7/ One of the bets for startups offering financial services is that they can innovate faster on customer acquisition to attract sufficient desirable customers from incumbents, while keeping the risks relatively constant, to overcome their lack of ability to rely on scale.
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8/ This is a bet most startups offering financial services will, bluntly, lose horribly, but that's startups for you.
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9/ Geeks both underestimate how #%()#)&ed the engineering practices of large financial firms are and underestimate how impressive they are. They make radically different tradeoffs than a startup would, including routinely spackling over technical debt with thousands of people.
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10/ One of the biggest problems in financial services qua tech is that the entire technical universe changes over every national border (sometimes within it, too) and that there is a weird goldilocks zone in terms of scalability on approaches for going international.
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11/ The goldilocks zone goes something like: you can't go international without truly massive resources, which you can never justify allocating to you in a small market.
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12/ The upper end of the zone: If you have truly massive resources, it is tempting to use the difficulties of international as a barrier to protect margins of some of your business lines (you have a lot, almost by definition), causing you to avoid international cooperation.
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13/ For this reason, historically the really interesting international businesses in finance happened when they were young and hungry. ("Who?" You can trivially name four global businesses in finance. It's surprisingly hard to count to eight. More are under the hood though.)
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14/ Finance is a much, much more regulated industry than tech is, and a surprising amount of the competitive landscape is downstream of the preferences of your polity-of-choice and their elected representatives, which sometimes look irrational. They generally are not.
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15/ For instance, the United States does not have a strong opinion on the right number of tech companies in it, but it *does* have a strong opinion of the right number of banks, and it sets that number about 100X more than Japan does or 1,000X what the United Kingdom does.
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Replying to @patio11
What does controlling the number of banks do? At first I thought it was about how much $ the respective govts are prepared to insure/guarantee but I don't see that having a direct relationship to number of banks. What am I missing?
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Having a high number of banks (and, by extension, bank branches) distributes access to credit and financial rails extremely broadly within the geographical footprint of the US and, more secondarily, distributes relatively high-quality office jobs.
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