All The Fintech - 8.18.19 - Apple Card playing the long game

Hi everyone! If the format looks new, it’s because I recently moved over to Substack as I was having issues with my previous newsletter app, so here’s to hoping that VC money gets put to good use :)

In other news, I finally got an invitation to apply for the Apple Card and wanted to put some quick thoughts on paper, especially as I’ve been reading a lot of other interesting takes.

Quick thoughts:

1) Mobile only signup flow - This is the first time I’ve been able to apply for a name brand credit card via mobile end to end and although the internet apparently wasn’t too impressed, I actually think Apple + Goldman have set a new standard for mobile onboarding for a financial product. Some things I noticed during the onboarding flow - no need for full social security, just a confirmation of last 4; dynamic KYC depending upon what information they were able to pull (e.g. not all users needed to take a picture of a physical ID); name, address, email already pre-filled from iCloud account; instant underwriting + provisioning of a virtual card in minutes.

2) First class mobile experience - To my knowledge, there’s actually no web interface for the card so the only way to manage payments are via the wallet or over phone if necessary. This is super interesting - a truly mobile first / only approach towards financial services. This fits into Apple’s strategy to continue to push adoption of mobile payments, but will be curious to see if Apple does end up releasing web features - maybe something built into Safari? They’re also real subtle on trying to make the Apple Card your default payment mechanism with specific call to actions + making their wallet experience first class vs everyone else. Apple + GS have built a first class product experience combing hardware, software, and plastic (I guess metal now) and I think there’s significant demand for this, particularly with subprime / near prime financial products.

3) Apple Card is to Apple as Amazon Prime is to Amazon - I don’t expect the card to be meaningful in regards to revenue for Apple for many years, rather it’s all about lock-in into the ecosystem. If users adopt the Apple Card as their primary payment mechanism, it makes it literally impossible to switch from an iPhone to any other mobile device. I wouldn’t be surprised to see a lot more tech companies attempt to accelerate their payments / fintech strategy as a result - everything becomes payments with a large number of users, unique platform, and long enough time horizon.

4) It’s not about the rewards - I’ve read a ton of tweets stating how the card isn’t that great since the cashback doesn’t compare with cards like the Chase Sapphire Reserve, Amex Platinum, etc. I think this misses the point - I would have been extremely surprised if Apple + GS immediately came out with an aggressive cashback mechanism out of the gate especially since almost everyone is eligible for the card. Cards with 2% cash back and above tend to be for people with good credit - cards such as Citi Cashback, CapOne Savor, etc all generally require a credit score of ~700+. The Apple Card has an extremely wide band of credit that they’re accepting - subprime, near prime, and prime all with different credit limits + APRs.

Since they’ve already removed most of the fees that subprime cards often view as profit centers, Apple + Goldman probably already has significant exposure trying to making profit off interchange + interest vs balancing default rates across such a wide spectrum. I wouldn’t be surprised to see the rewards structure change over a longer time for different demographics once GS is able to build out their risk curve. The first card I was ever able to get was a Discover Charge card since I had no credit history and that came with 1) no cash back, 2) a poor product experience (I still don’t get what I should be generally paying…), 3) low merchant acceptance - the Apple Card is 100x superior to anything being offered in that space.

5) Low acquisition cost - There have been some articles that state that the CAC is ~$350 per card and to be honest, I would question that data point. Apple + GS don’t need to do any direct mail, online advertising, etc - all they need to do is send a notification via your Wallet. There’s never been a financial product that has had the ability to get such wide distribution on day 1 and that’s what makes the card extremely exciting. The ability to own the experience end to end with such scale is very interesting…

6) Instant cash back moving liability off balance sheet faster - Unclaimed rewards are increasingly becoming a cause of concern for large credit card programs. For example, JPMorgan’s credit-card holders had accrued $5.8 billion in rewards they had not yet redeemed as of Q3 2018 and a lot of this is due to the product experience (as well as users stashing points for different experiences). By keeping the cash back experience simple and instant, there’s almost no reason to hoard points on the Apple Card - it’ll be interesting if there will be more tie-ins to Apple Cash to try and drive further usage of Apple’s P2P payments too.

Anyways, let me know what y’all think - if I’m totally off base, other viewpoints I missed, etc - keep the feedback coming! And look forward to the next one where I attempt to go deeper on Strong Customer Authentication aka the reason why processors and merchants are stressing out over in Europe…

All The Fintech - 8.5.19 - RBS "Free" Fintech Cash Money

Hi everyone! A couple of weeks ago, I had the chance to meet a bunch of people and companies in the UK (thanks to everyone that made connections over Twitter too) and I learned quite a bit about how different the fintech landscape is compared to the US. One of the more amusing discoveries was regulatory related - after commenting at a happy hour that there were a ton of London Tube and bus advertisements from fintech companies focused on the SME space, I learned about RBS' Remedies Fund competition that just recently closed (link).

TLDR - As part of conditions attached to the £45bn government bailout of the Royal Bank of Scotland during the 2008 crisis, RBS initially attempted to sell and spin off a portion of its SME banking business. However, plans soon fell through and an alternative agreement was put into place where RBS would contribute £775m into an Remedies Fund that would be administered by a body that's independent from the government and RBS. £425m were given out as award to help challenger banks developer their own offerings while the other £350m was put into an incentivized switching scheme to try and get up to 200k RBS business clients to switch their accounts.

On 2.2.19 - it was announced that Metro Bank, Starling, and Clearbank won the initial first three grants (£120m, £100m ,£60m respectively) while the rest of the funds were dolled out in themed pools to variety of fintech companies, with the final pool prize winners to be announced on August 19th. For all intents and purposes, these prizes represent effectively "free cash" as their is no equity or repayment terms associated (to my knowledge).

Regulators in the UK and EU seem very much incentivized to increase competition in financial services, but it seems a bit similar to the US where while they're not afraid to jump in and shake things up, details on exact technical execution start to get a bit fuzzier when deadlines approach. Putting Brexit aside, when it comes to building across the EU + UK, each market is extremely different across a wide variety of factors and does require somewhat localized approaches to each. Nevertheless, this does imply that there's ample opportunity for companies that can figure out how to effectively navigate through each market and create seamless, unified experiences, particular for B2B.

In other news - I'll probably be moving my newsletter over to substack in the next few weeks in an attempt to pressure myself to blog a bit more :) - look out in your inbox for a new one soon! I'll leave you all with a great tweet on fintech by A16Z's newest partner below.

All The Fintech - 5.31.19 - On co-branded credit cards

I have historically been a semi-loyal United flyer, mostly due to the fact that Newark is the closest airport to where I live. However, over the past few months I been flying on a few different airlines and while the experiences have all been quite varied, there’s one thing that’s been extremely consistent: the co-brand credit card signup broadcast in-flight.

Naturally, this got me thinking more about co-branded cards and exploring what are the primary business drivers. It turns out the numbers are pretty eye opening. For example, United Airlines - “in the year ended December 31, 2018, 2017 and 2016, the Company recognized, in Other operating revenue, $2.0 billion, $1.8 billion and $1.7 billion, respectively, related to the marketing, advertising, non-travel miles redeemed (net of related costs) and other travel-related benefits of the mileage revenue associated with our various partner agreements including, but not limited to, our Chase co-brand agreement.” It turns out, a big drivers for airline company profit comes not from selling tickets, but rather co-brand credit cards.

But Charley you may ask, how do companies make money in a co-brand relationship? I decided to spend most of my flight back from SF doing some more research and breaking it down into 5 main revenue drivers for most co-brand programs for card issuers (like Chase or Amex) and co-brand partners.

1) Signup Payouts

Whenever someone signups for a United MileaguePlus card with a flight attendant, United gets a healthy signup bounty from Chase, which probably explains why announcements have become so prevalent.

2) Fee Rebates

For every credit card swipe, the merchant typically has to pay interchange on that transaction with a large portion flowing to the card issuer. However, whenever someone spends with a co-brand card at the partner (for example, using Citi’s Costo card at Costo), the issuer [Citi] will issue a fee rebate for “on-us” transactions, thereby enabling the parnter [Costco] to capture a greater share of the transaction as revenue! This often leads to co-brand partners creating unique incentives to encourage more spend since they make more money off those transactions.

3) Revenue Sharing

This is where things start to get really interesting in my opinion - a lot of co-brand card deals have a rev share agreement where if the card-owner spends at other merchants, incurs interest, fees, etc a portion of that revenue will be sent to the co-brand partner! This aligns incentives for both the issuer + co-brand partner to encourage spending for all transactions, not just at the partner.

4) Advertising + Data Sharing

This is a bit indirect, but companies do put a significant dollar value on being able to advertise each other’s products and share user data between the issuer + partner. The partner also often gets aggregated data from the issuer for marketing + demographic insights and behaviors.

5) Selling Miles

Finally, this is a bit unique to travel cards (still figuring out if hotel cobranded cards work like this too…) but airlines such as United will establish a significant contract to sell MileagePlus miles to its co-branded credit card partner, Chase. This ends up being a huge other revenue line item for United from Chase! In United’s 10k, they identified the following significant revenue elements around their co-brand partnership: the air transportation element represented by the value of the mile; use of the United brand and access to MileagePlus member lists; advertising; and other travel related benefits. 

I’m really curious if there are interesting co-brand opportunities for a lot of the new fintech credit cards that are starting to hit the market. Co-brand partners have also gotten a ton of market power over the past few years and have been able to dictate the terms from the issuer - case in point, Amex losing Costco to Citi which was a huuuge deal. It’ll be interesting to see if there will continue to be other big moves with several of the big co-brand card agreements coming up!

For some more fund co-brand readings, see below.

All The Fintech - Neobanks - 4.12.19

The So What

2019 looks to be shaping up to be a very interesting year for fintech - particularly in regards to “neobanks” which got me thinking, what the heck is a neobank anyways? Well thankfully there’s already a wikipedia page with an attempt at a definition: “a type of direct bank that is 100% digital and reaches customers on mobile apps and personal computer platforms only.”

In 2018 - 2019, we’ve seen some big ‘unicorn’ valuations for a variety of neobanks in the US + abroad including ChimeRevolutN26, and most recently Monzo (“rumored”). So what’s the big deal? I thought a quick comparison between Chime vs Chase could be interesting…


Founded in 2013 by Chris Britt and Ryan King, launched in 2014. On Sept 2017, announced their $18MM series B with 500,000 bank accounts opened and expecting to reach $1B in transaction volume by the end of the year.

Less than a year later on June 2018, Chime announced their $70MM series Cwith a $500MM valuation with over 1MM+ opened accounts, adding >100k new bank accounts / month, $4.5B in transaction volume, and saving accounts holding about $150 million (implying an average of $150 / account) - all with just an 80 person headcount.

Less than a year later on March 2019, Chime announced their $200MM series D with a $1.5B valuation with over 3MM opened accounts, adding 200k new accounts / month - all with just a 120 person headcount.

CAC and LTV strategy aside, Chime has been able to quickly acquire users with a highly effective, lean, technology enabled team and that rate continues to accelerate. The longer term bet is that as their users continue to engage with Chime and move from underbanked, they’ll continue to transact using the debit card on larger transactions (interchange revenue), deposits under management will continue to increase (deposit revenue), and Chime will continue to offer other financial products (fee based revenue).


One of my other favorite things to do (sorta joking but not really…) is reading through investor day presentations by large FIs to get a sense of what their strategies are. Banks are unique in that because they’re so large, their development + product strategies are typically set years in advance so what’s generally stated to Wall Street gives a glimpse into the next few years’ priorities.

Chase’s investor day presentation had some really fun stats, including…


Chase banks 62mm households and 4mm SMBs, which represents ~50% of US households. Out of their total consumer base, 22mm are active on mobile (active being defined as users of all mobile platforms who have logged in within the past 90 days, which is also a very interesting way to define that KPI…). This gives Chase the largest active mobile customer base amongst US banks as well as the fastest-growing mobile banking customer base. Chase has also been #1 in new primary bank relationships in 2018 with 9% of the retail deposit market share, and has issued over 99MM debit and credit accounts.

In regards to digital channels, Chase has opened 1.5MM deposit accounts since Feb 2018 to Feb 2019 and the average deposit across all consumer accounts is $527.


While Chase’s Community and Corporate Banking division does have a much larger and more sophisticated business with credit cards, home lending, etc - it’s still really quite impressive to see what growth a tech-first neobank such as Chime can accomplish with 120 people vs Chase at 140,000 people. There are obviously nuances and lots of questions still to be answered about long term viability and whether the growth rate is sustainable, but increasingly so it does feel as though large banks are realizing that all of these upstarts could actually affect the bottom line and the need to focus on product quality is all the more important - and makes these unicorn valuations seem a little less out there :).

Chase Key Business Drivers

Deposit growth rate at 6% CAGR

Focus on mobile engagement

All The Fintech - 1.3.19 - Ma Thoughts on 2019 Fintech

Happy 2019 everyone! Put some quick thoughts below on what's top of mind for me on fintech as we head into the new year.

1) Neobanks - Gradually, then suddenly

  • Neobanks started to get some more mainstream attention in 2018, and I believe that in 2019 companies such as Chime, Acorns, MoneyLion, Empower, Aspiration, etc will continue to scale.

  • By the end of 2019, large FI's will be caught by surprise at the amount of scale that these neobanks will achieve and will start thinking about M&A for user, product, and talent acquisition.

2) Global competition heats up

  • Related to thought number one, 2019 will see later stage fintech companies compete on a global stage

  • UK + EU based companies such as Revolut, Monzo, N26, and EToro have all announced plans to launch in the US

  • Meanwhile US based companies such as Robinhood, Coinbase, Acorns have already launched small beachheads in countries such as Australia + UK

  • A lot of these companies have requisite amount of significant capital to launch internationally and scale quickly, will be particularly interesting to see how it affects the US neobank market

3) Bitcoin price remains (relatively) constant

  • ¯\_(ツ)_/¯ seems as though most retail investors have been burned, so at this point it's mostly hodler or institutional investors

  • would not be surprised if we still see more massive rises + dips driven by algo's chasing signal

4) Enterprise blockchain still isn't really a thing

  • I've blogged about this before, but I'm still super bearish on "enterprise blockchain" - I have yet to see a great use case that's actually easily implementable by a large enterprise

  • Getting an enterprise to buy and deploy a simple database is hard enough...

5) AI moves into overhyped enterprise technology

  • Honestly more of a personal wish due to a lot of personal experiences this year with my banks...

  • The point isn't to completely automate personal banking, the point is make it easier for consumers to get their needs met in a de-risked manner

  • When it's something that should take 1-2 minutes, give me an AI but if it's something more involved, please stop making me click through 500 options, that's not using AI!!

6) Beginnings of a new credit model

  • A ton of companies are starting to investigate / build really interesting new credit models based off data separate from a pure credit score.

  • Companies to look at include Square, Petal, Brigit, Dave, Even, Earnin, Credit Karma, etc

  • I find CK to be really interesting as they've been able to use their scale to convince large US lenders to share underwriting models...

  • (Slowly) moving away from a delayed, pull based model to a real time, consumer-consent push model.

7) Winter is (finally) coming? Raise up.

  • Growth stage companies will continue to raise "mega-rounds" and stay private longer

  • I actually think this is not a bad outcome, allows fintech companies to focus more on long term value creation vs chasing endless growth (although of course they will still need to grow...)

8) Larger tech companies offering more "fintech" products

  • Everything is fintech if you look closely. I don't expect large tech companies to be launching competing fintech products any time soon, but increasingly they are starting to offer more products that look like fintech.

  • Examples include Uber Cash, Amazon Pay + Cash + Lending, Facebook's stablecoin for WhatApp India, etc

  • Privacy topics from 2018 will prevent many of these companies from launching new finance products quickly - public fintech companies to watch IMO are Amazon, Square, PayPal, and FiServ.

9) M&A activity driven by banking core providers

  • Hot take - I think we'll see FiServ ($29B market cap) acquire a "newer-age" banking core provider like a Q2 holdings ($2B market cap), or a large bank acquiring a smaller core banking provider to jumpstart a new application

10) All of the large fintech unicorns stay private

  • Pretty self explanatory - it seems as though most unicorn fintech companies still have a healthy amount of funding (at least off the number of ads that I see still...), so no need to IPO for 2019

  • Unicorn companies will find other ways to provide liquidity to employees while still staying private ala Uber's secondary offerings, etc.

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