Fintech startups often fail because they misunderstand their core business, which is not just selling a product but selling money and managing risk. Traditional financial institutions have a major advantage in pricing and shaping risk, which fintechs must also master to succeed. This involves novel approaches to mitigate risk after 'selling money', such as innovative customer selection and risk management strategies. Successful examples include Brex and Afterpay, which exploited gaps between perceived and actual risks.
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