Jan 2, 2019 · 41m · a16z
a16z Podcast | Fintech from the World's Financial Capital -- London
Alex Rampell · 19m spoken Eileen Burbage · 13m spoken Sonal Chokshi · 3m spoken Michael Copeland · 2m spoken
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Recorded live in London, this episode of the a16z podcast brings together venture capitalists Alex Rampell and Eileen Burbage to analyze the global FinTech landscape, comparing regulatory approaches, consumer payment habits, and the competitive battle between legacy banks, FinTech startups, and big tech platforms.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 8% of the talking time here. How this is scored →
The host as informed peer 3.0 Guest teaching 5.8 Guest disagreement 1.6 The host pushing back 2.8
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 35:00 Dismissing new payment system startups
Alex forcefully rejects the premise that startups can launch standalone payment networks, calling himself 'incredibly bearish' and insisting payments must expand concentrically like Tokyo's Suica card.
Hardest push from the host ▶ 15:20 Michael challenges guest premise on consumer demandMichael directly confronts the guests' narrative that consumers lost faith in banks post-2008, stating he doesn't believe consumers are actively asking for new fintech alternatives.
Biggest teaching moment ▶ 13:41 Alex explains US card liability shiftWhen Michael assumes merchants avoided chip reader hardware purely due to expense, Alex corrects him by explaining the systemic fraud liability shift that incentivized merchant adoption.
The host holds their own ▶ 33:45 Sonal cites WeChat payment primerSonal demonstrates specialized domain expertise by citing a published primer on WeChat to explain how messaging platforms convert stored payment credentials into broader ecosystem monetization.
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 |
|---|---|---|---|---|---|---|
| Why London Emerged as a Financial Tech Hub | 3 | 5 | 1 | 2 | The hosts prompt the guests on London's rise as a fintech hub and whether regulation helps or hinders growth. The guests educate the hosts on regulatory constructs like KYC, AML, and OFAC, as well as historical banking laws dating back hundreds of years. | |
| Consumer Payment Adoption: Europe vs. the United States | 2 | 6 | 2 | 2 | Michael asks why US consumer payment tech lags behind Europe. Alex corrects host assumptions about terminal costs by detailing the October US credit card fraud liability shift that forced merchant chip adoption. | |
| The Battle Between Incumbents and Financial Startups | 4 | 7 | 3 | 6 | Michael pushes back hard on the guests' assertion that post-2008 consumers actively want new banks. Alex delivers an extensive masterclass comparing bank inertia to Gmail's rollout, explaining legacy card operating systems like T-Sys, and outlining why distribution beats startup innovation. | |
| Trust, Millennial Behavior, and Big Tech Expansion | 3 | 5 | 1 | 2 | Sonal questions whether millennials actually care about traditional institutional trust. The guests detail how incumbents use firms like McKinsey to layer on hidden fees while big tech platforms earn higher consumer trust. | |
| Payment Networks, Global Regulation, and Emerging Markets | 3 | 6 | 1 | 2 | Michael asks how volatile international economies influence financial system design. Alex educates on European interchange cap regulations killing credit card rewards, while Eileen outlines mobile leapfrogging in Kenya and India. |
Statements from this episode (21)
Rampell: Incumbents don't use "fintech," only new competitors do
“We were just joking about this, that it seems like a contrived term, because if you were to ask any of the existing incumbent companies what they do, they would not say FinTech. They would say, we loan money, we're a bank, or we do finance, we do microfinance.…”
Burbidge: The term "fintech" is a swipe at legacy banks
“It's almost like a diss, right? It's like the new, newer companies are thinking, oh, we're going to introduce technology into your sector, thereby implying that they never used technology to do it. So it's almost a bit of a swipe.”
Burbidge: London surpassed New York as global financial capital in 2015
“Which it just re-got again from New York this year.”
Burbidge: UK financial sector contributes up to £160B annually to GDP
“The financial services sector contributes about 150 to one hundred and sixty billion pounds a year to the UK economy and GDP.”
Burbidge: UK government committed to granting 15 challenger bank licenses
“We're going to approve or grant new licenses for up to 15 challenger banks.”
Burbidge: London hosts more US bank headquarters than New York
“We have more American bank headquarters here in London than in New York.”
Burbidge: London transit is world's largest bank-backed contactless network
“And that is the largest contactless payment bank sort of backbone as opposed to a private network contactless payment in the world.”
Rampell: Wireless restaurant payment terminals do not exist in the US
“In Europe, if you go pay at a restaurant, they bring the terminal to you. And that level of infrastructure, that wireless payment infrastructure does not exist in the U.S. At all.”
Rampell: US merchants swiping chip cards bear 100% fraud liability
“If you're a merchant, and there's a card that has a chip, and you don't read the chip, you instead read the mag stripe, you, and you alone, as the merchant, are responsible for fraud.”
Burbidge: Over 90% of European banks rely on FIS or Fiserv
“It's at least here in Europe about something like 90%, more than that, of all of the banks are using one of two back-end suppliers, FIS or Fiserv, which prohibits them from being able to do things faster.”
Rampell: TSYS serves as backend for half of credit card issuers
“The point is that T-SYS is effectively the operating system for maybe half of all credit card companies that issue credit cards, and they're not really a tech company.”
Rampell: Startups win if they get distribution before incumbents get innovation
“The battle between the incumbent and the startup comes down to whether the incumbent gets innovation before the startup gets distribution, and it's very, very hard.”
Rampell: Top 10 US banks control 70-80% of credit card market
“If you look at credit card issuance in the U.S., I mean, the top 10 banks are like 70, 80% of the market.”
Burbidge: Barclays spends $5 billion annually on technology
“Barclays has been publicly establishing that they spend three billion pounds a year, which is about five million dollars, five billion dollars a year on its IT spend or its tech spend”
Burbidge: Nearly 80% of millennials trust tech giants over banks
“Certainly more than 50, I think it was close to 80% of millennials trust the brands, you know, Facebook or Google. Or Apple, I think was the top of the pile, much more than their banks.”
Burbidge: Fintech startups will sell to big tech, not banks
“Your exit opportunities aside from staying independent and maybe going public or whatever is potentially on the buyout side. You may not be selling to a bank, you might be selling to Facebook, you might be selling to Amazon, you might be selling to Google as t…”
Rampell: Non-product companies focus innovation on fee extraction
“The larger the company and the less product-driven it is, the more the innovation is around, like, how do we charge more?”
Rampell: Extremely bearish on startups building new payment systems
“I'm incredibly bearish on any startup that says we're going to build a new payment system.”
Rampell: EU regulation caps debit interchange at 20bps, credit at 40bps
“So what's happening in Europe right now is there's a European mandate on interchange, which is reducing debit interchange to 20 basis points and credit interchange to, I believe, 40 basis points.”