The Connector Podcast - - Unchain FinTech Festival - European Digital Finance Association (EDFA) ...

Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks, and regulators worldwide. Join CEO and founder Cohen van der Huydonk as you learn more about the latest available trends and solutions in the markets. Welcome to our next interview here at Unchain, contributed by Edva. The European Association of Fintechs, and today I have with me Robert all the way from Belgium. And I can say that because I'm also from Belgium. So Robert, can you just tell us who you are, where you're from, and where you work for?

Hello, Koen. I'm Robert. I'm from Belgium, Brussels more exactly, and I work as the founder and CEO of Paynovate. Paydovet is a Belgian EMI, electronic money institution, and we provide many payment services to our customers.

And I will gonna dive into the company more later in this conversation because we're gonna spend quite some time here today. So I'm very curious to learn more about you, who is behind Robert. So could you give us a bit of— what would you like to share if that was my question?

I'm a father of 2 children, a boy and a girl. My daughter has actually just turned 18 today.

Today? Congratulations!

And otherwise, well, I've studied at Brussels Free University. I studied business management and also law. Besides that, my passion has always been computer programming, and that's why altogether computer programming, business, finance, together with legal matters— well, fintech was kind of a natural, a natural playing field for me.

So it's kind of interesting that You combine those ingredients, you could almost say that that makes you like a generalist, and a generalist is a general manager.

Kind of, yes, especially in the beginning, because the company I run today grew quite a lot. But the point is that I started it from scratch, very first person working for it. So, in the beginning, it was very helpful to be able to manage more or less all the activities of the companies, of the company. And well, that helped in the beginning. Afterwards, it's less.

And today, if you would reflect on yourself, do you see yourself more as a manager, a coder, or a legal person?

I would be happy not to be a coder anymore, but it happens that, well, I'm still a coder sometimes, not that often. Um, legal matters actually is much more interesting because I still think that my ability to really understand and manage the legal aspects of our activities is, is still very important today. Uh, to, well, to think about what is really possible or not, why, what is to be paid attention to. Yes, that, that's very important. Otherwise, I'm a manager, and manager in one company is very similar to any other company because for more things it's generic.

You're the very typical example of a serial entrepreneur, and you managed several companies at once. So please give us the magic sauce.

Oh, the magic sauce. Well, shouldn't sleep too much, work like 18 hours a day, um, plan to go on holidays to enjoy a real vacation at least once, and that just doesn't happen.

What do you mean, once in your career or once a month?

Well, the idea was at least once a year, but now it starts to happen, but it's been a lot of work for many years.

And how do you then balance the time between the different companies that you own or that you're part of?

It's always the problem because if you try to define a way to to prioritize things. Usually you can try to, to differentiate the topics between important and urgent, and you should of course focus— that's what people do— on things that are both important and urgent. And then you have to, to choose between things that are urgent but not that important and things that are very important but not that urgent. And the problem is that people naturally tend to do things that are urgent because it's urgent.

It's the nature of the human—

Yes, but then the problem is that the things that are very important but not that urgent, they just keep being postponed week after week, month after month, all over again. And, and that's an issue. So I try to really make sure that there is at least part of my time to be devoted to important things even if they are not that urgent.

Well, I'm a fan of the Eisenhower quadrants myself too. Thank you, Stephen Covey, for bringing it to us. So, I concur with you, and there has been a lot of investigations done that the most successful companies are those that spend most time in the important quadrant.

Yeah, but it's difficult.

It's very difficult. So, how do you then define What is urgent and what is important? Do you have a methodology for yourself?

You try to think about what could be the outcome. So what, what is the consequence of what you're working on? Is this just because it's okay, it's an issue, but you have to tackle it, but the potential positive or negative outcome is limited? So that's just Just urgent, not that important. But it's always also just a matter of appreciation, and it's not—

So it's the famous stomach feel, almost, or not really?

Well, not really, but it's all— it's also something that you just try to evaluate because you cannot be certain yet. So you have to make some— well, there is some gut feeling or best guess at least, like, okay, what do you What would be the outcome of this? And then you have to decide if you work on it or not.

And Robert, where do you pick up this skill along your career? The skill of making these decisions, conscious decision to do something or to do not something?

It's just something that I think that you build over the years. Part of experience, part of just pure luck. And well, I have no secret recipe to do that.

Damn it, we were all hoping for the, the secret recipe.

Well, the secret recipe is just to try to think about it, just not do the urgent things just because they're urgent without thinking about it.

That's maybe the secret Okay, so there you go, audience. There's some hints to keep with you. So, let's explore a little bit further on maybe finding out some twists that we can actually do or that we can learn from your experience. Because building up so many companies, I guess you're always at the unique situation where you also create the business culture of that company. Is that also a conscious thing that you think about when building a company, that you think about the culture of the company?

From my part, no. At least not at the beginning. It was just things that you do and then you just hire people or coach people or manage people more or less according to your own values. And for me, it wasn't a conscious topic. I mean, I was just doing it on a day-by-day basis.

Okay.

But it happened recently that when you have more managers, at some point you start maybe to realize that some things are not managed the way you would like them to be managed. And then it was something that we, well, we dedicated bit of time to, to think about, okay, what are the real values that we want to see applied within the company? And that was a very interesting exercise.

And is it something that you then apply to all the companies, or—

Yes, yes, because while usually your values, they do not depend very much on the company itself, it's usually something that is personal values.

Um, I guess that, that leads me into those— you already mentioned that, like, a couple of lessons, I would say, that you use to build up the team apps, to do it from a natural sort of thing and using your own values, and then sort of recorrect when necessary. How would you describe then an ideal composition of a startup team?

It depends a lot on your ambitions. Let me give you an example. In one company, we wanted to be very international, and so from the start we said, okay, we will hire only people who speak English. They could speak other languages as well, but they must speak English, and preferably have enough people who do not speak French or Dutch, so that we must have all the internal meetings and all the written recordings and, and the processes in one language, which, which is English, so that you can then really expand abroad. Because otherwise— and you see that in several European small companies, they start with local people, they speak their local language, and then when they want to expand abroad, they say, oh, we will hire someone speaking that local language in the country we want, we want to expand to. But then the problem is that this person cannot benefit easily from the internal knowledge and support because maybe that internal people do not communicate that well. In English or in the new country.

Yeah, like the misunderstanding between languages.

Yes. And so, for example, that was one thing that was consciously done from the start, is, okay, we want to be able to grow afterwards.

So an international company by design.

Yes.

Does that also apply on technology stack?

It does. At some points we had to make choices for example, between programming languages and pick up a language not because of its own specific benefits, but for example, because of the availability of programmers on the market if we want to hire new programmers. So yes, that's something that also counts. For me, it was less important.

Does if you talk about these ingredients, does the legal part and regulations also come in when you starting a company in terms of European legislation? How do you look at it?

Legislation for recruitment or building the company?

Building a company when when it's international at first, do you also make that assessment that? internationally it fits within the regulations, or how do you do that?

Well, in the beginning you try to do your best. I mean, you try to do your best, you do mistakes, and you hope that those mistakes would just not kill you. And then when you realize that something was not done as it should, then you try to work on it. Regulations, no, that wasn't taken into account as much as maybe we should have done it. But I mean, we started in Belgium, and so we made sure about the regulations in Belgium, and then we looked for the new countries when we decided to expand.

Makes sense. Because you're a serial entrepreneur, and that's probably one of the last questions that I'll ask on the more general side, you've been building several things. So how does— how is your brain wired in terms of ideation? Because I almost must imagine that you're a type of person that sees opportunities in a lot of things.

Yes, and I think that my people would tell you even too much.

So, a yellow type of person?

The problem is not yellow and red, I think, because we also must put enough energy and push to make things happen. The problem in my personal case is more try to focus on something instead of having enough ideas. Yes, the problem for me is the focus and not to try to do everything at once.

And is this something that you got better in over time?

I'm now better at recruiting people who would prevent me from doing that and would Protect the company against them.

Is that another advice, Robert?

Yes, there is. Well, 2 things, I think, more generic things is that first, I really think, and that's something of an issue that I see in some companies, is that you must dream big enough. Because if there are things that you cannot even dream of, then it's for sure that you will never achieve that. So that's very important because sometimes I see companies or people who are working in things and they just limit themselves without even knowing it, and, and that's an issue. And then the other thing is that sometimes you just decide for a goal and something you really want to achieve, and, and sometimes doesn't happen and you're so frustrated, and then you realize that, oh, but actually it's much better that it didn't happen. Or things that does happen and then you realize that actually it's not exactly what you wanted to achieve. So I think that goals are usually overestimated.

Overrated.

Overrated by far. And of course you must set goals because Because it's important for you to decide where you want to go, even if maybe in the end it's not the best choice. And so what's very much, very important from my point of view is to enjoy the journey, because if you only work for that goal that you want to achieve, it means that you do not really enjoy what you do on a daily basis.

Yeah, what's the meaning of life, I guess. Yeah, well, I would say on, on that bombshell, because I think that's a very important lesson for all of us, is to continue to enjoy life. I also wanted not only to focus on you as a person but also to deep dive a little bit about Painovate, the company. So could you tell us a bit more about what Painovate does?

Yes, so Paynovate is an EMI, an electronic money institution based in Brussels, Belgium. Paynovate is regulated by the National Bank of Belgium. We also have a license in the UK by the FCA. Paynovate provides, I would say, all kinds of electronic payments to its customers. So, all kinds, meaning IBAN accounts, wire transfers, currency conversion, card issuing, card acquiring, open banking services, you name it. Besides cash, I think that we provide all the payment means that can be provided.

I guess that was the easy part to explain because now you left it very wide. So, I'm interested also, what are the unique features? What brings you to your unique customers?

The unique feature for us, or the business model we have, is quite easy to, to explain. Uh, there must be an added value in what you do. For us, the added value is that we provide financial services to more or less everyone every legal activity, and which means also to people who are usually struggling a little bit to get good financial services from traditional players. And that's one diff— one difference for us. The other difference is that, as I said, we can provide them with all the services they need So our unique positioning is kind of a one-stop shop for financial services for people who struggle a little bit to get good financial services from traditional players. That's our business model.

Yeah, I guess you then talk about the unbanked.

How—

because you can go from people on the lower end of the economy, or you can also think about other people that are unbanked. So where does that lie? Which type of unbanked people/companies are you serving?

We're serving people from many different fields and sectors. Of course, we don't say yes to everyone. There must be a business case for us, and we try to focus on some specific sectors. Because of course when you work more in a specific sector, you know it better, so it's less risky. So that's important.

So you became a boutique?

Yes.

Yeah. And could you give an example of, uh, an unbanked company person that you served, or what, what is it that you're focusing on?

Oh, I can give you 2 examples. One example is something that people usually think about when they think difficult sectors for traditional players like gambling. So we welcomed recently in Belgium many customers from the gambling and gaming industries. That's something a bit specific. Of course, we want people to be regulated and to have very legal and good activity, but even those companies, they struggle to be To be banked. Banked by traditional banks. Another example is maybe less obvious, our nonprofit organization, because, well, during the last couple of years they've been rejected by traditional banks, not because of their activity, but because of their usual— the composition of the directors board. Because usually there are a lot of people with links to politics and the public, politically exposed persons. And so for the banks, it's, it's more work to assess them and to, to make all the checks and verifications. And so banks decide that it's too much work, not worth it.

So we have special offers for this kind of Robert, you mentioned earlier that regulations is also the core of your company. It's very essential. I mean, you're legislated, you're regulated better. You're a bonus pater familias, so you're responsible for your company. How do you actually marry the fact that a lot of banks are struggling with the element that compliance becomes a very expensive part of the operations, and you are rather niche, boutique, yet you're serving those that have extra needs on the compliance side?

Well, the difference is that banks, they tend to serve everyone, to serve the whole economy, so they are not specialized. The difference is that for a bank, for the compliance department of a bank, If they have— okay, let's say a company from the gambling industry, they don't have dedicated people with the experience and knowledge of that specific business sector. And so for them, it would be one customer among many others. Is that profitable for them to assess this particular customer? The answer is no.

No.

No, the difference is that for us, of course, anyone could apply to have a bank account with us, but we do, we do focus on some specific sectors. And so we have people dedicated to those business sectors, which makes it profitable for us to serve those specific customers. That's the difference.

Understood. So, it comes back to focus. You also mentioned that you're regulated by the National Bank of Belgium, so that gives you a European passport, and you're also by UK under the FCA. Do you see any difference or do you feel differences between both jurisdictions?

Well, the UK is a little bit different. Different now because of Brexit, because previously it was just the exact same regulation, at least the exact same European regulation. But so far they still continue using the same rules that came from PSD2 or AMLD 4, 5, 6. So, so today there isn't much difference. Then there could be some differences in How it's being applied on a country-by-country basis. And for example, we see that France do not— it's an interpretation question— they do not interpret those regulations in the exact same way as Belgium.

So you're mentioning more the gold plating that is happening within the member states in Europe? But I guess later on we'll talk about that a little bit more, about what is happening in the e-money industry, because I think there's a lot of movement in there as well. Maybe jumping back into technology, so we went from regulations back in technology, regtech. What is the important role for you, or from technology, where do you situate that for your business?

Well, as we are providing payment solutions by definition today and we do not process cash, so we only process electronic payments, so obviously technology is key in our business because everything's processed by software and servers and computers. So, so this is a key element of what we do.

And would you say that your IT stack is a differentiating factor towards other players in the market?

Today it is, or at least we're working for it to become a key asset for business. We're not totally up to the level yet, but it's something that will make more of a difference in the future than what it was in the past, I think.

So what you're saying is that innovation is still— is also a very important part in your company and also in the future outlook of the company?

It is, but innovation is not always done on the technical part. It could be done on the product definition, it could be done on How we build our processes for KYC compliance, also business methods. How do we identify and get in touch with potential customers? So, it's not always IT.

So, it's more a holistic approach on continuous improvement, if you want.

Definitely. And then you try to identify what are the topics that would make the biggest difference.

Earlier you mentioned that you could cater for a lot of different types of clients within the boutique. What would you see is then the difference between, for example, retail, e-commerce, other types of services, or how does that look like? Maybe I'll ask my question different. Those unbanked, what type of services are you providing them?

It depends on the sector. For some customers, it's only IBAN accounts with wire transfers, sometimes with direct debits. For other customers, it's only card issuing. We do have quite Decent number of fintechs as well who just work with us to issue cards. Other customers are using acquiring services. In Belgium, most— many customers are using our payment terminals because we also distribute payment terminals.

So, would you then rather say that the offering is product-oriented and products fit certain users? Or do you also see that users have certain processes and therefore products fit in a process?

Well, it's always a question about whether you develop products and then you try to sell them, or you sell and then you develop what you just sold.

Yeah, maybe that was my question a little bit, maybe not asked in the wrong— in the good way, but underlying.

I, I would say that in the beginning, uh, it depends what is the source of the added value that you can provide to your customers. Because as a small company, a small mid-sized company, you do not have huge marketing budgets to make huge advertisement and so on. So you need to provide something that is really appealing to your customers. So that, okay, you develop service or product and then you are able to sell it quite easily. And in the beginning, of course, people are not choosing you because of your strength and size and processes and organization and stuff.

Because you're nifty.

Yes, and because you're flexible and that you can react and you can adapt. And you— so in the beginning the best service you can give to your customers is flexibility. And that means that you find the customer first and then you adapt to their needs. And then when the activity grows, the problem is that the, the reason why people would come to you, it tends to, to evolve from very reactive to more organized and solid. And it's a bit complex as well, also because you also need to make changes in the teams and the organization to try to, to go with that evolution, to try to be more product-focused than customer-focused. I would say it's not that easy because it's, it's a big change also in the culture of the company. Which means that no, we can say no to a customer because it doesn't fit in what we want to sell. That's something that you cannot do in the beginning because otherwise you just don't have customers.

Makes sense, makes sense. Robert, we almost at the end of our second part of this interview about the company itself, so we're moving slightly but surely into the future. So how does the future for your company look like? Let's say 5 years ahead, where do we stand?

Well, today we focus, as I said, on— we continue to improve our processes, IT processes, but also organization internal processes and so on, to be more reliable, efficient, and on in what we do today. So that will continue, uh, and we think that our business model is valid in Europe, but it's also valid abroad. So now we're also applying for licenses in the Middle East so that we can expand there and provide more or less the same offering in new regions. That probably will be the main focus now, and sometimes We can have a good idea maybe and have maybe one innovative product, but it will be something a lot less frequent in the future than it was in the past.

And if so, you probably will put it in a different company.

Maybe.

Maybe. Well, Robert, you're also known in the market as a person with a very vivid view of the future of payments in Europe and also globally. So if that would be my open question to you, go.

Uh, well, of course I could speak about one thing which is a key focus for us. It's the problem with de-risking. So it's a global tendency that we can see everywhere in the world, which is this increased burden of regulation, anti-money laundering, very, very heavy regulatory burden for traditional financial players including banks. And it's very natural for them to tend to focus on profitable customers and not try to serve everyone. Because when you have specific needs, specialization is an asset, and big players, they cannot specialize on, on everything. So, so that's a natural tendency. I would say that will continue, and it's there to last for a long time. Then on the technology point of view, we see that speed increases over and over again. And now a big tendency is instant payments, which is something that brings in very important changes in risk management as well, because of course if you have to execute an instant payment, all your regulatory checks and security risk and so on must be done in Real time, within seconds, and that's an issue.

So, de-risking continues to happen, instant payments. Anything else that you see?

These for me are the 2 biggest, 2 main focus points.

Do you see any regulations that is sort of helping the future in those domains?

Well, for us, the new regulations regarding money laundering, it just helps because as we focus on people who are rejected by the traditional players, the more regulations are coming in, the more potential customers we have.

The more you present yourself as the boutique?

Yes, even if As I said, for us, we are subject to the exact same regulations, so we do not have a magic wand. We have to comply with the exact same requirements. So, for us, the key is specialization.

But I understand that your focus on the process is different than the one that is a one-to-one basis versus a one-to-many relationship.

Yes, and so specialization is important, and of course also IT developments, the ability to control what you do in-house, or at least with a reasonable degree of control when you outsource or externalize development, to make sure that you can fine-tune your processes, including IT processes, to the specific customers that we intend to serve.

Do you believe that today on a technology point of view we're already there to this sort of real-time, near-time future?

Well, instant payments in Europe, at least for wire transfer, is something that's now becoming very common. Also, it's a little bit different, but the value proposition is similar, is with contactless payments at points of sales. It was very much— it expanded a lot during the COVID crisis. But for me, it's a little bit in the same philosophy about easiness, instant— yes, very convenient. So, convenience, real-time, these are key drivers.

Well, I guess while you mentioned COVID and corona times, for many countries this was a strong push to move from bar money, real money, into digital money. So, what's your take on CBDC, central bank digital currencies? Is this— what's the importance in the future?

Well, during the big trade show Money 20/20, there was—

A few weeks ago?

Yes, a few weeks ago. There was a question like, does central bank digital currency solve something? For the moment, I do not really see what added value it could bring, because for me, that's always the key driver. I mean, We have a very mature payment infrastructure in Europe, for example. I mean, it's quite convenient to pay in Europe.

Absolutely.

If you have a bank card, you can pay easily. It doesn't take too much time. So for a new payment solution to, to be used, because that's the key, I mean, if it's not used, there is no point, and for people to change their habits or to embrace a new technology, they must have a good reason to do so.

So for you, a lot of, a lot of the innovation is triggered about the user experience and the pickup by end users?

Yes. Do you want to force people to put energy in changing their habits and doing something new, maybe risky, if they do not see any benefit to it? No, I agree.

So for you then, CBDC in Europe, I think that's a very important thing to put into brackets. It's sort of an additional rail, and the question will be, will that rail then be used very often?

That's the question. If at some point we can find a use case where it makes a big difference, then of course it will be used.

Which in some countries, emerging countries, there is a bigger use case, and therefore I guess it makes more sense. But for me, it raises again a new issue, which is interoperability. And even today, if you look at the landscape, yes, we can do SEPA payments in Europe. How do you see that happening on a global scale? Because payment schemes and rails are different between countries and nations and continents. Do you see something happening there as well?

Well, we've seen many different initiatives to try to help with those international transfers. This is very much for us a B2B need because usually consumers, they do not need that much to make international payments, and if they have to do so, they would do it using a credit card or something, and that works quite fine.

Yeah.

And for businesses, the need is much more important. And you're right in saying that at least transfers between regions, it's sometimes very problematic. For the moment, we see initiatives using stablecoins, using different rails than the traditional wire transfers. There are a lot of initiatives those days around those topics. I did not see a very big trend yet, like an obvious winner, but yes.

But I agree with you, even today at the Unchained Festival, there is another panel dedicated to cross-border payments. So this seems to be the new kid on the block, where it was already there for obviously many, many years. I'm also thinking about technologies, and funny enough, you have not used the magic word AI. Is that something that you also look at or tend to start using within your company?

It's definitely something that we start using. AI is definitely very, very helpful in improving At least existing processes. It can help in support, it can help in many different things that are a bit tedious or already the human added value is not that high. Um, for the rest, we'll see how it goes. It's very, very trendy.

Maybe a more general question then. In all the companies that you manage, do you open up a generative AI tool for the employees or not?

Not yet. And it's something we're, we're definitely looking at it. At the same time, let me give you an example of an unexpected risk that was debated during the last event at FinTech Belgium about AI, generative AI tools, because for example there was a tool developed by one company to manage contracts and to help employees manage contracts. But then they did not realize that by definition the AI tool had access to all the contracts, and so they realized that one of the external suppliers Got also access to all their contracts. So I mean, it's very interesting. We shouldn't— well, we should probably pay enough attention as well about the potential risks that could be brought by AI and not just dig into it because that's the way to go.

But that's somehow the case with all historical There's always a good and a bad side. So I think that indeed is very important for industry to sort of channel it for the right purpose and to channel it also for the right reasons.

I agree. It's a risk-benefit management process. But when you use AI, you must pay attention to the data that you feed to the AI.

Because GDPR on steroids.

Awesome.

And you earlier mentioned that one of your big hairy goals for your company is to move out of Europe, so globalization. How much do you see competition already today from a global scale?

Do you mean the competition that we have in Europe?

How do you experience competition? And is that something— it's a fierce competition outside? Is it— how does that look like?

As we can see, we are specialized in specific business sectors, and of course it depends on the sector. In some sectors we see more competition, in some other sectors less. It depends also if the needs of our customers in some sectors are related to only one activity, like IBAN accounts, or on many of our activities, which is more difficult to do for, for us, but also then for our competitors. So it's very, very much depends on a case-by-case basis. Understood.

We're almost at the end of this very enjoyable conversation, and there's another element which I didn't ask you anything about, and also very hot, literally hot as temperature here in Romania at the moment. But how do you take in sustainability and ESG in your business models, and how do you see that sort of impacting what you do?

It's something, of course, we take into account very seriously. For us, okay, as we are not an industrial company, our biggest pollution, for example, is mostly the energy we use. And so we try to use green energy for data centers and things like that, but the impact is probably not very quite big. So we tend to focus more on the S and G aspects of ESG. So for S, we try to be diversified in our teams, to tend to— it's not— we're not there yet, at least not in Pennovate, with men and women balance and gender— well, gender origins, whatever, wider sense of equality, very diversified. That's also the goal because we think that it helps us as well to expand, especially to expand abroad. On the G part, we did a very, very big effort to improve our governance. We built a very, very good, I think, directors board. We have 4 independent directors out of 6 members. So the majority of our directors are independent directors. The management is not part of the directors board. So even if it's my company, I really do not manage it myself anymore. It's a collective management through the directors board, and that's very important.

Interesting. So you see, even if we have a long conversation, there's still open ends. For others to follow you in your journey. Thank you very much for participating to this interview. Thank you also to the audience, and we'll get more interviews coming live from Unchained. Robert, thank you very much.

Thank you very much.

Thanks for listening to another episode of the Connector Podcast. To connect and keep up to date with all the latest, head over to www.koenvanderhoydonk.com. Www.jointheconnector.com or hit subscribe via your podcast streaming platform.