Lessons from Simon Taylor

As a prominent figure in the fintech industry, Simon Taylor, co-founder of 11:FS and author of the widely-read "Fintech Brainfood" newsletter, has shared a wealth of knowledge over the years. His insights, drawn from a career that includes leading blockchain research at Barclays and his current role as Head of Strategy and Content at Sardine, offer a deep understanding of financial technology's past, present, and future.

On the Evolution of Fintech

Fintech is only 1% finished. This is one of Taylor's most famous assertions, suggesting that despite the rapid innovation, the digital transformation of financial services has only just begun. [1]
"Every company is becoming a FinTech company." Taylor argues that businesses across all sectors are increasingly embedding financial services into their offerings to create new revenue streams and improve customer experiences. [2]
The "DeFi Mullet" concept. This idea describes a business model with "Fintech at the front, Decentralized Finance or crypto at the back," allowing for a familiar user experience with the benefits of decentralized technology. [2]
The rise of "Day Walkers." Borrowing from the movie Blade, Taylor uses this term to describe professionals who can operate effectively in both the traditional banking and fintech worlds, understanding the nuances and strengths of each. [3][4]
Innovation often looks like risk at the beginning. Taylor emphasizes that truly new ideas can be hard to distinguish from risky ventures, and it's crucial to have a framework for assessing them. [3]
"Digital has moved from a nice-to-have cost reducer or growth engine to the only way to do business." The global pandemic accelerated the shift to digital, making it a matter of survival for financial institutions. [5]
"We are in the age of the fintech hyperscaler." Companies like Stripe and Revolut are not just large; they continue to grow at a rapid pace, a phenomenon previously seen mainly in big tech. [6]
The constant cycle of bundling and unbundling. Taylor frequently discusses how the financial services industry moves between periods of integrating various services into a single platform and then breaking them apart into specialized offerings. [4]
Fintech is not a drag race; it's Formula 1. Success in fintech requires not just speed but also precision and control—knowing when to slow down to ultimately go faster and win the long race. [7]
"Rising rates lifts all fintech." While rising interest rates have benefited traditional banks, they have also boosted the revenues of many fintech companies, contrary to some expectations. [8]

On Banking and Incumbents

Have empathy for banks. Having worked inside a large bank, Taylor stresses the importance of understanding the constraints and complexities that incumbents face, rather than simply criticizing their slowness. [4]
"Incumbent banks have not yet built great product, because great product comes when the underlying digital comes together with what's above the glass." True innovation in banking requires a seamless integration of back-end technology and front-end user experience. [1]
Banks are trying to use new tools in old ways. Taylor compares this to making a concrete canoe and wondering why it sinks. To be effective, new technologies require new processes and organizational structures. [1]
The future of banking is to disappear. Financial services will become increasingly embedded into other platforms and experiences, solving broader customer problems rather than being a standalone destination. [9]
"Every bank should tokenize deposits." Taylor sees tokenization as a significant future trend for banks, offering new efficiencies and capabilities. [10][11]
"The business model of banking was predicated on branches and distribution." Fintech has challenged this by finding new, digital-native ways to manage risk and acquire customers. [12]
Banks need to radically change how they do lending. In a digital-first world, online lending is critical for economic survival and growth, requiring banks to rethink their traditional processes. [5]
"Frenemies, not enemies." As the fintech market matures, both banks and fintechs are realizing they need to collaborate as much as they compete. [3]
The definition of "core banking" is often misunderstood. Taylor clarifies that "core" stands for "computerized online real-time environment," a term for any 24/7 processing system, and that many in the industry use the term without knowing its origin. [4]
"If Big Banks Win Embedded Finance, Innovation Dies." Taylor warns that if the regulatory environment favors large incumbents to the point of stifling smaller innovators, it will harm financial inclusion and economic growth. [13]

On Technology and Innovation

"AI is inevitable." While acknowledging the hype, Taylor believes the transformative power of artificial intelligence in financial services is undeniable, especially in areas like loan origination and customer service. [4]
"Whenever I reduce cost, I increase opportunity." Reductions in the cost of bringing products to market, often through new technologies, open the door for a wider range of innovators and ideas. [14]
"Every process should be born digital." Instead of just re-engineering old processes, companies should re-imagine them from the ground up for a digital world. This is a matter of business strategy, not just process improvement. [5]
The power of data enrichment in fraud and AML. Taylor highlights that "all risk problems are data science problems" and that enhancing raw data provides a much clearer picture for preventing financial crime. [15]
"The pace of change has now become your strategic advantage." In the current financial landscape, the ability to adapt and innovate quickly is a key differentiator. [4]
Technology can enable banks to manage risk in a completely different way. By using richer data sources beyond traditional credit scores, lenders can create more personalized and accurate risk assessments. [1]
"Fine-grained signals are essential" in fraud prevention. Different data points have different meanings depending on the context, and the ability to interpret these subtle signals is crucial for effective fraud detection. [16]
The future may involve managing money as an abstraction from underlying accounts. Taylor envisions a future where personal finance assistant apps sit on top of traditional banking infrastructure, helping users achieve specific financial goals. [1]
"Stablecoins are a new platform, not merely a new payments rail." He argues that viewing stablecoins as just another way to move money misses their potential to enable entirely new financial products and services. [7]
"Wallet wars" are the new battleground. The competition is no longer just for "top of wallet" in terms of a physical card, but for who controls the digital wallet that centralizes a user's financial life. [6]

On Crypto and Decentralized Finance (DeFi)

"Bitcoin either goes to zero dollars or it doesn't. And I don't really think it goes to zero." This fundamental belief leads to important questions about what Bitcoin and other crypto assets will become. [1]
Crypto is like a creative but chaotic child. "Like all things, when it is young, it is loud and chaotic. And it's drawing in pencil on the walls and you kind of want to tell it off sometimes. But it's also super creative." [1]
The lack of crypto regulation has been more net harmful to consumers than the passing of any of it. Taylor argues that a clear regulatory framework would bring in institutional players and create a safer environment for users. [4]
"Fintech can be a 1.5 bridge into 2.0 DeFi." Fintech companies can provide a user-friendly on-ramp to the world of decentralized finance, bridging the gap between the traditional and the new financial systems. [9][17]
The problem with self-custodial wallets is the "briefcase full of cash" problem. While they offer full control, they also make the user a target, highlighting the trade-offs between security and personal agency. [6]
Anything that happens on a crypto blockchain is forever. This is a crucial reminder of the immutable nature of blockchain technology and the need for caution. [18]
There's a massive fraud problem in crypto. This is a key challenge that the industry must address to gain mainstream trust and adoption. [18]
The pure crypto world and the banking world often view each other with disdain, but the reality is somewhere in the middle. Both sides have much to learn from each other. [9][17]
Many early blockchain efforts in banks were focused on efficiency, not new products. The technology wasn't mature enough for new product development, so the initial focus was on improving existing processes. [1]
Stablecoins are emerging as a serious contender for cross-border transactions. They offer the potential for faster settlement, lower costs, and reduced reliance on traditional banking rails. [19]

On Strategy, Culture, and Learning

Focus on input KPIs rather than output KPIs. Taylor suggests that business leaders should concentrate on the actions that are known to produce desired results, rather than just the results themselves. [3]
"Being wrong on the internet is the fastest way to learn." He embraces public discourse and feedback as a powerful mechanism for refining ideas and gaining knowledge. [14]
The importance of storytelling in strategy. Crafting a clear and compelling narrative is essential for making sense of a complex industry and for guiding a company's direction. [14]
"This is not a winner take all market." Taylor often pushes back against the narrative of picking single winners in large markets like B2B payments, arguing that there is room for multiple successful companies. [4]
"Money touches every single person in a very unique and personal way." This is a reminder of the profound impact that financial services have on people's lives and the responsibility that comes with working in the industry. [8]
Authenticity beats hype. In a world of constant marketing and buzz, genuine insights and transparency are more valuable in the long run. [14]
Find the "Day Walkers." Seek out and learn from those who can bridge the gap between different worlds, whether it's banking and fintech, or technology and regulation. [4]
Innovation is inherently risky, so the blast radius should be small at first. When experimenting with new ideas, it's important to start with small, controlled tests to learn quickly and minimize potential damage. [3]
"We have become an industry that pushes product." Taylor criticizes the tendency of financial services to focus on selling existing products rather than understanding and solving the evolving problems of their customers. [6]
Partner aggressively on the back end to focus on the customer experience. He points to successful companies that let other specialists handle the infrastructure while they concentrate on creating a superior user experience, which is their key differentiator. [3]

Learn more:

Lessons from Simon Taylor

On the Evolution of Fintech

On Banking and Incumbents

On Technology and Innovation

On Crypto and Decentralized Finance (DeFi)

On Strategy, Culture, and Learning

Written by Antoine Buteau

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