Comment by sandGorgon | Hacker News Reader

Comment by sandGorgon | Hacker News Reader

quite some time back, there was a position statement by QED Investors (the guys who were the first investors in CreditKarma) - https://s3.amazonaws.com/qed-uploads/The+Copernican+Revoluti...

It talks about how branch based banking will split into various parts - one of which will be distribution of fintech products by players like Instagram, Facebook, etc. Essentially commoditizing fintech.

But simultaneously, vertical neobanks/fintech would be created by those who can create the best of products in a particular niche. Instagram is not a niche. Uber could be (however has failed spectacularly in the past - https://www.theverge.com/2017/8/8/16112498/uber-phase-out-xc... ...but still has ambitions in the future https://www.theverge.com/2017/8/8/16112498/uber-phase-out-xc...)

So im wondering what's the future of fintech and lending. Do dating apps and social apps plugged to bank backends become the only viable fintech play (like Apple Card and Goldman Sachs) ? A16Z has been plugging this theory - https://a16z.com/2020/01/21/every-company-will-be-a-fintech-... - Or will verticalized fintech still win out like QED says.

IMHO Spotify and Instagram are not verticalized.

What does this mean: "IMHO Spotify and Instagram are not verticalized."

I don't think every app becomes a vertical neobank. I think apps that already have a moneymoving financial relationship with some niche, have a real opportunity to serve that niche very well. Specifically - if you're a material source of income for some niche, or if you're a source of growth for some niche, then you have a real shot at the vertical neobank strategy.

I mean instagram and Spotify have too broad a base. You wrote this - You can think of a vertical neobank as a checking account + debit card product, focused on a specific customer segment (rather than focused on a broad swath of “consumers”)

I'm wondering if that holds for Instagram as a vertical neobank. But I like your current statement "I think apps that already have a moneymoving financial relationship with some niche, have a real opportunity to serve that niche very well." .

So then do you think Instagram will be a successful fintech ? And I'm wondering why Intuit could not become a neobank without acquiring CreditKarma?

Got it.

For Instagram; they have creators (who create content, make filters etc) who already get paid by Instagram when that content is sold. No idea how large that business is, but it's a case where instagram is impacting the moneyflow. They would definitely not be a vertical neobank for consumers. Way too broad.

For Spotify - they are in the money flow for artists. The vertical neobank would be for those artists getting paid.

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