All The Fintech - Oct 9th, 2017
|Charley Ma||Oct 10, 2017|
Happy Monday! I actually had a much longer post here, but unfortunately the platform that I'm currently trying out to send out this newsleter (Revue) crapped the bed and failed to save my entire post :(. In the interests of just getting something out this week, I'll try and distill the same thoughts into a much shorter list and apologies in advance if there are typos! Without further ado, 10 bullets, of which some are reasons, on why I'm bullish on financial technology.
1) We are still in early innings when it comes to financial technology, and I'm super bullish.
2) There are a ton of market headwinds and trends which will lead to opportunities to create large, market defining companies. Huge college debt load, low active use of credit cards, low home ownership, and much more. (Check out Benchmark's Sarah Tavel for more reading)
3) There is no Facebook or Snapchat today in Fintech. One could argue that companies such as Venmo and Credit Karma are perhaps the closest on the consumer side perhaps...but still not quite close enough in regards to scale for DAU. The time to start to create a new financial brand is today for the future. Chase was founded in 1799, Amex in 1850, Visa in 1958, and PayPal in 1998.
4) Creating products in financial services is difficult, one way to accelerate product experience is knowing what products to integrate and who to integrate with (e.g. what's involved with integrating an ODFI for ACH, how to connect to Visa direct, etc)
5) Creating a large company in social is pretty much next to impossible today (IMO), the large social media companies dominate that space in relation to product execution and scale. Financial technology is the next closest market to social in terms of sheer size and number of addressable users, people interact with their finances every day.
6) That being said, banks have an advantage of being hundreds of years old and I believe that most people like their money in an old, established institution.
7) The above norms are starting to change as demographics shift, real opportunity to build a brand (although this takes time too), see point 3. Starting to see this across several financial technology companies today (SoFi, Affirm, etc)
8) Financial products driven by technology need to be at least 100x better than what's currently offered, and this needs to be obvious. One of the hardest experiences to create is an immediate result - something I'll explore later...
9) Tech is not front office at banks, although this attitude is starting to change (I think GS is making the most moves towards moving this forward). Best engineering and product talent are not going to banks.
10) More experienced founders and teams creating more financial services products + companies. While prior experience is certainly not a prerequisite, does offer significant advantage (i.e. point 4), this creates a feedback cycle where more information is shared into the market. The less knowledge/expert asymmetry there is, the better for the market and experience around esoteric aspects becomes less necessary (or can hire more experts when required)
TLDR - excited for what other products will be created in fintech as well as tracking what current companies do today to continue to capture marketshare and mindshare. Still a whiles to go :).