Notes from Fintech Snark Tank

If you were between 14 and 21 in 1991, you might remember Nirvana’s release smells like teen spirit, which first appeared in September of that year. The song launched the band into stardom and became an anthem of teenage anxiety for millions of underprivileged Gen Xers.

Today, these Gen Xers are in their mid-40s to early fifties, and many (if not most) of them have jobs, families, and maybe even children of their own with teenage anxiety.

In other words, these Generation Xers have become disenfranchised – or more simply – active members of society.

What nirvana Smells like a sperry figNothing to do with fintech?

There are parallels between what disadvantaged youth experienced in the early ’90s (and every generation before and after, for that matter) and what fintech companies are going through today.

Fintech Funk: From hero to villain

For the past 10 years, fintechs have been the fair-haired kid who can do no wrong.

Like kids who were told they could grow up to be a president, fintech companies were coddled and branded as white knights who would solve the problems of financial inclusion, financial inequality, and financial illiteracy. Fintechs had a “superiority complex”:

โ€œThere is a pervasive notion in the fintech industry that fintech startups are somehow more ethical than legacy banks, or that there is a ‘spirit’ of fintech that sets fintechs apart from banks and somehow makes them morally superior.โ€

That crust is cracking. Fintechs are seeing massive valuation cuts, funding cuts, and layoffs. according to Forbes Article titled In Fintech, 2022 has become the year of layoffs:

โ€œRising interest rates, fears of an impending recession and a sudden slowdown in venture investment have led fintech founders to cut expenses dramatically. Every corner of the fintech industry is feeling the pressure, from investment apps and teenage digital banks to back-end trading software and tech fashionโ€ .

This spring and summer, well-known fintech companies announced job cuts:

In addition, Forbes identified nine other financial companies that recently cut jobs without any announcement or public reporting of their downsizing.

However, the low point for fintech companies may have occurred in the past two weeks when Acting Currency Controller Michael Hsu warned:

โ€œThe encroachment of fintech into the traditional financial sector is increasing complexity, and the emergence of unregulated fintech companies will be a driver of a financial crisis.โ€


Fintech's funk smells like the spirit of a fig

Fintech โ€œrevolutionโ€ sounds a lot like โ€œevolutionโ€ at this point, and reminds me of how we evolved from child to teenager to young adult to adult (although, admittedly, some of us never make it to that last stage).

Although fintech hasn't quite reached its teens yet, it does suffer from teen anxiety.

Alex Johnson, author of the popular Fintech Takes newsletter, agrees:

The similarities to anxiety in teens are strong. Spending the money like it's becoming obsolete and then having to lay off employees = paying off your meager savings and having to go back to live with your parents. Problem with the organizers = My parents don't understand me. Getting your own fintech company by a bigger company (or God forbid a bank) = getting your first real 9-5 job, and realizing that work sucks. Seeing the rise of Web3 and having a bunch of young talent to work on something cool = realizing that young people think you're boring."

Maybe the fig spirit doesn't smell so bad

Although Nirvana's song has grown into the disturbing teen anthem for Gen Xers, few people truly understand the reference to "teenage spirit."

The video for the song shows the band playing in what feels like a high school gymnasium, and over the course of the song, students watching the band tear up everything in the gym and make a mess.

For years, I thought "teen spirit" referred to the energy that teens generate in the big video hole, and I couldn't imagine that smell so sweet.

However, the reference to "teen spirit" in the song is actually a reference to "teen spirit," which is a deodorant. According to Joe Queenan:

โ€œSmells like teenage soulโ€ was written on the wall of Kurt Cobainโ€™s apartment by Catherine Hanna, lead singer of the band Bikini Kill. Hanna wrote this as a joke because fellow bandmate Toby Phil, who was Cobainโ€™s friend at the time, was a fan Fig Spirit deodorant."

So I guess teenage spirits don't smell so bad, after all. And despite the funk that is out there, the fintech industry isn't doing it either.

Except it's not really an "industry".

Just as teens are part of the human race (although parents of teens can be difficult to accept), fintech is not an industry per se โ€” it is part of the financial services industry.

Rebellious teens often threaten to set out and start their own community, only to mature, get jobs, and join the established community. Likewise, the key to fintech development is to play its part in the existing financial system - not start a new one.

Each new generation grows into adulthood and brings new ideas, norms, and attitudes to the society it eventually joins. Andโ€”believe it or notโ€”many older generations embrace those ideas, standards, and attitudes (if you don't believe me, ask your mom or grandmother how often they use Facebook or Instagramโ€”you won't like the answer).

Ironically, though, OCC's Hsu cautioned against fintech infringement In the traditional financial sector, fintech Comprehension In this sector is exactly what fintech companies and banks - and their clients - need in this regard.

Ten years from now, we'll look back at 2022 and realize that this was the year that saw the end of the Neobank era and the transition of fintech from the anxious state of adolescence to adulthood.