins are being used every single day by businesses across the globe, so if Europe is serious about the digital euro, turning it into a real thing soon will be key.'
Narang explained that regulatory guidelines are essential in shaping how innovation moves in the industry: 'DeFi's rapid evolution demands a balanced regulatory response: mitigating risks like smart contract vulnerabilities and financial crime, while preserving its potential to democratise access to finance. At the same time, the development of a digital euro and expansion of regulatory sandboxes across Europe are enabling both fintechs and established institutions to experiment, collaborate, and innovate within a clear, supervised framework. Adoption of harmonised data standards, such as ISO 20022, will further empower AI-driven analytics and seamless cross-border payments.
'As I see it, Europe's leadership in fintech will be defined by its ability to build trust, foster responsible innovation, and create a regulatory environment where bold ideas become reality-without compromising security or stability. By harmonising oversight, incentivising public-private collaboration, and embedding ethical guardrails, regulators can ensure Europe remains the global benchmark for responsible and transformative fintech innovation.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
22 minutes ago
- Reuters
China's vice president visits Spain as mutual courtship blossoms
MADRID, June 10 (Reuters) - China's Vice President Han Zheng arrived in Spain on Tuesday for a four-day trip during which he will meet with King Felipe and Prime Minister Pedro Sanchez, a further sign of increasingly close economic and political ties. Han's visit is taking place two months after Sanchez visited Beijing for the third time in as many years. There, he sought to woo China's President Xi Jinping as global trade reels from U.S. President Donald Trump's tariffs policy. The Socialist premier has been vying to position Madrid as an interlocutor between China and the European Union, as well as to attract more Chinese investment in advanced technology such as batteries, electric vehicles and hydrogen. Last year, auto maker Stellantis and Chinese battery maker CATL announced plans to build one of Europe's largest EV battery factories in Spain. However, not all is idyllic in Spain's relations with China. Beijing's anti-dumping inquiry into EU pork launched last year in retaliation for Brussels' tariffs on Chinese EVs hit Spain, a top exporter, hard. Sanchez's last visit to China, however, clinched expanded access for Spanish exports of pork stomach - a product widely consumed in China but not previously authorised. Han will meet with Sanchez on Wednesday morning in Madrid, Sanchez's office said, while King Felipe will receive the Chinese official on Thursday, according to the royal household's agenda. The Spanish monarch is also scheduled to visit China later this year to commemorate the signing of a strategic partnership 20 years ago. After his meetings with Sanchez and Spain's king, Han is set to travel to Seville to meet Andalusia's regional leader, Juan Manuel Moreno, who last year secured over 2.5 billion euros ($2.86 billion) of Chinese investments in the southern Spanish region. According to projections by tourism lobby Turespana, the number of visitors to Spain from China is expected to surge by 36% this summer compared to last year, making Spain the European destination with the biggest growth in tourists from the Asian nation. ($1 = 0.8749 euros)
The Sun
30 minutes ago
- The Sun
The best jobs that allow you to retire early and how you could boost your pension pot to £345k
EVERYONE dreams of escaping the daily grind early and retiring - but what jobs will help you do that as quickly as possible? Here, we reveal the top roles to get the best paid pension and the employers offering more to make you richer in retirement. It might be tempting to choose a job based on salary alone, but it's important not to overlook how it will affect you when you retire. While private sector jobs tend to offer more flexibility and a higher salary, public sector jobs typically offer more generous "defined benefit" or "final salary" pension schemes. These schemes guarantee an income that rises with inflation, making them a "gold-plated" option rarely found in the private sector. In the private sector, you'll likely have a "defined contribution" scheme, where your retirement income depends on contributions and investment performance. Auto-enrolment requires at least 8% of your salary (5% from you, 3% from your employer) to go into a pension fund, and the government adds to this through tax relief. For basic-rate taxpayers, every £80 contributed becomes £100. Although defined contribution schemes may seem less appealing, starting early and maximising contributions can build a substantial retirement fund. According to the Pensions and Lifetime Savings Association, a single person needs £13,400 per year for a basic retirement, while a couple requires £21,600. Craig Rickman, pensions expert at interactive investor (ii), said: "Don't overlook pensions when job hunting. "Even though it might not seem like extra cash in your pocket right now, an attractive workplace pension means you don't have to save as much personally every month to retire comfortably. "That's why it's vital to engage with your workplace pension at the earliest opportunity." Kings Speech 2024 reveals huge pensions shake-up that could add over £11,000 to retirement pots Below we reveal the best jobs in the public and private sector to help you build your pension pot and boost your chances of retiring early. Top jobs for solid pension pots Town planners have some of the most generous pension pots. For example, someone earning £30,000 a year from the age of 30 could retire with an annual pension of £41,400 through the Local Government Pension Scheme (LGPS), according to ii. The LGPS works by adding a small portion of your salary - 1/49th - into your pension pot each year. This amount grows over time in line with inflation, helping it keep its value. Boost your pot by £354,000 RETIREMENT expert Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, shares how to maximise your pension savings. She said: "Small changes can make big differences to your pension." "And increasing your contributions beyond auto-enrolment minimums can make a huge impact over time. "The amount you contribute now will directly impact how much money you have when you decide to retire, typically around age 68. "For example, if someone starts saving at age 21 and continues until age 68, with a starting salary of £25,000 per year and an investment growth of 5% per year after fees, they could save around £236,000 by retirement. "This assumes they contribute 5% of their salary, and their employer adds an additional 3%." "If you increase your contribution to 10%, with your boss still adding 3%, you could boost your savings to roughly £384,000. "But what if your boss is feeling generous? "A more substantial contribution from your employer can significantly boost your retirement savings. "For example, If you save 5% of your salary and your boss matches that with another 5%, your pension could reach approximately £295,000 by the time you retire. "Even better, if both you and your boss contribute a hefty 10% of your salary each, you could be looking at a substantial pension pot of around £590,000. "It really pays to find out what your employer's policy is on pension contributions – it could make a massive difference to your future." Meanwhile, armed forces personnel don't have to pay into their pensions at all, as the Ministry of Defence contributes on their behalf, adding 1/47th of their salary each year and adjusting it for inflation. The standard pension age is 60, but those who serve for at least 20 years and leave after age 40 can benefit from the Early Departure Payment (EDP) scheme, which provides a tax-free lump sum and monthly income. For example, a sergeant retiring as a major could receive a pension of around £32,000 a year. Plus, teachers can build a pension of roughly £25,700 a year after 40 years of service on a £60,000 salary, plus a £170,000 if they tax a one-off tax-free lump sum, according to ii. Tax inspectors in the Civil Service Alpha scheme could receive £23,600 a year on a £36,100 salary. The Civil Service Alpha pension scheme is a 'career average' defined benefit scheme where you build up an annual pension based on 2.32% of your pensionable earnings each year, adjusted for inflation Police officers can retire after 30 years with about £22,000 annually. Firefighters retiring at 60 might get £20,000 to £29,000 a year, depending on service length. NHS workers build pensions based on 1/54th of their salary each year, offering strong retirement income. Museum curators in public roles could get £15,000 a year after 30 years, earning £30,000 annually. I tracked down lost pension and boosted my pot by £5,000 KATHERINE Brant was one of millions who lost track of an old pension pot – a common problem in the UK, where 4.8 million pots are "missing, Each time you start a new job you start a new pension, which can leave you with several pots of cash that are easily forgotten about. On average, employees lose sight of pots worth £10,000. As an assistant manager at a charity shop in Lincoln, Katherine, 32, realised she had no idea where her old pensions were, fearing that the savings from her previous jobs might be lost forever. Determined to take action, she decided to get on top of her pension planning during the pandemic. "I only had a very basic understanding of how pensions worked, but I knew I must have old pots knocking around somewhere that I'd completely lost," she said. Her search led her to Moneybox, an app designed to help people locate and consolidate their pension pots. Unsure of what to expect, Katherine signed up and provided her details. What followed was life-changing. The app helped her uncover a forgotten £2,000 pension pot, which has since grown to £5,000, significantly boosting her retirement savings. With decades left before retirement, Katherine now has plenty of time to grow her savings even further. "Finding this extra money feels life-changing—I had no idea it was even there," she said. If you're looking to track down a lost pension pot, you can also use the government's Pension Tracing Service by visiting Top jobs in the private sector Some private sector companies offer generous contribution rates to employees. The financial services industry tends to be a good place to start, with average employer contributions around 9.5%. For example, Unilever provides a benefits package equal to 25% of your salary. If you earn £40,000, this means £10,000. You can decide how to use it - put it all into your pension, take some as extra pay, or split it, such as £8,000 for your pension and £2,000 as cash. Shell follows with a total pension contribution of 20% (5% from employees and 15% from the employer), which can rise to 27.5%. Legal & General combines a basic contribution with a matching scheme, allowing employees to potentially reach a total of 20%. Kingfisher, owner of B&Q and Screwfix, offers a sliding scale where employees contributing 8% or more receive 14% from the employer. Phoenix Group boosts salary sacrifice contributions, enabling employees to receive 14.2% while contributing only 2%. A salary sacrifice scheme is where you agree to reduce your gross salary in exchange for a non-cash benefit, like increased pension contributions. This reduces your taxable income and National Insurance contributions, potentially saving you money while boosting your benefits. Royal Mail contributes 13.3% to its Collective Defined Contribution scheme, with employees adding 6%. Tesco matches pension contributions up to 7.5%. INDUSTRY trade body The Pension and Lifetime Savings Association calculates how much a single person and a couple need to afford different levels of comfort in retirement. They factor in all household bills, groceries, travel and car costs, going away on holiday, clothes, beauty treatments and more, into the amount of money you need per year. There are three lifestyle levels - minimum, moderate and comfortable. Here's how much you need per year to afford them all. Basic retirement: A single person needs £13,400 annually for a basic retirement lifestyle, while a couple needs £21,600. This covers essential needs plus a few extras like a small holiday and monthly cheap meal out. Moderate retirement: A single person needs £31,700, while a couple needs £43,900. This covers one holiday abroad a year, eating out once a week, and budget for two or three weekly activities like going to the cinema or swimming. Comfortable retirement: A single person needs £43,900, while a two-person household needs £60,600. This includes a foreign holiday and several mini breaks a year, as well as beauty treatments and hair appointments every six weeks.
Auto Express
36 minutes ago
- Auto Express
Car Deal of the Day: family-size Skoda Enyaq EV going cheap at under £280 a month
SE L trim; 268-mile range Plush interior; spacious and practical Only £276.71 a month Skoda has taken a lot of what owners love about the Enyaq SUV to create the Elroq, albeit in a smaller, cuter package. But what if we told you that you could have the bigger, more spacious car for less than £2 extra month on lease? That's exactly the case on the Auto Express Find a Car service. GB Vehicle Leasing is offering the Enyaq for just £1.81 extra a month over the smaller Elroq (through a different broker), after a £3,620.50 initial payment is put down first. Advertisement - Article continues below Then it's £276.71 for a total of 48 months with a 5,000-mile-a-year cap; a 8,000-mile limit can be arranged for just £6.07 extra a month, meaning this deal could be perfect for those who need to travel further. That extra £1.81 will get you a car that offers considerably more interior space, with greater levels of head and legroom. You'll be able to carry more luggage and shopping bags, too, thanks to the Enyaq's 115-litre-larger boot. The Enyaq and smaller Elroq both travel around the same distance on a charge, with around 268 miles possible from the same 58kWh battery, claims Skoda. In the real world, both will offer between 200 and 250 miles. There's no difference in terms of spec between the Enyaq in this deal and the cheapest Elroq on a lease (from another broker) either, as both are in SE L trim. This nets you heated front seats and steering wheel, sat-nav, and that all-important umbrella in the driver's door. The Car Deal of the Day selections we make are taken from our own Auto Express Find A Car deals service, which includes the best current offers from car dealers and leasing companies around the UK. Terms and conditions apply, while prices and offers are subject to change and limited availability. If this deal expires, you can find more top Skoda Enyaq leasing offers from leading providers on our Skoda Enyaq hub page. Check out the Skoda Enyaq deal or take a look at our previous Car Deal of the Day selection here… Find a car with the experts Car Deal of the Day: A Volkswagen Golf R Estate for less than a GTI Car Deal of the Day: A Volkswagen Golf R Estate for less than a GTI The Golf R Estate is one of the best performance estates around – and right now it's criminally cheap. It's our Deal of the Day for 9 June. Should Citroen make a new 2CV? Some say oui, others say non Should Citroen make a new 2CV? Some say oui, others say non A new Citroen 2CV could be inbound, but would this be a French fancy or a financial flop? Avoid using car finance claim firms, says financial watchdog Avoid using car finance claim firms, says financial watchdog FCA warns that using a claim firm could see consumers lose up to 30 per cent of their winnings if car finance redress scheme is implemented
