Banking-as-a-Service might be en vogue, but that doesn’t mean it’s well understood

I came across this impressive twitter thread a while back from Nicolas Benady, who runs a new Banking-as-a-Service (BaaS) platform called Swan. It explains why BaaS, Core Banking and Open Banking solutions are totally different.

But, to our mind, some of the confusion is justified. While today there is a big difference between Open Banking, BaaS and B2B SaaS systems, like core banking solutions, a lot of the differences are dissolving. Further, not all BaaS platforms are created equal and, as the example of Sequoia walking away from its investment in Finix demonstrates, the BaaS space is also quite complex.


Enterprise software analysis is broken. Here’s a new, digital age, methodology to fix it.

When was the last time you went into a branch (even pre-COVID)? Or the last time you paid for something in cash?

Financial services have been gradually digitizing for years. It started with digital distribution of existing services. And then the services and service providers started to change. Who still uses their high street bank for FX payments or for buying stocks?

We’re now moving into a new phase where, now digitized, financial products are going to be more and more embedded into other services — either tightly, like payments within the Uber app, or just bundled together for convenience…


Evaluating strategic options in a world where businesses have never been easier to start, but never been harder to scale

We’ve talked often about the diminishing importance of supply-side economies of scale. In its simplest expression, digitization flips the industrial age equation. What was scarce in the industrial age was supply; what is scarce in the digital age is demand (attention).

In the industrial age, scaling supply meant mass production to spread the fixed cost of large capital investments over large volumes. And the industrial age was an age of mass produced, relatively standardized goods. This applied to goods and services provided by the private sector, but also to state-provided services, such as education and public services.

Since the advent…


Crisis is not the time to stop all IT projects, but to double down on the ones that really matter

Renovate in Winter

For many, ourselves included, the extent of the current crisis came as a bit of surprise. At first, we thought we had a MERS- or SARS-like crisis: a novel virus, but which would be limited to a single region of the world. But, it’s now clear that we face something much more serious and widespread — a global pandemic — that will cause profound social and economic impact.

However, this is not an article about how businesses should face up to the crisis or conduct contingency planning. …


In the networked age, scale of production is no longer a moat. Instead, network effects are the new moat. Peter Thiel gets this; Buffet doesn’t.

The investment “moat”

I look for economic castles protected by unbreachable ‘moats’ -Warren Buffett

The quote above from Warren Buffet, a statement he first made in a 1996 investor letter, is one of his most famous. It neatly encapsulates his investment approach: invest in giant companies that can achieve a “moat” by operating at a scale that others can’t reach.

By spreading the fixed costs of expensive, non-transferable assets like machinery or a banking licence, as well as highly-geared operating expenses like brand marketing and regulatory compliance, over a larger revenue base than competitors, these companies could be better known and cheaper. …


The banking software market is reconfiguring around the demands of the digital economy — and value is accruing to new systems of intelligence

In Clayton Christensen’s Law of Conservation of Attractive Profits, he talks about the “reciprocal processes of commoditization and de-commoditization” that occur in technology value chains when product architectures change:

“The law states that when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits will usually emerge at an adjacent stage.”

Our view is that this same process of commoditization and de-commoditization is playing out in the market for banking software. Changes in technology (cloud and AI) as well as changes in regulation (real-time payments and open banking) are…


Six reasons for an incumbent bank to launch a challenger brand

The last couple of months have seen JP Morgan close its digital bank Finn, as well as BPCE close the UK arm of its digital bank, Fidor. This has led to a lot of speculation about whether it’s possible to run a disruptive business within an incumbent organisation. But, it also raises a simpler point. When does it make sense to launch a challenger bank?

The battle is on to see which firms will dominate the internet-era banking market | artwork by @morysetta (IG)

The rise of the challenger bank

Challenger banks are definitely in vogue. In the aftermath of the financial crisis, regulators sought to introduce more competition into their domestic banking markets. One of the most progressive was the UK regulator, which lowered…


A look at existing and emerging internet-age business models

Are US subscription-based business models an innovation, or a compromise? | artwork by @morysetta (IG)

Have you ever wondered why the social features on Spotify aren’t better? It’s not difficult to imagine a more engaging experience if, say, it was easy to co-create playlists or you got updates on what friends and artists were listening to. One explanation could be that it is hard to build siloed social interaction — outside of horizontal apps like Facebook or WhatsApp. But my hunch is that, while Spotify wants to maximize users, it doesn’t want to maximize usage. Why? Because unlike most aggregation platforms, its marginal cost grows with usage, meaning that — like MoviePass — its best…


Neither cuckoo clock nor silicon, Switzerland’s adaptive system combines lasting quality with cutting edge innovation

In one the most notorious scenes from cinema history, Harry Lime, a racketeer played by Orson Welles in the The Third Man, compares the cultural achievements of Italy and Switzerland. He says,

“In Italy for thirty years under the Borgias, they had warfare, terror, murder, bloodshed. They produced Michaelangelo, da Vinci, and the Renaissance. In Switzerland, they had brotherly love, five hundred years of democracy and peace, and what did they produce? The cuckoo clock.”

Still image from Carol Reed’s The Third Man

It’s probably unfair to suggest that this stereotype of Switzerland as safe and sterile originates directly from the film, but it has certainly helped to…


In pursuit of faster growth, firms must choose what not to do

As Michael Porter once said, “The essence of strategy is choosing what not to do.” Strategy, as an exercise in weighing up opportunity cost and allocating resources between competing priorities, has always been about making choices and this is truer than ever.

Bruce Henderson, BCG Founder, standing in front of the ubiquitous growth/share matrix

However, traditional strategic theory has not kept up with the digital age. It presents a static view of the world at a time when technology is fundamentally changing the nature of scale, the nature of work and the nature of the firm. Where sustainable competitive advantage used to come from maximizing the scale of production, it now comes…

Ben Robinson

Launching and scaling digital era businesses at aperture | Board member at additiv & Assure Hedge | Based in Switzerland, but often found in London and Berlin

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