Jan 2, 2019 · 27m · a16z
a16z Podcast | When Banking Works Like My Smartphone
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this a16z podcast episode, TransferWise co-founder Taavet Hinrikus and a16z's Angela Strange discuss how financial technology startups are disrupting legacy banking through price transparency, mobile-first user experiences, and unbundled financial services.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 4.3 Guest teaching 4.2 Guest disagreement 1.5 The host pushing back 2.7
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:03 Refuting the 'Trust is Overplayed' Argument
Tavit directly counters Angela's premise that trust might be secondary to cost, emphasizing that without baseline trust, users will not send $2,000 across borders regardless of price.
Hardest push from the host ▶ 7:22 Pushing Back on Trust as the Primary DriverAngela plays devil's advocate using survey stats from Tavit's own report to challenge whether trust is actually secondary to plain cost and convenience.
Biggest teaching moment ▶ 11:23 Reframing Banking Engagement ExpectationsTavit educates the hosts on consumer intent, clarifying that nobody wants to interact with a bank or find it 'sexy'; rather, optimal banking should operate invisibly in the background.
The host holds their own ▶ 4:10 Citing Detailed Industry StatisticsAngela demonstrates deep industry knowledge by highlighting that UK consumers pay £8 billion in hidden costs on checking accounts marketed as free.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Consumer Expectations and the Origins of TransferWise | 3 | 3 | 1 | 2 | Michael opens with a direct question asking why consumers should believe fintech claims this time. Tavit explains how changing consumer expectations driven by services like Uber and Skype motivated the founding of TransferWise. | |
| Bank Transparency, Hidden Fees, and Marketing Stunts | 5 | 4 | 1 | 1 | Angela demonstrates solid host knowledge by citing specific UK checking account fee statistics (£8 billion) and referencing TransferWise's public guerilla marketing campaign. Tavit elaborates on how consumers unknowingly pay hundreds in hidden fees due to bank inefficiencies. | |
| Trust Dynamics, Peer Referrals, and the Post-2008 Landscape | 6 | 5 | 3 | 6 | Angela offers strong pushback, citing TransferWise's own data to question whether trust is overplayed compared to cost and convenience. Tavit counters by explaining that trust and security are non-negotiable table stakes when moving thousands of dollars. | |
| Rethinking the Banking User Experience and Brand Building | 5 | 4 | 2 | 3 | Michael asks if fintech will make banking exciting, prompting Tavit to reframe banking as a service that should ideally be an invisible background utility. Angela expands on this with an expert breakdown of inflection point marketing and product layering like SoFi. | |
| Market Disruptions, Skype Analogy, and Future Financial Structures | 4 | 5 | 1 | 2 | Tavit uses his background at Skype to draw a parallel, predicting tech firms will capture 30-40% of banking within a decade. The hosts prompt him on regulatory structures, banking charters, and unbundling versus rebundling. | |
| Geographic Differences, Digital Transformation, and Changing Demographics | 3 | 4 | 1 | 2 | The group discusses global differences in fintech adoption, noting how emerging markets bypass legacy infrastructure. Tavit addresses demographic myths by citing survey findings and mentioning his nearly 70-year-old parents using tech daily. |
Statements from this episode (18)
Hinrikus: TransferWise international transfers are 10 times cheaper than banks
“We typically do it 10 times cheaper than the bank would do it, and we do it in a pretty quick way.”
Hinrikus: Nobody really cares about fintech as a category
“So I think, first of all, I don't think anybody really cares about fintech as such.”
Hinrikus: Banking expectations are set by seamless apps like Uber and Skype
“Consumers have come to expect that everything works the way Skype works the way Uber works. You know, you basically get what you want to get it now. You know how much you pay for it. You know how quickly it's going to arrive, but banks, you know, aren't quite …”
Strange: UK Checking Accounts Generate £8B in Hidden Annual Costs
“Checking accounts, which are advertised as free, account for it's eight billion of costs, and that's just in the UK.”
Hinrikus: 'Free' UK Banking Costs Customers £200-£300 Annually
“Every customer who believes they have free banking in the UK, Ends up paying around two, 300 pounds in fees every year to the bank.”
Hinrikus: Physical Bank Branches and Buildings No Longer Matter
“Banks have kind of gotten used to this world where, you know, they can have lavish office buildings and the branch network and all this jazz which doesn't really matter anymore.”
Hinrikus: Average TransferWise transaction size is $2,000
“The average transaction size is 2000 dollars on transfer wise.”
Strange: Millennials trust tech giants more than traditional banks
“There's definitely a lot around the millennial generation and how, you know, they hate going to their banks more than they hate going to the dentist. They would actually trust Apple, Google, name your tech Institute more than banks.”
Hinrikus: Banking should be an invisible background service
“You know, to be honest, inherently I tell you that banking is incredibly boring and banking should actually be a background service.”
Strange: SoFi acquires users via loan refinancing to cross-sell mortgages
“SoFi is the classic case of this. If they come in, they refinance your student loans, they throw it really easily, and then now they're layering on mortgages.”
Hinrikus: Skype controls 40% of international long-distance calling
“I spent a large chunk of my life building up another company called Skype, and Skype today is, I don't know, 12 years old maybe, but Skype owns 40% of long distance calling.”
Hinrikus: Tech companies will control 30-40% of banking by 2026
“I firmly believe that we're going to see something similar in banking. We'll see tech companies own 30, 40% of banking in, in, in 10 years time.”
Hinrikus: Deposit holding is the only thing legacy banks do well
“A banking charter is really good for one thing, it's for holding deposits, and that's actually the only thing that banks are still great at, for holding people's money.”
Hinrikus: The UK leads the US in fintech traction and regulation
“Fintech probably has more kind of traction and more companies in UK, but, and I think that, you know, and regulation is, is slightly better in UK as well.”
Hinrikus: Emerging markets will skip desktop banking for mobile-first finance
“So what happens in China or India or Africa, I think could actually be, you know, even, even more change, you know, Kind of like, you know in a way, let's say, we'll jump over the old internet and go purely mobile, and the ways that will deliver services is pr…”
Hinrikus: Consumer banking attitudes do not vary significantly by age
“If we look at the research and one of the things which was somewhat surprising to us was that the views don't differ that much based on age.”
Hinrikus: TransferWise holds 5% market share in the UK
“So we have five percent market share in UK and I think it's kind of hard to find other examples of companies having reached five percent share in any given geography.”
Hinrikus: Fintechs must control the full stack to improve services
“Purely by putting on a little bit of makeup and a better front end, you can't really offer a fundamentally better service. So you do need lots of kind of, you know, let's say, you know, as a popular world, this word is full stack. You know, you need to control…”