Apple will be a bank in all but name

Plus; Monzo to try again to enter the US; Revolut hoping to get a banking licence with new stock structure

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Hey, Fintech Nerds ❤

It has been a hard week for many.

Whoever you are, wherever you are, I hope this week, Fintech Brainfood is a welcome distraction from world events.

There’s lots to get to.

Apple will be a bank in all but name, and Open Banking is how they will get there. Monzo is trying again at US market entry, and Revolut is still hoping for that banking license.

Fintech never sleeps.

Here's this week's Brainfood in summary

📣 Rant: Apple will be a Bank in all but name.

💸 4 Fintech Companies:

  1. Pontoro - Global Infrastructure Finance

  2. Vega Investments - Wealth Management for Gen Y (UK)

  3. Revio - Payments Orchestration for "Africa." 

  4. - Pro-level Currency Risk Management for Tech Firms

👀 Things to Know:

If your email client clips some of this newsletter click below to see the rest

Weekly Rant 📣

Apple will be a Bank in all but name.

Apple offers way more financial products than many realize—payments, savings, credit cards, open banking, BNPL, and even iPhone payment acceptance.


Apple needs new revenue sources.

As new iPhones become minor refinements rather than major jumps, sales from the core device revenue line are slowing, and services become more important. There's also a non-zero risk that AI and spatial become a "new platform," eroding Apple's market dominance for nearly 15 years.

Services make up 22% of Apple’s revenue.

But financial services are regulated.

And Apple isn’t having a great time with regulators lately.

EU law has forced Apple to adopt USB-C and the sideloading of apps away from the App Store. Apple has strong-armed the financial services industry into adopting Apple Pay. It has captured its Apple tax in the App Store for nearly a decade, creating an Apple-quality, privacy-centric consumer experience.

If Apple wants to become its customers' financial control center, it must figure out regulation. 

And it will have to do it in the end-boss of jurisdictions. 

The EU.

The continent that brought you GDPR, Open Banking, and now made the mighty Apple Adopt USB-C. 

But what if regulation is the opportunity?

What if Open Finance in the UK from Apple is a sign of things to come?

Let’s dive in 🏊‍♀️

Thesis: Big tech needs to learn how to manage Big regulation. This begins with the passage of new laws and ends with a landscape change. Perhaps leaning into regulation like Open Finance will enable Apple to become a bank in all but name.

  1. Apple is an interesting beast

    1. The master of ecosystem lock-in

    2. Has insane leverage

    3. Is not afraid to litigate

    4. Owning the device gives Apple a powerful wedge

    5. And they have mastered supply chain integration

  2. Apple Pay is a case study for Apple Culture

    1. Apple was the first to make Mobile Payments a thing

    2. They did it with the device as a wedge, leverage, and the promise of privacy and security

    3. It has become a route into many more products

  3. Apple is a bank in all but name (but only in the US)

    1. They offer nearly every consumer product line and are doing more in-house

    2. Finance is becoming a meaningful percentage of overall revenue and an engine for growth

    3. Finance products were via partnerships (which has some consequences)

    4. Apple hasn't gone global in financial services for this reason

    5. But is making a play for identity in the US

  4. Regulation is finally catching up with the mighty Apple

    1. The EU isn't playing softball

    2. Sideloading could erode Apple's dominance of its ecosystem

    3. However Apple is benefitting from regulation with the UK's Open Banking

    4. PSD3 is coming. Could Open Banking be their play?

  5. Apple needs services and a change of tact

    1. Banks have scar tissue from Apple Pay and saw the Goldman mess play out

    2. The iPhone and Mac aren’t delivering the growth they once did

    3. Apple has some level of existential risk from a possible AI platform shift

  6. Where now for Apple in Financial Services?

    1. Do they lean into becoming more regulated and vertically integrating via Open Finance?

    2. Will we see more M&A?

    3. Will we see more products?

  7. Apple's mixed blessings

1. Apple is an interesting beast.

a) Apple is the master of ecosystem lock-in. What has worked for Apple is creating lock-in. Sometimes with force, sometimes with incentives. Life inside Apple's walled garden is beautiful. Devices screen share or file share with a sense of magic. 

But it enforces this experience in two ways: 1) With a stick for developers and 2) with a carrot for users. 

  • Stick: Apple's App Store has a rigorous approval process, meaning apps tend to work as users would expect, and scams or fake apps have a much harder time in the Apple universe. This comes with a cost. Any payments must pay the App Store tax at 30%, and apps will get rejected if they violate any "App Store policy." Developers complain of arbitrary and inconsistent reviews in a process where Apple is judge and jury. 

  • Carrot: The "blue bubble" for iMessage is a mark of quality and prestige, especially in the United States. The default messaging app on the iPhone happens to use a proprietary format that doesn't work with Android. A non-iPhone user doesn't get the full richness of content that an iPhone user would. This creates a type of social proofing that's especially powerful with teenagers or image-conscious consumers. 

The Apple promise is that our consumers are the most high value because we offer the best experience. We can only offer the best experience if we own that experience to the finest detail. That means they do infuriating proprietary sh*t, but it always works, and most customers don't care.

Once you're in that Apple universe, the switching costs feel high. 

b) Apple has insane leverage. With 1.46bn active iPhone users and the worlds largest company by market capitalization, it has more negotiating power than almost anyone. Even the mighty Google will spend $20bn annually to remain the default search engine on the default Apple browser Safari.

c) Not afraid to litigate. Apple's strong-arm tactics in the courts are legendary. As early as the 1980s, Apple was litigating against the young upstart Microsoft in the courts over Windows 2.0, borrowing many ideas from Macs. Today, whether it's Epic Games, Samsung, or a small indie developer shop. Apple is mighty and will use lawyers to protect its interests. 

(Any large company with a significant market share has to litigate and will get litigated against. This isn't unique to Apple, but what is relatively unique is how consistently they have used this approach throughout their history).

d) Owning the device is a powerful wedge. The mobile phone has become the platform for consumers, and Apple is the dominant actor in the mobile phone device market. Apple can move the market by adding chips, sensors, and features to their phones. This helps them win on things like "privacy" or "security" because the device is physical with a person. Contrast this with Google or Meta, who need online logins, or Samsung, who don't have a cloud-based ecosystem. 

You can see this in Apple deciding they won't allow tracking cookies or the Apple Wallet, which becomes a secure way to store airline tickets, concert tickets, and even credit cards. 

e) Apple is the master of supply chain integration. Securing the right parts at the right price is mission-critical for a company relying on device revenue. The true miracle of the iPhone is the sheer volume of parts worldwide; it secures in volume and distributes consistently. This helps Apple build consistent experience up and down the software, hardware, and distribution stack. 

2. Apple Pay is a case study for Apple Culture 🍎

This modus operandi is true in financial services, too.

a) Apple was the first to make Mobile Payments a thing. The Banks, Telco industry, and handset manufacturers have been trying to enable mobile payments since the late 90s. The idea was to use Near Field Communication (NFC) as a standard to transmit data between the device and a terminal instead of swiping a credit card. By the late 2000s, "tap to pay," and contactless transit was becoming more normal in markets like the UK and Hong Kong.

Every conference article was about "Mobile Payments." Google took several swings at it through the early 2010s. The first iteration of Google Pay was largely a hack. It allowed consumers to add cards in a way that felt like an e-commerce transaction. Despite all their might, talent, and market access, nothing happened. 

b) They did it with the promise of security and privacy, the device as a wedge, and leverage. Then, on September 9, 2014, Apple Pay launched with iOS6. Apple built a full verification process for consumers to add cards securely to their wallets. It felt secure. For banks, this is critical, and for consumers, it enabled an experience that felt "Apple good."

Apple already had the chips required in their devices; they'd soft-launched the wallet and, behind the scenes, built the partnerships with the large banks needed to drive enough consumer and merchant adoption upfront. 

From a bank's perspective, Apple was disintermediating the consumer relationship. Instead of using the bank's app and brand, now they're using Apple, and the bank was just behind the scenes. Apple would also take a chunk of the card-issuing bank's revenue (interchange).

Initially, there were some howls of pain from card divisions in the banks. Apple negotiated hard. The experience had to be implemented by the bank in the way Apple dictated, and the revenue share was non-negotiable. 

Some banks pushed back, others dragged their feet and delayed launching, but eventually, most fell in line. 

In 2022, Apple Pay processed over $6 trillion in payment volume and is the #1 mobile wallet. That makes it bigger than Mastercard or AliPay and halfway to Visa. In 2021, it accounted for more than 92% of in-store debit Mobile Wallet transactions.

(Visa and Mastercard would point out here that most of those transactions happened on their rails, too. The salient point is Apple got a piece of that massive volume).

Apple Pay dominates mobile payments in the West.

c) It has become a route into many more products. Once you have a basic payment behavior established, cross-sell opportunities open up. Apple has built concentric circles around the payment experience, like a basic card and savings. Everything it does feeds its ecosystem, and its ecosystem feeds everything it does. 

3. Apple is a Bank in all but name (but only in the US). 🏦

a) They offer nearly every consumer product line and are doing more in-house. BNPL, Credit Cards, payment acquiring, family cards, gift cards, savings accounts, and now open banking. They've avoided riskier products like term lending but secured a lending charter for their BNPL product. According to recent rumors, Apple may develop its own payments processing infrastructure in-house

(Image courtesy of Whitesight)

b) Finance is becoming a meaningful part of their overall revenue. 22% of revenue comes from "services." That's up 8% YoY when iPhone and Mac sales are slowing. Services include the app store, video, cloud, Apple Care, and payments. We didn't get a breakout of the results, but Tim Cook mentioned that revenue hit all-time records for Cloud, Apple Care, and Payments on the earnings call. Likewise, payments don't get a breakout. However they did mention Apple has $10bn deposited in savings accounts and that the launch of savings and pay later contributed significantly.

(Image from Mac rumours)

Given that this is becoming the growth engine for Apple revenues, they must continue to launch new products and geos. It's also critical for them to defend their take rate on the App Store and other cloud services. 

c) Finance products were via partnerships (which has some consequences). BNPL, Apple Card, and Apple Savings all came via a partnership with Goldman Sachs. Apple Savings had a better rate than the Marcus by Goldman savings rate when it launched. 

But after the Apple Card launched, it suffered rumors of a CFPB investigation it gender bias in credit decisions, a higher-than-expected level of chargebacks from users, and even Tim Cook not being able to pass KYC. Now we hear rumors Apple wants to breakup with Goldman.

I've written about this many times, but this is such an interesting culture clash of two organizations at a point in time. 

  • The Deal-Maker: The East Coast deal-making investment bank that does the "deal of the century," winning the mighty Apple as a client. But also a bank with little experience in cards and what could go wrong and launching products on multiple fronts. It has to be regulatory compliant and keep Apple happy. Rock, meet hard place.

  • The Tech Gorilla: Apple wants things their way or not at all. The best economics, the UX a certain way, and when things go wrong, Apple doesn't have the control it loves to be able to fix it. But you can't control KYC/AML. Tim Cook gets impersonated and should be flagged by a good KYC process for review.

Apple Card and Savings have been an unmitigated success for consumers, but it was too much too soon for Goldman and a huge lesson learned for Apple.

But fixing it may be harder than they realize

d) Apple hasn't gone global with financial services. The gulf between markets where Apple Pay is live vs. everything else is noteworthy. It was entirely a domestic endeavor until they launched the Open Banking feature for Apple Wallet in the UK. 

Apple loves vertically integrating, but that's impossible in financial services, as each jurisdiction has different partners and license requirements.

As part of iOS 17.1, the Wallet app will now show the user's account balance from their bank and a history of deposits and payments. Balances will also appear when buying something with Apple Pay.

🤔 First signs of life after the Credit Kudos acquisition. Apple acquired UK Open Banking provider Credit Kudos in March of 2022, and since then, it's been typically hushed from Cupertino. 

🤔 Will Apple Pay Later be next in the UK? Credit Kudos' use of open banking data for cashflow-based underwriting made it unique in the UK landscape. This is now common in the US but still very rare in the UK. Apple can now underwrite, but does it have the partnerships and regulatory understanding it needs to execute? 

e) Apple is making a meaningful play for identity. Digital identity is hard. Unless you're in India or markets with top-down government-issued digital identity, KYC and AML are a mess. Documents, paper licenses, and proof of address still run the day and create massive risk. Identity is such a core primitive of commerce that owning it can unleash innovation. 

Apple is now actively working with Arizona, Colorado, Maryland, and Georgia to add a driver's license to the Apple Wallet. This can now be used in an increasing number of airports. One of the earliest internet memes was s, "On the internet, nobody knows you're a dog." 

Well, Apple would

This feature would unlock KYC for new products and services digitally, giving Apple a huge structural advantage in commerce and finance. Prove your identity for new schools, rent, job applications, or wherever you're doing something

And pay Apple for the convenience. 

4. Regulation is finally catching up with the mighty Apple 👩‍⚖️

a) The EU isn't playing softball. While a US election might limit the anti-trust pressure Apple faces domestically, it's not the US regulators they must be concerned about. Increasingly, China and the ASEAN region are where device sales growth comes from, and the EU has proven it can force Apple to adapt to new standards. Device charging and USB-C is just the opening salvo. 

b) Sideloading could erode Apple's dominance of its ecosystem. The European Union's Digital Markets Act (DMA) requires "gatekeepers" to digital services came into force in November 2022. This could result in Apple making major changes to its App Store, Messages, FaceTime, and more. The biggest threat is its 15 to 30% take rate on App Store transactions and in-app purchases. One of the reasons we haven't seen more commerce in mobile applications is this Apple Tax, which makes Stripe's 2.9% seem cheap

"Sideloading" means installing an App but not via the App Store. This means an App won't have gone through Apple's security and approval processes. Apple claims this will lead to a lack of security privacy and increased malware. 

They're not wrong, but Apple makes plenty of money in advertising. I've always been dubious of their privacy claims (yes, I'm a Pixel owner). Enforcement of this ruling starts in Q1 2024 and could create a wave of innovation, risk, and opportunity. 

c) Apple is benefitting from regulation with Open Banking in the UK. A counter-example is how regulation has actually helped Apple. The acquisition of Credit Kudos has allowed them to build an instant balance capability in Apple Wallet that they haven't replicated elsewhere. In the US, the "conversion" issue hampers user experience. Open Finance is a battleground between private market actors with limited regulatory clarity (although that may be changing; see Things to Know). 

In the UK, Open Banking just works.

d) PSD3 is coming. One of the big misunderstandings about Europe and the UK is that we have "regulated open banking." We don't. We have regulated open checking. Want to see mortgages, loans, credit cards, or investments? You are sh*t out of luck. 

PSD3 will provide a regulated basis for all products. People also forget that Open Banking in the UK provides a regulated framework for payment initiation. In 5 years with PSD3, Apple could offer almost any service via its Apple Wallet without partnering with banks.

PSD3 will also require a "dashboard" where consumers can control and manage their data. Does that sound like Apple Wallet to you? It does to me.

Open Finance is how Apple can become a bank in all but name.

If the US enters its Open Finance Endgame, it's possible there too.

They have to shift with the times.

5. The market is changing around Apple.

a) Partnerships will be harder if banks have scar tissue from Apple Pay. Only fools rush in, as Goldman learned the hard way. If you're a senior leader in a bank and you saw the Goldman news, I imagine you'd have your guard up in any negotiation. Rightly so. As a bank, you don't have to say yes to Apple's demands, but they need a bank partner if they offer deposits or they need to get a charter (which in the US is nearly impossible). 

b) The iPhone isn't the growth engine it once was. Apple delivered $81.8bn revenue in Q2 2023, but iPhone sales dropped from $40.6bn a year earlier to $39.6bn. Apple has reached saturation for its core product; no other product line comes close. If anything is delivering growth, it is the services revenue line.

c) Apple has some level of existential risk from a possible AI platform shift. Relying on the device and ecosystem lock-in is predicated on the iPhone and its ecosystem being the dominant platform for consumers and businesses. It is making a play with Vision Pro to start owning spatial and doing things in AI. 

From the outside, they're nowhere compared to the foundational models and their big tech competitors. Open AI just raised at a $90bn valuation, Claude at $30bn, and everyone but Apple has a Generative AI story.

I mean. Siri is sh*t isn't it? 

IF (and that's a big if), AI became a thing, and we started transitioning away from Mobile. 

What's next for Apple broadly?

Two things. 

  • The ecosystem becomes critical. If Apple can't lock users in by force, they must lock them in by choice and convenience. iMessage has proven they are good at this. The services revenue line is the growth engine for Apple Inc., and financial services can be a massive part of that.

  • On-device AI becomes a thing. Google's recent Pixel phones have featured Tensor chips that are not as fast in raw speed but way better at AI than competitors. This enables them to do radically better voice-to-text or image editing than the competition. GDPR, identity, and financial services demand data privacy. Apple has convinced the world it is good at on-device privacy. Throw in "private AI assistants," and they could be in an exciting place.

6. What happens now for Apple Financial Services? 💸

a) Do they lean into becoming more regulated and vertically integrating? Or go the Open Banking Route? This would be Apple's ideal, but it's not always possible. Getting a banking charter in markets like the US is near impossible and would open a new front of regulatory scrutiny. The reality of Apple's "vertical integration" is it relies on 1,000s of suppliers across the globe to deliver parts. 

But "vertical integration" might be a possibility via Open Finance. Apple can become a bank in all but name if regulated Open Finance is available in more markets. The open question remains if that is possible in the US (especially with an upcoming election). But in Europe, it's more than possible, it's probable. 

Apple is also shifting more manufacturing to India, a country which is perhaps the growth engine of the next several decades. With a rising middle class and amazing public financial services infrastructure, should Apple make a play here, too?

b) Will we see more M&A? Perhaps Apple's strongest moves in financial services came via acquisitions. Apple acquired Mobeewave in August 2020 for $100m, allowing it to turn iPhones into payment terminals. This service is now live with Square, Stripe, Fiserv, and Adyen. They acquired Credit Kudos in March 2022 and launched their Open Banking feature recently. 

This feels more like Apple. When Apple acquires, they can own the experience. If I were them, a 3rd generation issuer processor would be on the shopping list. 

c) Will they launch more products? Almost certainly, yes. The launch of payment acceptance is an interesting nudge towards SMBs and commerce. If sideloading means the Apple Tax gets eroded, does Apple go deeper into the commerce "experience?" It already offers delivery notifications, so this would be logical. 

The big question is, who's the balance sheet and regulated partner helping them in the US? Will there be more at-scale bank partners elsewhere? 

7. Apple's mixed blessings ⛪

Apple has become the benchmark for Big Tech Fintech in the West. 

Apple Pay is synonymous with Mobile Payments, generating billions in revenue and becoming the growth engine for the whole company. But as they get into payments, Apple the Big Tech must learn how to manage Big regulation. 

Apple is patient and consistent. Apple likes to do business on its own terms. And it can, it is mightly. It has an incredible economics and market position with Apple Pay and can leverage its ecosystem for sweetheart deals.

But Apple has also learned a ton of lessons in recent years. 

Parternships are hard.

Regulation will get you.

And now there's a non-zero risk of a platform shift.

The Big Tech's Fintech Dilemma: Can the tech company get regulation before the regulator gets the tech company to heel? 

Is regulation even the savior for Apple? By leaning into Open Finance, Apple could become a bank in all but name. 

Apple has the ultimate wedge and market position.

If anyone can make it happen, it's the folks from Cupertino.

And I'm not going to bet against them.


4 Fintech Companies 💸

1. Pontoro - Global Infrastructure Finance

Pontoro curates loans that banks have originated for infrastructure (roads, bridges, airports, etc.) and places them on their platform. Marketplace participants can then access a pool of these infrastructure investments (loans). Pontoro also includes a secondary marketplace to sell those assets. 

🤔 This is a risky asset class but with huge demand. I wrote last week about the explosion of private credit and specialist lending. One example is infrastructure finance. You know who did a lot of international infrastructure financing that hasn't gone so well? China. Building an oil pipeline in Niger seems like an excellent investment in natural resources until political instability upsets that. The team here has the chops to make this work; the CEO was the CFO of Peleton and, before that, worked in Blackrock private equity. Ultimately, they're building a marketplace, and the buyers need to ensure they understand what they're buying.

2. Vega Investments - Wealth Management for Gen Y (UK)

Vega is a wealth management platform for the high net worth, digital-first Gen Y consumer. They construct advanced portfolios from public and private markets and provide analytics, lending, and even tax structuring. 

🤔 The UK doesn't have a winner in this category yet. A generation is hitting middle age. As Gen Y turns 40, they're thinking a little less about new experiences and a little more about retirement. Having a savings account is fine with inflation and macro, but accessing a diversified portfolio of products like credit is a huge benefit. All the banks are trying to court this generation, and the trading apps are trying to upsell, but it is an unsolved market segment. Anyone earning above 6 figures in the UK hits a curve where they become the highest-taxed part of the population, with take-home income being less than 50% if not optimized. A service that can lend, tax plan, and maximize investments has significant appeal. 

3. Revio - Payments Orchestration for "Africa." 

Revio provides payment orchestration for the African context. It provides a single API for 30+ payment methods, optimizes checkout, and can automate recurring billing. The checkout optimization includes combining SMS and Whatsapp at checkout to re-activate a user who might be hesitating. The service is available in 25 markets.

🤔 Context matters. Every payment type has quirks, and building + maintaining the software to handle those can become an entire industry. Payment orchestration has been a theme in Europe and the Americas, so it makes sense to see it in one of the most challenging, diverse, but highest-growth markets.

4. - Pro-level Currency Risk Management for Tech Firms helps tech businesses handle currency risk as they scale internationally. While many exchange services focus on rates, Bound zeroes in on proactive risk management to ensure currency risk doesn't become currency cost. Their website says it best "Volatile currencies can really f*ck up a tech company's finances, especially in uncertain times."

🤔 Currency volatility can erode revenue and runway. It means you can "lose money" and runway just because something happened in the markets. If you go to move the money in "spot" markets, you get today's rates. But the pros will lock in a price early when a rate with something like a forward or futures contract is good. These services always existed at a bank or broker's FX desk, but they look like something from the 80s. Often, they're really nice Wall St / City types who always want to speak to you on the phone. Someone needed to package FX brokerage for the 21st century for treasury investments, like Meow, Arc, and Round*. 

Things to know 👀

Monzo has hired a new US CEO in a second attempt at US expansion. Conor Walsh was head of product at CashApp, and the COO noted that Monzo was still working out the right product-market fit with a small team at a recent conference.

🤔 Monzo's ambition was always to be more than a UK-only Bank. The first investor prospectus said, "the first bank for a billion users." Monzo was founded at the dawn of Open Banking, a new path to licenses in the UK and amid global scale tech giants reaching billions of users. It seemed rational. 

🤔 Geography expansion is hard, but all the rage. Every US Fintech is trying to head to the UK or elsewhere as it seeks enterprise value and leverage the platform it has. We've not had many Fintech equivalents of Adele or Ed Sheran, but maybe Monzo is it. (Would that make Chime or Ramp Taylor Swift? You decide)

🤔 The UK is a solid platform for Monzo to build from. Monzo found the pandemic and transition to being a full bank challenging. With a CEO change, they're reaching MoM profitability as they go deeper into lending. More interestingly, while most banks wrestle with tech debt, Monzo arguably has one of the most solid foundations of any in the world (except possibly Nubank). 

🤔 The US is an ultra-hard mode for getting charters. The number of new FDIC chartered banks annually is in the mid-teens, averaging 0 from 2010 through 2016. Meanwhile, ~100 banks per year shut their door or get acquired. 

🤔 Monzo's is entering a crowded market for consumer everyday spend management. They are still the world's best everyday Neobank and account to me. But now, Monzo is entering a market where Venmo, CashApp, and the ecosystem of Fintech companies have solved many of the problems Monzo solved in its V1 in the UK in 2016. Finding a wedge will be hard. Perhaps the best route for Monzo is to follow the lead of SoFi. Find the wedge via specialist lending. That's not their DNA, but it could be.

Revolut investor Softbank has agreed to give up its preferred class of stock to help Revolut secure a banking license in the UK. The Bank of England does not wish to see such arrangements. However, Revolut's inability to produce clear and accurate accounts is a giant issue for the central bank and UK regulators that must be resolved. 

🤔 Revolut's growth culture isn't compatible with regulators' control culture. Revolut is the master of blitzscaling. That's why they have more users and products and operate in more markets than any local competitor. However, move fast, break things, and squealing in the press isn't the best tactic for securing a banking license, especially in the UK. 

🤔 Compliance matters. The Fintech is also allegedly in discussions with the FCA over a failure that allowed £1.7m ($2.06m) to be released from accounts flagged as suspicious by the National crime agency. In UK circles, the lax controls at a certain Fintech are almost a running inside joke. It will take a ton of work to turn that around.

🤔 Credibility matters. The inability to produce accounts is a huge black mark on credibility. 

🥊 Quick hits: 

  • The SEC takes another L as it loses a motion to appeal🤔 The US is now an outlier in the developed world, having not passed legislation to legitimize Crypto. Whatever happens in the next election, a change of strategy is required.

  • Citi group has "no room for bystanders," says their CEO 🤔 Citi is eroding market share and is just sort of there. (Except for trade and treasury, which is doing interesting things) The CEO has a tough job to turn that around because big political companies rarely have one leader. "Stakeholder management" is a thing because everyone can say no, and nobody knows who says "yes." Citi won't do an Elon and fire 80% of the staff, but some measure of shock therapy is a good idea. They had a good results season. But so has every bank. Rates are up, but the recession hasn’t hit. In a “higher for longer” world, that will change.

Good Reads 📚

If you're offering lending products and not a bank, you need to finance that lending. This post makes a few key points. Firstly, investors become interested if you're financing more than $50m to $100m. You need to show a track record for the business model and risk management, and debt investors will pay attention to your core unit economics and cash flow profile. The critical question is, can you generate enough cash to service the debt? The deal can run to 1,000 pages of legal documents, each with 3 to 10 drafts moving back and forth.

🤔 Experience matters. Alex Song has spent a decade as a credit investor. In a deal of this complexity, context is everything. Knowing mechanics like portfolio trigger calculation and how they could impact you isn't something ChatGPT is really up to. 

🤔 As debt is sexy again, this is a must-read. Higher-for-longer interest rates mean a bigger opportunity for those who can market lending products with a low cost of funds. But getting that cost of funds down if you're not a bank is about having the tightest possible capital markets approach. 

🤔 New Supply, new demand? This growth in demand comes at a time when the supply of credit "platforms" are also emerging. Finley is a platform for managing debt capital as a Fintech or non-bank. Moment is a platform for a new generation of potential investors in credit as an asset class.

The SIBOS conference is the annual gathering of all large banks to discuss the future of banks being banks. As you'd imagine, that's as male-dominated as gatherings get. In this concise piece, Leda and Sam talk about a group of women walking. As crazy as that sounds, women who've attended countless previous shows walking together, confused, amazed and generated questions. 

🤔 Perspective matters. Yours isn't the only one. 

Tweets of the week 🕊

That's all, folks. 👋

Remember, if you're enjoying this content, please do tell all your fintech friends to check it out and hit the subscribe button :)

Disclosures: (1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. (2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a (3) Any companies mentioned in Rants are top of mind and used for illustrative purposes only. (4) I'm not an expert at everything you read here. Some of it is me thinking out loud and learning as I go; please don't take it as gospel—strong opinions, weakly held.