Pitches for “Uber of banking” ventures assume that you can leave the actual delivery to commoditized providers. This is a mirage.

There  are three different Fintech startup models in Consumer banking:

1. Add an unregulated mobile layer on top of existing banking services. Simple is the best example (acquired by BBVA for $117m in Feb 2014). This is clearly not the “Uber of banking”. In this model, you depend on Banks for the underlying service. This would be like Uber delivering a service that relies on licensed taxi drivers for the service. When Simple started, it was early enough in the Fintech revolution to add value by understanding how to build a mobile customer experience. Today you can pay a team of developers a lot less than $117m for that. How much Banks will be willing to pay for any venture following the Simple model depends on how the Customer Acquisition Costs worked out for BBVA. Was this an expensive way to get some mobile software? Or did BBVA get lots of new customers at low cost? If it is the latter, then we can expect to see more ventures such as Simple thrive.

2. Provide a complete banking service from a regulated entity using a pure digital model. This could be a Challenger Bank (a UK term, but I have seen this in almost every stop on the Fintech Global Tour). A Challenger Bank is a Regulated Fintech startup. Or it could it could be a Big Bank going into foreign markets using the Telecoms playbook. The proponents of this model assert that, “controlling the whole stack is the only way to offer a differentiated customer experience.” The sceptics on this model assert that full stack banking is, “held back by the regulatory boat anchor from competing at digital speed”.

3. Cherry picking. This offers only one thing out of the total suite of services offered by banks. This could be regulated but more narrowly than a full banking license (many payments ventures are regulated as Money Services Businesses). Or you can choose a model that positions as a tech provider without the need for any financial services regulation. Michael Jackson of Mangrove Capital Partners makes the best case for this model, based on his experience at Skype. This avoids the need to partner with Banks. This could be:

• A pre paid digital wallet that you can use as a debit card. There are many examples in different niches such as Moven, Ffrees, GreenDot and Paytm. As you are not taking deposits, you don’t need to be a Bank.

• Financing via marketplace model. Lending Club could be described as the Uber of Lending. Angel List could be described as the Uber of private equity.

None of the winners that we profile here would dream of referring to themselves as the Uber of…. This is a weak way to excite naïve investors. The winners are already being referred to in this way by their own name (e.g. the Lending Club of… or the Angel List of…).

Uber of banking is a mirage because of two fundamental differences:

1. The commoditized service providers (aka Banks) have more power than freelance taxi drivers.

2. The full banking service is more complex than getting a passenger from point A to B.

Fidor is the one service that changes this debate by offering a service that is regulated but offering it as an API for other entrepreneurs to add value on top of.