March 2020 - Vertical Neobanks

This new way of winning distribution is quite different from the old way. Yes it’s also capital intensive, but you’re not buying real estate. You have low fixed costs, and variable costs that scale with usage (vs. real estate servicing that you pay regardless of use). And where branch-banking might have had winner-take-all dynamic regionally, there... See more

Ultimately, leading players want to take over the rest of the finance space leveraging their user base, technology and brand. Payment companies doing loans. Payroll providers starting to act like aggregators of services. Accounting solutions doing planning. Expense management platforms doing procurement.

The point is context — by abstracting a core function and delivering it in situ, value is created. That is achieved by removing friction or utilizing unique data. Shopify is the canonical example. In recent years, the e-commerce platform has moved beyond integrating Stripe to offer a range of embedded products, including merchant lending that uses ... See more