1042. News: Is Klarna a reality check for fintech IPO hopes?

19:36Albert Malikov:Absolutely. And in fact, David, like that is the reason why I love so many things about the stack story and what you've just been describing, Albert. because almost two, three years ago, when we went from the kind of traditional AI world into the generative AI world, there were certainly some pockets or some business lines that were fast movers, early adopters, and traditional data intensive workflows like KYC, like onboarding, like AML, like reconciliation, et cetera, were the first ones to pick that up. But from a generative AI perspective, most use cases tended to be in the summarization, reporting, marketing spaces.

20:17Albert Malikov:And there are two aspects of what you've described that I think are really interesting. The first one is finance is typically a very slow mover in terms of any kind of automation, any kind of innovation and technology adoption for understandable reasons, right? They are not incentivized to do new things. They have much more downside to taking risks than they have upside. and they are typically a cost center. To add to that, when you think of that in the domain of like generative AI and agent AI, if you are, say, putting together copy for a new marketing campaign, there is no such thing as accuracy, right?

20:54Albert Malikov:You can have like, say, 70, 80 % accuracy. You can have the right disclaimers. You can perhaps get your ICP a little wrong. It's all okay. In finance, you get one number wrong and you've effectively like crashed your share price for who knows how long. So these two reasons always made finance a bit of a laggard. But what you are describing, and I think that is the interesting piece here, for use cases such as this, which will benefit from automation, which will benefit from reducing manual work, the key to the unlock is that clever combination of three really important things. One is the data, which is reliable, which is ready, and which is comprehensive, which comes through your data layer, Albert.

21:35Albert Malikov:But the second piece is the deterministic models, because a lot of the analytics that you do, especially in the finance space, they're not ad hoc. They're not new. You know what calculations you need to do and you know what you need to get to. And deterministic ML models will have a much better chance of the correct outcomes than sort of generative models. But the fact that you are now layering the agentic piece for the workflow, I think that is a very intelligent recipe. And I almost see that as a blueprint for now starting to unlock use cases like finance, like legal, for example, maybe recruitment, maybe hiring, maybe performance reviews, where you do need to have a combination of deterministic and agentic slash generative to be able to get genuine business value.

22:20Albert Malikov:So yeah, congratulations again. I think that's a fantastic positioning.

22:24Joe Colchester:If you're going to start, pick a difficult place to start and see what happens. But I mean, as you say, and Colts, I don't want to keep going back to open mic night last night, but actually, this is something that came up a little bit there. Oh, it was the biggest topic. Well, and the next bit that you talk about is like regulation in all of the spaces, isn't it? You know, finance, you know, highly regulated, structured ways, submissions are all going to be. But, you know, whether it's wealth or whether it's retail or whatever, the regulatory part of it plays a big part, doesn't it?

22:51David M. Brear:Absolutely. And we need trailblazers like you to kind of set the tone and make the right risks and assume that risk, because then it kind of builds up trust, because trust and especially agentic AI isn't there at the moment. But people need to make this first move. And it sounds like kind of back office approach, which you're going for is actually the right way to go. Because I think users on a kind of B2C level aren't really ready for it. But there's kind of more back office approach. I think there's way more opportunities there to actually develop products from the ground up. What came up a lot, though, was the need for human intervention, human oversight and kind of guardrails.

23:31David M. Brear:And I'm just wondering what the kind of control framework there is for you guys over there.

23:37Aditi Subbarao:This is such a spot on question. so the way we build the system is so we have tools for teams for the accountants to complete the work using the tools i call it like in a semi-automated way so every workflow can be completed by just like clicking the buttons and checking the final work obviously every transaction everything is safe for audience in the future so all controls are there and then you have layers of approvals, just people coming in and just like all compliance and auditability of that system. But also in parallel to that, so we have the agents that are looking at what's happening there and learning from the actions of the humans there and just becoming smarter over the time.

24:26Aditi Subbarao:So you have a system that is have the like all the controls in place. So you have all the tools to just click the buttons and complete the workflow. And you have a smart system that's sort of like learning and completing more and more automation there. So I call it like a human in the loop system. And to me, it's a little bit similar to autopilot on the airplane. So, you know, like we just have like airplanes flying using the autopilot. But at any point of time, pilots can actually take over control and just land the airplane. And you have like all the controls built in there. So this is a similar concept, how we're actually thinking about the space and how we're building the frameworks for the control and auditability.

25:10Aditi Subbarao:Yeah, that's a really nice way of putting it.

25:11Joe Colchester:Yeah, it's an interesting one, isn't it? I'd liken it to the stage we're at now, the pilot can't take their hands off the steering wheel, can they? It's more like a Tesla's autopilot. You've got to be present, else it beeps at you a lot, but it won't be long before it's doing it all himself. Look, we're going to have to move on, I'm afraid. We could probably talk about this one for the entirety of the show. But Albert, congratulations. like I say, on the basis of your two previous companies, I reckon this one's going to go all right, which is good. But we'll continue with the show, and no doubt we'll bring you back to talk more about this one as things transpire as well.

25:47Joe Colchester:All right, next story that we had. Stripe PayPal Ventures bet on India's Xflow to fix cross-border B2B payments. TechCrunch picked this one up in a bunch of other places. Xflow raised$16.6 million in a Series A round led by General Catalyst with participation from existing investors including Stripe, Lightspeed and a new backing from PayPal Ventures. The round values the company at around 85 million post money. Xflows builds infrastructure to simplify and speed up cross-border B2B payments for Indian businesses, a segment often slowed by bank wires, opaque fees and long settlement times. Going to Joe, Aditi, do you want to jump in on this one?

26:33Joe Colchester:I mean, good investment in a company that's doing well in a market that needs this type of thing. It's like, as far as triangulation goes of opportunity against the action, then Aditi, maybe coming to you. I mean, it feels like a good opportunity for them to keep growing in this space and the backing by such big people. You know, these guys, Stripe, don't often get anything wrong, do they?

26:54Albert Malikov:You know, David, when I read the story, I had two conflicting feelings. The first one was, oh my goodness, I am so glad I went through all the pain of remitting money from foreign countries into India. Ironic. And then the second piece is, okay, this is really interesting because finally, that pain might not be as bad the next time. So I definitely think this is very interesting from three perspectives. So the first one is the actual pain. Like I said, in India, it is so funny, and I've spoken about this before on this show also, domestic payments operate as though they are, I don't know, 10 years forward.

27:34Albert Malikov:forward, you can literally buy one banana from a roadside vendor by scanning a QR code or with one click on your phone. The Indian UPI system, as they call it, or the unified payments interface, it is extremely efficient, extremely futuristic, very low friction, very low fees, right? So domestic payments are fabulous. But the moment you start crossing borders, and obviously this is like India is a restricted capital account market, the currency is not freely convertible, There's immense regulation and actually moving capital and money to and fro across the borders. But the moment you start getting into cross-border payments, it is a whole minefield and it's really, really painful.

28:11Albert Malikov:So I think from the pain perspective, Xflow have definitely hit the nail on the head. The other piece of this, which is interesting, is the way they've structured the offering. So if you look at some of the quotes which their founder has made in the article, he said, And I don't want to build the next wise. I want to build the capability that powers the next 100 visors. So effectively, while we are obviously wrapping this up in the cross-border payments conversation, the cross-border payments piece is more their addressable market. It's the TAM. What they are building is the infrastructure and the technology rails to be able to facilitate that.

28:50Albert Malikov:And from that perspective, if we look at the TAM, I was just reading this up. it seems Indian SaaS, the market for SaaS grown in India has grown at somewhere around 35 % KGAR, which is twice of the rest of the world. So you have like these thousands and thousands of startups and technology companies being grown in India, who are effectively exporting to the global market. But let's say you build like a really cool and really sophisticated like AI agent company based out of Bangalore or Chennai or wherever. The moment you get paid for it, you've effectively earned 5 % less compared to what you would because of the fees, because of the time, because of the settlement issues and so on.

29:37Albert Malikov:And I think especially where India is at the moment and where the sentiment is from investment and services exporting in India, this is a brilliant market to start tapping into. Which kind of brings me to why maybe Stripe and PayPal did it because if it goes wrong, it's a very small bet for them. If it goes right, they've effectively put their foot in into hundreds of billions of dollars worth of market right in the early stage, right? So they're getting the data, they're getting the flows, they know exactly where to double down and where to cull. I think it's a brilliant move by these two investors.

30:15Joe Colchester:Yeah, it's amazing as well to see the sort of narrative around India changing dramatically as well. I used to work at Infosys and actually, you know, the sort of narrative very much was about the world came to India to get resources. And now actually, the world's coming to India to invest in amazing startups that have scaled at scale that they could only dream of to then export them, those ideas, not just the people to be in a place where actually they're starting to lead the world in this space, which is amazing. I always kind of find it interesting when, you know, look, it's like that whole, you know, New York quote, if you You can make it there, you can make it anywhere.

30:52Joe Colchester:The needs of India are so diverse when it comes to different parts of it and almost completely different types of customers because of the scale of the country. So, yeah, if somebody can make something great and it's scaled to such a great place, then it will work everywhere around the world in that regard. So, Joe, I mean, this one's an interesting one. I'd like to say when we start seeing the Stripes and the PayPals of the world doing pretty meaty investments in different places. That's a really interesting sign of really what they're, the stage that people like Stripe and PayPal are at, but also maybe the insights of where they're looking for growth potential all around the world as well.

31:37Joe Colchester:Definitely.

31:37David M. Brear:I think it's a huge endorsement of the company and the region as well. It's quite interesting to see Stripe and PayPal doing almost joint statements at the moment. I mean, it might be a little commentary on where those two are headed. I think that they put out a really interesting statement about the X-Low was saying, you know, we don't want to be the next wise. We want to be behind the next 50 wises. I don't know if we need another 50 wises, but it was a really interesting kind of commentary. What we see in Pulse, the front end stuff, there's huge UX challenges when it comes to international transfers and FX.

32:11David M. Brear:But really, the biggest challenge remains kind of what happens behind the scenes with the compliance and the front exchange and all the kind of back-end technical infrastructure going on there. And that's really what they do very well. So it's actually getting through the hard stuff first. Of course, there are big challenges to remain for those people that do end up using them. But they're really, really tackling the kind of core problem and the one that people might not talk about so much. But really, that's where a lot of the pain has felt.

32:39Joe Colchester:I feel like if the wise guys heard it, they'd be like, yeah. If people start using our business as like the barometer of like a level of a success, I don't think they'd take offense by that. Wise have done a really good job. Oh, absolutely. Albert, what do you think on this one? I mean, you guys have got to be having your eyes on India if you really want to scale at some point, right? Maybe the next round of investment potentially, but there's some pretty amazing things happening in that part of the world.

33:04Aditi Subbarao:Well, first of all, it's great to see two of our investors involved in this deal as well, General Catalyst and Lightspeed. It's actually interesting. so in my prior experience at Plat and Uber was very much sort of like involved into the B2B cross-border payments as well and I think one interesting element of that it's obviously I think Joey alluded a little bit to that as well very much sort of like it's a workflow problem as well not just like money movement so and it seems like the company is solving for that but also a very interesting move from PayPal and Stripe because you know like just building out those workflows yourself could actually sort of like be like very niche investment, while the rails and sort of like infrastructure that you're using, potentially it could be coming from those big players as well.

33:50Aditi Subbarao:So it's an interesting bet on really sort of like going deep into the segment and definitely sort of like huge problem to solve and a massive business that could be built out of that.

34:00Albert Malikov:I also think this is a bet, this is like a five to 10 year or perhaps even more bet on the part of PayPal and Stripe. And for two reasons, one is like you were saying, David, But there is definitely this sort of interest and energy about India, like Blackstone, for example, have said that India is their top ROI market and they're investing massively. It's kind of no longer an emerging economy. It's kind of well-developed and on the path to grow more. But from that perspective, I don't know if you guys recall, but a few years ago when they first set up the CNH-CNY corridor in China, that became a huge differentiator for the banks that were offering.

34:42Albert Malikov:So HSBC, I think Stanchard to some extent, like they leveraged that to such a large extent to increase their corporate client flow. India and all of these brick markets will gradually start moving along that way. And especially as the shift happens in the services from being a paid per hour kind of put people in seats world into an actually create and build stuff which the rest of the world uses. That transition is going to lead to so much more openness and convertibility. It's almost like a closed system that is slowly starting to open. And I think that's kind of where these two are going in, whether separately or jointly, to say that when the standardization of the rupee happens, when the opening of the rupee happens, we want to be right in on the ground floor to be able to take advantage.

35:31Albert Malikov:So I will definitely be following this with quite a lot of expectation.

35:36Joe Colchester:Yeah, it's amazing thing to say. Feels very condescending to be like, well done, India. You've done really well. Because essentially, it's changed the market dramatically. Like every, like you say, gigantic corporate banking really woken up and paying attention. Pretty much everybody in the wealth space is talking about India right now in terms of, you know, where the, you know, people have done very well are looking for alternatives from a banking infrastructure perspective as well. And to have such a high aspiration. But yeah, that does sound really condescending. I didn't mean it like that.

36:05Joe Colchester:Sorry, India. I didn't mean it like that. All right, we're going to have to move on and get on to all of the other good stuff that has been happening in the news shortly. but we're going to take a quick break. Hey, folks, David Breer here, CEO of 11FS. Here's something you might not know about me. I get a lot of people trying to impersonate me online, fake profiles, scam emails, the lot. And a big part of that comes from data brokers, hundreds of them quietly collecting and selling your personal information, your phone number, email, home address, job title, all out there and all fueling identity theft, scam calls, and spam.

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38:03Joe Colchester:All right. Now, what we're going to do is a quick break from the headlines to tell you about our next After Dark event. It's only two weeks away. Can't believe it. We're recording Finting Insider News live at the London Village Underground on the 17th of March. And we've just announced the panel. Joining me will be Ross Gallagher from 11FS, Helen Bearton from Lloyds Bank, Clem Salon from Formance, and Julie Sutton from Paymentology. We failed to mention in this, it's also St. Patrick's Day, so it's going to be really good fun. So it is free to attend, but tickets are going really, really quickly.

38:39Joe Colchester:So if you want one, head over to 11fs.com forward slash after dark to grab yours. Again, that is on the 17th of March. It's going to be a lot of fun. All right. Next story that we had was one from FinTech Futures. This is buy now, sell off later. Where did Klarna's IPO go wrong? Klana's much-hyped Wall Street IPO initially surged up 15 % on its debut and 20x oversubscribed. But six months later, the stock is down over 67 % and its valuation has fallen from$15 billion to just over$5 billion. Yeah, just$5 billion. Losses widened as Klana's push into banking and set aside significant credit loss provisions.

39:26Joe Colchester:and now with wider fintech IPOs pipelined under a bit of scrutiny, where does that really sort of leave us? What are you there? I mean, this is a hard one because people always want to enter into a market with a great valuation and there's always a bit of a market correction in terms of where people want. So some of this I don't think is crazy and abnormal and everybody should sort of lose their minds. But I guess I wonder if to the point in this, some other people who are, you know, thinking about launching into the market might just be a little bit more cautious. Aditi, what do you think on this one?

40:01Joe Colchester:Is that a fair summation? Are people going to be a little bit more scared of the waters than usual?

40:07Albert Malikov:I'm not so sure. I think there's a number of different factors at play here, isn't it? One is the geographical choice. So especially these days, we hear so much about like choosing between listing in London and listing in the US and like European ecosystem versus US ecosystem and all of that. And I do think there is a definite element of a price difference happening or almost a leeway difference that has happened because they did not kind of list out in home market to some extent. I do think in Europe, we tend to be a lot more emotional about our babies. Like you said, if it's been set up, it's a baby of the country as opposed to in the US, it's just an investment.

40:49Albert Malikov:Like if it doesn't price well, I'm selling it off. So I think there's a little bit of a angle there. And I think the other angle also is more just the timing. We have all been, I think, spoiled a little bit by the zero interest rate era and how much liquidity there was in the system. And I'm kind of known for my childcare analogies for everything, David, so you're going to have to bear with me. But when you're taking your kids to the park on a holiday, you're going to let them try their own shoelaces, right? They'll take a long time. They'll make a mistake. You'll teach them. They'll do it again.

41:22Albert Malikov:You'll help them. And then you'll still be peaceful, maybe just slightly impatient while you finally take them out. At 8 a.m. on a morning on a weekday, you're not going to give them the space to do that. You are going to tie those laces. And if they don't, they're going to get shouted at. I think Lana has very much gone through that phase because the timing is not good liquidity. The opportunity cost of an investor is much higher. and expectations have shifted from believing in a narrative and a story to seeing those results. And the combination of all of these things, it's almost a perfect storm for Klana.

41:57Albert Malikov:So I almost think people should treat them as the older sibling. It's like, okay, this person learned to drive, crashed the car into the fence. Now, how can I be a bit more careful and take it from there?

42:09Joe Colchester:Some tough love in your household, I have to say. But yeah, I definitely agree with you. I mean, it is an interesting one that you say there as well. I mean, pre-IPO, it's all momentum and metrics and story. It's the narrative around all of the things. And post that, it's price, right? So it's a very different game that you're playing. Joe, what do you think on this one? Is this a sort of maybe the remit of Klarna sort of shifting in the landscape of financial services as well?

42:39David M. Brear:Yeah, I think maybe that they were trying to be too many things too quickly. They obviously offer a great buy now, pay later product, but then suddenly, you know, they were a bank and they were leaders in AI, but maybe they weren't. And they're kind of shifting around a lot. And I think that thing around identity and narrative and their IPO in the US, I think maybe just trying to be too many things for so many people. I just don't think that quite hit the mark, at least not at this stage. So I think it's a bit of storytelling there. And I think, you know, Revolut and Monzo possibly have clearer narratives.

43:10David M. Brear:I know they're doing a lot, but I think they possibly do in their story. So I think they'll learn from that, I think.

43:15Joe Colchester:Yeah. I mean, it's an interesting point as well. When Klarna floated at 15 billion, they actually thought it was, you know, most people said it was conservative, you know. So actually for this reasonably significant change, like you say, I mean, you know, it's like sort of launching a boat into, you know, nice waters. Those things can change really quickly, can't they? So, Albert, any thoughts on this one?

43:41Aditi Subbarao:I think it's interesting from the angle of managing that narrative, and it's probably like the muscle for the companies as well. And I remember when Uber went public, the stock went down as well, and there was like a feeling like, hey, just business is not doing great. And many of us, including myself, actually sold part of our stock, but then sort of like it was a rocket ship after that. I think what is important is I don't know what's going on in terms of the core fundamentals of the business, but then the market is very noisy. Cloud is an amazing business, and I think that the team is great there, so I'm pretty sure that they're executing on long-term strategy there.

44:20Aditi Subbarao:And that's kind of like just putting this a little bit in comparison to more private companies like Stripe, Revolut, reporting the grade valuation increases almost every week. But the thing is, they are valued not by the market, by the private investors that are looking a little bit long term, looking a little bit deeper into the business while the public markets are a little bit noisy and just like reacting on some narrative. So I'm curious how, like what would be impact of this with sort of like some of these companies maybe actually staying for longer as a private company is just like seeing benefits of being a private business.

44:58Joe Colchester:Yeah, I mean, it's worked out pretty well for Stripe, right? But it is interesting, you know, shareholders should never be driving your product roadmap, right? But I imagine it's going to be leading to much more complex conversations at the board with regards to, you know, what are the things we're doing to, you know, to layer that valuation back up to make sure of shareholder values being created across that as well.

45:18Albert Malikov:I don't think that's necessarily that bad a thing, though, David, in the specific Klarna case. Because if you think about it this way, if they have decided what their roadmap is, if they have decided that they want to expand from being a buy now, pay later company only into offering more banking services and going properly into the credit space, then they do need to have the capabilities of managing, reporting, monitoring that credit a lot better. They don't seem to. They do then need to shift from the Klarna model of how many losses you can take and how much lending you write off to the bank model of safeguarding your balance sheets and having the right reserves.

45:58Albert Malikov:And therefore, that shareholder scrutiny, perhaps not dictating the roadmap, but nudging them to frame that roadmap with the right guardrails need not be a bad thing for the company and by the shareholders by consequence.

46:11Joe Colchester:Yeah. Yeah, I think so. You are right. I think that balance there is important. I think the challenge often, depending on what type of shareholder it is, is the forgoing of the midterm or the long term for the short term.

46:25Albert Malikov:Absolutely.

46:26Joe Colchester:And getting that balance right is often a real challenge, particularly in sort of incumbent organizations, because often what they're facing into is technology debt that doesn't get solved in the short term. Whereas Klarna, a modern day business built on great technology, their ability to innovate and develop product is, you know, very different. So it's kind of a prioritization of the speed of returns rather than putting off the heart surgery that you know you need. But yeah, super interesting. You know, I hope these guys continue to thrive in the market and acquire customers. But I think you are right, Aditi.

47:01Joe Colchester:I think it's about being in a situation where they mature the offering to continue that relevancy to the market. Last final story that we had for the week that we're going to move on to. This was one we picked up on Finextra. And I'll be honest with you, when I read it, I got this one totally wrong. Chase to open 160 branches in 2026. Don't panic. I don't think that's Chase in the UK before anybody freaks out. That's what I read it as. And I was like, holy crap, did not see that one coming. JPMorgan Chase is opening more than 160 new branches this year while renovating another 600. This is following the commitment made in 2024 to open 500 new sites, renovates 1 ,700 and higher, 3 ,500 staff over three years.

47:42Joe Colchester:The expansion includes low to moderate income in rural communities, as well as fast growing regions across the US. There it is, guys. All of this at a time when many banks have been shrinking their physical footprint. There were some really good stats actually from the financial brand. Shout out to Jim Marouse and the guys over at the financial brand. In the decade after the 2008 financial crisis, the US saw the net declines of more than 1 ,000 branches a year. During the COVID peak from 2021 to 2022, nearly 6 ,000 branches closed. But in 2023, net decline of 1 ,500. 2024, net decline of 1 ,100.

48:23Joe Colchester:And 2025, net decline of just 400. I mean, it's pretty interesting, really. I mean, we've all been sort of talking and i know the u.s is different and the uh you know it's not like there's an atm on every corner if you live in texas you know like you just don't walk to an atm right so the the role of the branches are much more important in you know communities all across the u.s so but we have been sort of provocating of the the demise of everything physical uh joe what do you reckon on this one it's uh it's a weird world where we're sort of getting excited about bricks and mortar, but actually it's a service that's critical to many, isn't it?

49:04David M. Brear:Yeah, I was actually a bit disappointed it wasn't the UK as well. I think that that would be more of a headline, and the way it was written suggested it could have been. But no, I think it's still an interesting story, and I think it is perhaps just an endorsement of the importance of human interaction still, especially when it comes to larger stakes items, larger deposits, larger loans, these kind of things, and how digital work for large populations and growing populations, but there still is a huge importance for brick and water for in-person. So I think it's also kind of playing to the strengths of the traditional banks about building that trust layer that perhaps fintechs have struggled to attain en masse.

49:46David M. Brear:So I think it's interesting because it looks like a step backwards, but it's more perhaps a commentary on the market as a whole.

49:52Joe Colchester:Yeah, I guess it's an interesting one for international sort of audience to be like, J.P. Morgan to open all of these branches. It's not really J.P. Morgan, this is Chase. Like actually, when you think of Chase over in the US, it's an everyday bank for everyday people. And I think they've got something ridiculous like 60 million customers or something. It's absolutely huge. But it was quite an interesting point that they were making to push explicitly into low income and rural areas. I thought, Aditi, that felt like them trying to establish themselves more and more as the kind of center point for communities across the US.

50:28Joe Colchester:Like that's, that for me feels like a good use of space when you're going to do those things because you're engaging with communities that might need more support.

50:37Albert Malikov:A hundred percent. And I do think like very rarely in business and especially in banking, does there rise in opportunity for doing the right thing and the good thing and for doing the commercially intelligent thing. But I think this is something that Chase is very much doing. So if you look at this quote in the article from their CEO, Jennifer Roberts, she says, each branch represents our promise to stand alongside our customers as partners, helping them navigate and achieve their financial goals. So the way Chase is positioning themselves is they're definitely trying to buy that trust almost.

51:14Albert Malikov:They want to be there when it counts with the people who are absolutely going to be neglected by their competitors, who are now increasingly digital, they're challenger banks, they're AI native, they might perhaps compete on a vector of customer experience, but for people who are savvy enough to be on a digital banking app. Chase wants to go all the way back and go to those areas and those geographies where perhaps this is an underbanked client base and use their wherewithal from a pure capability and resources and money perspective to be able to plant themselves there when it counts. And therefore, I think this is actually a very intelligent move because once you have gone in there, once you have this community branch, once you have these like education centers and these local people staffing those local branches, you buy that trust.

52:06Albert Malikov:And the reason I keep saying buy that trust is because they published numbers which said that they're spending this year, not just on the branches, but overall is going to be$105 billion, which is like much higher than that last year by more than$9 billion. And the market clearly didn't like that from a share price perspective. But however, if you look at what that translates into from an ROI perspective, they have already demonstrated that these branches have brought them in a significant increase, not just in terms of the deposits that they're getting, but also in the ability to cross sell them into things like mortgages, into things like insurance, into things like other affiliated products, which are much higher from a fee perspective, which are much stickier, and which therefore buy you much more penetration and higher wallet share from your customers.

52:54Albert Malikov:So I think from an economic perspective, as well as an ethical slash community perspective, it is a very smart move by Chase.

53:01Joe Colchester:Yeah, it is interesting. And sort of in a dynamic of a global landscape of fintech banks versus big incumbent banks, it's not really a move that I would see a fintech do, you know, and actually trying to figure out the unique advantage of being an incumbent in that space is, you know, is pretty smart on their part. But Albert, it's an interesting context, isn't it? With all of the advancements that we've got from technology and AI and, you know, adoption and, you know, everybody carrying, you know, a mobile device with them, then sometimes actually the sort of human interface to that, then there are communities out there that are not as technologically savvy or I mean pretty much every community is not financially services savvy either you know so having these outposts is in some instances probably a good idea.

53:51Aditi Subbarao:Absolutely I think it's interesting that so first of all like US market is very different it's sometimes hard to even imagine sort of like the needs of the customers there because they have a different context and I'm pretty sure it makes this move makes sense in that context what is interesting um even in the like our communities like digital first and i'm like a digital first person i don't remember last time i visited um the branch of the bank but at the same time what i've experienced recently working with the one of the leading new banks here in europe as well so when i had a critical problem that i needed to resolve uh digitally.

54:30Aditi Subbarao:So the customer support just became like really bad. And so especially sort of like in the age of AI, sort of like everyone is trying to automate the customer support. And literally sort of like I couldn't resolve the issue for a month. And if I had a branch where I just show up and try to resolve the problem, that would be very helpful, even sort of like in our digital first context so i think in the sort of like areas that are like super sensitive as like money money movement i do believe that some hybrid approach um makes sense yeah i think your your

55:07Joe Colchester:point aditi on trust i think is exactly what albert says that i mean you trust is built in those moments of like absolute need aren't they and uh and albert you know to your point it's like yeah it was going really well until i like actually needed something slightly off normal and then i had this experience with a, screw it, I'll say it's DHL, dear God, if somebody has a phone number to actually get in touch with DHL, it's almost impossible. Like being put through and hanging it up and, you know, automated thing and hearing this machine type and it's just crazy, you know? And yeah, the DHL guy was trying to deliver to my address, but had the complete wrong address.

55:47Joe Colchester:And there was no way of telling them that, you know, everything else is fine on the core happy journey. But when you stray off it, it becomes really, really difficult. But yeah, well, I think, again, I do feel on this one, the, you know, big banks being able to do things that challenger banks or smaller banks or, you know, community banks can't afford to do is actually probably an interesting strategic move on the banking battlefield. So we'll come back and talk about this more, I'm sure.

56:15Albert Malikov:The other angle with my snowflake hat on is that this is a power move from a data perspective. Have all of you seen The Big Short?

56:24Joe Colchester:Yeah, my story about The Big Short was my wife is like a big Office fan. So when she saw Steve Carell was in it, she thought it was going to be a comedy. So surprised me and took me. She was not expecting that to be a banking crash story for three hours, but I really enjoyed it. Go on, sorry.

56:42Albert Malikov:That is actually a great story and like quite emblematic of misplaced expectations as we have in like so much of the markets. But you know, when those two traders, this story reminds me of this, when those two traders go out into the hinterland and they're literally knocking on doors that people have walked out of when they can't afford to pay back the mortgages. Chase is on the ground now. Like you are collecting so much data by just having a presence there and onboarding these new customers and getting on these new deposits and getting the mortgages from a section of the economy, which you perhaps normally might not have accessed, but which effectively determines so much more of what happens to the economy in the future.

57:31Albert Malikov:When you overlay that with AI capabilities and scenario analysis capabilities and predictive modeling, I think they are going to be sitting on a treasure trove of data, which very few of their competitors are going to have. every single customer interaction, every single sign of vulnerability. It is really, really clever to see what they could do with that. So I think that's another kind of aspect of this, which is not very obvious through the new story, but over the next few years is definitely going to build up to be a big advantage for them.

58:06Joe Colchester:Yeah, it's an interesting point. If it's a developing sort of demographic or a young demographic. I mean I had a primary bank account relationship for 15 years because they came into my school and gave me a clipboard you know like so these things do happen you know so all right on that note we are going to have to wrap up this part of the show and we'll be back with you really shortly.

58:33Joe Colchester:so now is a time for a quick look of the stories that we didn't have time to cover in full and i can't believe we didn't cover this one in full like i'm sorry richard alica bank hits unicorn status big deal for you guys lots of other stuff happening i know uh uk sme lender alica bank has raised$155 million in a Series D round, valuing the business at$1.2 billion. The round includes most common equity plus additional tier one capital. So this is a pretty serious bank grade funding round. In just five years, Alica has built a balance sheet of nearly$4 billion in SME loans and over$5 billion in deposits.

59:16Joe Colchester:It now serves 30 ,000 SMEs in the UK and says it wants to double that penetration to 10 % by 2028. Massive congratulations to the team. To be honest, I know I've said this on the show before, but the minute that Richard went and took that role, knew that he was going to absolutely crush it over there. So yeah, super, super proud to say that I called this one. And actually, if you want to go back and listen to the show that we did with Richard, I have no idea what number it is, but just Google it. You'll find it. It was really, really good. All right. So I guess, and finally, is always a really fun one.

59:56Joe Colchester:And we talked about them a little bit earlier on on the show, but this is a very different context. But JP Morgan opened a bar for employees if only they could actually get in. I don't know if you guys saw this one. It's funny. Wall Street Journal. So how do you fit 10 ,000 bankers into a 55-seat English pub on the 13th floor of a 3 billion skyscraper? Sounds like a weird setup to a joke that you didn't need to hear. But welcome to Morgan's, Jamie Dimon's in-house gastropub in the sky. Located inside JP Morgan's new 3 billion HQ at 270 Park Avenue, it has an English pub aesthetic, serves fish and chips, shepherd's pie, Guinness, like everything you would expect, but just for 55 people.

1:00:44Joe Colchester:I feel like this is like a man cave gone crazy, hasn't it, basically. So Diamond reportedly banned printing his face into Guinness foam after concerns it looked like a vanity. It looks like a vanity project. Yeah, it sort of looks like a vanity project. And the pub has a strict no day drinking policy. So I guess some things have changed in banking, I guess. over the years, haven't you? But I mean, first off, Jamie, if you're listening to this, I'd love an invite. Like that would be fun. So I'll happily come and have a drink with you. My Jamie Dimon story is getting told off sitting in the, I don't know if anybody's been to J.P.

1:01:24Joe Colchester:Morgan's offices in New York, but there's a little cornered off bit. And that's where apparently Jamie Dimon comes down to reception and hangs out sometimes. I just wanted to sit down. So I kind of went through the rope and sat down, got told off quite largely by some really big American guys. So what do you reckon is this one then? Is this a fun, hey, look, you've got loads of money and you can make a fun thing for your employees to go and do, even if it's only 55 at a time? Or is this just a bit of a silly sort of, Joe, should we get one of these in the 11FS office? Maybe starting there? Yeah, I think that's a great shout.

1:02:01Joe Colchester:I think that will get people in for sure. But last thing, it does sound like something I would do, but maybe not Jamie Dimon. You know what I mean? So maybe he's way cooler than I thought he was. Maybe that's the story.

1:02:13David M. Brear:Yeah, is it the start of a bit of a rebranding from him and JP Morgan? I don't know. But I can definitely see there being long queues because there's a lot of customers to get in there.

1:02:22Joe Colchester:Yeah, well, 55 seats and 10 ,000 employees. That's going to be a weird rotation. He's going to have to do like back-to-back outings for like a couple of years to rank through all of those people, isn't he? But Aditi, have you had an invite to this sort of strange location or is it just Azu has been left off the guest list?

1:02:42Albert Malikov:I'm still waiting. I'm still waiting, David. And I think that might be because of my Jamie Dimon story, which was actually in J.P. Morgan's New York offices. I had visited there when I was working with J.P. in London. I passed him in the corridor And I was like, oh, that person looks familiar I didn't even stop and say hello And you know, this is the classic moment You do your elevator pitch You have your 30 seconds with the man And I completely blew it So I don't know if and when I will ever go in there again But I must say, I think this almost seems a bit like If you want to see the celebrities Then book a table at this restaurant Rather than somewhere for the employees to actually like hang out and like change the culture a little bit because the numbers just don't stack up.

1:03:26Albert Malikov:It's like in most fintech companies here, you're walking around having nerve gun fights and getting free beer at four o 'clock on most Thursdays. It's like, why bother with so much faff around something which could be done a lot more easily?

1:03:38Joe Colchester:I mean, it does get into like, I think, a sensible argument about if you were going to, if like somebody was going to be a pub manifestation, who would it be? like JP Morgan wouldn't, like I think Goldman Sachs because like, isn't that guy like a DJ as well? Like, so I mean, so like the alcohol would be great and he would like just rock the party as the DJ of the setup as well, you know, but maybe that's where he's going. Maybe Jamie's, maybe he's a good karaoke singer. Albert, I mean, like after the big fundraise lately, is like crazy man cave on the agenda or do you think the investors might get upset about that?

1:04:13Aditi Subbarao:I was just thinking that we'll need a lot more rounds and a lot more progress on our goals to get to that point. But yeah, who knows, just like maybe just visiting first their bar in New York, you know, like after you described it. Yeah, I got very curious.

1:04:31Joe Colchester:Yeah, it's probably a good idea. But when you get to that point, all right, when you've like crazy, you know, again, going from all the companies you've got, and you've got all of that success and you create that pub for 55 people, then, you know, us three are coming, just so you know. Deal. Perfect. All right. Do you know what I really like on this story as well is like, you know, it wasn't making the pub and it wasn't doing all the things. It wasn't the, you know, stacking the bar or the, you know, the size of it. None of those things were like too far. But Jamie didn't want his face printed on the top of the Guinness.

1:05:04Joe Colchester:Like that way, do you know what I mean? Like it read through all the things and it was like at that point, and he was like, no, this is too much. But it's good to know that there is too much. There is a level. But all right, on that note, we are going to have to wrap up the show. It's been a lot of fun. Thank you so much to today's guests. Where can people learn a little bit more about you and all the good stuff you're doing? Joe, starting with you.

1:05:24David M. Brear:You can find me on LinkedIn, but you can find out more about Pulse at 11invest.com forward slash Pulse. And there's 20 ,000 user journeys from banks and fintechs from all over the world and heaps of all features coming. So check it out.

1:05:36Joe Colchester:Sounds good. Aditi, where can people come and talk to you more?

1:05:40Albert Malikov:Exactly the same. Please find me on LinkedIn and you can learn more about Snowflake on snowflake.com. Please do make sure to check out our Cortex AI offering and Coco, the agent.

1:05:51Joe Colchester:Very cool. Albert, where can people find out more about you and all the good stuff you're up to? Yeah, very similar.

1:05:57Aditi Subbarao:Check out my LinkedIn page. I'm sharing a lot of updates, also stories about building the company. So you can go to stags.ai for everything for finance agents that they're building.

1:06:07Joe Colchester:Very good. As for me, I'm no longer lurking on LinkedIn. LinkedIn sucks, but drop me an email on david at 11fs.com. More than happy to hear from you there. That does wrap up today's show. Thank you so much for listening to this episode. If you did like the show or if you do like what you've heard, then please make sure to follow us on pretty much everywhere. You can find us on social media. If you want to continue listening or there's any other episodes you've missed, Just lurk for us on every podcast platform at this stage. As always, if you want to join the conversation, you can find us on social media.

1:06:40Joe Colchester:Just search for 11FS or Finsip Insider. Or if you don't want to email me, email podcast at 11FS.com instead. Thanks again for listening, everybody. Goodbye.