Each year, participants of EADA’s International Master in Finance attended electives in the strategic specialisations in the third trimester. The specialisations include 12 electives divided into three areas focus aras: corporate finance, investment banking and FinTech. Here we talked to visiting professor Yannis Mergos, who led the course FinTech Investment.
Professor Mergos joined us from Washington, D.C. where he is currently a Senior Investment Manager with the IFC Asset Management Company (a division of the International Finance Corporation, World Bank Group). Professor Mergos brings more than 15 years of experience in investments and M&A in the financial services sector. He specialises in equity investments in companies in the financial sector, including banks and financial technology / fintech companies. Professor Mergos started his career with the Boston Consulting Group and his experience covers Europe, the U.S., and global emerging markets. In this interview, Professor Mergos shares his views on the future of fintech and what it means to him to teach at EADA.
Do you think that FinTech is positioned to make a positive impact?
Fintech can have a material positive impact which can unfold in multiple ways. First of all, fintech can help improve access to finance. A large part of the world, both in developed and in emerging markets, continues to remain “unbanked” or “underbanked”. Technology enables new distribution models which can address this access gap. Furthermore, by being product- and customer-focused, fintech companies are also driving significant improvements in the service quality, setting the bar for all players and improving user experience.
And in the background, invisible to us as consumers but extremely important developments are taking place, the technology applications that many fintechs are using allow them to improve risk assessment and increase efficiencies. I think this can be a “win-win-win”: for fintechs and consumers, but also incumbent players like banks.
What is key is that we make impact management a priority, as without data and widely adopted methodologies, we cannot really compare and contrast performance and measure progress.
Measuring impact can be challenging – how do you demonstrate the impact of investments to stakeholders?
With data. Having data that measures and tracks impact is key. In general, trying to measure something without data is, as you can imagine, difficult. So having meaningful and accurate data is always paramount. Impact measurement, however, is a relatively new area and there is no established impact measurement methodology yet. It’s an ongoing process and we need to develop commonly accepted metrics and ensure that we build comparable datasets that enable us to quantify impact. There is a lot of cutting-edge work that is happening in this field right now, spearheaded both by international organisations and the public sector, but also by private companies. It’s a collaborative approach but the outcome should not be taken for granted – we need to keep the momentum. What is key is that we make this a priority and we continue this process – as without data and widely adopted methodologies, we cannot really compare and contrast performance and measure progress.
What attracted you to the field of FinTech?
I’ve always found the financial services sector interesting. Fintech is one part of that “ecosystem” – a very exciting part, of course. Fintech is bringing new dynamism to a very traditional sector which is overdue for disruption. So, it’s a fascinating space to be in. However, one should not forget that Fintech is part of the overall financial system – only then can one fully understand the value that fintech brings.
Do you think that FinTech is here to stay, or is it just another fad destined to disappear?
I think that what we are seeing is a transformation of the financial system with fintech companies driving a large part of that. However, there has always been innovation and innovation does not always happen in a uniform fashion or stem from a single source. Existing incumbents play an important role in the ecosystem, and regulators are also key drivers of this process. Everyone has a role to play.
How do you keep up in a field that is in a constant state of change and development?
There are so many things happening in the space of fintech that it is indeed hard to keep up. I think it’s fair to say that there are always new things to learn and find out. My everyday work allows me to stay close to developments and screen the market for emerging players and ideas. I try to keep in touch with various practitioners in the field and voraciously read market news to better understand new business models and spot pockets of growth.
Part of the learning process is looking at things from different perspectives and thinking critically about them.
How has your professional experience in consulting, strategy and investing informed what you teach at EADA?
Different and diverse experiences help us learn to see things from multiple angles, which is key for analysing something and understanding it well. And it’s only when you understand something well that you can explain it in a simple way and teach it. So, I hope that my prior experiences help me do that. Part of the learning process is looking at things from different perspectives and thinking critically about them.
What is most rewarding part of teaching young professionals about to launch their careers in finance?
I think we all had teachers and professors that inspired us and helped us learn and grow. I just hope that I can do the same. It’s a nice thing to do. Teaching is also fun and you always learn new things from the questions that young professionals ask. I always try to have a dialogue with them, as they bring new ideas and perspectives – this interaction is really valuable and mutually rewarding.