The 7 major fintech shifts by Dan Kimerlin from Deciens Capital

When I find a podcast interesting, I try to summarize it as it helps me understand the concepts and ideas explored in that podcast. Happy reading 🙂

More on Dan: his Linkedin, his twitter, his fund Deciens.

1/ Fintech will scale even more due to 4 factors

The internet: Broad low-cost distribution through the internet makes it possible to scale fintech to billions of users globally.

Tech: Today we have the required powerful technology that can enable advanced financial applications. A few years ago we didn’t.

Mobile: Around 6 billion people today have a phone. The fastest growth in mobile usage comes from mobile-first countries that lack western infrastructure.

Design/UX: The mobile experience has gotten dramatically better over the last few years. It enables users to do a lot more in an easier way on their phones.

2/ Fintech has unbundling and re-bundling cycles

2013–2015 Unbundling: Many small new startups focusing on a tiny piece of the banking and financial ecosystem.

2018–2020 Re-bundling: Companies that started from a given niche adding multiple financial services under their brand but in a different way than big banks used to do it.

Another way of unbundling will come again in a few years.

3/ Aging populations will have a big impact

In the next 30 years, aging populations in the US, Europe, and Japan will put a lot of pressure on financial service providers as consumer needs will change a lot.

4/ Open banking is just starting

We’re starting to see how open banking will impact the global economy. One of the first changes we see is embedded finance (covered in point 7 below).

5/ Mobile wallets replacing bank accounts globally

The mobile revolution wasn’t an obvious development, but it happened. Today, once a company finds the right business model, it can hit the distribution scale through mobile at an insane speed. Two good examples of that are Instagram and WhatsApp. Both hit tremendous scale through mobile very fast. Good examples in fintech: GoJek (leading mobile wallet in Indonesia), bKash (33% of the GDP of Bangladesh flows through this wallet). Africa’s mobile wallet adoption is very high right now, and we start seeing the first multi-jurisdictional wallets that enable network effects on a global scale.

6/ Vertical banks designed for a specific niche

Until now traditional banks weren’t focusing on any given niche. The new wave of banking and financial companies offer financial products for specific types of consumers and businesses. Those typically are customized to the culture, behavior, and workflows of the targeted niche. Lendeavor is an example of that: A bank for dentists and other medical professions.

7/ Embedded finance globally

Until now banks created financial products and distributed them through owned branch networks and early uses of mail, email, and the internet.

What we’re seeing now is that there are going to be two different types of companies: Those who create financial products and will probably have specific financial licenses, and non-financial institutions that will distribute those products by embedding them into their workflows.

Foreign exchange example: Airbnb embedded the foreign exchange into the user experience in a seamless way through a currency conversion partner.

eCommerce example: Millions of eCommerce companies use Affirm to offer Buy Now Pay Later (BNPL) options to the customers on the checkout process.

Solutions like Shopify Pay, Shopify Capital, Square Cash, and many others are great examples of embedded finance.

“From an investor’s perspective, being right at the wrong time and being wrong are indistinguishable.”

Cool quote by Dan