In this article we have the great pleasure to ask questions to Spiros Margaris with his unique insights within the world of Fintech and Venture Capital.
Spiros is recognized from the Onalytica 2016 report as the worlds most Influencial Person within Fintech. Spiros is also a Senior Advisor to Fintech Forum, plus investor with kapilendo.com and moneymeets.com and owner of Magaris Advisory
What inspired you to write for The FINTECH Book?
I just loved the idea of The FINTECH Book to allow the worldwide Fintech (financial technology) community to present their best thoughts and ideas to Fintech, and to let the community choose the articles it liked the most for the book.
I was very honored that I was chosen to contribute my proposal, “The FinTech Supermarket: The bank is dead, long live the bank!”, for the final book chapter on how I see the future for the Fintech industry to develop. However, I also believe that many of the contributions that will not be in the FINTECH Book had great insights and elements that can inspire us all.
The two co-founders and co-editors, Susanne Chishti and Janos Barberis, did a fantastic job to make the FINTECH Book become a reality that will be published in Q1 2016. They also chose an excellent international partner with the publisher Wiley. They did the community a service to make Fintech a more recognized industry.
What excites you the most about Fintech?
I just love the customer-centric approach by the Fintech startups. The best know how to mix innovation, technology and simplicity to reinvent the banking experience. What I love even more is the social aspect of Fintech, since it provides people, the less fortunate ones and the unbanked good to great banking services that were too expensive or not even available to them previously.
I had launched two startups in New York during the dot-com era and, in some ways, I feel there is a similar excitement out there now. As the Internet did not disappear despite a dot-com crash, the Fintech industry will not disappear even if we might have a crash down the road. Not that I see one happening soon, but then again it would be just part of life and growth process that will pass; the strong and fortunate ones will still be in business and determine the future.
For me, it is clear that the Fintech industry will never disappear; it might be named differently one day but as long as we use technology in our daily lives, we will have Fintechs.
One of the core elements I like from moneymeets.com is your focus on banking and insurance. Why do you feel this remains such a challenge for other companies to bring these two areas of finance together?
I believe it is hard for the brick and mortar incumbents to sell services that are not their core business or competency. In other words, a banker will not sell insurance policies or services, and the same is true for an insurance agent.
Fintechs do not have that problem since it is the technology that provides the banking or insurance services. That is a great advantage since there is no historical legacy they need to deal with, unlike what traditional banking and insurance people face.
And that is why moneymeets with its Fintech Supermarket approach, essentially a bundling of Fintech services (Fintech 2.0), is a natural company to combine as many services as the financial industry has to offer its customers. Specifically, to your questions, it also means banking and insurance services.
What short advice would you give a new business leader today on performance measurement for their business?
My short answer and deeply heartfelt advice for startup entrepreneurs would be:
No matter what you say you deploy in technology, people and money at the end of the day, I want to know what your user growth is. In other words, does your strategy really attract clients to come to you and use your services or is it just a pipe dream?
If the startup entrepreneurs execute well, then we should see this in user growth; if not, then we need to address the issue and, most importantly, find a way to scale user growth.
But as I said, that was my simple answer. Of course, not all clients or users have the same impact on the growth of a company. Depending on the customer profile, some growth would be more valuable or profitable than others. What is the point if I get one million new subscribers who do not use my service but were only curious to see how it feels or what it does?
I would rather have 100'000 who really use my Fintech offerings actively. Active users also help to improve the service and user experience continuously, and make a more attractive destination for all us. Passionate users will attract other eager and curious users. Let’s not forget that when you set your strategy for growth.
We need also to consider the short/medium/long term aims of the Fintech startup business. If they have enough funding, then their highest priority may be different than with a Fintech company with less perfect financing or cash flow situation. The critical point is that performance management needs to reflect the reality of timing, scale and opportunity for growth or improvement within a business. These can be affected by external factors such as regulation, shareholders demands, and customer trends.
As you can see, there is a short answer to your question, and I also believe a more complicated one. Combined, both and you have a real basis as a startup entrepreneur to start planning your next important steps.
What did the 25 year old Spiros Margaris think about finance when he was at the start of his career and how has this changed?
At that time, I thought only the incumbents such as Goldman Sachs, JPMorgan, UBS, etc. could change where the future of finance will go, so I thought in my youth they were the masters of the finance universe.
Now it is quite the opposite; I believe that Fintechs determine the future and the incumbents will need to follow eventually. As I always say, and phrase here again, it is hard to follow a speed boat when you are ship tanker.
However, I believe also that incumbents and Fintechs will be well served to collaborate to create a truly win-win situation.
What advise has influenced you the most in either life or business?
Actually, I keep reminding myself that we need to dream as big as we can. Even if we falter, we are still further ahead than we were before.
We sometimes see risk as something bad, but we forget that risk is the entry ticket to opportunity and to something new.
When we remain too long with what feels comfortable, we will drift away from what is important. I think many incumbents have that exact problem.
When and why should a company invest in robo-advisors?
We all know that the sum of assets that the robo-advisor Fintech startups manage now is not huge; but it will be, and they will control a big part of the professional investment management industry, and that is rather sooner than later.
Robo-advisors provide investors and advisors more options, and that’s great. The client gets professional automated investment advice that is less expensive, has lower entry hurdles, and a beautiful, simple interaction.
The human advisor gets a tool that allows to hold on to clients that make no business sense now but eventually might have the means to justify such a close relation and make it a very profitable one.
Let’s face it, profitability is a serious issue for a pure robo-advisors not connected to a larger institution since they need to increase their assets under management substantially to compete against the incumbents such as Vanguard, Schwab, etc.
That’s why the robo-advisor startups must remind themselves always what attracted and will attract clients to them in the first place. And, of course, they should find new ways to stay attractive as a destination for value.
I believe firmly in robo+advice or a robo+advisor, where everyone – robo-advisor and human advisor - can play to their strengths and, therefore, create a truly win-win situation.
Fintechs believe that they can make the world a better place by eliminating evil established players. But they shouldn’t discount incumbents entirely. They may have won the first round, but what if incumbents wake up to the notion that perhaps they don’t need the Fintechs?
Banks will not just lay down and die.
My bottom line is that Fintechs and incumbents would be well served if they work together and create a win-win situation where both will potentially reap enormous benefits from such a partnership.
We hear Fintech is disrupting banking but what areas do you think will disrupt Fintech?
Incumbents, other Fintechs and the Tech-Giants all have the potential to disrupt established Fintechs. There is no status quo; it is only up or down. Any company that forgets this will end up at the shorter end of the stick.
Many banks have too long rested on their laurels and forgot or ignored the customer. It is not bank first and customer second as many incumbents seem to have too long practiced; it is the customer-centric approach that we all demand that will decide the winner.
Shareholder value drives business in the wrong direction towards profits first and customer second. Let’s not forget who made us big in the first place: it is the customer (period).
What will privacy mean in 10 years and how will it affect the customer ability to buy services?
I believe that many people do not care much about privacy.
I know that many will scream at my statement, but I think we reveal already so much on social platforms, or when we buy things, or search the web.
But let’s not forget that we allow that our personal data be collected and analyzed voluntarily. And, therefore, the natural consequence of that data-collection is that the collector draws conclusions that they will use. As long as the benefits seem to outweigh the loss of some privacy, many will not care as much as some privacy advocates would love them to do.
Definitely, I do not want to say it is a good thing that privacy is sometimes undermined, but then again everyone needs to decide for himself and take the right steps to limit what information about them goes out to the ones who try to monetize them.
How can any lessons from Fintech’s impact to banking be applied to other industry sectors and personal life?
Three things I keep reminding myself:
Everything is possible and failing is just part of life.
If you don’t fail sometimes, you don’t try hard enough to succeed.
You can’t make an impact by playing it safe.
What top metrics do you consider before making an investment?
It’s all about people, more than about technology and money behind a startup venture, that will make all the difference.
All about people (period).
THANKS TO Spiros for His valuable insights and inspirations for fintech and startups. I encourage our readers to connect with Spiros Margaris for specific innovative solutions within the finance industry.
Further Reading and Reference
Future of Fintech: A Combination of Barbarella & 2001: A Space Odyssey by Spiros Margaris