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 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.”
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.”