⚡️A Decade Of Fintech Strategy
Affirm pays 7.1% for funding.
Traditional banks pay 2-3%.
That gap explains a decade of Fintech strategy
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When your cost of capital is 2-3x higher than incumbents, you can't win on lending economics alone. So Fintechs got creative with positioning.
- BNPL became a "payment splitting tool."
- Earned wage access became a "payroll feature."
- Short term lending became "cash advances."
Same products. Different labels. Higher valuations.
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Because investors price "banks" on book value and "tech companies" on revenue multiples. The semantics were worth billions.
That model still works for some. Affirm has built a business around merchant relationships and underwriting speed, not cheap deposits.
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But for others, two things changed:
- Partner banks started blowing up.
- SVB. Synapse. "Rent-a-charter" started looking like "rent-a-liability."
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Then
Regulators reopened the door.
New bank formation went from 6/year to a wave of applications.
Now Mercury, Stripe, Circle, Nubank — they're all applying for charters. Not because they have to. Because deposits are the cheapest funding source, and they're done paying someone else's margin.
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🎯One path isn't better than the other. But the choice is now real. The era of "Fintech that pretends it isn't a bank" is splitting into two lanes: own the rails, or own the software layer on top.
OP: Simon Taylor