Customer relationships can be separated from banking infrastructure as the front-end first principles experience is controlled by an entity distinct from the one that owns the balance sheet or the banking licenses. As we think about the future of FinTech In addition to a signi昀椀cant and growing TAM, we think that FinTech infrastructure can be a infrastructure, there are several key great business model that lends itself well to developer-led growth and unit economics that principles that guide our belief in the success of the business. For example, scale with end customers. For example, Marqeta and Plaid sold into Cash App when it was we expect: just an early product inside of Square and presumably their contract size grew in tandem with CashApp’s scale. To round it out, you also tend to see very healthy gross margins as these 昀椀rms bene昀椀t from the scale of integrations and volume breaks. Some fear that consumer Fin- Tech players like CashApp will eventually build this infra layer in-house. While that is always a there will be local winners. possibility, engineering resources are not unconstrained and solving customer-facing issues Successful companies will attempt that are core to their business is likely to take priority. to buy their way into new regions. This historically has not been successful. We have seen that infrastructure businesses have been successful across broad horizontal Understanding local nuance, customer behavior, and the unique regulatory markets organized by end customer and product function. Looking forward, we expect they landscape of each geography is key. will see competition (and this applies to many of the categories in FinTech) in connection with the pursuit of depth within each category as new entrants focus on more narrow verticals. Examples to note in payments occurred when broad-based POS was faced with competition in developers (Stripe), vertical markets (Toast and Shopify), and marketplaces (Uber). api documents are the product. If the documents aren’t Much like the neo-banks that they are serving, we anticipate that these infrastructure world class, developers businesses will be rebundled themselves. Just as many consumers want a one-stop-shop won’t adopt the product. for their bank account, brokerage, and credit cards, we have seen that FinTechs would also strongly prefer to work with one partner that is capable of handling many products. We have started to see attempts of this from some of the largest players in the space, but frankly to date they’ve had limited success. It is very hard to do FinTech infrastructure part time. These it is never an are massively complex problems that are mission critical and require armies of product and overnight success. engineering teams. As such, we predict that we are years away from rebundling, and that Founders and investors much of it will happen inorganically—this stu昀昀 is hard to build and maintain! alike need to be patient during the initial build. The painful backend process is the moat! 14 trust that the tam will develop. It often looks small in the beginning. INFRASTRUCTURE IS ENABLING INNOVATION SHARE VISIT PG 10