Innovations That Transform Traditional Banking Models

Nubank dismantled Brazil's banking oligopoly. Here's how they do it. Q2 2025: $3.7B revenue, 28% ROE, 122.7M customers. The growth numbers look impressive, but they mask the real disruption happening underneath. Nubank has systematically destroyed every cost structure that traditional banks built their empires on. The efficiency gap tells the story. Nubank's 28.3% efficiency ratio vs competitors trapped at 36-55%. Every new customer widens this structural advantage. Four cost pillars reveal the blueprint: 1. Cost to serve: Nubank at $28.3 per customer vs traditional banks averaging $200+. Zero branches, 8,000 employees serving 106.5M customers. Each employee generates $1.73M in revenue vs traditional banks averaging $0.4M. When Nubank adds customers, marginal cost approaches zero. When traditional banks add customers, they are burning $$$. 2. Cost of risk: Nubank's 9.2% risk-adjusted NIM leads the sector while serving underbanked populations vs traditional banks averaging 3-6%. Superior data models from controlling the entire customer experience enable both 44% credit growth AND better risk pricing. Every transaction creates data that improves underwriting. 3. Cost of funding: 35% funding through FIDCs breaks the expensive retail deposit trap that burdens all traditional competitors. While legacy banks pay for branch networks to gather deposits, Nubank accesses institutional capital markets directly. 15.7% CET1 ratio (highest among all peers) creates self-reinforcing capital strength. 4. Cost of acquisition: Nubank at $19.2 per new customer vs traditional banks averaging $80-115. Product-led growth creates viral effects where superior UX generates organic advocacy. Santander Brasil spent $54.4M in H1 2025 for ZERO net customer growth. The competitive response reveals the existential threat. Banco Itaú migrated 60% of infrastructure to AWS and developed 1,300+ AI models. Bradesco's BIA handles millions of interactions with 82% resolution. Massive digital transformation investments across all major banks signal recognition that the old model is obsolete. The core dilemma remains unsolvable. Traditional banks can't abandon their branch networks without hemorrhaging existing customers, yet every day they maintain them deepens their permanent cost disadvantage. Digital transformation can't fix a fundamentally broken cost structure. Platform economics transform banking. Nubank operates on software-like margins with network effects. Each additional customer makes the platform more efficient. Legacy banks see complexity and costs increase with scale. The market still doesn't get it. Trading at 4.5x revenue while building the most efficient banking platform globally. Platform banking will redefine global financial services where the most efficient operators capture disproportionate value. Every traditional bank globally should study this playbook. The old moats became anchors. What's your take on Nubank vs Big 5? Comment down below.

I’ve been to more accelerator demo days than I can count, but this one was different. Innovation Day showcased impactful POC collaborations with FIS that are pushing the boundaries in fintech: 1. Prelim: A seamless integration pulling core data into treasury management documents, removing manual input and boosting efficiency. In partnership with FIS, this innovation transformed a bank’s workflow, making data entry accurate and fast. 2. RiskScout: As financial crime rises, RiskScout provides real-time solutions that streamline compliance, automate workflows, and ease BSA team workloads. Partnering with FIS, they tested transaction monitoring, risk scoring, and automation, setting a new standard for regulatory compliance at reduced costs. 3. Entrio: Simplifying vendor management, Entrio offers visibility into tech stacks, identifying and optimizing existing solutions. FIS worked with Entrio to clean and consolidate its own vast supplier network, unlocking new efficiency in vendor governance. 4. Spade: With real-time merchant intelligence, Spade identifies genuine merchant identities to enhance transaction clarity. A POC with FIS saw 96.4% of transactions accurately matched to merchants, improving approval rates while preventing fraud. 5. MoneyKit: Connecting fragmented financial accounts is key, and MoneyKit offers FIS a single API for five major platforms, driving seamless customer interactions. The POC demo showed how consolidating data can boost engagement and loyalty in digital banking. 6. Blooma CRE: Automating commercial real estate underwriting, Blooma’s cloud-based platform delivers faster and smarter insights. FIS’s POC confirmed Blooma’s potential to minimize implementation fatigue and manage risk, with AI adding value without replacing human judgment. Stay tuned for Part 2, where I’ll cover the remaining companies and panel takeaways! #fis #innovationday #fintechinnovation #ecosystembanking

Neobanks.io captured 19.1M UK users in 5 years. The architect behind this revolution shares their playbook The numbers prove it: 2018: 2.9M users 2023: 19.1M users Growth: 559% Monzo Bank leads this revolution with 24% market share. Their playbook reveals three core principles: 1. Digital-First Infrastructure • Zero physical branches • Real-time transactions standard • 24/7 service availability • 90% reduction in operational costs 2. Customer-Centric Innovation • Built-in budgeting tools • Automated savings features • Instant payment notifications • Cross-border capabilities at 0.4% fees 3. Strategic Partnerships • Banking license agreements cut regulatory costs • API-first architecture enables rapid iteration • Third-party integrations expand services • Shared compliance frameworks reduce overhead The financial impact speaks volumes: - Customer acquisition cost: €200-300 • Revenue growth: 130% CAGR for specialists • Market penetration: 30% of UK adults • Transaction volume: £846M annually Two emerging trends shape the next phase: 1. Specialization Premium segments deliver higher lifetime value. Focused players like Wise achieve profitability through deep expertise in cross-border payments. 2. Embedded Finance Banking features integrate directly into business software. Companies turn financial services into seamless experiences. Success requires balancing growth with unit economics. The winners master both technology and trust. Next week: Why traditional banks partner with neobanks instead of competing

Why embedded finance matters and what is the new financial value chain? The rise of embedded finance is transforming how businesses and consumers interact with money, integrating financial services directly into digital platforms where people shop, work, and transact. A recent report by Bain & Company highlights the scale and potential of this shift, projecting that embedded finance will grow to over $7 trillion by 2026, reshaping the financial services industry as we know it. Embedded finance a paradigm shift in financial accessibility and convenience. Companies like Shopify, Uber, and Apple have successfully embedded payments, lending, and banking into their platforms, making financial interactions seamless for end-users. This trend is being driven by three core benefits: - Enhanced Customer Experience: Embedded finance removes friction from transactions, enabling users to complete purchases, secure financing, or make payments effortlessly within the apps they already use. - Cost Savings: Platforms that integrate financial services can lower costs by leveraging proprietary data, reducing risks, and streamlining operations. - Expanded Financial Access: By embedding lending and credit into digital platforms, businesses can offer financial services to underserved segments, unlocking new opportunities for consumers and SMEs. Traditionally, banks controlled the entire financial services value chain—from product creation to distribution. Embedded finance unbundles this model, introducing a new ecosystem that consists of: - End Customers: Individuals or businesses using digital platforms for transactions. - Platforms: Companies that own the customer relationship and embed financial services within their offerings. - Software Enablers: Fintech providers that supply the infrastructure, compliance, and technology required to integrate financial services. - Regulated Financial Institutions: Banks and financial entities that provide the necessary licenses and regulatory compliance. This shift in value distribution presents a challenge for traditional banks but also opens up opportunities to participate in the embedded finance ecosystem as enablers or infrastructure providers. For banks and fintechs, the rise of embedded finance demands a strategic shift. Rather than competing directly with platforms, banks can embrace their role as regulated service providers, offering infrastructure, compliance, and financial products through digital partners. On the other hand, startups and platforms have an enormous opportunity to leverage embedded finance to increase engagement, improve customer retention, and create new revenue streams. Would love to hear your thoughts on embedded finance opportunities in your line of work. Please comment below! Here is a link to the complete Bain & Company report on embedded finance: https://lnkd.in/d4fmKVX2