Fintech Disruptors: Who’s going to win the digital finance race?
Eugene Danilkis: My take on what success takes is people view this in a binary way – partly there’s a hype-cycle funded by VCs and propelled by press. The story at the high level was that only one side could win – it’s true to some degree but doesn’t capture the nuances of what’s happening. The question that needs answering is how much are fintechs uniquely able to solve some of the challenges – in a way that banks won’t be able to compete with?
Our positioning is looking at the traditional core banking landscape where we’re competing. We’re providing infrastructure for the next generation of the landscape and in the longer run it’s a bit of both – banks and fintechs will win.
Fintech Disruptors: What does it take to be successful?
Eugene Danilkis: It takes a shift of mind-set. Both fintechs and banks are buying into a different approach. Previously it was about building something that will run for the next 5 to 10 years it requires setting up a process and a model – you can change it but it can be expensive. Now it’s about agility – building something that’s quick to market – and [being able to] change it. [You] need flexibility – don’t want a system that doesn’t need code, is easy to plug it into with no proprietary standards.
As a side-effect, you [also] have things like the SaaS business model which aligns most closely with business model of [our] customers. [To compete] fintechs have no choice but to do stuff more quickly – they’ve come into the market and are forcing questions on established players.
Fintech Disruptors: When did you start to see this change coming?
Eugene Danilkis: Relatively recently – 12-24 months ago really. Just two years ago [the banks] were only thinking about this. For [our] project with [Mambu Client] ABNAmro there were two objectives – to try a new commercial model and capture a new segment in Netherlands; the second is for the bank to use New10 to leverage and operate models for main business, and outside the main bank to get away from traditional ways of doing things.
When we were coming into the market – the story was about larger institutions but it will be about smaller institutions [sooner or later]. It’s the larger institutions that are going for this first – the tier one players in the market. These are the ones that have the resources to make that bet – for smaller banks building something that’s separate might be too much of a distraction.
Fintech Disruptors: Where are the most exciting market and regional opportunities?
Eugene Danilkis: Europe and US will be in the driving seat. I’d say Europe is really at the forefront of innovation – US took [an early] lead in P2P lending with the likes of Lending Club, OnDeck and so on but there’s more of an innovation an approach in Europe. Latin America and Africa might be next.
[At Mambu] we’re excited about basic financial services – SME and consumer focused lending for example are both really big markets. There’s also limited access in developing markets and plenty of room for innovation around those areas.
Fintech Disruptors: What’s your strategy for realising some of these?
Eugene Danilkis: Fintech is really about using technology to automate processes and drive down the cost [to serve]. Our strategic aim is to work with institutions to make banking simpler – N26 for example makes banking much simpler to enjoy it and make it easier to interact and much simpler to use than mainstream.
Companies doing SME lending are trying to reduce complexity and make it easier for companies. In emerging markets, it’s about accessibility – and we’ll see fintech in developing markets making access easier.
There’s a lot of opportunity for simplifying the process, the experience and the costs. Gamification is [one example of this in action] – a tool in the user experience designer’s toolkit – use it to make a product addictive as well as easier and simpler to use and [help] overcome negative tendencies.
Fintech Disruptors: Regulators – inhibitors, leaders or followers?
Eugene Danilkis: Regulators are looking at fintech in a way that they looked at banks – so process is not that different. They want to make sure they’re doing what they can to protect customers. I’d say their favourable to fintechs not because they’re not banks but because their contributing to the dilution of risks to marketplace by contributing to growth in the number of providers.
Within Europe and the US, it’s our customers that have to work with regulators. [Mambu] plays a key part in ensuring a customer is compliant and if you think about regulators as part of a work stream and engage early – the better it is for the institution, and also the regulators themselves.
Given all the other things they have to do they’re doing a fairly good job of it. From what we’ve seen, when you engage with them they put in a good amount of resources.
Fintech Disruptors: Any areas for improvement?
Eugene Danilkis: Where they could be better is to explain how to go about setting up a company and we need to do as founders. Because they can be reactive, founders might go the opposite way at the beginning – it would be better not to discourage them from engaging with them.
Fintech Disruptors: How important is talent to Mambu’s success?
Eugene Danilkis: Talent is the biggest challenge for any company whatever the business. You need to have a strong combination of deep subject matter expertise – one in technology and another in financial services and products, and if you’re a bank also in regulation. The challenge is getting the right skill set and that’s the challenge most institutions are facing.
[Ultimately] you need to be strong in something – either tech or finance. If you’re starting off in finance – you need to convince someone that they’re working on new technology – they won’t want to work on old technology because it moves on so quickly.
Someone might be attracted by a high salary that you’re offering, they’re also thinking about their careers – in the longer-term they’ll want to work with cutting edge so it’s not just about paying high salaries.
Fintech Disruptors: How have you managed to build the right team?
Eugene Danilkis: We’re a tech company more than a financial services company which makes life a bit easier – also with the focus and scope of our product. We try to find people that are strong in something – in finance for example they’ll generally work on project teams on the product side.
We look for good listeners and those that are constantly learning. We have locations in Berlin, Romania, Miami and Singapore and have been a global business, servicing global clients from the beginning. Our goal is to ensure those offices are communicating with each other. We don’t want them to be too different – should feel like a smooth transition, a shared company culture.
We’ve doubled the headcount over the last 12 months. So, we have to make sure we have the right people and the right way of communicating between teams. We’re looking at different methods and processes and communications and as the team continues to grow – getting the right people in the right places.
We use our board including our VCs and investors for insight here. [We have also been getting] to know other CEOs and start-up founders – I was in San Francisco recently at an investor event where they brought different founders and investors to talk about best practices in managing people which was really helpful.
In terms of cost of talent, the tech sector has always been high so nothing unpredictable – it’s pretty much business as usual.
Fintech Disruptors: The ‘B’ word – Brexit – any impact on your business yet?
Eugene Danilkis: Brexit has been more of an opportunity for us because of our HQ in Berlin – we’ve had more people thinking of moving to Berlin so in the short term it’s been beneficial. As for doing business in UK – we’ve seen no impact as we have a business there already.
Fintech Disruptors: What’s keeping you busy at the moment?
Eugene Danilkis: Making sure that our product and service is consistent in the market – and keeping things aligned is what takes up most of my time.
As we grow so quickly making sure that everything is going in the same direction. When you talk to marketing or sales for example, everything individually is going well but the permutations – the stuff that we are not doing for example – I’m trying to make sure I’m happy with the stuff we’re not doing.