Victor Trokoudes: I think Eurobank Greece has found a company that is able to innovate quickly

Following an impressive growth spurt, smart money app Plum has entered a strategic partnership with Eurobank Greece, which includes a €10m investment. Here, in an interview published in the February issue of GOLD magazine, Plum’s founder and CEO Victor Trokoudes shares insights into what made Plum such a sought-after product, its expansion plans in Greece and Cyprus and how AI is the last piece of the money management puzzle.

“We’ve built something that people want,” Victor Trokoudes says in a matter-of-fact tone. The founding CEO of smart money app Plum is referring to Eurobank Greece’s decision to take a €10 million plunge in the fintech world at a time when investor prudence prevailed. Insights from the analytics platform Pitchbook indicate that European startups raised only €57.1 billion in 2023, nearly half of the €105.1 billion secured in the year before. The US and UK startup landscapes experienced a similar contraction. An important nuance was that investors expressed weariness when writing big cheques, favouring pre-revenue and seed ventures with the lion’s share of their remaining appetite. For scaleups, survival was the name of the game, with raising money being a side benefit – Plum was one of the exceptions. Why? As Trokoudes tells me in the same straightforward manner, “Plum is simply a product that works in multiple economic environments.”

Founded in 2016 in London’s buzzing fintech scene, Plum launched as a money management chatbot on Facebook and quickly evolved into an app: users linked the app to their bank account to unlock a range of automated features tailored to optimising savings by analysing their spending patterns and facilitating investment opportunities. Before founding Plum, Trokoudes, who had studied Economics at Harvard University, was one of the first employees hired by one of Europe’s early unicorns, TransferWise (now Wise), which he helped launch in 25 markets. While Plum grew fairly fast – by 2018, it had 130,000 users – what really set the pace, as Trokoudes underscores, was the sequence of macroeconomic events in the past four years. “What we keep getting reminded about since COVID-19 – and now with the cost-of-living crisis – is that people want to manage their money better. That meant a lot more growth for us as a business,” he explains. In 2022, Plum grew by a staggering 7,735%, making it the fastest-growing fintech on the coveted Deloitte Fast 50 UK list; it was subsequently crowned as “Best Personal Finance App” at the 2023 British Bank Awards. Trokoudes mentions that last year alone, the fintech doubled its revenues, with over 1.9 million customers across the UK and EU setting aside in excess of £2 billion.

Eurobank Greece’s €10 million will come in two tranches: €5 million was committed in December 2023, while the other €5 million will be part of a second €12.5 million fundraising round, scheduled for 2024. Both rounds will follow the same strategy: to evolve Plum’s offering, especially for its EU customers to match the UK experience, and grow Plum’s reach in Greece, Cyprus and anywhere Eurobank has a presence. In Greece alone, the benchmark is to reach 700,000 users by 2027, opening the way for an aggressive expansion. “For our part,” Trokoudes notes, “we speak the language, we have the employee base – almost half of our people are in Cyprus and Greece – and we want to commit to these markets from a heritage perspective. I think Eurobank Greece has found a company that is able to innovate quickly, understands the regulatory landscape and is not a bank, which means we can move even faster. It has chosen to collaborate with us to bring a new proposition to the market that can appeal to the younger generation.” To which, he adds, “That’s not to say we are excluding anyone, of course!”

At its core, Plum is all about automation. The algorithm dissects users’ spending behaviours, from paying energy bills to ordering chicken soup on a cold winter night, and finds the sweet savings spot. Users can manually save or opt for automation, delegating their saving strategy to the app. The money is transferred from the user’s bank account to a Plum-managed money pocket and the app allows users to create pockets for different purposes, like earmarking funds for vacations. “We believe that by having automated saving rules that you commit to, saving becomes a lot easier,” Trokoudes explains. The premise derives from behavioural economics, which tells us that the human condition of undervaluing delayed gratification manifests in a spend-fast-worry-about-it-later pattern. Observations from Plum’s user base suggest that once people embrace automation, their time horizons change. As though flipping a cognitive switch, they embrace the value of future rewards. “We see that our users’ savings grow quite dramatically the longer they are with us,” Trokoudes adds.

The other half of Plum’s proposition – investments – comes in different flavours: EU users can buy and sell shares in more than 3,000 brands, while UK users can also access over 30 investment funds administered by different providers, each with a thematic focus such as Tech Giants, The Medic, Socially Conscious and American Dream, to name a few. The most popular funds are the Tech Giants (which focuses on fast-growing tech companies such as Netflix, Amazon and Meta), the Balanced Bundle (which offers a 60/40 balanced portfolio of shares and bonds) and the S&P Total Market fund. The most popular stocks include the Magnificent Seven companies, BP, McDonalds and Spotify. On top of that, Plum offers its own pension wrapper, although this is only currently available for the UK market. The latest addition to the app, Plum Interest, is backed by Money Market Funds (MMF), which emerged as the darling for retail investors in 2023, particularly in the US. As banks maintained low deposit interest rates, savers increasingly sought low-risk, highly liquid alternatives elsewhere that reflected higher central bank base rates more closely – MMFs cater precisely to this need, investing in short-term instruments like government bonds. In turn, government bonds have yielded big returns in the past two years, with T-bills alone outperforming the earnings yield of the S&P 500 on the last stretch of 2022. Considering their traction, Plum will continue to persist with MMFs in 2024 while also looking to launch ETFs in Europe later this quarter, alongside additional tax wrappers for saving in the UK market.

Perhaps more interesting are Plum’s plan to leverage the natural language capabilities of Large Language Models, whose technology will be used to optimise internal processes, like boosting responsiveness in customer support and introducing a personal finance assistant so people can discuss their finances as if they were talking to a human. Trokoudes reflects that when Plum launched as a chatbot, AI was not sufficiently advanced to engage users in actual, natural conversation. However, with LLMs, the fintech will re-engage that capability to enable its users to have real conversations via the technology concerning their finances as they steadfastly build wealth for the future. For Trokoudes, the advancements made in AI represent the final piece in the money management puzzle; it promises to provide everyone with instant assistance at the click of a button, guiding them to understand their financial actions comprehensively.

According to Eurostat, in 2022, the average savings rate across the EU stood at 12.7% of disposable income. In Cyprus, it dropped to 6.5%, while Greece reported a negative 4%. These numbers underscore the potential to address a market gap in an early-bird-gets-the-worm move for Plum. But, they also indicate people’s passive relationship with savings. Why that is, Plum will surely find out soon. Nonetheless, Trokoudes maintains an optimistic outlook. “This year will be super interesting to us, especially with the Eurobank partnership,” he says. “I believe the fintechs that have broken out successfully – and I put ourselves in that bracket – will be the financial institutions that are here to stay.”

(This article was first published in the February issue of GOLD magazine. To view it click here)