Physical presence important in digital economy

There’s nothing like having feet on the ground when you want to best serve customer needs, Mambu cofounder and CEO Eugene Danilkis said.

Mambu works with banks, microfinance institutions and other service providers to provide key banking services to people and emerging enterprises around the world. This is achieved by providing banking technology built in and delivered by the cloud.

Mr. Danilkis and I spoke at LendIt 2017 in New York City, shortly after Mambu announced the opening of a new Miami office to go along with ones in Singapore, Berlin, Dresden and Romania.

While Mambu has served clients around the globe, the new office in Miami and the one in Singapore, allow Mambu to cultivate growing presences in the Americas and Asia, Mr. Danilkis explained.

“It’s easier to do business when you can spend actual face time together.”

It also helps with keeping track of what is happening in different parts of the world, which can have some similarities but also many differences, Mr. Danilkis explained. The European market is mostly focused on SME lending and digital banking, while emerging markets feature consumer and small, micro-level SME lending.

Mambu's Eugene Danilkis

Mambu’s Eugene Danilkis

Clients tend to have one of a few different general needs, Mr. Danilkis said. Established companies wish to diversify by moving into lending. Large telcos and other companies with significant business client lists are some who consider such a move. New fintech firms starting up are another. A third group are existing organizations looking to transform their service provision while a fourth are those wishing to keep doing things the same way but with new systems.

Mambu clients in Asia and Latin America tend to be from well-established organizations such as banks and telcos looking to take early digital steps. American and European ones are often backed by venture capital.

“It’s easier to come in from scratch and raise tens of millions of dollars one you get some traction and try to be a disruptor, whereas in those markets where raising capital is harder and there is less risk of a risk culture it sets them up to do more specialized lending,” Mr. Danilkis said.

Those geographical differences are often due to the state of local economies or of individual clients. The process begins with unsecured consumer lending before graduating to more complex products like micro and small business lending and larger personal financing like larger business lending and mortgages.

Fintech’s emergence in large market economies was due to the fact large market economies were not well served by banks, Mr. Danilkis said. The structure wasn’t there to provide good banking services to a very distributed consumer base. The new entrants have identified poorly served segments and are using technology to capture that segment before someone else does. Those with a macro view may or may not generate a profit in the shorter term but their vision sits further out.

“(It) may (or may not) be profitable in the short term but they now have that market and can try to look for additional services and product lines,” Mr. Danilkis said.