FINTECH'S MOATS DON'T COMPILE

Summary from the TLDR Crypto newsletter

While AI compresses software valuations by collapsing build costs, fintech moats are structurally immune because their defensibility was never engineering-based – PayPal and Block allocate only 9-12% of revenue to R&D, while the real spend flows into credit losses (Affirm at 35% of revenue), compliance infrastructure (Wise deploys roughly a third of its workforce to maintain 65+ regulatory licenses), and transaction volume that generates proprietary underwriting datasets. Rather than disrupting incumbents, AI actually amplifies existing fintech moats: tighter loss models lower credit risk, improved fraud detection reduces chargeback drag, and compliance automation lets smaller teams hold more licenses. The strategic implication is a reorientation of durable value toward entities that directly own regulatory relationships, absorb credit risk, and accumulate transaction-level data.