ARYZE interviewed CEO Anzhelika Osmanova from the startup Lendonomy, a fintech company that is developing a credit scoring and peer-to-peer microlending mobile application for young people. We wanted to find out from her how she sees the future of the fintech sector and why a healthy relationship with money is so important today.
In her own words, Anzhelika Osmanova is a full-stack marketing architect with a decent understanding of modern IT. She is not trained as a software developer but she understands IT architecture, appreciates blockchain, and can write a bit of not too complex code. We interviewed her regarding young people and their relationship with money.
What is the biggest issue the payment industry has today?
“There are multiple challenges that the industry has: starting from fraud and omnichannel payments and ending with technical integration and legal boundaries limiting innovation. The biggest issue, in my opinion, is the lack of structure. The industry is producing all sorts of fintech maps to help us navigate in the ever-changing landscape, but when it comes to the use of modern technology and finding creative solutions to emerging customer problems, there is no way even for big players to recognize the new groundbreaking tech and implement it quickly. Legacy systems and old code hinder the development of good old payment players. Another problem is the monopoly of credit card issuers, which, being the status quo, might feel comfortable for consumers, but which presents a large risk of overcharging on, for example, cross-border currency conversion fees that lie on top of the processing fees. Just a few U.S. companies are owning 90% of the B2C payments market today.”
Why is it important for young people to have a healthy relationship with money?
“It is absolutely essential for young people to start building healthy relationships with money early on because the habits that an individual is developing at a young age tend to be formative and sticky. We don’t have a structured approach to nurturing financial knowledge in our kids. At the same time, our society to a large extent relies on third parties assessing such intrinsically human properties as our levels of responsibility, honesty, and character based on strictly mathematical/financial variables such as credit scores and credit history. If we want our kids to have access to all the wonders of adult financial lives (e.g., getting a good loan for their first mortgage), then we must make sure that the financial decisions they make when they are young are contributing to that. That means that young people need to start building their relationship with money, preferably under the guidance of a person or a system that can pass that knowledge over. Financially educated young people rarely get into loops of debt, rarely overspend and have a better understanding of how credit works. Without financial knowledge, young people are vulnerable to unethical marketing practices of credit cards and high-interest microloans, and we all agree that it’s no good.
Do you see any issues with transferring money across borders today?
“Absolutely. Any person who has ever purchased anything from abroad will tell you that the amount they saw in a foreign webshop and the amount they ended up paying were two different amounts. Currency conversion rates and processing fees are hidden from consumers today. The infrastructure of cross-border payments is complex and even occasionally unreliable when we are dealing with countries that have their unique local payment infrastructure: try buying a book in a Russian or Chinese webshop with e.g., Norwegian crowns, and you will be surprised to see the ways of payment you’ve never seen before. Cross-border payments are also expensive for the consumer. If transferring money cross-borders is hard enough for e-commerce, it is even more complicated for peer to peer payments. If the problem didn’t exist we would never see the rise of such players as Transfwerwise and Revolut. Cross-border peer to peer payments are considered risky by default, and even though technically speaking, they should not be complicated to perform, the risk is generally considered high if we are talking, for example, about cross-border lending transactions.”
How could peer-to-peer transferring of the value function in a smarter way?
“As long as the party performing the peer-to-peer transfer does everything possible to secure the customers with a reliable IT architecture, smart contracts, transparency in communication and pricing, peer-to-peer can become what it is in a non-digital format: a natural process of people sharing money with each other, lending, borrowing, supporting and helping. Today, there is too much distrust and uncertainty associated with peer-to-peer transactions, but it doesn’t have to be this way. Today’s technology can be used to mitigate lack of trust, ensure transparency and make peer to peer transactions safe and efficient.”
Which technology will make the biggest difference in fintech in your opinion?
“Blockchain will be it, in my opinion. It has already made some waves, but the application of blockchain is yet to be explored in other contexts. The technology per se is amazing, and once we have a structured legal framework for it, we will see the emergence of new great products where the use of blockchain will not only be justified but will actually be an integral part of the value-creating process.”
How do you see the fintech sector evolving in the next 20 years?
“I see cross-national payments becoming a commodity, and with the world becoming more interconnected – the rise of technology companies as financial service providers. Banks will be gradually moving towards becoming platforms of data, while technology companies will be ensuring a decent user experience.”
Which advice you would like to share with aspiring entrepreneurs in the fin-tech business?
- It is a difficult space, where compliance will occasionally be hindering innovation, so be prepared to move slower than you would naturally like to.
- Take inspiration from other fintech startups.
- Build good relationships with people working at banks and financial institutions. They know a lot, and you can learn from them.
- Don’t invent something first and then think about how to sell it. Find a problem that you don’t see solutions for, and start from there.
Lendonomy is a fintech company that is developing a credit scoring and peer-to-peer microlending mobile application for young people. At Lendonomy, they want to help young people build healthy relationships with money. For more interesting insights stay tuned on our ARYZE blog.