What the Last Decade of Fintech Got Wrong | A Look Into Crypto Neobanks
episode
Talking Tokens: Crypto, Onchain Finance, Investing
7 min
2 speakers
7 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What exactly are crypto neobanks and how do they differ from traditional neobanks?
Welcome back to Talking Tokens and another edition of Strata Research, the series where we sit down with our institutional research team to break down one major timely trend across the industry. Last time, Alex and I dug into agentic payments, and today we're staying on the infrastructure theme, but pointing it at the consumer instead with crypto neobanks. These are the apps that are trying to do what Chime and Revolut did a decade ago, except rebuilding it on stablecoin rails. And Alex just published a full playbook on how to actually build one. So if you want to go check that out, we will put it in the show notes. But essentially, let's get into it. Alex, welcome back on. Why now? And what even is a crypto neobank?
Yeah, sure. Thank you for having me. Basically, what a crypto neobank is, it's very similar to the traditional neobanks that we had a decade ago, like SoFi, Revolut, and Chime.
Why is the float and yield model considered the most lucrative yet fragile revenue stream?
The only difference is that it uses stablecoins and blockchain on the back end. The interface is pretty much the same. It offers cards, accounts, trading, yield, but you have the blockchain rails on the back end, which allow for obviously cheaper transactions,
international transactions cross-border transactions that sort of thing um yeah and they're kind of having a moment right now so they're having a moment exactly and you laid out five revenue lines in it but i think one of the more interesting points in it is that the mix tells you what kind of business you're really looking at so can you kind of break that down for us and what do you see as maybe the single out the float and yield model as both like the most lucrative and the most fragile angles
Yeah, sure. There's a few angles that neobanks can take depending on their business and what product they're trying to make to generate revenue. If they include trading, they might take a little spread on the transactions. If they're focused on payments, they might take a fee for the payments. Or if they're doing cross-border payments or anything with multiple currencies, they might take a spread there. But I think the most interesting one to look at is the float and yield. revenue that they generate. So a lot of neobanks are offering yield through DeFi apps like Aave and Morpho and things like that.
How do market conditions affect DeFi yield rates for crypto neobanks?
It's typically like the highest revenue generating tool for neobanks. The only issue is that like DeFi yields are very, they're variable. They kind of swing in the market. So in like in boom times, you know, in a bull market, you know, you might be getting 12, 10% APY. Um, but then in the bear, you know, like we see now, um, you know, Athena, but USD is giving you maybe like 3.5%. So, um, they fluctuate a lot. And if your business isn't set up for, uh, the bear market, I think it's really hard to build a sustainable product there.
Yeah, I agree with that too. And like, I think the APY conversation is super interesting on the front of like, what is the percentages we're going to get depending on market conditions? Because to your point, yeah, sometimes in a bull market, it is much higher. But I think there's also the conversation of like, you need to know where the yield is coming from, regardless of market conditions, right?
Why is targeting a niche market more effective than launching a ‘bank for everyone’?
Another thing that you put in the report that I want to talk to you about is that a lot of the founders want to launch the quote, crypto bank for everyone. And your report says that's a mistake. So maybe why is that the angle that you're taking? And what do you think the last generation of finance neobanks have taught us that we should not apply here on that front?
yeah i think there's actually a little nuance there so i don't think it's necessarily wrong to launch broad right if your product is really revolutionary and like you know people are going to use it um then yeah sure like launch it on pretty much every country across the world that you can um and then people will find uh the best ways to use your neobank or to use your products but i think that's kind of a tougher angle because you really have to be
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Chapters
7 chapters
1
What exactly are crypto neobanks and how do they differ from traditional neobanks?
0:06–1:00
2
Why is the float and yield model considered the most lucrative yet fragile revenue stream?
1:00–2:36
3
How do market conditions affect DeFi yield rates for crypto neobanks?
2:36–3:32
4
Why is targeting a niche market more effective than launching a ‘bank for everyone’?
3:32–4:48
5
What are the biggest operational risks – DeFi integration and partnership failures?
4:48–5:44
6
Which “picks and shovels” (in‑off ramps, custodians, stablecoin issuers) will drive growth in the next 12‑24 months?
5:44–6:24
7
What key signals should investors watch to evaluate crypto neobank success in the coming years?
6:24–7:15
Speakers
2 identifiedMore from Talking Tokens: Crypto, Onchain Finance, Investing
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