Friedberg explains fintech companies can accept lower profits per customer without shareholder pressure over short-term declines.
“Companies generally have a lower operating expense per customer so they can make less profit per customer and build a great business.”
Friedberg explains fintech companies can accept lower profit per customer and avoid shareholder pressure to gain scale quickly.
“And so they can make the investment to take a more aggressive approach, make less money per customer per year and gain scale very quickly.”
Friedberg argues traditional financial firms face a catch-22 in M&A: autonomy loses cross-sell leverage.
“And if they do that, they lose the leverage of their over their existing customer base, which is to cross sell digital services in.”
Friedberg says traditional financial firms ruin tech acquisitions when they try to integrate them, creating an innovator's dilemma.
“And if they try and do that, then they step in and they try and run a tech company and the whole thing gets ruined and falls apart as we've seen in M and A over and over again in many different So it is this kind of classic innovator dilemma moment that we're seeing in financial services”
Friedberg characterizes the current financial services landscape as a classic innovator's dilemma moment.
“So it is this kind of classic innovator dilemma moment that we're seeing in financial services as the fintech companies kind of storm the field.”