Exceptional deep dive into how fintech disruptors can force incumbent innovation even when structurally unprofitable.
The CIT/MIT two-leg transaction model is brilliantly explained, but what really resonates is how Curve's structural losses were almost beside the point. They proved the concept of credential flexibility could work, and once Visa and Mastercard saw consumer demand, they had no choice but to build issuer-centric versions.
The winner-takes-all dynamic you describe for flexible credentials is fascinating because it fundamentally changes the competitive relationship between the schemes themselves. Legacy banks can't easily adopt these models without consoli dating their card portfolios under one network, which creates real switching costs.
It'll be interesting to see if neobanks that adopt flexible credentials early gain enough of an advantage to justify the complexity.
Thanks for the comment. To some extent Monzo has build their own version in house as they allow users to “flex” most transactions and turn them into instalments or even a longer term credit transaction. There’s a strong likelihood of seeing more neobanks go live with a similar product via VFC or MOC especially as partners such as Marqeta and Affirm will also be out talking to prospective clients about their offerings, and how they can support with this.
This was a brilliant breakdown 👏
Thanks so much for your feedback!
Exceptional deep dive into how fintech disruptors can force incumbent innovation even when structurally unprofitable.
The CIT/MIT two-leg transaction model is brilliantly explained, but what really resonates is how Curve's structural losses were almost beside the point. They proved the concept of credential flexibility could work, and once Visa and Mastercard saw consumer demand, they had no choice but to build issuer-centric versions.
The winner-takes-all dynamic you describe for flexible credentials is fascinating because it fundamentally changes the competitive relationship between the schemes themselves. Legacy banks can't easily adopt these models without consoli dating their card portfolios under one network, which creates real switching costs.
It'll be interesting to see if neobanks that adopt flexible credentials early gain enough of an advantage to justify the complexity.
Thanks for the comment. To some extent Monzo has build their own version in house as they allow users to “flex” most transactions and turn them into instalments or even a longer term credit transaction. There’s a strong likelihood of seeing more neobanks go live with a similar product via VFC or MOC especially as partners such as Marqeta and Affirm will also be out talking to prospective clients about their offerings, and how they can support with this.