I think the regulatory environment plays a huge role! The UK has had increasingly attractive regulatory environment for FinTechs – as the UK government is trying to promote competition via initiatives like Open Banking, where banks need to share data with any new entrants. In contrast, the US regulatory system for financial services is far stricter: if I want to start a bank I need to get 50 state-banking licences, which takes a lot of time and resources. This is why Monzo had to find a partner bank for its US launch (see article below)!
Totally agree on the international transfers. I would love a future where I could transfer money between my UK Monzo account and my US Monzo account without friction (and getting the best possible rate on conversion). I wonder would they be willing to that though given the FX risk. The other alternative is to partner with someone like Transferwise.
Would love to talk about Monzo more!
Good point on adoption with older generations!
I believe Monzo can tailor their digital solution to suit some of these people, while still maintaining their digital model. As an example, I read that Monzo are partnering with ‘PayPoint’, which has locations in convenience stores across the UK, to provide cash depositing services (article below). This offering would be helpful for older generations that would typically go to bank branches to deposit cash. However, it’s true that some older people will still never trust a digital bank!
Interesting post – thank you!
I actually got my first Amazon grocery delivery last weekend, so a lot of these reasons resonate with me. In particular, the convenience was phenomenal. I was able to select a 2 hour slot for my food and track its progress in the Amazon app. In contrast, when I used services like Hello Fresh, I would be given a 5-6 hour delivery slot.
However, I do want to question one point – do you really think Amazon’s existing data helps to optimize grocery inventory? I’m not convinced that data on my purchasing habits of clothes, gadgets etc. is predictive of my grocery shopping. As a result, I believe Amazon will have a learning curve to learn from the grocery data they are collecting. Perhaps they could use data from Whole Foods stores to help predict inventory? I recall being asked if I had Prime membership last time I was in Whole Foods – so I suspect the Whole Foods acquisition is also paying dividends on the insights they are getting from this data!
Plaid is really a fantastic Fin-Tech success story. From your article, it seems as if Plaid exhibits cross-side network effects. You have banks and financial products providers (i.e., FinTechs) on either side. Financial product providers choose Plaid because they have a long-list of compatible banks – which maximizes their potential users. For the remaining reluctant banks, they are almost forced to work with Plaid – or risk alienating their customers who want to use these financial products with their bank account. These network effects seem to have been part of Plaid’s ‘secret sauce’ over the past few years.
To @ssingayapally’s comment above: I believe the main benefit of Visa’s acquisition of Plaid is distribution. Visa’s network will give them a tremendous ability to roll out Plaid’s services globally quickly. This may work better in some geographies than others – because of the trend towards open banking you mentioned. But open banking is still very juvenile: even in the UK, where open banking launched recently, there are major issues with the rollout. Even though they are required to comply, banks are dragging their feet and trying to resist sharing their data – so it will still take a significant amount of time before it can match Plaid’s API.
Very interesting article!
Blizzard seems to be a great example of a company that has rested on its laurels for too long. As a teenager, I used to play WoW and it was a fantastic game at the time. But customers grow up and games become outdated – you need to innovate with original titles to attract the next generation of gamers.
I do wonder what the industry structure will look like in 5-10 years. Will Apple and Google be able to successfully move into content creation themselves? If they did, this would be almost a exact parallel to Netflix – who first started by distributing content from other studios, before moving into content creation. To do that, they would need to access the top creative talent – which Google already seems to be doing in Montreal, a gaming talent hotspot (see article below). My opinion is Apple and Google will succeed, but it will take far longer – given most blockbuster original games take 4+ years to develop. Either way, the future doesn’t look bright for Blizzard.