I’m coming up on four years of writing Fintech Takes, and, in that time, I’ve come up with a lot of theories.

The theories represent my best guesses for where fintech may be going. 

They often end up being incorrect, but that’s ok. For me, the process of trying to develop unified theories to explain the week-to-week craziness of this industry is, in and of itself, a clarifying exercise.

And so, as I prepare to return from paternity leave in a few weeks, I thought it might be useful to go back and review some of the most interesting theories that I’ve tossed out in the newsletter over the years and evaluate the validity of those theories with the benefit of hindsight.

Ready? Here we go! 

Fintech and the Overton Window

The theory: Fintech companies are constantly pushing on the outer boundaries of what is possible in financial services and, as a result, shifting the boundaries of what customers expect and what regulators will accept.

How has it held up? This is from one of my earliest essays, and I think it holds up pretty well! The specific example I gave at the time (Shopify) is maybe a little less relevant today, but the overall concept is still very valid, and the takeaway for banks (pay attention to fintech and be a fast follower) is still good advice. 

Read more: The Value of ‘Radical’ Fintech Innovation

Don’t Be Too Eager to Unbundle Yourself

The theory: Banks have built some incredibly profitable and well-liked product bundles, and they shouldn’t unbundle them at the first sight of competition from fintech companies. 

How has it held up? I just came up with this one, so probably too early to say. But I think it’s interesting. 

Think of this theory as the mirror version of the one above. Banks, when faced with a new competitive threat, shouldn’t be too quick to unbundle themselves in order to respond to it, even if that’s what McKinsey is advising them to do. You can’t get the toothpaste back in the tube.  

Read more: The Only Way to Win is to Not Play 

The Difference Between Data and Understanding

The theory: Specialization allows lenders to become comfortable with risks that their competitors, armed with the same data, wouldn’t be willing to lend against.  

How has it held up? I think this theory helps explain why community banks continue to dominate in commercial lending. However, I think I overestimated how much specialization (particularly vertical specialization) would help fintech companies. Turns out that other factors (like the cost of capital) matter a lot more! 

Read more: The Future of Small Business Lending

BaaS is the Solution to Concentration Risk in Banking

The theory: Specialization creates value for customers on the front end, but it also leads to fragility for banks’ balance sheets on the back end. The solution to this conundrum is to force banks to either become specialized solution providers (fintechs, basically) or diversified infrastructure providers (BaaS). 

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How has it held up? This was less of a theory for what will happen than it was a wild, no-way-this-actually-happens idea for what should happen, in the wake of the SVB collapse. I think the reasoning is still solid, but the actual idea is super unrealistic.

Read more: Could BaaS Prevent the Next SVB?

The Goldilocks Theory of Banking Innovation

The theory: Everyone in banking talks about the importance of innovation, but most small community banks don’t have the resources to actually do anything interesting, and the big national and super-regional banks are, ironically, too well-resourced to need to be smart and careful with their innovation initiatives. Large regional banks, by contrast, have just enough resources to make a splash, but not enough to be able to afford continual screwups. This is where innovation in banking really thrives.   

How has it held up? I feel good about this theory! Banks like Fifth Third and Keybank continue to impress me with their focused and carefully-considered innovation projects.

Read more: How is Fintech Impacting Financial Services? 


The theory: Banks and fintech companies are only solving for a small percentage of the financial problems that consumers have.

How has it held up? This is one of my all-time favorite theories, built on some really interesting original consumer research that I conducted a few years ago. I continue to think it is true. 

Read more: Underbankers 

The New Centers of Gravity in Financial Services

The theory: Fintech has done more than unbundle banking. It has atomized it into its most basic functions and created an opportunity for it to be recombined in new an unlimited number of new ways. The new ‘centers of gravity’ in financial services within this environment may look nothing like a bank.

How has it held up? I love this theory, but it hasn’t really manifested yet. My predictions for which types of organizations would take a more active role in financial services – employers, communities, merchants – don’t look great so far. Merchants are probably the furthest along in supplanting certain aspects of banking, but even they have moved slower than I would have thought.

Maybe this one just needs more time to marinate, but so far not so good.  

Read more: The New Centers of Gravity in Financial Services 

The Unhealthy Influence of Too Much Infrastructure

The theory: Modern fintech infrastructure has made it so easy for fintech product developers to quickly build almost anything that many developers have lost sight of what problems they are supposed to be solving for customers. 

How has it held up? I’ve been beating this horse for a while, but especially after the collapse of crypto. I think this theory has held up well and it remains a concern for me. 

Read more: The Product Developer’s Dilemma, Infrastructure Inception  

The Money-Happiness Problem

The theory: The biggest and most foundationally-important opportunity in financial services is helping consumers develop a better relationship between money and happiness.

How has it held up? I continue to think this is true, but I have seen very little evidence (outside of a few interesting examples in the PFM space) that banks and fintech companies care to address the emotional side of their customers’ money problems.

Maybe I’m the only one who sees it?

Read more: The Most Fundamental Problem in Financial Services 

Intent Matters in Product Development

The theory: One of the tricks to building insanely great products is to isolate the product development process from the larger strategic objectives of the company. 

How has it held up? Startups don’t usually have this problem (their only strategic objective is to build a product that their customers will love), but I continue to see this theory in the failures of larger, more established companies. A recent example is the slow disintegration of Goldman Sachs’ consumer banking business.  

Read more: Intent Matters in Product Development

The Two Models of BaaS Middleware

The theory: Baas middleware platforms, which serve to connect sponsor banks with non-bank partners, can operate using one of two models. The ‘AWS Model,’ which focuses on abstracting away the complexities of building financial products. And the ‘Hinge Model,’ which prioritizes building direct relationships between sponsor banks and non-bank partners.  

How has it held up? This theory continues to be an accurate way to categorize the infrastructure providers in the BaaS space.

I think the more interesting question is which model will ultimately prove to be more successful? There has been a lot of consolidation in the BaaS middleware platform space in recent months, but so far, neither model has proven to be decisively more defensible than the other. It’s still too early to say.  

Read more: Breaking Down Banking as a Service 

Hands-on-the-Wheel Money

The theory: Gen Z is an inherently ‘risk-on’ generation and, as such, values fintech products that give them control over their finances over solutions focused on automation. 

How has it held up? Not well! This was very much a ZIRP-era theory. I think it accurately captured the focus of many early-stage B2C fintech companies between 2020 and 2022, but it hasn’t held up. Gen Z is no more inherently ‘risk-on’ than any other generation. They just happened to come of age at a time when YOLOing into memestocks was a semi-defensible investment thesis.     

Read more: Hands-on-the-Wheel Money 

The Digitization of Ownership

The theory: The primary driver of disruption in financial services has, for the last couple of decades, been the digitization of product manufacturing and distribution. The next wave of disruption will be driven by the digitization of asset ownership.   

How has it held up? This is probably my most web3-friendly theory. I’ve never been a proponent of crypto as a technology (Patrick McKenzie’s description of blockchains as slow databases has always resonated with me), but I’m intrigued by the philosophical argument that consumers can benefit from new models of asset ownership, enabled by technology.

I remain intrigued, even as the crypto/web3 hype has receded.     

Read more: The Implications of Ownership

You Are Your Business Model

The theory: If a company’s mission isn’t aligned with its business model, its mission will eventually be abandoned, and its product and customers will suffer the consequences. Your business model is your destiny. 

How has it held up? This is one of my favorite theories. It explains why companies make terrible decisions about their products and the direction of their businesses even though their executives sincerely believe they are doing what’s best for their customers.

This theory is particularly relevant now, as we are transitioning out of a period in fintech where illogical business models were depressingly common.

Read more: You Are Your Business Model 

Young Adults Never Like Credit Cards

The theory: Every 10-15 years, market researchers “discover” that 18-25-year olds are uncomfortable with debt and don’t like credit cards and conclude that credit cards are dying. This never turns out to be true.  

How has it held up? Maybe Gen Alpha will actually kill the credit card, but I think it’s much more likely that they will follow in the footsteps of Gen Z and Millennials.

The basic reality is that credit cards aren’t a good product for people in their early 20s, but are a great product for people in their 30s. We always want to declare, “This generation is fundamentally different,” but that’s rarely true. People are people. 

Read more: Fintech is Making Credit Cards Weirder

The 15% Rule

The theory: There is a small percentage of the general consumer population (about 15%) that enjoys building budgets and categorizing and tracking expenses, and seeing detailed charts of cashflow patterns, and that consumer segment never gets meaningfully bigger. PFM providers that build for this segment will never reach mass-market adoption. 

How has it held up? In a narrow sense, this one provides a good explanation for why PFM, as a fintech category, has never really taken off. More broadly, I think it speaks to a tendency in fintech for founders to build the products that they (and their friends and family) would want, rather than the ones that the majority of the market needs. 

Read more: A PFM App By Any Other Name

Embedded Lending Increases Positive Selection

The theory: The biggest advantage in embedded lending – selling loan products through non-bank products and channels – is the ability to increase positive selection through the right distribution partnerships.

How has it held up? While it’s not a new idea, we’re still very early in the shift from direct lending to embedded lending, so it’s probably a bit too early to say if this theory will hold up. 

That said, I’m bullish on this one.  

Read more: Earning the Right to Win in Embedded Lending

Alex Johnson
Alex Johnson
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