The Rise of FinTech and AI with Spiros Margaris

Thank you to Spiros Margaris for his illuminating insight on the world of fintech and AI on our AI Time Journal Podcast. Tune in to hear all about the role fintech has in shaping our world and budding advice for entrepreneurs looking to make headway into this industry right from one of the most influential Fintech experts himself.

Transcript of the conversation with Spiros Margaris

Senthujan Senkaiahliyan:
Hi. My name is Senthujan Senkaiahliyan and I’ll be hosting today’s podcast on AI Time Journal’s Podcast. Today we’re going to be talking to Spiros Margaris, one of the biggest FinTech influencers in the scene
right now.

Senthujan Senkaiahliyan:
Spiros is a venture capitalist and senior advisor for many tech companies and has presented at numerous conferences around the world most notably being the first non-IBM keynote speaker at the biggest IBM event in Europe. Today, we’ll be talking about the basic understandings of FinTech for our viewers and delve into some more interesting and emerging topics within the field. Thank you for being here today, Spiros.

Spiros Margaris:
Thanks for having me. It’s a great pleasure.

Senthujan Senkaiahliyan:
Perfect. Let’s just dive right into it. From your knowledge, I want you to explain what you think and how you define what FinTech is.

Spiros Margaris:
That’s a good question. Basically, it’s a broad field. I tell most people it’s… As it says, financial technology. That’s what FinTech is. It’s basically a technology that enables companies, startups to provide financial services through technology sometimes with a better user experience, sometimes with better technology but the field is so broad.

Spiros Margaris:
We talk about the challenger bank, sometimes the B2B service provider that basically has nothing to do directly with customers but basically, the FinTech industry aims to enable companies to provide better financial solutions and the benefit of all of this are the consumers directly or indirectly through the financial service provider.

Senthujan Senkaiahliyan:

Spiros Margaris:
But it’s a big space. FinTech existed before the expression “FinTech” existed but when FinTech was defined as such, it became a brand and it helped the whole industry grow.

Senthujan Senkaiahliyan:
And how do you find FinTech is transforming the world in the modern age?

Spiros Margaris:

I think that FinTech provides cheaper, better solutions. It helps a lot of less privileged people to have banking services for instance. As I said before, it’s very broad but I think the most important part of FinTech will be helping the less privileged people to have banking services which they can afford and which serve a purpose.

Spiros Margaris:
When I say to serve a purpose… For people who are unbanked or underbanked, FinTech allows them to have access to financial services, banking services and that’s a huge enabler in their lives. I always tell people and I have to stress it here as well is the legacy of FinTech will be one day that we help the less privileged people and/or the underbanked, unbanked people to have a better life.

Senthujan Senkaiahliyan:
Amazing. And due to FinTech’s deep-rooted nature in digital technology, what do you believe the role of AI come to play in the development of FinTech in the years to come?

Spiros Margaris:
It’s already now here. Not only for FinTech, for all companies. If you want to scale a company and with all the data, with all the digital footprint we give from fraud detection, to protect the company against cyber attacks or to provide personalized services. I think without AI, machine learning would not be possible.

Spiros Margaris:
AI will play a role everywhere but sometimes it’s overhyped but nevertheless, we’re on the road to a world that AI, machine learning will augment our lives, our work and hopefully free us up from doing things that are maybe a little more boring and if you want to scale data, it’s not possible. The whole process… It would be extremely expensive and not feasible to have systems in place to go through all this
data and come to conclusions.

Spiros Margaris:
But again, I think it’s a little bit overhyped but every cool stuff is a little bit overhyped. That’s beyond FinTech. There’s excitement. If it’s a fashion brand or another brand, that’s just part of the success story
and I think AI went through different AI winters and I think we’re in a good stage now but I think there will be more exciting things to come.

Senthujan Senkaiahliyan:
That’s amazing. I agree with you. Everything. AI has become the new buzz where it’s the new cool. Things becomes ubiquitous with everything in our society. I’m looking to see the role that AI does play in
FinTech as it evolves and gets more deep-seated in.

Spiros Margaris:
FinTech players use AI tremendously. It will not be possible to do their job they do with fewer people and all this data and to scale it but I think we still picked up the low-hanging fruits.

Senthujan Senkaiahliyan:

Yeah. That’s very interesting. I want to go back to your comment on making the rise of FinTech being the primary goal is to make financial services more accessible to consumers. We see a rise of FinTech in Southeast Asia and South Asia. I want to hear your thoughts and opinions. Do you think because of the accessibility of FinTech that is what makes it so widely attractive to consumers in Asia because of its cheap financial services? 

Spiros Margaris: And also personalization. Both. I guess for somebody who hasn’t had anything… Simple banking services, simple credit card solutions… It’s already a great thing and if you are a little more sophisticated in terms of a little more spoiled, then you obviously would like to have something more personalized.

Spiros Margaris: Again, like sneakers. You buy normal sneakers, they want personalized sneakers but Asia in general is extremely advanced as we know. The super apps, et cetera and I think each continent for some reason in some ways inspires… It’s like competition. If you look at each country or continent as a startup, I think they get inspired. They have a different environment like South America where a new bank grew tremendously because people were not banked or underbanked.

Spiros Margaris: With a lot of poor people, there’s more opportunities for FinTech obviously which is a good thing that we can help them. In very rich countries for instance like where I am, Switzerland, you will not have the same amount of opportunities in the FinTech space because people are not looking for the best deal as much as in other countries but Asia…

Spiros Margaris: Going back to Asia, China, et cetera. In some ways they were so ahead of us of what they offered as super apps. Apps within the apps but different countries, different culture… I think it’s very difficult to take one solution and make it work everywhere because it’s also a cultural thing.

Senthujan Senkaiahliyan: Mm-hmm (affirmative). That’s great to know. All right. Just how you just mentioned right now, there’s so many opportunities in Asia, there’s so many different varieties and options. I want to hear. What would you give advice for aspiring entrepreneurs? We can see there’s lots of people in the Asian market very hungry to start up their own FinTech startups to capitalize on this market. What advice would you give those aspiring entrepreneurs?

Spiros Margaris: That’s a million-dollar question. When you look at some successful startups in Europe everywhere, it all started for your personal need. You couldn’t get trends-wise. They found it difficult to wire money or too expensive so they found a different way. I think they have to go inside themselves and look.

Spiros Margaris: Say, “Hey. What would I like to have which I don’t have?” Which makes it also a little more difficult at the beginning because if it’s too new… If the solution is easily understandable or understood, then maybe a lot of people, competitors already have done it so it’s very hard to really make something new

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: … but I think there will be always be with newer technologies at hand… AI, machine learning. It’s not about technology, it’s about to finding a true niche that still has huge potential. In the old days, it was difficult to explain what FinTech was but the competition was there were fewer competitors.

Spiros Margaris: Now, everyone knows what FinTech is and a huge amount of competitors. In the end, you have to go with your heart, with your expertise and not to give up but it’s also a question of timing. You can have a great idea but the timing is wrong but the longer you survive, I tell everyone of my startups, the more likely you will succeed because eventually the opportunity might come and when you are around.

Spiros Margaris: There’s no magic bullet. I think in each business case, there’s opportunities but if everyone is already in that space you want to go, it’s going to be very hard to succeed unless you really… I don’t know. But at the end of the day, I think the real entrepreneurs… If they have passion, they invest a lot of their time. Indirectly, money.

Spiros Margaris: I think they’re smart enough to figure out if the business has potential and if you find traction in your idea… You find traction once you have launched it, that’s a good sign that maybe there’s a huge business opportunity out there but you have to be a little bit crazy, a little bit naive because if you’re too rational, you can’t do it. Basically, it’s like everything. We all dream to be Michael Jordans or whatever you want to be but there are very few who will achieve it.

Senthujan Senkaiahliyan: Right. 

Spiros Margaris: If you look at Jeff Bezos when he started in a small office that was probably very small. Probably even himself if he is still honest, he hasn’t envisioned that what would happen with Amazon but you grow with your business to be successful.

Senthujan Senkaiahliyan: Perfect. For entrepreneurs or even early learners who want to get that beginner’s knowledge and to start understanding the FinTech industry, what platforms do you believe provides that knowledge and has the most influence and reach when we’re learning about the new trends in FinTech?

Spiros Margaris: I think Twitter. I’m a big fan of Twitter.

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: Twitter. There’s a lot of experts on Twitter. Not only in FinTech, on anything and if you have enough time, the good ones, they share great insights and you learn by immerse in this community by reading the stuff and reading is part of it, doing is the second thing

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: … but you learn a lot from those Twitter influencers or experts. You name it. LinkedIn as well but I think Twitter is probably the platform to find a lot of good stuff on FinTech, AI machine, on everything.

Senthujan Senkaiahliyan: Perfect.

Spiros Margaris: That’s just part of it then it’s really doing. It’s like you can read a lot but you have to do it and that means also painful moments, failures, et cetera but I think if you just read, it’s not good enough.

Senthujan Senkaiahliyan: Perfect.

Spiros Margaris: Reading is just part of breathing. If you don’t work and you have time for that, do it. There’s no magic bullet. It’s like baking a cake. A lot of ingredients to become successful

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: … and the insights you get there on FinTech, AI… Just one ingredient but there are many ingredients.

Senthujan Senkaiahliyan: Perfect.

Spiros Margaris: Makes sense.

Senthujan Senkaiahliyan:No. That makes total sense. It’s good to learn the theoretical and the foundations but at the end of the day, you just need to get yourself into the field, start trying out your ideas and see what works and what doesn’t work.

Spiros Margaris: And also building a good team. This is not MBA talk. All successful startups have great teams because everyone brings different elements to the table. Different strengths, expertise and together, you’re really strong. I think we’re not an island and this is not management talk. It’s like, “The better the team, the more likely it will succeed.”

Senthujan Senkaiahliyan: Perfect. I want to move into traditional methods of banking and payments. In some nations, the banks hold a lot of power over financial systems. Do we see the rise of FinTech being something that’s going to threaten the dominance and the monopoly that banking systems have or do you think it’s something that we see potential for integration or do we think of these two as two silo institutions working apart from each other?

Spiros Margaris: I think they all coexist. They work together, we see everything now because there are more players now. It’s not only the FinTechs, it’s the tech giants who take… They don’t go into bank directly but they take pieces of the business where they bring value to the customer. Then you have embedded finance. Basically, non-financial companies that provide the customer base, usually big ones with financial services.

Spiros Margaris: Walmart, the biggest retail in the world has set up already its own FinTech company to provide some services for the customers. Look at the financial services from banks to FinTechs to tech giants, embedded finance companies. Non-financial companies but going to the financial space partially. It’s like one big cake and it’s just shared differently. For banks obviously, they have the customer base, they have the capitalization, they have a lot of things going for them. The trust.

Spiros Margaris: A lot of people still rather put their money with a big bank, the salary slip but that will change. I remember when Amazon started or the internet started, it was difficult for people to imagine to pay with credit card and buy things. Now, you don’t even think twice about it. To be fair to banks, I think some banks understand the threat of change have a cushion to survive longer than startups but it’s like the Wild West.

Spiros Margaris: That’s a wrong expression I guess but I think it’s like there are different players in the same market. Because some people work together. Some of these companies. The ones who can do it themselves, do it themselves. There are B2B players who really need incumbents to serve them, to provide them with better services. The beginning was all a hype. At the beginning I think as we mentioned with AI, everything was hyped as a standalone. FinTech will replace everything

Senthujan Senkaiahliyan: Mm-hmm (affirmative).

Spiros Margaris: … but now it’s more like there’s some players that can do it themselves, some players want to work with incumbents end and end. The one thing what happened is the cake for banks has… That piece of the cake has become small and smaller but it’s still big.

Senthujan Senkaiahliyan: Right.

Spiros Margaris: But it’s getting small and they know it.

Senthujan Senkaiahliyan: Right. And I think banks are resilient and they’ll find ways to adapt with the coming

Spiros Margaris: To a certain extent. Yes. The smart ones will and we will find out at the end. 

Senthujan Senkaiahliyan: Yeah. Perfect.

Spiros Margaris: But banks will be around for a while and the big banks anyway but there will be new players around and I think competition is good for consumers.

Senthujan Senkaiahliyan: Exactly. That’s what I was going to say. It’s good for competition. It inspires more and keeps everybody nimble on their toes.

Spiros Margaris: And even if some of them fail… A lot of them fail. As we know startups, 90% rule of thumb fail but then there’s always new kids on the block that will say, “Hey. Let’s learn from these mistakes or let’s do it differently.” I think you can’t stop this trend, it’s here to stay and there are some huge players around.

Senthujan Senkaiahliyan: Perfect. Speaking of big players, I want to also talk a little bit about Bitcoin and its role with FinTech especially because more and more nations are starting to focus on having a cryptocurrency policy for their country. How do you feel and what do you think Bitcoin has a role in FinTech and how those two will be intertwined together? 

Spiros Margaris: FinTech is [inaudible 00:18:52]. Bitcoin is crypto and obviously blockchain as the enabler. That’s FinTech and Bitcoin and crypto in general… Ether and other cryptocurrencies, they’re here to stay. Not all of them but I think few of them are here to stay and more and more people will buy crypto.

Spiros Margaris: Of course, for speculation for whatever reason. That’s a blockchain solution that had a mass adoption. A blockchain is coming as well now but for other good use cases but crypto’s here to stay and it’s out there. I’m a big believer in crypto but I don’t make prediction where it’s going to go. It can go a 100k likely but it can go much higher because the more and more institutional investors come in, more retail investors come in and then and then.

Spiros Margaris: I come from the hedge fund business. If you ever jump into a cab and the cab driver says something about Bitcoin, then maybe you have to sell at the moment but we’re not there yet but it’s much easier to buy Bitcoin or crypto in general so I think it will stay volatile. I will not put all your money in there but it’s where to put some money into crypto

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: … I believe.

Senthujan Senkaiahliyan: That’s good advice. Sounds good.

Spiros Margaris: You need to lose it.

Senthujan Senkaiahliyan: Yes. Okay. That’s good advice. I also wanted to talk a little bit about as FinTech takes more dominance as payment methods, do you see government intervention, government regulation of these startups just to maintain privacy, data security, to ensure that fraud isn’t happening or do you consider it is to be very much to be in the private corporation realm where people must have their trust in the company to do the regulation for them? 

Spiros Margaris: No. FinTech companies are very regulated. They’re regulated like banks and maybe if they’re less regulated because they don’t do all the same things as banks do but if they do the same, if they provide the same services, they’re under the same regulation as banks are. Sometimes it seems like they’re less regulated but they’re regulated because it’s in the interest of the FinTech companies to be regulated because it provides a safety net for their customers and trust.

Spiros Margaris: Regulation is not bad. I think innovation, regulation go hand in hand and if you want to build trust, you also have to have regulations because then that gives you the comfort to know that there’s some laws in place to protect me, to protect my money and to make sure that some processes are done correctly within this company you invest money or whatever.

Senthujan Senkaiahliyan: Okay. How would you measure the success of a FinTech company? I know that might be another million-dollar question.

Spiros Margaris: No. I think I always look myself at the traction.

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: How quickly do they gain customers? Paying customers in one way or another and I think traction is the first thing I look at because it shows you everything. It shows you that customers… You have an idea and people love it or don’t and if you see a huge traction, it means, “Oh. Maybe they’re on something.” To be profitable or not, that’s not the key. Obviously, the bigger they get… It’s better if they get profitable soon or cash will breakeven but growth, traction, customer growth or whatever growth they have but it’s a growth. That sounds so simple but it’s hard to achieve.

Senthujan Senkaiahliyan: Mm-hmm (affirmative). Mm-hmm (affirmative). Makes sense. Okay. To wrap things up, I want to get your thoughts on what FinTech companies do you think that we should be keeping an eye out for the upcoming years for our viewers?

Spiros Margaris: Oh. A very hard question.

Spiros Margaris: No. It’s difficult to say.

Senthujan Senkaiahliyan: Okay.

Spiros Margaris: I could give you a name but I would not like to. There’s so many great companies. I think we will still see new companies emerge that will shake the market. Now, we have the Stripes, we have the Robinhoods, Revolut, Wise. We have a lot of great companies. Klarna.

Spiros Margaris: They’re all great companies in their space but I believe there will be other companies coming in their space as well and shake it up. They shook up the incumbents, eventually they will become incumbents and other players would come with newer technologies, new ideas. I think we picked up only the low-hanging fruits in the business.

Spiros Margaris: Things that incumbents should have done, those great startups did it, keep doing it but the newer ones will say the same thing. Will say, “Oh my God. This great FinTech company did it so perfectly but I think I can do it better.” And if they can do better, they will take market share from that company and so I think there’s always somebody else coming after.

Senthujan Senkaiahliyan: Because of the rapidly evolving nature of technology and how fast it’s progressing.

Spiros Margaris: Doesn’t mean easier because it seems like everything has been done.

Senthujan Senkaiahliyan: Right. Exactly.

Spiros Margaris: Oh. It’s always the case. There will be a different Google as much as we don’t believe that Google will be replaced as a search engines but it will be replaced because the other good players coming up with better algorithms… As crazy as it sound and then of course, then you have different gatekeepers.

Spiros Margaris: For instance, if you would search through an earpiece, then it could go to anywhere, to another search provider. Before Google, there were other ones. Yahoo, AOL. There were always other ones before and at the moment you thought, “Nobody can replace them.” There was Myspace and Facebook came but things evolve but as dominant as those players are… They did a lot of great stuff. I believe all those tech giants… Sometimes we want to regulate them more but on the other hand, they provided services we could never have imagined.

Senthujan Senkaiahliyan: That is very true.

Spiros Margaris: … and enabled us to become more productive, more knowledgeable.

Senthujan Senkaiahliyan: It also [inaudible 00:26:25] us as a community.

Spiros Margaris: Yes. But I believe other players will come and replace them but it’s to predict who it will be… It’s kind of impossible. Once we see it, we know it.

Senthujan Senkaiahliyan: Okay. That’s actually great advice.

Spiros Margaris: No answer. Just follow your dream. All successful people. If I have to follow a dream, there’s going to be a lot of setbacks and if you know that and you can survive, it’s like getting up again. If you’re knocked down in boxing match, you only lose if you don’t get up again.

Senthujan Senkaiahliyan: That’s a good analogy.

Spiros Margaris: Yeah. It’s not mine but it’s so true.

Senthujan Senkaiahliyan: Perfect. All right. Thank you so much, Spiros. This was a very informative session today. You really got into different topics of FinTech and you gave a lot of advice for aspiring entrepreneurs who want to get themselves into this field. I really appreciate your time for having this podcast with me today.

Spiros Margaris: It was my pleasure. Again, thanks a lot.

Senthujan Senkaiahliyan: Thank you so much. Have a good day.

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