The Fintech Parallel Part I: How Retail Banking Rediscovered the CMA Playbook
When European entrepreneurs taught the world what customers actually want from banks
There’s been a long-standing debate within the fintech community on the efficacy of neobanks, particularly given its mixed history in the US and Europe. Two of the authorities on this topic, David Brear and Jason Bates of 11:FS had spent years inside the traditional banking system before becoming part of the fintech revolution that would reshape European finance. Brear had worked at Barclays and HSBC, while Bates had co-founded Monzo before starting 11:FS. When I worked with them in 2022, their insights consistently came back to the same theme, namely that successful fintech companies weren't just building better technology—they were asking fundamentally different questions about what customers actually wanted from financial services.
As Bates put it in a 2019 interview with Forbes: "The challenger banks didn't win by having better technology. They won by starting with the customer problem and working backwards."
The comment reminded me of something I'd read about financial services innovation decades earlier. The approach these European entrepreneurs were taking—starting with customer needs rather than industry structure, integrating services around outcomes rather than products—sounded remarkably familiar.
Where had I heard this before?
Oh right. Thomas Chrystie's 1977 presentation to Merrill Lynch executives about the Cash Management Account.
The more I've studied the European fintech revolution, the more convinced I've become that every successful neobank is executing some version of the CMA playbook. They've just figured out how to do it for a smartphone generation that never accepted the premise that banking had to be painful.
Starling's Declaration of War on Traditional Banking
Anne Boden's path to revolutionizing retail banking began with a 30-year career inside the system she would eventually tear down. After working her way up through Lloyds, Standard Chartered, and RBS, she had achieved something remarkable: she genuinely understood how banking actually worked behind the marketing messages.
The reality was worse than most customers suspected. As Chief Operations Officer at RBS, Boden had front-row seats to an industry that had stopped innovating decades earlier. Core banking systems running on code written in the 1970s consumed IT budgets through maintenance rather than new capabilities. Customer service remained designed around branch operations that most people no longer used.
In a 2018 interview with the Financial Times, Boden described the fundamental problem: "The big banks have got legacy technology that's decades old. They've got massive cost bases, they've got thousands of products that they've built up over the years, and they're trying to digitize that rather than starting from scratch."
The breaking point came during RBS's post-financial crisis restructuring. Despite having billions in taxpayer bailouts and regulatory pressure to serve customers better, the bank continued prioritizing internal efficiency over customer experience. Boden realized that traditional banks couldn't fix themselves because their entire business model depended on the friction they claimed to be eliminating.
When the UK's Financial Conduct Authority announced new banking licenses specifically designed for digital-first challengers in 2013, Boden saw her opportunity. Unlike the United States, where fintech companies needed to partner with existing banks or pursue decade-long charter processes, Britain would allow technology companies to become actual banks with streamlined approval.
As she told TechCrunch in 2017: "I wanted to build a bank that put the customer at the heart of everything we do, and use technology to deliver a better service."
Starling Bank launched in 2017 with a radical premise: what if we built banking from first principles, using modern technology, optimized for customer success? Unlike traditional banks adding digital features to legacy systems, Starling built everything new. They created a real-time core banking system that processed transactions instantly rather than in overnight batches, API-first architecture that could integrate seamlessly with other financial services, and spending insights that automatically categorized transactions and provided helpful analysis rather than raw data dumps.
The results validated Boden's thesis completely. Starling grew to 3.6 million customers by 2024, accumulated over £10 billion in deposits with industry-leading growth rates, achieved consistent profitability faster than most traditional bank startups, and maintained 90%+ customer satisfaction scores in independent surveys. More importantly, Starling proved that building modern banking infrastructure from scratch could be more cost-effective than trying to upgrade legacy systems, with technology costs per customer significantly lower than traditional banks while providing superior customer experience.
Anne Boden had demonstrated that the banking industry's problems weren't technical constraints or regulatory requirements—they were choices. Banks could eliminate customer friction and still be profitable. They just needed to want to.
Monzo’s Community-Driven Revolution
Jason Bates's frustration with banking came from a different angle than Anne Boden's insider view. After studying at Oxford and working in consulting, he'd experienced firsthand how antiquated banking infrastructure made building modern financial services nearly impossible. When Bates teamed up with Tom Blomfield, Jonas Huckestein, Paul Rippon, and Gary Dolman to found Monzo, they made a radical decision: they would build a bank designed like a technology product, with customers as active participants in the development process.
Rather than raising traditional venture capital in private, Monzo decided to involve their future customers in the funding process itself. In February 2016, they launched one of the first equity crowdfunding campaigns for a financial services company. The campaign wasn't just about raising money—it was about proving customer demand.
The results exceeded every expectation. Within 96 seconds of going live, Monzo had raised £1 million from over 1,000 individual investors. The final crowdfunding round totaled £2.5 million from 5,700 people, many investing just £10-50 each. But the real value wasn't the capital—it was the community of engaged users who became product evangelists. These weren't just customers; they were stakeholders who had literally invested in Monzo's success and felt ownership in its development.
Monzo's bright coral debit cards became one of the most recognizable brands in British fintech, but the color choice wasn't marketing whimsy—it was strategic community building. The cards became social proof of early adoption. Using a Monzo card indicated someone was tech-savvy, frustrated with traditional banking, and part of a community building something better.
Beyond branding, the card experience represented genuinely superior functionality that traditional banks couldn't match. Instant spending notifications with merchant names, locations, and automatic categorization replaced monthly statements. Real-time balance updates eliminated confusing "pending" transaction limbo. Built-in budgeting tools helped users understand spending patterns automatically. Fee-free international usage with transparent, real-time exchange rates ended hidden foreign exchange margins. Instant card controls through the app allowed freezing, unfreezing, and managing spending limits instantly.
Getting a full UK banking license proved more challenging than Monzo's founders anticipated. The regulatory process took two years and cost millions while the company operated under restrictive prepaid card limitations. But this constraint forced innovation that became central to Monzo's competitive advantage. Unable to offer traditional banking products immediately, they focused obsessively on customer experience and community engagement.
During the pre-banking license period, Monzo built unprecedented customer loyalty through transparent development with regular blog posts explaining exactly what features they were building and why, community forums where customers proposed features and provided feedback on prototypes, and in-person events across the UK where customers could meet the team and connect with other users.
By the time Monzo received their full banking license in 2017, they had built customer loyalty and community engagement that traditional banks couldn't replicate regardless of their product offerings or marketing budgets.
Once Monzo could offer full banking services, they implemented perhaps their most significant innovation: transforming banking data into actionable financial insights. Traditional banks collected enormous amounts of customer spending data but provided virtually no useful analysis. Monthly statements listed transactions without context while annual summaries showed totals without trends.
Monzo built machine learning systems that could identify recurring subscriptions and highlight unused services, predict budget overruns before they occurred based on spending patterns, provide salary predictions for users with irregular income, track progress toward savings goals with visual feedback, and suggest financial optimizations based on spending analysis. This wasn't just better user experience—it represented a fundamentally different relationship with money. Instead of banking being something that happened to customers, Monzo made financial management an active, engaging, and genuinely helpful process.
As Monzo established their core banking services, they made a strategic decision that differentiated them from traditional banks: becoming a financial services marketplace rather than trying to build every product internally. Instead of developing expensive internal capabilities for every financial need, Monzo created a platform where customers could access savings products from partner banks offering better interest rates, investment services through partnerships with established platforms, insurance comparisons from multiple providers with transparent pricing, and energy switching services to help customers reduce utility costs.
This marketplace approach created better customer outcomes since customers got access to best-in-class services rather than being limited to their bank's internal products, revenue diversification through commissions when customers chose partner services, and customer advocacy since the platform succeeded when customers found better deals.
The European Expansion Models
While Monzo focused on community-driven banking excellence, Nikolay Storonsky took a completely different approach with Revolut. His vision was explicitly inspired by the Merrill Lynch CMA model: become a one-stop financial services provider that could handle every customer money need.
Storonsky's background at Deutsche Bank and Credit Suisse had shown him how financial services actually worked at institutional levels. He understood that most financial products were profitable because customers couldn't easily access alternatives or compare options.
Revolut's strategy was aggressive expansion across financial services. They launched multi-currency cards with real-time exchange rates and fee-free international usage, addressing a pain point that traditional banks exploited for profit. Cryptocurrency trading integrated directly into the banking app made crypto accessible to mainstream users without separate exchange relationships. Stock trading with commission-free equity purchases competed directly with traditional brokers and investment platforms. Business banking with API-first architecture was designed for modern companies rather than traditional corporate banking relationships.
The execution was relentlessly focused on speed and scale. Revolut prioritized rapid feature development and international expansion over the community engagement that defined Monzo's approach. Results demonstrated the appeal of integrated financial services: over 45 million customers globally by 2024, with expansion across Europe, Asia, and planned US launch. Revolut became one of Europe's most valuable fintech companies by proving that customers wanted comprehensive financial services from providers that understood modern technology.
Valentin Stalf and Maximilian Tayenthal took yet another approach with N26, applying German engineering principles to retail banking. Their thesis was that banking should work with the precision and reliability that German customers expected from quality products.
N26's differentiation focused on operational excellence rather than community engagement or service breadth. They offered transparent pricing with clear fee structures and no hidden charges, addressing a major frustration with traditional German banks. Reliable technology worked consistently across all features rather than impressive capabilities that failed under stress. Streamlined design made common banking tasks faster and more intuitive than traditional alternatives. International consistency as they expanded across European markets provided identical experiences regardless of local banking norms.
N26's growth validated the engineering-focused approach with over 8 million customers across multiple European markets, particularly strong adoption in Germany, France, Spain, and Italy. The company proved that superior execution of basic banking could compete effectively with both traditional banks and more feature-rich neobank alternatives.
SoFi's American Interpretation
When Mike Cagney, Dan Macklin, James Finnigan, and Ian Brady founded SoFi at Stanford in 2011, they had a different insight than their European counterparts. American banking dysfunction was obvious, but the regulatory environment made direct competition more challenging.
Instead of pursuing banking licenses, SoFi identified a specific customer segment and pain point: young professionals carrying substantial student loan debt while being underserved by traditional financial institutions. The insight was both mathematical and psychological. Recent graduates from elite universities had strong earning potential but were paying 8%+ interest on student loans while banks offered them 0.01% on savings accounts.
But SoFi's real innovation was recognizing that student loan refinancing could be a gateway to comprehensive financial relationships rather than a standalone product.
Under Anthony Noto's leadership starting in 2018, SoFi articulated a vision that explicitly referenced the Merrill Lynch CMA model: integrated financial services that grew with customers' needs rather than forcing them to manage separate relationships.
As Noto explained during a 2019 earnings call: "We're not building a lending company that happens to offer other services. We're building a financial platform that helps members achieve financial independence."
SoFi's approach was methodical, starting with student loan refinancing at competitive rates to establish the primary relationship, then adding savings and investing for the monthly savings generated by loan refinancing, complete banking with checking accounts and debit cards to become customers' primary financial relationship, and finally advanced services including mortgages, personal loans, insurance, and wealth management.
Each phase built naturally from previous relationships using data and trust that SoFi had developed over the member's financial journey. SoFi's path to comprehensive financial services required strategic infrastructure development through acquiring Golden Pacific Bancorp in 2022 for instant national banking privileges, owning Galileo payment processing infrastructure that powered 70+ million fintech accounts, and building the Technisys core banking platform for modern, scalable infrastructure.
This infrastructure enabled integrated customer experiences that traditional banks couldn't match due to legacy system constraints and regulatory limitations. Current results validate the integrated approach with 8.8 million members using multiple platform services, $9.7 billion in total deposits with strong growth across all product categories, consistent profitability with sustainable unit economics, and high member satisfaction scores with strong retention rates across services.
The Universal CMA Pattern Applied to Digital Banking
Merrill Lynch's 1977 Cash Management Account succeeded because it integrated separate financial services around customer needs rather than industry structure. The innovation was recognizing that customers wanted financial coordination, not financial products.
Every successful neobank used variations of the CMA integration strategy. Starling Bank combined banking with spending insights and marketplace services around financial success. Monzo integrated banking with community engagement and financial guidance around money management. Revolut merged banking with investing, crypto, and international services around comprehensive financial needs. N26 paired banking with transparent pricing and reliable technology around operational excellence. SoFi blended lending, banking, investing, and wealth management around complete financial journeys.
The common thread was starting with customer financial objectives rather than traditional banking product categories.
Established banks faced the constraint of their own success when trying to compete with neobank integration. Legacy infrastructure built for separate product lines couldn't easily integrate customer experiences. Organizational structures with different departments managing different products created conflicting incentives. Revenue dependencies on fees and friction conflicted with integrated approaches that eliminated such barriers.
Meanwhile, neobanks had the freedom to ask fundamental questions: What do customers actually want to accomplish with their money? What would banking look like if we built it today with modern technology? How can we eliminate friction that doesn't serve customer needs?
The Next Evolution
The success of integrated neobanks has created the foundation for the next major evolution: embedded financial services that integrate with non-financial platforms around complete customer experiences.
Healthcare finance integration addresses what patients actually want—avoiding medical bankruptcy while getting necessary care—rather than managing separate relationships with insurance companies, medical billing, and payment plans. Real estate finance integration focuses on what homebuyers actually want—successful homeownership without financial stress—rather than managing separate relationships with realtors, mortgage brokers, insurance agents, and title companies. Business operations integration serves what businesses actually want—seamless financial operations that support growth—rather than managing separate relationships for banking, payments, lending, and financial planning.
The companies that figure out these next-level integrations, combining financial services with healthcare, real estate, or business operations around complete customer outcomes, will build the next generation of customer relationships that traditional providers can't match.
The retail banking revolution demonstrates that the most successful financial innovations start with customer needs rather than financial product categories. Anne Boden didn't set out to build a better bank—she set out to eliminate the friction that made banking frustrating for customers. Tom Blomfield and Jason Bates didn't set out to build banking features—they set out to create a financial community that helped people succeed with money. The Revolut team didn't set out to build multiple financial products—they set out to handle every way that customers wanted to use money internationally.
The pattern is always the same: understand what customers actually want to accomplish, ignore industry constraints during ideation, then build integrated solutions around complete customer journeys. The companies that master this approach, combining first-principles customer thinking with modern technology capabilities, will define the future of not just banking, but every industry where customer needs have been subordinated to legacy business models and regulatory structure.
Next in this series: "The Fintech Parallel Part II: How Business Banking Discovered the CMA Formula" — How Mercury, Ramp, and others succeeded by ignoring traditional commercial banking assumptions and building around what businesses actually need to operate efficiently.