00:00 Speaker A
There’s a lot of investor appetite, both retail and institutional, for Fintechs that have got to scale and are profitable and are growing very fast. So, I think we will see some Fintechs going public in 2026. I think we’ll see more in 27 as these as Fintechs are moving through the maturation cycle. But Fintech is back in that um 69% now of public Fintechs are profitable. That certainly wasn’t the case in 21. Uh the revenue multiple’s gone from about three to 4 and a half, 5 and a half, sorry, over the last uh uh two or three years. So there’s a sense that these companies are real, are at scale and companies like uh Robin Hood, of course, now are becoming household names.
00:43 Speaker B
Um it’s been a really fascinating trajectory to watch some of these fintechs um expand their offerings, their services over the past few years. and as somebody who’s a veteran of not just the traditional financial industry, although Capital One was an upstart as well when it when it began.
01:00 Speaker A
Once upon a time. Once upon a time.
01:01 Speaker B
Right? Um but also somebody who’s invested in a lot of these companies, you know, I look at the SoFi and Affirms and Klarna’s of the world or a Robin Hood, which is also expanding its offerings. And I wonder if you look 5, 10 years from now, what share of financial services you think those types of companies will have?
01:21 Speaker A
Oh my. I think it’s going to be very large. But you’re quite right. Uh Fintech start with a single product. And they make that product work. They get the unit economics to work, they get the wonderful net promoter scores, they’re solving a real customer problem, be it a consumer or a small business. And then from there, they expand. They go into uh uh analogous spaces of either on the asset or on the liability side or both. And new banks are a perfect example of that that started with a lending product in Brazil, uh went to deposits and CDs and went to wealth management and built out uh full range of lending products. And Capital One did the same thing 30 years ago. And Capital One also uh um went to Canada and the UK and France and Italy and Spain. So, Fintechs by their very nature are incredibly expansive. And we’re going to see a lot more of that. Um if we look at the data, Fintechs which only represent 3% of all revenue in financial services, is actually 400 billion of revenue on 14 trillion, so 3%. If you look at the growth rates of Fintechs, they’re growing at 21% last year. Incumbents grew at 6%.
02:35 Speaker B
Mhm.
02:35 Speaker A
If you extrapolate that forward, and I think Fintechs are going to continue to grow a lot faster than the incumbents, then Fintech represents 10% of market share in 10 years. So I think we’re going to see a lot more of that. And then if I might add on, we that we also have a generation of Fintechs that have been developed overseas who now have critical mass, who are very much eyeing the United States. Newbank that has nearly 60% penetration of all Brazilian households. Uh, um, uh, Revolute
03:07 Speaker B
You’re an investor in Newbank we should mention as well.
03:08 Speaker A
Yes. very early investor in in them. Uh Revolute, uh, uh, uh, uh very strong in in other geographies. And Monzo, a neobank startup in uh the US in uh in the UK.
03:22 Speaker B
Mhm.
03:22 Speaker A
And the the the US in terms of market opportunity, the TAM, the total addressable market is so much bigger. So it beholds them to really look at uh the the United States. So we’re going to see more of that. Plus, the regulatory climate in the last 12 months has dramatically changed.
03:42 Speaker B
Right.
03:42 Speaker A
So Newbank is applying for a banking license. We’re going to see so many Fintechs, both inside the United States and those that covet the United States getting access to banking licenses that under the previous administration would have been implausible.
