The Next Great Consumer Fintech company

Plus; Apple Card has 12m users but nobody is spending, and New York sues Citi for failing to protect fraud victims

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Spatial computing is here. It started looking like a toy, but will it stay that way?

Perhaps it's a glimpse of the future. Right now, it's laptop screens in a 3D space, but in the future, who knows? I imagine it’s like the first graphical interface in XEROX PARC. It is early, but it feels possible.

New hardware. ✅

AI. ✅

And the one nobody talks about enough?

Tokenization. ✅

(But not the token’s you’re immediately thinking of.)

Three new megatrends. We might be on the cusp of a revolution.

With all that how can we predict the next great Fintech company? That was the task I set myself for this week’s Rant.

If the next tech megatrend is not so simple to predict, how can we predict the next great Fintech company? That was the task I set myself for this week’s Rant.

Here's this week's Brainfood in summary

📣 Rant: What will the next great consumer Fintech company look like?

💸 4 Fintech Companies:

  1. Xillion - Creating financial independence with AI

  2. Bilanc - Mixpanel for CFOs

  3. Tandem - The account for couples

  4. Karty - CashApp for Qatar

👀 Things to Know:

GMail users. Want to help a guy out? If you find this in your promotions folder, move it to inbox.

Weekly Rant 📣

What will the next great consumer Fintech company look like?

The consumer Fintech space is crowded

There's a Neobank in every primary color. BNPL, trading apps, and now savings apps exist for every audience. There's a Neobank for doctors, movie production studios, and even sports teams.

New propositions get ever more niche, suggesting innovation is tapped out.

I don't think it is.

Mainstream consumer Fintech is reaching maturity. It has to diversify to grow, and most user growth is behind it. Just about every good idea and 1000s of bad ones got funded in the 2021 cycle.

But here's the twist.

Consumer businesses move in generations.

Gen X brought us online-only companies, like E*Trade, Ameritrade, Netbank, and, of course, PayPal. Gen Y was the mobile-only era of everything from Chime to Robinhood or services born in the cloud land everything-is-e-commerce like BNPL or Stripe.

Gen Z will deliver a new wave of consumer Fintech companies, but it's not obvious they have a clear technology megatrend that will drive the shift. It’s still early for spatial (unless the Vision Pro can eventually out-sell the iPhone), GenAI feels like a platform shift but dangerous for consumers, and Crypto is still stuck in its messy teenage phase.

The temptation is to write off consumer Fintech without an obvious megatrend driving it. But those megatrends will be obvious in hindsight. 

Every generation grows up in a different world from their parents, creating new brands and new billion-dollar businesses. We see this in their social, gaming, and e-commerce habits already. Over 50s use Facebook, 30 somethings Instagram, and the teenagers live on TikTok. 

To see the future we have to look for the patterns.

There's usually two

  1. New megatrends in technology

  2. New brands respond to new consumer preferences 

The next big thing always starts out looking like a toy. 

So, what's the next big thing in Fintech? 

  1. Gen X was Online

  2. Gen Y mobile-first

  3. A lesson in perspective

  4. Gen Z lives in a different world

  5. Gen Z might be AI-first, spatial, or nothing at all

    1. AI-first will become the default way to interact with financial services

    2. Spatial will start skeuomorphic (branches in AR) but in time new hardware unlocks new possibilities with devices

    3. Tokenization is already transforming payments and identity (e.g., passkeys)

  6. Don't dismiss the hype just because there's plenty of it

1. Gen X was online.

The megatrends: The web browser, internet access, and email made everything go online. 

The brands: Amazon, Microsoft, and Netscape entered the public consciousness.

The benefits: Consumers no longer had to visit a branch or call someone; the service generally worked 24/7, and a whole e-commerce category emerged. If a branch or phone line wasn't available outside office hours, online probably was.

Online is an ultra-low way to service customers because, unlike the telephone or bricks and mortar, there's no building to pay for or staff required to operate. Once the site is live, it should just sit there.

It's crazy to think, looking back, how much of a toy all of this appeared to be. 

Amazon was widely lampooned in the press as an obviously stupid concept from the .com bubble. PayPal was viewed as "not secure." by bankers and much of the payments industry, and several banks had internal teams trying to build their own Internet.

2. Gen Y was mobile-first 

The megatrends: Cloud, social, and mobile made everything 24/7 and on-demand.

The brands: Facebook and the iPhone became a generation's dominant form of social interaction. 

The benefits: Anything you could do on a laptop could be done online. In addition, the mobile device came with sensors like cameras, geolocation, or fingerprints that changed the services that could be offered or how security worked. 

Mobile is even lower cost than online in most cases, and cloud platforms made the cost of starting and running a web-scale business 10x less.

"Netflix and chill" became a thing. 

Stripe made it possible for any developer to accept payments online.

While the online world still relied on the branch or telephone for account opening, consumers could now take pictures of their ID. Towards the end of this generation, we also saw mobile payments emerge and slowly come to dominate. 

Today, Apple Pay is a juggernaut.

Most VCs have a Fintech team, and 4 out of 10 checking accounts are opened at Neo or digital banks. Americans average 3 Fintech apps on their phone, and the default "account" used by growth businesses has shifted from SVB to a Fintech company.

So what's next?

What is Gen Z Fintech?

3. The danger of making predictions.

Life is a constant cycle of the older generations trying to figure out young people so they can sell them sh*t and hit this quarter's sales target. 

~2010 was the "year of the millennial," and the Internet was full of articles about what these younger, mobile-addicted consumers wanted and how they'd change the workforce.

Now, Gen Y has kids and a mortgage. 

I'm pushing 40. I don't have TikTok installed, and if you get drinks in me, I'll waffle on about obscure late-90s video games. 

I don't live in the world that Gen Z inhabits. 

But I have been that young person in the workforce.

I started my career at age 16 in a software engineering apprenticeship (I guess you'd call it a "new collar" job now). What was obvious to me was alien to my colleagues. Can't figure something out? Just Google it. Can't figure out the new software version? Click around and find out.

But now I'm scrambling to play with the latest tech while being a Dad and paying the bills. 

And the MBAs in my LinkedIn inbox live in a completely different world of normal.

The lesson is humility. 

With that said, I've always been fairly good at spotting patterns, and some are emerging in Gen Z.

4. What's normal for Gen Z that isn't for you?

Born between 1996 and 2010, some of Gen Z aren't that young anymore. They're pushing 30, spending $853bn per year, grew up on Youtube, and prefer TikTok to Meta. 

100% of a Wharton professor's class used AI in their homework.

The future is here. It's just not evenly distributed. 

For a generation of people:

  • Generative AI does the homework

  • Your social life exists more online than in person

  • Your first bank account was probably a family card like Greenlight 

  • Live streaming and video have always existed 

  • Your Dad or both parents play video games

  • Crypto and day trading always existed

The next great consumer Fintech brand will be built by someone for whom these things are true.

Likely on a new generation of Fintech infrastructure.

5. The Gen Z megatrends.

New megatrends: AI, Spatial, and tokens.

AI makes 10x productivity gains on basic tasks available to everyone. Spatial and tokens are works in progress but could change how we interact with computers and commerce. 

Can something displace the mobile? I’m not sure. But tokens will displace everything, just not the tokens you’re thinking of.

a) 🤖 AI Thesis: AI will become the default way to interact with financial services, putting a wealth manager in every consumer's pocket, *eventually*.

There's a very real possibility AI is the new platform. OpenAI is trying to make an app store around ChatGPT; the device is a super logical place to anchor that. It's with you 24/7, adds security and gives real-world context about a user.

👉 Takeaway: AI as the way to interact with financial planning and action will eventually be a default (hallucination aside)

👉 Takeaway: The current boom of consumer Fintech AI companies will eventually blitz scale towards something workable. Timing is the question (and no it won't just be PFM via AI).

b) 🌌 Spatial / Hardware Thesis: We won't be visiting branches in Vision Pro, but new devices will force a new consumer behavior that will create a new way to distribute financial services. The question is, who wins? Is it AI on an iPhone, Rabbit R1, or a Vision Pro?

Meet the Rabbit R1. The hardware is also a personal AI agent that can understand human intent and carry out actions. Even if it’s not this device, it shows what AI as a platform could feel like as a user experience.

But why doesn't Apple just build this? Maybe they will, but Apple is also tied into a revenue stream predicated on its app ecosystem. This isn’t 2010 Apple. This is Apple that made the disappointingly poor Siri.

Although there are rumors Apple is developing its on-device LLMs, will that threaten its app and services ecosystem? Apple is on defense, not attack.

Speaking of Apple. 

Is the Vision Pro the new Apple TV or the new iPhone? 

Apple Vision could make interacting with finances more natural. Today, it is a ttoy for the tech early adopters. The first products will be skeuomorphic (e.g., doing spreadsheets in 3D), but what if Apple Vision is the Apple TV? An amazing experience but only for a small niche.

My take is that Vision Pro is a glimpse at an eventual future. The NEXT computer was for Apple laptops, and the XEROX PARC mouse was for the home computer. The big question is when not if.

I’ve already seen FIVE “Spatial Banking” blog posts by consultants. That’s horrifying. We need to see spatial and all hardware in the context of the other two trends, AI and tokenization.

👉 Takeaway: Spatial UX is still in its experimental phase. We won’t visit branches in AR soon (and anyone trying needs to stop)

👉 Takeaway: Hardware-enabled AI feels inevitable, but it appears on an iPhone before Spatial. (PS. Anyone building “spatial branches” needs to go away)

👉 Takeaway: Tokens on hardware are here now. Speaking of tokens.

c) 💸 Tokenization thesis: Tokens will become the default way payments, identity and assets are recorded and transferred. Impacting payments first and all assets over the next decade.

Tokenization is confusing as a topic. Let's split it in 3.

  1. Tokens the password replacement on devices and social media

  2. Payment tokens in the classic cards, open finance, Visa, Apple, PSP sense.

  3. Asset tokens in the Bitcoin, Blackrock, Stablecoins, tokenized real-world assets (RWA) sense

Passkeys are being rolled out by Google, Apple, and the card networks as an alternative to passwords for secure authentication. In time, every payment and secure interaction in the economy will change. This could shift where identity lives and, in turn, create winners and losers in payments and finance.

Payment tokens are already becoming standardized to facilitate transactions, while new asset tokens like stablecoins show promise for mainstream adoption as a consumer cross-border payment rail. 

Asset tokens will allow every ownable asset to be recorded as a token. Cash, Securities, Art, Music, everything. Interaction with token-based money and assets will happen in the background for most consumers.

👉 Takeaway: Apple and Google wallets could become identity and financial services hubs. Especially if they have secure account access via open finance (which also uses tokenization)

👉 Takeaway: Consumer Fintech will build with tokenized access to payments, wallets, and account data as a default

👉 Takeaway: The next great cross-border consumer Fintech might use Stablecoins as a default.

New brands: TikTok, Temu, and Shein represent new e-commerce powerhouses. YouTube and Fornite are more likely to use BNPL services like Klarna than their parents. We don’t know who that will be in Fintech yet.

New benefits: AI could become the personal shopper, wealth manager, and tax planner. Anything a high-quality lawyer, advisor, or personal trainer would do might be more accessible.

There's also a wildcard here. This is a generation who's surprisingly into vinyl. After 17 years of consecutive sales rises, 2023 also saw a surge of another 21% in the first 6 months.

A generation who grew up with video games could go from subscribing to everything to owning things again. If that happens. Digital loyalty, digital event activation, and digital identity have become powerful tools

But who knows. Maybe it's finally time for the Apple Store of branches and money clips to comeback.

Ok I'm kidding.

6. Don't dismiss the hype just because there's plenty of it.

Every time an innovation comes along, the first reaction of old people is, "We already have that."

  • The Internet lets you communicate with anyone in the world. Ever heard of a telephone? 

  • You can watch video through it. Ever heard of a TV?

  • Neobanks give you a card and a mobile app 100% digital. "We could do that too."

Three new megatrends can change how things we take for granted work daily. The combination of the trends is critical. Mobile + Social + Cloud reshaped everything in society and the economy in the past 15 years.

AI + Hardware (Spatial) + Tokenization of the economy will reshape things just as much. Every Fintech company in consumer is doing something in AI. There are 1000s of them. Perhaps it's fool’s gold. But what if it's not?

Personal Finance Management always got stuck at that 10% of people who love to budget. They're better spreadsheets. 

But AI extends humans and could be better humans for people who can't afford more than a mobile app and self-service in their finances today.

Tokenization makes digital identity and instant secure payments possible. If you can instantly and securely create accounts, pay, sign contracts, and manage your data, that’s the biggest economic unlock I can imagine in digital finance.

Put all of this in a Spatial experience, and you redefine frictionless.

Many will try.

Many will fail.

But it's when, not if.


PS. You’re not paying enough attention to how identity tokens (passkeys), payments, open banking, and asset tokens will collide in the next decade.

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4 Fintech Companies 💸

1. Xillion - Creating financial independence with AI

Xillion analyses 401ks, potential real estate investments, your current risk, and your trajectory to financial independence. Users can upload their finances and receive personalized guidance as a "money score." It is a measure of how effectively a consumer is managing their own money. If a credit score evaluates how well you pay back money, the money score measures how well you manage it. The product is in beta and free of charge in exchange for feedback. 

🧠 Everyone is trying to build wealth manager AI; Xillion's approach might be a sign of what's coming. The right money management decisions are incredibly circumstantial. That requires a lot of number crunching and expertise. To compress all of that into algorithms is the holy grail of Fintech.

🧠 There's so much here that I almost can't believe this isn't mechanical turk. Take the 401k analyzer; it will analyze your current fund performance, make alternative suggestions, and help you combine previous ones. Who's the ideal customer profile here? Because the UI is baffling. With all of that said. I want this service. I want this to work. I hope someone cracks it someday.

2. Bilanc - Mixpanel for CFOs

Bilanc provides a single dashboard for real-time P&L, unit economics by customer, runway, burn multiple, gross margin, and cost of acquisition (CAC). Today, Mixpanel provides analytics to product managers for user engagement and retention, but finance teams are still cobbling this data together. Bilanc will also identify repeated workflows and attempt to automate them on. 

🧠 There's no lack of CFO tools; is analytics a category that was waiting for AI? Many have tried and failed in the CFO analytics space. The largest B2B Fintech companies have all started in expenses, payables, and workflow. The path from there is toward lending and high-yield deposits. While some offer analytics, it's not their focus. Often, because these analytics are so bespoke to each company, the humble spreadsheet is hard to dislodge.

🧠 Workflow identification and automation is neat. This could be a clever wedge. The new age of SaaS tools like expense management, AP automation, and payments automation has been one word. Workflow. But building workflows is a schlep. Why not have the AI identify those workflows and automate them as they appear?

3. Tandem - The account for couples

Tandem helps couples plan, save, and spend on key items like home furnishing or save for long-term goals like a property. Couples can earn interest by pooling funds in a high-yield account and reach their goals faster.

🧠 The joint account that's not a bank account is a trend, but is it a business? Every Fintech idea has 100 companies trying to do it, especially post-2021, but perhaps timing is everything. Post-pandemic, millennials are reaching a certain age and entering a life phase of home ownership and kids. There's a gap in the market for the service that can become the hub for the family P+L. It could eventually get there if they can build a durable business. Acorns for couples is a nice business.

4. Karty - CashApp for Qatar

Karty enables instant peer-to-peer transfers with zero fees. It features 100% digital onboarding, bill splitting, and budget tracking. The service is in waitlist for Qatari nationals and immigrants.

🧠 Migrant workers comprise 77% of the Qatari population and are poorly served by the large banks. Much of the construction boom across the GCC is serviced by workers from India, Nepal, and the Asian continent who aim to remit money back home. This is the sweet spot for P2P payment apps.

Things to know 👀

The New York Attorney General said negligence by banks had allowed "scammers to steal millions from hard-working people." The suit alleges that because consumers can transact online and via mobile, it must reimburse victims under the Electronic Funds Transfer Act (EFTA). A Citi spokesperson said, "Banks are not required to make clients whole when those clients follow criminal instructions.

🧠 The political and legislative pressure to solve scams is massive. Volumes are exploding since the pandemic, as scams have become the #1 type of fraud experienced by most consumers and businesses. 

🧠 Scams and fraud are legally distinct. Fraud is breaking the system, e.g., stealing a credit card or breaking into someone's account to move money. A scam is tricking someone into moving money under false pretenses. 

🧠 Scam laws focus on communication but not reimbursement. Fraud law focuses on financial transactions, and scam law focuses on communications (except, notably, social media).

🧠 Authorized payments are generally believed not to be covered under the Electronic Funds Transfer Act (EFTA). Regulation E does not outline reimbursements for consumers who authorize a payment, even if they have done so under false pretenses. 

🧠 Scam laws must bring social media to the table. Most scams start on social media and must be covered by scam laws. Banks are potentially liable for something they had no visibility or control over. That has to change. Ideally, social media would securely share data with banks to help detect bad actors ahead of a transaction.

🧠 We need some way to make victims whole. Zelle has put a clawback mechanism in place, and I expect other RTP networks to follow in time. I expect the courts or regulators to close this gap if banks continue to push back against it. My dream scenario is some split between the communication provider (e.g., social media) and participating financial institutions.

🧠 It's strange the banks are lobbying against this; the writing is on the wall. In the UK, all banks and payment institutions will split liability 50/50 in the event of scams under new rules from October 2024. This has concentrated minds and led to a (long overdue) significant investment in scam prevention technologies.

Apple's credit card program now has 12 million consumers who have earned over $1 billion in cashback. 30% of customers make "two or more monthly payments" to cover their credit card bill. The service also has 1m Apple family users. 

🧠 This feels a bit small for "Apple scale." A great estimate here by Sheel puts an annual spend of $67bn (or $5.5k per user/year.) In 2022, Chase had $1.1trn, Citi and Capital One had $563bn and $534bn respectively. 

🧠 Growth takes time. Apple Card was launched in 2019 and has 12 million users. That's good penetration of the ~55m Apple Pay users but a fraction of the 148m iPhone users. There's a lot of headroom to grow user base. 

🧠 Can they (and do they know how to) grow the spending volume? Card programs make money when users spend. Other than cashback on Apple products, why is the Apple Card anything other than an affinity card?

🧠 Who will run this program if Goldman exits? Countless press leaks and rumors suggest Apple and Goldman Sachs will exit their partnership for Apple Card. Being Apple's sponsor bank will be tough. This demanding tech company will throw its weight around and doesn't always fully grasp regulation. I think it will go to a non-big-5 bank and probably a sponsor bank specialist who's broken the trend on compliance tech investment.

🧠 Apple generally is in a malaise. iPhone sales growth is slowing, they're fighting the EU on multiple fronts with sideloading apps and NFC access, and the CEO of Spotify has gone public with how anti-competitive Apple is being. Meanwhile, Microsoft has overtaken Apple's market cap. They must win on identity, and passkeys might be the way there.

Users of Ramp will now be able to manage procurement, purchase requests, contract review, and purchase order sync with ERPs. They also have a "seat intelligence" to show users when they're paying for licenses they're not using. 

🧠 This is well-timed. Cost discipline is everything in this market. Going deeper into procurement enables AI and automation to do more. 

🧠 This is an interesting founder story. TK Kong started as Head of Design at Ramp and has boomeranged back in through the acquisition.

🧠 B2B Fintech is a battle of the blitzscalers. Ramp goes deeper into the customer problem space and solves more manual tasks. While Mercury and Arc look more like they're speed-running the SVB product set (albeit with way better UX), Brex appears to be going after bigger traditional enterprises (calling out Concur in its marketing for example).

That's all, folks. 👋

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(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 *. None of the above constitutes investment advice, and you should seek independent advice before making any investment decisions.

(3) Any companies mentioned are top of mind and used for illustrative purposes only. 

(4) A team of researchers has not rigorously fact-checked this. Please don't take it as gospel—strong opinions weakly held 

(5) Citations may be missing, and I've done my best to cite, but I will always aim to update and correct the live version where possible. If I cited you and got the referencing wrong, please reach out