Your Margin Is My Opportunity

Visit any downtown area in any city. Which companies have the nicest buildings? The banks. Who do you think pays for those buildings? We do.”

If you look up “nickel-and-diming” in the Cambridge Dictionary, the example sentence is “The banks nickel and dime you to death with all the little fees they charge you.” So banks are quite literally the definition of nickel-and-dimers!

(Slide courtesy Alex Rampell, AndreesenHorowitz)

It’s worth noting that some large traditional retailers — most notably Walmart — have survived and even thrived in the Amazon era. In Walmart’s case, the company has always been maniacally focused on value (lowest prices, largest selection), enabled by massive scale. But there is no Walmart equivalent in banking. To the contrary, banks with the most scale tend to be the least focused on customer value, with higher prices, more fees, and cringe-worthy policies.

It’s worth mentioning that Stripe is one example of a company that has innovated deeper into the banking stack, in this case for payment processing. But as Stripe expands into lending and credit cards, it must do so through a bank partnership with all the associated limitations.

“The problem is desire. We need to *want* these things. The problem is inertia. We need to want these things more than we want to prevent these things. The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it, even if only to force the incumbents to build these things. And the problem is will. We need to build these things.”

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