Fintech 🧠 Food - Monzo's scam stopping feature

Hey everyone 👋, welcome to Brainfood, the weekly read to go deeper into Fintech news, events, and analysis. Join the 33,440 others by clicking below, and to the regular readers, thank you. 🙏

Hey Fintech Nerds 👋

👀 News this week, Monzo's new feature stops scams, Square's big outage, and my analysis of the Visa Stablecoin project. TL;DR This industry is nuanced, and if you go deeper, it makes more sense.

📣 How do you get hired in Fintech? And Navigate a career? This week, the Rant is for everyone in my inbox, either looking to hire or getting hired. There is a ton of demand in both directions lately. :)

📚 I loved reading "UBS Deal of the Century" by Marc Ruby; I've added some notes below.

Oh, and this caught my eye. Share financial data without sharing login credentials. Where have we seen that idea before?

PS. Congrats to Episode 6 on launching "Business Now, Pay Later" the "industrial strength" alternative to BNPL for small and midsized banks. Love the market positioning and branding. 

Here's this week's Brainfood in summary

📣 Rant: Growing your career in Fintech

💸 4 Fintech Companies:

1. Chart - Comms compliance as a service (GenAI)

2. Jitty - GenAI-powered property search (UK)

3. Functional FI - Modern Treasury for Insurance 

4. Knomee - Financial plans as a service for RIAs

👀 Things to Know:

1. Visa makes Stablecoins available to acquirers

2. Even Square has outages

3. Monzo's new feature lets customers know if they're being scammed in real-time

📚 Good Read:

1. UBS deal of the century?

If your email client clips any of the above, click here to see the full post on Substack 

Weekly Rant 📣

Growing your career in Fintech

Barely a day goes by without one or two messages asking for career advice in Fintech landing in my inbox.

Here's a longer form, generalized version of what works for me, what's true about the market, and how you can position yourself accordingly. 

But wait, isn't Fintech over?

If the sector is down 85%, it must be dead right?

85% down from outer space is probably sensible.

I prefer this chart from Rex.

Name a Fintech Unicorn.

Now, name the year it got its first round of funding.

Fintech isn't over; it's just different. 

Finance is the world's largest profit pool, and we're barely scratching the surface. The cycle will come the other way. As Warren Buffet said, managing emotions is the hardest thing to do to succeed. 

The emotional response to ditch Fintech is precisely incorrect.

This transition is your opportunity.

Whether you're hiring or looking to move, chaos creates opportunity.

1. Why should you even work in Fintech

   1. It's so much more than a job

   2. Finance is the incentive mechanism for the species

   3. Few understand it well

   4. It will always exist in some form

2. Soft skills applied to Fintech

   1. Listen past finance jargon for meaning

   2. Be the person who carries context

   3. Know your audience

   4. Persist when someone says, "The regulator won't allow it."

3. Principles to orient yourself with

   1. Everyone else's tech is terrible, and that's your problem

   2. Payments are easy; edge cases are hard

   3. Lending is easy; getting paid back is hard

   4. Everything is compliance and risk

   5. Everything else is incentives

4. Where to start

   1. MBAs and top schools do open doors

   2. Starting an incumbent gives incredible context and grounding

   3. Starting in a consultancy makes you a world-class generalist

   4. Starting in a scale-up builds a network and experience

   5. Some mix of the above maximizes your skill set

5. Which role to pick

   1. AI skills are a no-brainer

   2. Industry operational knowledge is golddust

   3. Great general-skill operators are always in demand

   4. Again, mix all three for the home run

   5. But most importantly, optimize toward what you enjoy

6. Who's hiring and who's growing

   1. Incumbents are thirsty for tech talent

   2. Lot's of geography expansion into the UK or LATAM 

   3. AI companies, DUH, but there's a catch

   4. Every public Fintech has a younger challenger who's hiring

   5. And the most complex bits of finance are ripe for disruption

7. Now what?

   1. Start, be consistent, build a network, be conscious about what you enjoy, and most importantly, do you. 

1. Why should you even work in Fintech?

a) It's so much more than a job. The UN just dropped a report explaining how most scammers and fraudsters are among the most vulnerable people in the world. That spam email or phone call is likely from a migrant who was trafficked and is now subject to countless human rights violations and abuses. 

When Russia invaded Ukraine, the financial services world had to react as the West enacted sanctions. This means no Russian company or person on the sanctions list could move funds or get an account with any regulated entity tied to those US and European markets. 

The darkest of humanity can be seen in finance, yet by changing it, you can change outcomes for people massively.

If we prevent economic crime better, we take the prize away from criminals.

The World Bank has cited mobile money and payments as key to lifting nearly a billion people out of poverty.

More than anything, finance is a technology that creates opportunity.

b) Finance is fascinating. Finance is one of those topics that is endlessly fascinating. It's naturally counter-intuitive. On the surface, it looks as dull as dishwater; it's all spreadsheets and acronyms. But as I peeled back the onion, I found it more interesting until I realized my hobby was Fintech. 

More than sports, more than music, more than being British and having a ginger beard. I love this stuff.

Because I found out that finance is the incentive mechanism for the economy.

And the economy is the incentive mechanism for the species. 

Finance is the only horizontal industry that thinks it's a vertical. Like law or taxes, finance touches everything. No company or person on earth completely avoids interacting with finance in some form or fashion. 

Meaning. If you change how finance works as a system, you change the whole god damned species. 

c) Few understand it well. Most people only ever see the trees, not the forest. Professionals understand one domain well; businesses and consumers know how they interact with finance, but very few have done a tour of duty across the industry. This is most severe in large organizations where someone can spend 20 years working in a department but not experience life outside that worldview. 

Very few understand the products, client types, motivations, middle and back office, and cultural differences. Even in a large organization that does everything, the most successful people generally spend their lives carrying context between meetings.

This video talks through a market landscape and scratches the surface on the types of products and clients.

Then, consider the supplier ecosystem that exists underneath. Each product is complex and filled with edge cases. Each client type has different motivations and pressures, as does each internal department. 

As time has passed, the Fintech battleground has shifted from relatable consumer products to the harder to relate to, more complex infrastructure products. This means those understanding the less obvious can have an outsized impact. 

d) It will always exist in some form. Unless AI wipes us out or creates a utopia, the odds of us disrupting the concept of money and commerce are extremely limited. Money is how you do things. Want shelter? Money. Food? Money. A limited edition signed Taylor Swift album? Mucho money. The only real exception is tribes in the Amazon, and even they have a limited form of communal barter (and limited experience with the economic and social savior Taylor Swift). 

2. Soft skills applied to Fintech

Look. I'm a flawed human, and I won't pretend I'm a benchmark overachiever at 39 typing to you Anon. However, the nature of my journeyman career taught me a few things that work really well for this industry. On the soft skill side, a few came to mind.

a) Listen past the finance jargon. Finance speak is the worst kind of gobbledygook. Regulators are referred to by their acronyms, as are compliance processes, payment systems, and parties to a payment or transaction. The Fintech industry enjoys understanding terms like ISO8583 or throwing around regulatory terms like "When 1033?" on T-shirts. 

Generally, Google can define terms, and ChatGPT might do it better. 

Understanding the term isn't the goal, though. Listen past that.

A genuine sentence I heard in the first week at a bank: "We've got a Sev1 on a SWIFT bene who's a PEP, which means an AML hit, but the TM system didn't flag it, and that's the week before the Regulator exam."

Luckily, that week, I was going through the mandatory training every bank employee has to do (which is lowkey a goldmine). I knew "Sev1" meant a severity 1 issue from my days in a payments processor and that SWIFT is the international payments network. I'd learned from the training that PEP means a "politically exposed person," and AML means "Anti Money Laundering." So, there was a system that didn't flag it, which wasn't good before the regulatory exam. I asked the person next to me what a TM system was, and they didn't know either. 

Asking a few more folks, it turned out that TM meant "transaction monitoring," and this was when examiners were looking hard at those controls. If you go deeper, you can understand more than the jargon and get at what is being said. 

With that context, you become surprisingly rare in modern finance.

Most people understand their job. Some are even great at it.

But the ability to understand the context of everyone else's is a superpower, especially early on. 

b) Be the person who carries context. One thing remained true whenever I worked as a consultant to banks, fintech companies, or payment companies, sold to them, or was employed directly. 

Context is king.

I always used to hate that old guy at the beginning of the meeting who'd say, "Let's take a step back here" or "Let's zoom out for a second." It feels performative. But the good ones follow that with the all-important why. 

Why are we here? What are we doing? What's the consequence of what we're about to discuss, decide, or action. If you're constantly building a map of the "why" and listening past the jargon, you can walk into a room full of compliance folks and get SCARY NEW PROJECT delivered.

How?

c) Know your audience. Compliance (and risk) folk scare easily. Their job is nearly all downside and minimal upside. Nobody notices if they are the GOAT compliance team, but if a needle in the haystack gets missed, it can be a career-ending. They were often seen as "the department of no" or "revenue prevention officers." 

If you walk into that room without empathy and just try to rush to your objective, you'll get nowhere. Instead of having empathy, what pressures are on that team? What are they likely to worry about? And how can this group or person help you creatively solve that problem to deliver the best possible outcome? 

Thankfully, this is changing, and much credit has to go to Fintech companies for changing the operating model, but the broader point remains. KYA.

Invoking the creativity to deliver better customer outcomes is a fantastic use of their experience and skills. Something again, thankfully becoming more common but still far from the default. 

d) Persist when someone says, "The regulator won't allow it." This is particularly common in larger organizations and banks, but I've heard it across the industry. The regulator is used as a boogeyman and an excuse not to do something, even if it's a massive net benefit to the customer.

When I heard "the regulator wouldn't allow it," I took it as shorthand for "this feels risky and not well thought through." This is crucial in most big banks because to get anything live, it has to get through an approval committee where the risk teams "sign off." 

Persist, ask why, and try to get to the underlying concern. 

Soft skills also require context of how the industry operates.

Here are some principles I've picked up over 20 years to help orient from.

3. Principles to orient yourself with

The first principles of finance remain true.

a) The tech is terrible and that's your problem. I show every engineering grad who wants career advice the picture below and ask what it is. This is the UI that cost Citi Bank $900m. An offshore team accidentally checked the wrong box and repaid an entire loan instead of an interest payment. I don't mean to pick on Citi because this type of thing is possible at almost any large bank. 

These massive legacy systems run trillions of dollars of trade daily. In many ways, a credit to them; you only hear about it on the rare exception where there is a major failure. Like when a plane crashes, it's so rare you notice.

But their scale also makes them hard to change. "It's harder than a heart transplant on a conscious patient above a nuclear power station close to meltdown on the moon. " As one bank chief architect once put it as a metaphor for the complexity.

👉 Takeaway: No matter what your job is, it will be impacted by everyone else. In finance, no entity is an island. The other payment companies, banks, merchants, and fintech companies are your "counterparties." And counterparty risk comes in many flavors. (The one above is operational risk FWIW).

b) Payments are easy; edge cases are hard. Paying is as simple as squirting a few data points into a file format and pressing send. Until one day, you wake up, and there's $400,000 missing (as happened to the founder of one Neobank). Or, you're suddenly getting hit by a wave of chargebacks or return codes. 

Or worse, that one bank with terrible tech doesn't like how you formatted the payment file, even though you did it the standard way. 

There are open secrets in payments, where everyone knows "that bank" is a terrible source of Apple Pay fraud, and "other bank" will reject a lot of payments from a particular merchant category code, so don't bother. There are thousands of nuances, like how fleet cards work, the types of fraud those cards have, or charge cards vs. credit cards. 

Also, your customers will defraud you. 

I could go on.

👉 Takeaway: If you interact with payments, find specialists who can handle the edge cases or help you do so internally. There are so many edge cases in tokens, fraud, or just payment ops. Building a waterfall is constantly error handling, retrying, and creating fallbacks. I spoke to one Fintech COO who described their job as "chasing waterfalls." (In a neat and much-appreciated TLC reference)

c) Lending is easy; getting paid back is hard. Lending is a business where there is never a lack of demand. You are giving away money; if you've done your underwriting risk management right, you should get paid back, but there are so many reasons why somebody wouldn't or cannot.

Perhaps they can't afford to repay or lose their job. Perhaps they're a fraudster? You have to figure all that out from the data you see while onboarding them. You must do that without creating too much friction during onboarding to damage conversion and without violating GDPR or data protection rules around personally identifiable information (PII).

The market also changes. An underwriting model can perform well in a strong economy and suddenly break into a recession. Your supply of capital is critical and not unlimited. As a bank, it comes from your depositors, and as a non-bank lender, it comes from other companies lending to you. Supply gets a lot harder when markets are lean. 

👉 Takeaway: It is called risk management, not risk elimination. Having new or better data is helpful, but the context around that data and knowing what it means is much more helpful. 

d) Everything is compliance. Start and risk and work backward. If you want the highest conversion at checkout, figure out fraud. To solve the retirement income gap, figure out registered investment advisor rules. Want to get closer to the metal to drive out better unit economics? Figure out the governance rulebook for that payment system, network, or thing.

👉 Takeaway:  The best performance bang for buck will generally come from the hard bits most people ignore. Wrestling with complexity, abstracting that for users, and building an incredible product is how you win.

e) Everything else is incentives. One of the highest-margin companies in financial services is Visa. People confuse them for a payments company, but that's 1% of what they do. They sell trust. They sell a brand and a series of rules about what happens when a payment goes wrong. The rulebook is the product. The ability to drive change across the industry comes from decades of building an incentives network for all participants. 

 Whenever entrepreneur X from Grad school Y comes to be and says, "I'm going to disrupt Visa by building QR codes on open banking." I must dole out comparing Open Banking payments (in any market) vs. cards. Open Finance isn't what it could be because the banks have had very little upside. It's "all stick and no carrot." 

👉 Takeaway: There is generally a move towards more payment rails, not less. But the need for rules on those rails is still the key to that rail's long-term success. And people will sign up to those rules if there is some incentive.

4. Where to start

a) MBAs and schools are a ticket to play the game. As someone who doesn't have a college degree and has on-the-job experience, there is no substitute for that. But the Fintech college and MBA programs have dramatically improved in the past 5 or so years. They'll take a ton of time, money, and energy, but if you give it everything, they'll open doors, too. 

b) Starting in a bank or incumbent. Many of my readers work in banks, financial institutions, payments companies, or incumbent vendors. Because those companies are "old" or "big," don't confuse that with career risk. A smaller bank is easier to network around, a larger one will teach you the breadth of finance, and large vendors have the biggest customers. You can grow your network, be a sponge for knowledge, and spot opportunities for disruption others will miss. These companies are hiring and looking to take background from Fintech companies. From here, you always have options.

c) Starting in a consultancy. Consulting is a fantastic grounding as a generalist. They'll teach you to work hard, be a self-starter, and expose you to the inside of multiple organizations in a particular vertical. It can be a tad soul-destroying, but there's an incredible line of people who became founders from this background. 

d) Starting in a scale-up. Some of the largest companies in finance are not banks and are less than 10 years old. If you want all of the finance with the modern tooling that comes with a younger company, this is a great start. Incumbents are aching to hire a person who did well at the scale-up. These companies aren't hiring as many roles as they were two to three years ago, so spots might be a little harder. 

e) Secret option: Some mix of the above. There is no right path. It's just the best path for you and your life. Generally, you want to get in where you fit in and optimize for learning. Jump around a little, and take some career risk if you can. Being okay to fail and be humbled increases your learning velocity.

5. Which job role to pick

The world is full of articles that say, "X job will be dead in 10 years," or there's a skill gap for 1m AI prompt engineers by Tuesday. As with all headlines, it's hyperbole designed to get you to click. But the real superpower comes from overlapping domains and skills.

a) AI is the no-brainer. Data engineers with AI skills can command million-dollar salaries if they come out of the right schools. We will unlikely enter a sudden bust for AI as a skill set. But even if you don't have an engineering title, you owe it to yourself to always have a ChatGPT or other LLM window and tinker. The best skill you can have in any industry is a growth mindset and constantly trying to improve.

b) Operational depth is gold dust. People who've worked in compliance, fraud, underwriting, securitization, treasury management, or FX trading desks have a feel for jargon and context that school can't give you. Sometimes, the unsexy, entry-level jobs are the perfect breeding ground to get this depth. Doing this with an MBA could be a nice mix.

c) Great operators are still rare. Great product, finance, or marketing folks have a feel. Regardless of domain or background, they'll quickly get your business your context and deliver. A product role could be ideal if you're naturally organized and a great communicator (and Lenny's substack should be your bible). 

d) The ideal is to be a mix of all three. If you're a great operator with depth in a domain, who's rapidly adding AI or engineering to your skillset? That's GOAT status. 

e) But most importantly, learn what you enjoy. Nobody is 100 out of 100 in every domain. Consciously observe what you enjoy and what lights you up. Think about what bit of your job would you do if nobody was paying you? If you head in that direction, you'll be more successful and better paid, and it will feel less like work.

6. Who's hiring and who's growing?

In a market with layoffs at the big name Fintech companies, the first job out of school might be less obvious today or in 12 months. Here's what I'm seeing.

a) Incumbents are thirsty for tech talent. There are plenty of regional, mid-sized, and even large incumbents with new leadership and/ or dangerously close to getting it when it comes to tech. The in-house AI teams for preventing money laundering at large banks or stock trading are among the most sophisticated in the world. The downside of them being big is the sheer drag of dealing with a big corporation. The upside is they pay well, and the good ones listen and want change. This can be ideal for recently laid-off Fintech leaders looking for the next move.

b) US companies are expanding into the UK or LATAM. My inbox is flooded with founders looking to hire a GM for the UK (no, I'm not available; thanks for asking 😂). The UK isn't nearly as saturated for happy hours, infrastructure providers, or founders with that American hustle. As I wrote a few weeks ago, that can create a culture clash, but this is the world's 6th largest economy and a global financial hub. Done right, it can be a great move. Talent. You're well placed if you can bridge borders, build teams, and get the business from 0 to 1 with sales. 

c) If it's AI, it's funded and hiring. No surprise here. The risk is like Crypto and web3; before it, the funding could dry up, and the market could change direction. There are so many startups that there are no guarantees that joining a team will result in a big exit. What you will definitely get is an incredible education and exposure. That's a pretty great downside risk if the salary pays the bills. 

d) There's a challenger for every big Fintech. For every company that made it public, like Marqeta, there's a Lithic or Highnote. For every Adyen, there's a Moov. The new Fintech infrastructure is closer to the metal and unbundled. Take a read of last week's "is payments a race to the bottom?" for a feel about how the market is being reshaped. 

e) The complex bits of finance are being disrupted. Corporate finance, fixed income, emerging market lending, private credit, wealth management, and asset management are further up the complexity curve. They're harder to relate to, break into and understand. Disrupting them requires a bit of specialism, but the time is now. Wealth management is booming; a generational wealth shift is happening, and this sleepy backwater is ripe for change. 

7. What to do now

Just start.

Want to get good at writing? Start. AI prompting? Start. 

Be consistent. 

Anyone can post a social post a few days in a row, but few can commit to the daily grind. Anyone can play with ChatGPT or Midjourney once, but few add it to their workflow. 

Build a network.

Happy hours help, but networking isn't like collecting Pokemon. Depth matters. Who you're in contact with regularly because you share interests is what will increase your luck surface area. 

Be conscious about what you enjoy. 

I heard James Clear, the author of Atomic Habits, say he has a weekly reminder in his diary to ask himself a handful of questions. It's a really great way to zoom out. Questions like, What am I optimizing for? What fills my cup and gets me excited? Audit the diary. Does my time spent match my priorities and excitement? How can I create an environment that drives these outcomes? 

Do you.

Career advice is like fashion or fitness advice. There's stuff that works for most people, most of the time, and there's what works for you. The worst thing about your early 20s is most people don't know what that is yet. 

Early on, optimize for learning and take career risks to do so.

Mid-stage, figure out your superpower, and position yourself where that has the most value.

Late stage, grow the next generation, keep learning.

Wherever you are in your journey. Keep going. 

And if I can help, hit reply :)

ST. 

4 Fintech Companies 💸

1. Chart - Comms compliance as a service (GenAI)

Chart helps regulated companies (like banks, insurers, or healthcare providers) ensure their internal comms, chatbots, and customer service teams meet compliance obligations. It takes unstructured data like call transcripts, team messages, and emails to scan for any number of regulations. 

🤔 This is a giant industry that is often outsourced. One example of regulation is UDAAP, a catchall consumer fairness regulation from the CFPB (similar to consumer duty in the UK). It applies to the entire lending cycle, including servicing and collections. Imagine if a consumer falls behind on loan repayments and calls an agent. How do we measure that agent's performance? Companies like Global Relay do part of this today, but the task often gets outsourced to a mechanical turk service where humans sample calls. GenAI can provide instant visibility alerts and manage the 1000s of regulations that apply to complex industries. 

🤔 Vertical vs. Horizontal GenAI for compliance. Vertical-specific companies are emerging that do "all of your compliance for the SEC," like Hadrius, and then horizontals that do "all of your compliance for chat." like this.

2. Jitty - GenAI-powered property search (UK)

Jitty allows users to search for "exactly what they want" with natural language and computer vision. It can read unstructured data like floorplans, photos, and maps to ensure the property is in a good school area or has a downstairs bathroom. Users can add their own data, like photos from viewings. Jitty aims to become the premier property listing site and disrupt by not charging real estate agents to list on their site. 

🤔 Property search is a huge deal in the UK. The dominant incumbent, Rightmove, has a market value of £4.6bn ($5.81bn). Bake into that valuation that generally UK-listed tech companies trade ~30 to 50% below where they would in the US, and you can see the potential for Jitty. The home buying process sucks, and search is the first step in the journey. If done right, the data about who's searching and what they're searching for could be a precious asset to lenders. 

3. Functional FI - Modern Treasury for Insurance 

Functional FI brings financial operations, workflows, collections, and payouts into a single dashboard and workflow engine. It integrates with accounting software and payment processing to create a single source of truth for the insurance middle and back office. 

🤔 If embedded insurance is the next big thing, insurance ops orchestration will follow closely behind. The same use case and challenge applies to CFOs at Fintech and growth companies. The future of Functional FI could be interesting. They're targetting challenger insurance companies, which, if that category becomes a thing, could mean Functional FI does, too. 

4. Knomee - Financial plans as a service for RIAs

Knomee helps users develop a tailored financial plan and document it as a "financial identity" to help target what financial products a consumer should buy to achieve their goals. The service works with RIA's to help them automate data collection, access more data, and get real-time alerts about life events (like births, deaths, career transitions, and home purchases). 

🤔 I love the idea of baking this into an RIA platform. These are all the questions an RIA has to ask anyway, so the business case of admin reduction is a no-brainer. 

Things to know 👀

1. Visa makes Stablecoins available to acquirers

Visa is making Stablecoin settlement available on the fast and cheap Solana Blockchain and partnering with Worldpay and Nuvei. While the swipe feels real-time, the money doesn't move between banks or payment companies until overnight or days later via Visa Treasury.

Visa Treasury is how banks that give you cards (issuers) and money to banks who pay merchants (acquirers). This service creates real-time settlement available to clients, meaning acquirers can get paid instantly. 

🤔 Acquirers are like the internet service providers (ISPs) of payments. They help merchants, shops, and e-commerce stores accept card payments globally. With this service, the acquirer can receive funds in the form of USDC instantly from Visa. In turn, the acquirer (e.g., Worldpay) can immediately send the USDC to the merchant 24/7 and anywhere in the world. 

🤔 This instant settlement is very different than the type offered today. Today, companies like Square might offer instant payouts to merchants. But what they're doing is they're essentially delivering payment now while they wait for funds to clear. They're taking that risk. Another way to do this is to hold a pool of dollars in multiple jurisdictions to give "instant dollars." But both options involve risk and cost. With USDC, the settlement is instant, and the money has actually moved. 

🤔 This is a huge validation for the core value proposition of Stablecoins: lower cost, lower risk cross-border US dollar delivery. Not every merchant will be ready to accept USDC, but every merchant wants instant settlement. Visa creates a huge unlock across the ecosystem by starting at the acquirers. How will you adapt anon?

2. Even Square has outages

Small business payments company Square has experienced an outage, causing many small businesses in the United States to revert to cash only for payments. In a Twxeet, Square said since Noon on Thursday 7th, September sellers have been unable to access accounts or accept payments. 

🤔 Even Fintech companies have outages. There's often an assumption that new = better. "Cloud platforms and modern tech don't have outages like legacy tech." Reality is rarely that simple. Mainframes are remarkably resilient but much harder to upgrade. Modern stacks are more upgradeable, but world-class uptime is hard regardless of tech.

🤔 Tech resilience matters. Square became the benchmark in user experience for smaller businesses and has earned the trust to become the operating system. Everything from accepting payments and managing stock to payroll can be run via Square. Without payments, you don't have a business. So you really notice when it's down. 

🤔 Tech resilience is hard. It's interesting to consider the arc of Square from a disrupter in UX to a critical infrastructure for small businesses. The pressures of maintaining an at-scale business are enormous. One day, you wake up and realize you've become so successful you have all the challenges the incumbents face. Heck, even the might AWS has outages.

🤔 Running your own infrastructure can be good and bad. Square was born in the very beginnings of cloud services, so like all companies of its vintage, it had to build a lot of tooling we'd take for granted today. My understanding is they also operate many of their own data centers. For a business of this scale, that's understandable.

🤔 Pour one out for the engineers trying to fix this. Sitting in a data center with the team, I've been there, trying to find a root cause and fix it. CEOs calling, clients calling, the eyes of the world feel like they're on you. It's the job that gets limited praise for doing well but tons of attention that one time it messes up. 

3. Monzo's new feature lets customers know if they're being scammed in real-time

Here’s me playing at reading this out as a video (let me know your thoughts 🙏)

A new in-app feature from Monzo tells customers whether Monzo is calling them or if they are being targeted by fraudsters with an attempted scam. The impersonation scam is when a user is contacted by a scammer claiming to be from their bank and making an urgent request for money (like "your account has been scammed, but don't worry, you can move it to a new one"). The new tool has "call status," which shows whether or not bank staff are talking to the customer.

🤔 This is a massive and growing issue. Scam rates are exploding, and while data is notoriously hard to come by, it's something we see and hear daily at my $Day_Job. Talk to any Fintech or banking operator; scams are becoming the issue for the whole organization. It's especially acute in the UK due to high RTP penetration (Faster Payments). But this is coming to the US, too, with RTP rails and wallets like CashApp, Zelle, Venmo, TCH, and FedNow all ramping up. 

🤔 EVERY BANK SHOULD HAVE THIS FEATURE. This is an industry-wide issue. One bank having the feature is not the same as it being a default. Monzo has form here; they innovated a user opt-in "gambling block" feature in 2018 that the big UK banks copied. Monzo built this feature in-house; most bank suppliers that would enable them to do the same aren't capable of it. (Of course, Sardine* can enable this if you're reading this banks, and don't hate me for paying the bills, or if your company can do it too, happy to name-check you if you reach out).

🤔 Banks can't be told what the future is; they have to see a competitor do it first. At most big banks, just keeping up with the market is hard, and while there's incredible innovation deep in the bank, the digital-first customer-facing innovation tends to come from challengers. That's why we need Neobanks and challenger banks. To raise the benchmark. 

🤔 I fear it will become a very low TAM feature without marketing. As a user, how would I know to go in-app to check that signal buried a few screens down while being scammed? I'm glad this feature exists, but it needs to be an industry standard and have education. We also need to stop scams before they happen by looking at user behavior before the transaction.

Good Reads 📚

1. UBS deal of the century?

UBS paid $3.8bn for assets valued at $53.5bn when it acquired Credit Suisse (albeit they were written down by $20bn). This rapid merger came when Credit Suisse was in crisis and now creates a dominant personal, wealth, and corporate bank in Switzerland. The new bank has assets of $1.7trn (or 2x Swiss GDP). The industry considers this an incredible price, and deposits are already returning.

However, Marc points out that UBS still has a lot of work to do. There are over 1,000 legal entities to unwind. The combined new UBS aims to make $3bn of cost savings this year, with half coming from winding down "noncore" assets from Credit Suisse. The former investment bank operates like a ghost ship, with many in the investment bank looking for jobs elsewhere. The other half relies on application de-commissioning and moving to "one platform." 

🤔 This is a fascinating read from a former Credit Suisse researcher. Marc is the ultimate historian and deeply understands, having worked at the organization historically. This is a paywalled article, but the analysis is worth the subscription. Marc is the GOAT finance writer, in my opinion.

🤔 Is it game over for equity research as a job? At a time when analysts are getting kicked for not calling NVIDIA right or dumping too heavily on Adyen, the true art of investment banking research has been called into question. A client will pay between $1,600 to $1.6m per annum for equity research. You want price clients to value correctness over depth of analysis, but the problem is that the market is weird and unpredictable. 

🤔 I get massive value from the public research reports from the Fintech teams at Morgan Stanley and Credit Suisse. The depth and data they bring are unlike anything in the blogger universe (except maybe Marc at net interest). I really hope that continues to exist in some fashion. 

🤔 The UBS cost savings from tech migrations will fail to happen on time. Projecting 3 years to rationalize IT real estate onto a single platform is optimistic. Decommissioning an application for a business line you no longer support is easy. Migrating customer data, deposits, and contracts to a new system of record? That's a dark art.

Tweets of the week 🕊

https://twitter.com/pitdesi/status/1699851526737653996?t=MHXGdtEdJlNMpYaaq5nIFQ&s=19

That's all, folks. 👋

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Disclosures: (1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. (2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a * (3) Any companies mentioned in Rants are top of mind and used for illustrative purposes only. (4) I'm not an expert at everything you read here. Some of it is me thinking out loud and learning as I go; please don't take it as gospel—strong opinions, weakly held.