Let's Talk About Finding Blue Oceans in Red Waters: Affluent banking
The more complex the system, the more room for gains at the interfaces
You know, as a straw-hat guy, I've always believed most ideas are cheap. Yet somehow, people often miss obvious problems right in front of them.
Take this whole red and blue ocean thing. Everyone's obsessing over finding that mythical untouched market, when sometimes all you need is half a brain to turn any red ocean blue with the right segmentation. Let me show you how.
Let's talk fintech. Yeah, yeah, I know what you're thinking - "that's as red as it gets." But hang on.
Today we're diving into Personal Banking, specifically for a group the fancy industry folks call "Affluent." I prefer calling them "Poorly Rich" - you know, those with liquid worth between 5-7mil$ and 150-200mil$. Not quite rich enough for the real fancy stuff, but definitely not your average folk.
And here's the beautiful thing - this isn't just a gap in the market, it's a massive opportunity hiding in plain sight. We're talking about a segment that's both wealthy enough to generate serious revenue per customer but not wealthy enough for traditional solutions. Back-of-envelope math? It's a MASSIVE TAM, and these customers are already spending money - they're just doing it inefficiently across dozens of fragmented providers.
Did you know these folks are actually struggling? And no, I'm not talking about their Michelin restaurant booking troubles or their disappointment when Kudadoo is fully booked for the season.
Their banking situation? It's completely fucked.
See, when you don't have significant money, banking is simple:
Investment? Just buy SP500, probably your best bet.
Emergency savings? You'll figure it out.
Daily needs? Well, I know this one company that gives great FX rates everywhere... ;)
But when you've got some serious cash (but not serious enough), things get messy. And if you don't get why it's messy, that's exactly the problem we need to solve:
- You need to figure out how to structure your wealth
- Taxes become like a subscription fee - and hey, I hope you're not writing emails to Tim Cook asking how you can pay more for Apple One
- Your kids' financial future needs planning (and don't get me started on international school planning across different countries - that's a whole other nightmare)
- That second partner? Better make sure everything's legally solid
- Simple FIC setup doesn't cut it when you're bouncing between countries
- Leverage becomes your best friend because it's cheap
- Insurance for literally everything
- Properties scattered across different countries
- And someone to manage your driver, nanny, and get you past those restaurant queues...
Now, here's the interesting part - this isn't a technology problem. It's an orchestration problem. The winning play isn't about having the fanciest tech stack (though you'll need a good one). It's about creating what people call a "full-stack" for this specific customer segment.
Why hasn't this been solved yet? Silicon Valley's ignored it because it doesn't fit their usual SaaS or consumer tech pattern. Traditional banks could not do it, cause they struggle with product DNA.
The defensibility isn't just in the tech - it's in the complexity of regulatory, tax, tech, a wealth management. Each customer relationship becomes more valuable over time as their financial life gets more intertwined with the platform. Classic increasing returns to scale.
And the unit economics? Pure magic. Highest LTV, reasonable CAC given the target market's concentration, and multiple revenue streams. This isn't a "grow now, monetize later" story - it's profitable from day one.
But I'll tell you this -I think that in the next 3-5-7 years, we're going to see proper banking for the Poorly Rich emerge. There are already 3-4 players out there who COULD pull it off. They've got the money, they've got the banking know-how, soon this will be not a red, but not as blue.
They just need people willing to commit 7-10 years of their life to this. People who actually know how to build products. People who understand "poorly rich" problem.
That's in my opinion opportunity right there. Hidden in plain sight, waiting for someone crazy enough to take it on. The only question is will it be a 50B$ or 200B$ business….oh, that’s I don’t know.
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