Today’s interview from Fintech Valley is with Dr. Tamaz Georgadze, CEO at the Berlin-based Fintech “Raisin”. It is a consumer focused company and, according to their website, it is: “…the leading platform for investments throughout Europe”. You can read more about Raisin at: https://www.raisin.com
FintechValley: Could you please give a short description and history about Raisin for those companies and audiences that are not familiar with the company and its products?
Raisin is a FinTech50 company and Europe`s leading deposit marketplace. Europe has a common market and a common currency, but it still lacks a common financial market. Savers in certain countries obtain lower interest rates than in other countries. We allow savers anywhere in Europe to obtain higher interest on their deposits regardless of where they reside by providing them access to savings products from banks across the EU.
We have been live since the end of 2013 in Germany and on a Pan-European level since 2016. The reception of our service has been very encouraging: Over 50,000 customers have deposited more than EUR 1.7 billion in our 22 partner banks from 14 European countries. These numbers are rapidly growing as more people realise they do not have to settle for near-zero or negative returns on their term deposits. The national EU-mandated deposit guarantee schemes safeguarding deposits up to EUR 100,000 per customer per bank give customers the security and comfort of knowing their savings are safe.
FTV: What are the Unique Selling Points of Raisin, what value do you bring to your target audience?
We offer customers deposits with substantially higher interest rates than they could obtain in their home country – all of them 100% covered by the respective national deposit guarantee schemes. We provide a very straightforward and fully-online account opening process as well as a one-stop solution to managing multiple savings accounts. Our service is transparent and there are no hidden fees for our customers.
FTV: Where are the Raisin Headquarters? Is there a special reason for settling the company here? Do you have regional offices in other countries?
Raisin’s headquarters are in Germany which has the largest savings market in Europe. We chose Berlin as our operational base since it is an excellent start-up hub where a diverse and talented workforce can be readily recruited. Plus, I think there are very few locations in Europe which offer such a high quality of life in terms of affordable cost of living combined with such a richness of cultural and recreational activities. We currently have no regional offices, but our localised internet presence for France, Austria and -in due course- other markets, allows us to offer our services tailored to individual countries.
FTV: What has happened in the last years to the main Financial Corporations to finally adapt new technologies? Do you believe they are reacting quick enough?
I think the banking industry has internalised the fact that finance will be transformed by fintech just like retail was revolutionised by e-commerce. Our service exemplifies how new technology allows small- and medium-sized banks to compete on a level playing field with large financial institutions, biting into their market-share and forcing them to wake up. Banks have also realised that customers increasingly take sophisticated internet services for granted. Unless banks upgrade their services via technology they will lose customers. Some banks such as our partner banks have rapidly embraced the challenge of fintech. Other banks are encumbered by legacy systems and unfamiliarity with the challenges of fintech. However, the industry is investing enormous sums to open dedicated accelerators as well as to provide customers with the digital experience they are demanding. This will accelerate the rate of digital innovation in the financial sector.
FTV: In your option, how relevant are the following 5 factors in the success of a Fintech Company. Can you please grade them with a percentage of relevance. (20% for each one of them, for example, would grade all of them as equally important.) Please feel free to add an extra factor that you believe could be important:
Consumer adoption: 30%
Marketing budget: 5%
Human talent and investors: 30%
Financial Regulators: 15%
In my opinion these factors are closely intertwined. A novel technology can generate a loud media buzz that does more for brand recognition than a big marketing budget. However, the public needs to be willing and ready to adopt it for the business model to succeed. Human talent and investors are crucial success factors as well. I would be inclined to assign more weight to them, but financial regulators are also very important, and it is undeniable that new regulation can make or break business models.
6. FTV: Has it become easier for you to reach Finance corporations and make them hear what you have to say in terms of finance innovation?
I think it has. As previously mentioned more and more banks now have dedicated accelerators and fintech VC funds. Their presence and the access they have to banks’ top management means that the speed at which new technologies and fintech services are tested and incorporated has markedly increased. At Raisin we have also seen that finding the first banking partner is by far the most difficult step. As soon as a handful of banks try and test a new fintech service successfully, it gets a lot easier to convince the next wave of partners to join.
7. FTV: What is the most important market for Raisin? What are the next plans?
Germany is our most important market, given that Germany with its EUR 2 trillion in savings is by far the largest savings market in the EU. It is also our home market and where we first launched our product. Our first steps towards internationalisation have been taken with this year’s launch of our Austrian and French localized platforms as well as with our Europe-wide English language platform www.raisin.com. We plan to continue along this path and open further localised platforms in the coming weeks and months. In addition to further scaling our business both in our home market and in other European markets we are also looking at expanding our product range towards additional simple and transparent investment opportunities for European savers.
FTV: In your point of view, when is regulation good for Fintech and when is it bad for Fintech? Is regulation helping or deterring financial innovation?
Let me start by saying that a certain degree of regulation is essential in the financial sector. Without a set of EU-wide regulations such as the harmonised deposit guarantee schemes, SEPA payments infrastructure, AML harmonization our business model would not be possible. Another example of regulation that has been crucial for our business has been the passporting notification for cross-border business, which allows banks to offer services throughout Europe without the need to open local branches. These are instances of regulation that are fostering a single European financial market, which is what we need for European fintechs to successfully compete with US-based startups.
On the other hand, there are still numerous examples of fragmentation in the European market. For example, when we look at consumer protection where every local regulator has implemented slightly different standards, this adds to the costs of entering new markets by increasing complexity significantly without necessarily adding significant value. For the lack of more appropriate regulation partially antiquated licensing requirements for physical brokers are currently applied on digital offerings as well. Those requirements are not harmonised or passportable in Europe and have mostly in mind individuals making decisions not machines offering standardized digital services.
FTV: Which is the Fintech capital in Europe from your point of view? Why? Is there a recipe or formula for being a successful Fintech capital?
London is currently the European fintech capital. It is a world-class financial centre with an ecosystem of the world’s most renowned banks, numerous VCs with an according availability of capital, and a regulator that has collaborated and focused on fintech very early on. This type of ecosystem is definitely a crucial factor for a successful fintech hub.
Nevertheless, Berlin is catching up. Depending on the exact Brexit scenario a move of fintech companies and capital from London towards continental Europe and particularly towards Berlin, is becoming more likely as access to the EU market is definitely a crucial factor for most fintech companies. Lastly, Berlin already offers a relatively affordable and highly attractive location for the talent that many fintech startups require.
FTV: Berlin has innovated tremendously as a start-up market, what can other worldwide capital cities learn from it?
Berlin’s recipe is to make a large city affordable, liberal and livable for young talent. Talent creates entrepreneurial opportunities, draws in further talent, attracts investments and creates an ecosystem. Local authorities certainly help and encourage this phenomenon, for example by helping companies in relocation of IT specialists. Berlin has also invested in a cultural and academic scene which welcomes young people. This has drawn tens of thousands of talented people from all over the world to Berlin. Cities need to offer this kind of open and tolerant environment to attract creative minds. Berlin proves this, just like San Francisco, Amsterdam or Tel-Aviv. At the same time, the city fails at times to provide basic administrative services or build a modern airport, which other cities manage to do with less effort.
FTV: Please feel free to add other points if you like
Today’s very low interest rate environment is detrimental for the returns of savers, particularly if they are risk averse and do not wish to invest more in capital markets. At Raisin we work on making sure that savers can access the highest available interest rates in order to make the most out of their savings.
We appreciate the time Dr. Tamaz Georgadze dedicated to this interview at Fintech Valley. For more information about Raisin please visit: https://www.raisin.com