Business Review attended a series of events organized by La villa numeris, a French digital think tank, in the framework of French Season in Romania, designed to foster cooperation between Romanian and French companies in leading the digital industries of both countries.
The fintech conference that took place at Impact Hub Bucharest under the name “A new financial era for a new and positive economic governance?” started with a keynote speech on fintech trends by Joelle Durieux, managing director at Finance Innovation, the French competitiveness pole.
“Finance Innovation brings together corporates, start-ups and academics in order to foster collaborative, innovative R&D projects, in France and at an international level. Finance Innovation is at the heart of the finance ecosystem. Our cluster aims to gather all the financial industry players in order to accelerate innovation and research inside the financial ecosystem. Our priorities are banking, insurance, asset management, real estate, social & the solidarity economy: we deal with the financial sector to a very large extent,” said Durieux.
The company aims to identify, select and certify the most promising fintechs in order to help them scale-up and make business partnerships with large financial corporations, to promote innovative financial tools for SMEs and to act as a think tank.
“Fintech is really a great revolution, worldwide, that will change the shape of the global financial system,” said Duriex.
Between 2016 and 2018, fintech companies significantly matured, with key segments being payment, lending, neo-banks, and insurance. Asia and North Africa are the dominant regions, but Europe is catching up. According to Finance Innovation data, French fintech companies have attracted many investors with a total EUR 370 million raised in 2018 through 74 operations, which put France fourth in Europe.
“We will have a redefinition of jobs in the finance industry, and the technical skills will be complemented by emotional skills such as empathy, leadership, and creativity, because they are much more difficult to automate,” said Durieux. “Our main purpose by being present at this event in Romania is to co-create projects at a European level. We must bring together our strengths to face challenges coming from giant countries such as the USA, China, and India, as well as the GAFAs (Google, Amazon, Facebook, Apple). Europe is really key.”
MARKETPLACE AS A FINANCING POINT
Maillon.io had started as a consumer credit marketplace available for points of sale financing. “We democratize access to credit solutions for small and specialty retailers via an app connected to banks, neobanks and other potential lenders which is able via solutions such as Docusign and KYC solutions to gather data and information on the physical buyer and send information on credit needs and credit history, and then allow the final client to sign the lending contract electronically on the spot, and leave with the product they want to buy,” said Andrei Benghea Malaies, cofounder of maillon.io.
The company is digitalizing the whole credit process and offering options to smaller retailers to help them grow and become more competitive, thereby improving their survival chances and enabling them to sell better quality products. “If progress is motivated either by fear or greed, banks and large companies are slowly getting there, but the speed in more mature countries is significantly different than in Eastern Europe. From a regulatory perspective, Romania is a bit slow and this is not always in the interest of the consumer. So, we hope we will convince everyone to invest in this ecosystem, because at the end it will benefit consumers and the European Union economy as a whole and will address the competitiveness issue with other big markets on the planet,” said Malaies.
He also commented that there are start-ups in the Romanian market that are trying to get partnerships with big corporates from the beginning. And for the fintech business there has been progress, one example being the BCR accelerator, currently leading to products and POCs. He considers it important to partner with banks and understand the entire ecosystem. “Romania is a big enough market to start, you validate your product but also get some revenue from it. And there’s openness to trying new things. We are courageous enough, so overall the start-up ecosystem in Romania is receiving a great boost, and the fintechs can benefit from this entrepreneurial culture,” said Malaies.
“Fintechs, for sure, won’t be able to replace banks, mainly because people want to have a bank they can talk to, and fintechs are instead made to address specific segments,” concluded Malaies.
DEVELOPING AN IDEA
There are also legal issues to be addressed in Romania, and one of the main things lacking is the transposition of EU directives. “As a fintech company, we need to partner with other tech companies, sometimes even with competitors, for the good of the final user. It benefits everyone!” says Lucie Roulland, business developer for Eastern Europe, at Ariadnext.
“In France, there’s a lot of risk aversion, and it sometimes blocks innovation. So, we need to educate potential investors about the financial markets to encourage people to invest and to help the ecosystem to grow,” says Mark Kepeneghian, CEO at Kriptown, a company that helps SMEs and start-ups raise money and give investors in this sector liquidity. “When you are a fintech, you are developing an idea, you’re doing all the execution and going to the market, and the hardest thing for you is to find final clients, especially if you are a B to C fintech. For banks, on the contrary, finding clients is the easiest part, as they already have the clients. They only need to buy your product and to connect it to their clients and they know it’s going to be a success,” says Kepeneghian.
As far as innovation is concerned, in big corporations it comes from inside, after they put up the resources or create separate dedicated teams, while fintechs innovate from the beginning. “A lot of banks or big companies in general buy successful start-ups not only just for the idea, but also to get the team that developed it. I think Romanian banks in general are a bit ahead of the average European banks in terms of customer experience,” says Edward Cretescu, business consultant at Digidemat.
From the legal point of view, Europe needs more practical procedures that can apply to fintechs. “The game is changing both ways. We see a lot of start-ups pushing to be noticed in order to be invested in, and also large corporates establishing labs, R&D centers, to be able to be more competitive and integrate new technologies,” says Sonia Cissé, lawyer and counsel at Linklaters.
THE EXPECTATION ECONOMY
In a different discussion with Qualitance representatives, the view was expressed that Amazon, Google, Uber, Apple and Netflix have set the stage for a new economy – the so-called ‘expectation economy’. They have redesigned and redefined the concept of customer experience, raising the bar high for all businesses out there. In this new economic era, customers from all verticals are used to experiencing tailored services fast and with zero effort on their side.
“Once people are engaged in a superior customer experience or are offered a faster, easier way to achieve something, they rush in to apply their newly-raised expectation to every other brand. It doesn’t matter if they’re dealing with a bank or some other financial institution – customers expect the same level of empathy, care, and consideration delivered by the big players such as Amazon or Google. Hence, customers will judge the banking experience not only against fintechs or other banks, but against all the companies they do business with,” Qualitance chief of growth, Raluca Galos, told Business Review.
Since financial institutions operate in a highly regulated environment, customer experience is a major differentiator in an increasingly competitive landscape. The rise of fintechs is pushing traditional banks to switch from a reactive state to a proactive mode, accelerating their digital transformation to the benefit of both bank customers and employees.