In Strazdiņa’s view, there are currently no major fintech startups in Latvia that have announced themselves on the European and global level as loudly as, for example, Estonia’s Wise. But she believes that the situation will change in time and a Latvian company will achieve similar success.
Strazdiņa shares more about her work at Wise and the European Financial Technology Association in this interview with Labs of Latvia.
You are the co-president of the European FinTech Association. What exactly do you do in this position?
I am on the board, which represents the association in negotiations with EU institutions. The association was born out of the realisation that there are insurance and banking associations in Europe, but no financial technology association. Wise, N26, Raisin, as well as Latvian Mintos and some other fintech companies came together and founded this association.
Its purpose is to represent the interests of fintech companies at the EU level and to follow legislative issues affecting the sector. We have working groups where we discuss various legislative projects, and we represent the interests of the industry in various institutions.
It is interesting that the association represents a fairly wide range of companies – payment firms, neobanks, investment platforms, identity service providers, etc. We have extensive knowledge of how the industry works and how the proposed bills will affect it. That’s why we’re trying to change the laws so that they’re future-ready and don’t discriminate against fintech firms against banks and traditional financial institutions.
We are working so that when the European Commission develops a new proposal, it talks not only to traditional financial institutions, but also us. In recent years, the situation is changing and our influence in Brussels is increasing and we are in active talks with policymakers.
Can you highlight something that the association has already managed to achieve?
Currently, our greatest achievement is that the voice of fintech is being heard in the development of new bills and the revision of old ones. The association was founded just before the start of the pandemic and the first year was relatively slow. However, recently our influence is increasing – the European Commission is proactively coming to us, offering us to participate in various working groups. We are also in talks with the European Central Bank, which is developing the digital euro, and is interested in how it will affect the fintech industry.
How developed is the fintech industry in Europe? Do you also follow what is happening in Latvia in this field?
I do not know the situation in Latvia in detail, but I have noticed that a lot is happening in this sector. At the same time, nobody has a European-level fintech company in Latvia yet. It is hoped that soon one of the Latvian companies will grow into one.
In recent years, the fintech sector in Europe has developed a lot. In the beginning, companies were more inclined towards payments, but now there are more and more companies in the insurance and investment sector as well. The industry is expanding and becoming more diverse.
European companies are becoming more and more competitive. I think we’re just at the beginning of the journey for the fintech industry right now.
Already the Second Payments Directive created a new wave of financial technology companies, but now a new bill is being developed at the European Union level (Regulation on Financial Data Access), which will force various traditional financial institutions to share their data. The open data initiative is expected to play an even bigger role, which is still hard to fathom.
Did you know that the @EFAssociation is the first trade associations representing the voice of #EUFinTechs?— EFA - European Fintech Association (@EFAssociation) June 7, 2022
We are designed by and for Europe’s #FinTech Community!🤩
For more info about our Association 👇 https://t.co/lWnlBvUl2o #VoiceofEUFinTechs #DigitalFinance #EUPolicy pic.twitter.com/RS1r8aJrxG
What makes European fintech companies stand out on the global stage?
I deal with legislation and regulations on a daily basis, and I feel that Europe has been very progressive in these matters. That’s why there are quite a few large fintech companies in Europe.
In Europe, many laws are passed at the EU level. This means that a financial technology company in the payment industry can be established in one member state of the EU and have access to the entire EU market. The association advocates that the laws be harmonised as much as possible at the level of the EU, because fintech companies are essentially founded for the international market, not just one country. If laws were more harmonised at the European level, it would be easier for fintech companies to expand beyond borders and offer their services throughout the EU.
Of course, there is always the question of whether we have a big enough volume compared to the United States (US). For example, let’s look at Stripe, which was founded by Irish entrepreneurs, but due to the availability of funding, started a business in the US. And they recognised that it was much easier to expand in Europe than in the US, where each state has its own laws and licenses. Therefore, one of the main goals of the association is to work towards making the regulation as harmonised as possible.
What are the most important regulations affecting fintech companies right now that they need to start worrying about?
The industry is currently in an active period due to the revision of the Second Payment Services Directive, which will affect many fintech companies, especially in the payments area. Also, the open finance directive is in the process of development. If implemented correctly, it will open up many opportunities for fintech companies, such as sharing data with traditional fintech institutions.
It should be noted that the proposals for the Second Payment Services Directive were made in the summer of this year, but the European Parliament elections are next year. More movement on this directive is not likely to happen until late next year.
Yes, things are slow at the EU level, but when favourable rules are adopted, their impact is huge. It is for this reason that European fintech companies join the association – not everyone can keep track of everything that is happening in the legislative field. In addition, an association always has a louder voice than a single – even large – company.
You are not only the vice-president of the European FinTech Association, but also the head of EU policy and government relations of the well-known Estonian fintech Wise? What exactly does this position mean?
There are always very big problems with transparency in the financial world, especially in the field of international payments. Entering two stores, we clearly see that milk costs 1.20 euros in one, and 90 cents in another. A person can compare and choose where they want to shop. However, in the field of international payments, it is not possible to compare how much this service costs in different financial institutions. That’s why Wise works to make it clear to people how much and what they are paying for.
I represent the interests of Wise by cooperating with public institutions at the EU level, which is why I work in Brussels. Our team has two goals. One is to modernise the international payment system and work to make the laws suitable for the providers of modern payment services – to make the laws ensure that payments are fast and transparent.
The second goal is to ensure payment transparency – so that people see all the costs of the international payment service and there are no hidden surcharges. That is why we cooperate at various levels with both state institutions and international organisations.
What do you like best about this job?
Unlike many other companies I’ve worked with or consulted in the past, Wise is a mission-driven company. The company’s mission is to improve transparency and the payment system. This is important for every person, especially those who travel or work abroad and send money home. Since I represent the company in relations with public authorities, I have to believe in what I say and what I fight for. And I believe in the mission of Wise.
Wise is a very large company with a good reputation – what can Latvian startups learn from Estonians?
Coming from relatively hierarchical workplaces, I’m constantly amazed at how much autonomy everyone at Wise has. Each team focuses on a specific problem, and its employees are given a lot of freedom to solve it as they see fit. No one from above tells you to do this or that. It is a great opportunity for employees to influence how the company moves forward and how the product develops.
Wise is also a very international company, where more than 125 nationalities work. The largest office is in Tallinn, where more than 2,000 people work, each an expert in their field who wants to change the way international payments are made. The international work environment was one of the reasons why I decided to join this company. I have a great opportunity to learn from other colleagues.
One of my favorite topics is women in technology. Although there are more women in fintech startups than the startup industry as a whole, what are your thoughts on why there are so few women in the industry?
I think there are still a lot of stereotypes that come from what company founders and CEOs look like. I have been in the financial industry for eight years. In the beginning, sometimes I was the only or one of a few women in the room. All the rest were mostly middle-aged white men. Over the years it has changed and the situation is getting better – I am no longer the only woman in the room.
However, there is still room for growth, especially at the senior level. There are both men and enough women in the lower ranks, but there is less variety in the higher positions. Although there is an assumption in Latvia that women are not discriminated against and they have all the opportunities to do whatever they want, the situation in top-level positions is similar to elsewhere in Europe – such positions are mostly occupied by men.
How to change it? This is a very valuable question. There are a lot of negative opinions about quotas, but it looks like nothing will change without them. Of course, it is wrong to put a woman in a job just because she is a woman, but today there is no problem finding a qualified woman in any field – chemistry, energy, finance or any other.
What helped you to continue working in an industry where you don’t see people like you – women?
Internal support within the team is very important. I had very supportive colleagues who pushed me forward and inspired me, both male and female. I was helped a lot by colleagues and mentors, as well as girlfriends who are in similar situations.
Also, sometimes you just have to get over yourself, go and do it. Because a woman will not do it herself, no one else will do it for her. If you have the idea to start a company, it should be done. No one else will do it for you.
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