---
title: "Fintech from first principles"
author: "Matt Brown"
canonical_url: "https://notes.mtb.xyz/p/fintech-first-principles"
source: "notes.mtb.xyz (Substack)"
year: "2024"
primary_topic: "fintech"
tags: ["fintech", "frameworks"]
fetched_at: "2026-05-14"
note: "Markdown twin of the canonical Substack post. The canonical URL above is authoritative; this file may lag if the original is edited."
---

Financial services is one of the oldest, largest, and most complex markets.

“Oldest” is measured in millennia: the first coined currency is over 5,000 years old and many of the earliest written records are commercial in nature.

“Largest” is measured in trillions: financial services has the largest gross profit pool of any major sector, 3.4x greater than ecommerce and 9.2x greater than software (see chart below).

“Most complex” is harder to measure, but it’s apparent to anyone who’s spent time across the financial universe, from credit default swaps and synthetic derivatives to more mundane but no less complex topics like [interchange](https://notes.mtb.xyz/p/interchange-in-1000-words).

![Bar chart titled "Financial Services has the largest gross profit pool across every major sector — Gross Profit by Sector ($T) - 2021" showing Financial Services at $6.5T (highlighted in teal), Healthcare at $4.8T, eCommerce at $1.9T, Software at $0.7T, and Semis at $0.3T, with a side note that much of FS profit is locked in private markets via boutique community banks, insurers, and asset managers globally, and a footer reading "Every single person and business deals with money, naturally the profit pools are massive."](https://substackcdn.com/image/fetch/$s_!IC2e!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb0036dce-cd80-4f6e-886a-4d3097eb6715_1520x866.png)

[Source](https://assets.ctfassets.net/iqem6dz8q0mk/6qbZWboqFNcq2i0YFa4Sxz/153aa898890c48e5333b22b9c0f6ffb4/Coatue_Next_Decade_in_FinTech_Oct-22.pdf)

Despite the surface-level complexity, financial services has a few core products and value propositions. If you have $100 (or the equivalent in wheat, shells, or stamped coins), there are a few things you can do. This is just as true today as it was 5,000 years ago. These are:

- **Pay** (or get paid): exchange money for goods or services
- **Invest** (or save): exchange money for an equity-like, risk-adjusted return
- **Borrow** (or lend): exchange money for a debt-like, risk-adjusted return
- **Insure**: exchange money for a payout if certain criteria are met

![A hand holding a smartphone whose screen displays the evolution of money as four icons in a row: an illustration of wheat, a cowrie shell, an ancient stamped Lydian-style coin, and the modern Cash App green dollar-sign icon.](https://substackcdn.com/image/fetch/$s_!CjCF!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F9322737a-b1c9-4206-8e4c-b7077c46d2b4_1384x1478.png)

These core products aren’t mutually exclusive. In fact, the lines between them are blurred by design. For example, credit cards are a payment product on the acceptance side, but a credit product on the issuer side. A consumer may save funds with their bank, who is in fact loaning those funds out to other borrowers.

Despite their differences, these financial products all share two main values:

- **Accessibility**: how many people or businesses can access the product? Accessibility is a spectrum from “not accessible at all” to “accessible but inconvenient”. For example, before the rise of Brex, banking was very inconvenient if not entirely inaccessible to many startups, especially those with international founders.
- **Cost**: self-explanatory, but how much does it cost to utilize that financial product? The cost can be explicit, such as fixed fees and an APY, or implicit, such as mandated reserves in the case of payment processing.

Cost and accessibility have a strong relationship. A product is often inaccessible to a market or segment because it’s too expensive to offer it profitably. For example, Square started by making card acceptance accessible to a new segment of micro-merchants, like sellers at farmer’s markets. This was made possible by the significant cost savings that came with using people’s phones as a substitute for expensive, dedicated card terminal hardware. Cost drives accessibility and accessibility drives cost.

### Fintech’s fundamental canvas

Combining the 4 products and 2 values, you get what I think of as fintech’s fundamental canvas:

![Hand-drawn 4x2 grid forming "fintech's fundamental canvas," with rows labeled Pay, Invest, Borrow, and Insure and columns labeled Accessibility and Cost, all cells empty as a blank framework.](https://substackcdn.com/image/fetch/$s_!tO8S!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fd2eb0c18-a663-40a9-83de-634c7a6bf7cb_1600x1210.png)

### Today’s winners started with wedges that increased accessibility

With this canvas, you can map the origin and journey of today’s most successful fintechs. You can also get a preview of where they’re going. Note that I’m talking about the journeys that have worked *in the past* —the fintech winners of tomorrow may not follow the same path. I’ll touch on that further down.

So what has the winning strategy for fintechs been over the last decade?

**(1) Start with a wedge product that expands accessibility for new segments.** In the last decade, many fintechs used new platforms (Square’s use of mobile hardware and App Stores) or business model innovations (Robinhood’s payment-for-order-flow, SoFi’s peer-to-peer lending) to serve new segments and make certain financial products more accessible. Think Square’s farmer’s market sellers, Robinhood’s twenty-something casual investors, or Stripe’s early-stage startups.

Barring a tech breakthrough or platform shift, it’s difficult for startups to compete exclusively or primarily on cost. That comes with time and scale, but cost itself was rarely the initial value prop. **So most of fintech’s big winners from the last decade built a new platform or business model to make an existing financial product accessible to segments that had historically had been under-served and/or over-charged.**

![The fintech canvas grid with fintech company logos plotted primarily in the Accessibility column: Stripe, ramp, and Square in the Pay row, chime and Robinhood in the Invest row, afterpay, earnin, and SoFi spanning Borrow (with SoFi straddling into Cost), and NEXT Insurance and metromile in the Insure row — illustrating that most winners started by making products more accessible rather than cheaper.](https://substackcdn.com/image/fetch/$s_!6zAf!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F4a6ea05d-a5fc-4c53-a7e9-7f8ea6734bed_1482x1148.png)

**(2) Improve cost over time with scale.** As these companies grew, most used their scale and/or network effects to expand product value and improve cost. As the cost of Square’s readers dropped, they became increasingly accessible and adopted by a wider and wider array of businesses (farmer’s market stalls to food trucks to brick and mortar restaurants, etc). Since the line between accessibility and cost is blurry, many companies started straddling both and just honed both value props as they grew.

**(3) Expand to two or more adjacent products, especially if their value props can subsidize one another.** This is the phase most fintech winners have been in for the last few years as part of the [classic unbundle/bundle cycle](https://notes.mtb.xyz/p/bundling-unbundling-and-timing). Whether it’s to increase customer LTV, defend their core business, or for some other reason, nearly all have started bundling adjacent financial products that span product values. For example, this is SoFi expanding from cost-focused lending to multiple lending products to investing, savings, and even insurance products, or Robinhood going from investing to savings.

![The same fintech canvas with hand-drawn colored loops overlaying multiple cells per company: a grey loop around Square covering Pay, Invest, Borrow, and Insure (mostly accessibility), a green loop around Robinhood covering Pay, Invest, and Insure, and a blue loop around SoFi covering Invest, Borrow, and Insure across both Accessibility and Cost columns — visualizing how each fintech winner expanded across multiple products and value props.](https://substackcdn.com/image/fetch/$s_!XmUZ!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F6c28bbf4-d74a-4d3d-9783-ee8b83342011_1298x1000.png)

It’s often easier to provide multiple product values when expanding products within a single platform. If a customer is already trading stocks on your platform, then onboarding to trade crypto can be easier than if on a standalone crypto trading app, for example. Because products can be up/cross sold to the same user, they can be discounted because the platform has already paid the CAC for them.

### What’s after the wedge?

So what’s the point of all this? **I think the strategy of a “wedge of a single product + accessibility via a tech shift” is exhausted. There are still under-penetrated segments, but generally financial products are significantly more accessible today than they were a decade ago.**

**The new winning strategy will likely be (1) shifting “accessibility” to “convenience” and (2) going multi-product much sooner. The new winning strategy will touch a little on cost, but not overly optimize for it.** Customers won’t necessarily seek the cheapest option, but the most convenient. Companies will serve this by bundling much more, much sooner.

![Side-by-side comparison of fintech canvases labeled "2010-2022" and "2024+": the 2010-2022 panel shows a blue loop hugging the top Pay row in the Accessibility column with an arrow stretching toward Cost, and a blue loop along the bottom Insure row, representing wedge-and-expand strategies; the 2024+ panel shows a much larger green loop covering the entire Accessibility column with arrows fanning down and diagonally across into Cost, representing the new multi-product, broad-canvas strategy.](https://substackcdn.com/image/fetch/$s_!MCih!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8b991f74-098e-4e75-b60c-907182267265_1600x790.png)

The winning companies won’t start or stick with a narrow wedge, but will quickly bundle multiple products, both fintech and SaaS, to expand their LTV and compete with a sea of point solutions. This means [vertical SaaS / VERP companies](https://notes.mtb.xyz/p/the-golden-age-of-vertical-erps) not lingering on “SaaS + payments”, but quickly adding other products like banking and issuing. It means [fintech infra companies](https://notes.mtb.xyz/p/fintech-infra-fundraising) expanding beyond their core offering to other complementary ones, like [Unit adding lending](https://www.unit.co/blog/introducing-the-simplest-way-to-embed-lending-into-your-product).

Many large fintechs today are multi-product, but it took them years to get there. Tomorrow’s fintech winners will be multi-product within months or quarters, if not at launch. The proliferation of fintech infra, plus the accelerating commoditization of software thanks to AI, will cement this multi-product-first approach as the most viable one for new companies.