How did the idea of Young Leaders Club come to life?

The idea of Young Leaders Club (YLC) came out of necessity. We realized that something was missing in the Romanian Universities: in every university where students should have been taught financial and entrepreneurial education, this specific side – related to experts from the industry, experienced people who can take part in the academic act, who are involved – was missing. So we asked ourselves how we could bring something extra in all of this, some added value. We started the club in 2007 (back then it had another name), when we also launched YLC Finance, and a rebranding process was done in 2012.

In 2010 we started our entrepreneurial program, which, for the first two years, has been an entrepreneurial and innovation program. In 2012 we decided to focus exclusively on entrepreneurship, more specifically on technology entrepreneurship. At Young Leaders Club we are all volunteers, currently 15 people; some of us have other jobs, some are entrepreneurs, some people come and go, depending on their personal objectives and job-related requirements. I am happy to say that Young Leaders Club has established a partnership with F10, a Zurich-based accelerator, which is the biggest FinTech accelerator in continental Europe.

Which was the market feedback following the launch of YLC?

Contrary to our expectations, the start of our journey was pretty easy. Why? Because we found support where we least expected: in the Romanian communities from abroad (diaspora), Romanians who left the country some time ago and are now successful people in New York, London and other big financial centers. They said that our idea was great, and asked us how they could help. These people have participated, year after year, to our events, being involved in our programs. They’ve also activated their networks from Romania: former colleagues, friends, and business partners. Then the network became larger and larger, like a cascade effect. Since then, our mission has been much easier.

Tell us a bit about the recent YLC FinTech Hackathon (25-27 October)

This was the second edition (the first one was in 2018), but from 2020 we want to organize it twice a year (Spring and Autumn), to correspond with the two university semesters. Our main audience is made up of students from tech universities, and the ideal timeframe to organize such events would be the end of October and the end of March – beginning of April.

The YLC FinTech Hackathon stands at the crossroad of our two business lines: financial and entrepreneurial education. Over the past couple of years, FinTech has become a hot subject, much talked about, and it continues to remain so. In 2018, investments in FinTech startups exceeded 35 billion Euros in Europe alone, twice the values from 2017. At the moment, FinTech investments in Europe translate into 70% in UK, and the rest in Germany, France and Sweden. Apart from the Nordic countries, Great Britain and Germany, this trend hasn’t reached Eastern Europe yet. We believe there’s sufficient room to grow here. When some trends such as Artificial Intelligence, Machine Learning and blockchain will have perfect applicability in several industries, then FinTech will surely ‘explode’ in Eastern Europe, growing exponentially. And we want to prepare the system for that, to have people who know what is all about. Now, in Romania, there are a few relevant companies when it comes to FinTech and blockchain and Moneymailme / Modex are amongst them. That’s what we tried to do with this YLC FinTech Hackathon: to bring together important companies from Romania’s FinTech scene and banks or big consultancy companies.

How did the hackathon unfold?

It lasted for three days. Of the 162 entries we’ve received, 159 were valid. We’ve chosen the best 25 participants based on their ability to write code (at least 3 years experience with this). Many of them contributed to projects related to FinTech. We also looked at what programming languages they knew – we focused on those who knew how to code in Python, Java – and we also wanteed to have a good balance between front and back-end. Those 25 were split into 5 teams and each team had to solve a specific challenge (theme) that was given to them, not at their choice.

The main objective of this hackathon was to develop a prototype. At the end of these 3 days there was a Demo Day, on October 27th, when the projects were presented to the judges. This step had two parts: the pitch section – which showed how relevant a specific theme was in today’s global context – and the second part, where members of the jury were given a product demo by each team. Points were given – 80% for the prototype and 20% for the quality of the presentation – and a winner has emerged.

The winning project: an intelligent debit card for parents and children. This card would be used by parents to deposit money for their kids every morning without handing them cash. No withdrawals can be made from this card, so children pay only by card. In the meantime, parents can control exactly, in real time, how children spend their money. Moreover, parents can set some tasks for their kids – take out the trash, clean their room – and once these tasks (challenges) have been done, the children automatically receive money on the card. One of the reasons we’ve chosen this project as the winning one: its time to market was the shortest (a few months from prototype to launching the product on the market) of all the projects presented. It’s also worth mentioning that this winning project will be showcased at How to Web (30-31 October, Bucharest), where the people behind the project will also have one-on-one meetings with potential investors, mentors as they seek to gain finance, over the next three months, to continue with developing the product.

Arthur Mattli, Switzerland’s Ambassador to Romania and a person highly interested in blockchain, was also part of the Jury, together with Kai Hennig, Plenipotentiary Minister of Germany in Bucharest. Switzerland wants to become the Crypto Valley of Europe. To achieve that, they’ve changed the legislation and they are actively encouraging blockchain startups to come to Zug area, close to Zurich, where they benefit from facilities, a well-developed infrastructure, etc. The Swiss Ambassador is willing to facilitate better connections between Romanian blockchain startups and companies from Switzerland, a message echoed also by the German Minister when it comes to developing ties between startups from Romania and companies in Germany.

In your opinion, which are the main challenges for the FinTech market?

I believe that one of the main challenges has already been solved. Initially, FinTech started out as a rivalry between tech companies and banks. Many thought that banks will disappear from the industry and the fintechs will take their place, which – of course – didn’t happen. However, what has happened: the banks and fintechs started to collaborate, and I’m not speaking here about business to business (B2B), but also about business to consumer (B2C). Thus, fintech discovered that banks have some characteristics which also help them: a wide distribution network, the trust of their clients – which is very important, and they can scale easier together with banks than against them. On the other hand, banks were forced to ‘open their doors’ more than they’ve wanted. And that’s how terms such as “blockchain” or “artificial intelligence” came to being used daily. Nowadays, almost every major bank and the Big Four companies have a special department (at least 5-10 people) dedicated to blockchain. These dedicated teams also work with startups, so now it’s all about collaboration.

I believe that the main challenge which remains is related to the adoption speed. Banks are mammoth organizations and these big corporations have a slower reaction speed than startups. The main issue here is that both banks and startups need to better understand the needs of the other side. On the one hand, we – as fintech entrepreneurs – have to understand that it may take up to two years or more to accomplish something together with a bank. It’s almost impossible to shorten this timeframe given the processes which take place inside a bank, it’s how they work. They are regulated companies, they simply can’t burn stages to react quicker. On the other hand, banks need to understand that the attention span of a startup is short, in most cases. Over the course of two years, that start-up can disappear or become bigger. With these in mind, banks have to create their own platforms for innovations – some have already started doing that. Thanks to these platforms, banks can cooperate easier with startups.

Another major challenge comes from banks, more precisely from the people working there. Some of them believe that startup technologies equal with losing their jobs. Beyond the slowness of procedures in a bank we spoke about earlier, there’s also this fear that the adoption of new technologies will lead to their replacement. So their conservation instinct might tell them to do whatever they can to slow this adoption process or even stop it. On the other hand, startups should better understand these fears and act accordingly. After all, it’s in our human nature – those people are not to blame. Startups should make those people understand that by adopting these new technologies, banks won’t replace them, but will help them in taking better decisions, faster, will help the banks overall with the automation process, repetitive tasks, etc.

How about the challenges in Romania?

Here we can’t speak about these challenges as we’re still at the beginning of the FinTech revolution. It seems to me that in Romania I see a lot of mimicry. In Romania we have big organizations (bank) which are ahead of insurance companies, just like it happens outside the country, and I also see a trend to copy the things that happen abroad. That’s because many banks present in Romania are part of large banking groups and these banks present in the country follow the group’s initiatives. I believe that in three years time we can also speak consistently about FinTech in Romania and by then there will be some important players on the market. Modex and Moneymailme are already major companies on the Romanian market today. And that’s also what we are trying to do, at Young Leaders Club: to be ahead of the curve, to be ready for the moment when FinTech picks up steam also in Eastern Europe.

How do you see the partnership with Moneymailme and Modex?

This hackathon marked our first collaboration. Of course, I already knew about Moneymailme, the money transfer and chat app and one of the first serious FinTech projects in Romania, then about Modex, the blockchain database company. Partnering with Moneymailme and Modex came as a natural step since you are the biggest developer and promoter of blockchain technology from Romania. More important, we want a partner for the long run. One of the drawbacks of a hackathon is that the buzz surrounding it ends quickly, after 2-3 days, as soon as the event is over. Participants return to their daily jobs, students to classes or exams, etc. I think they need to remain connected to the industry. Especially the teams that show potential need to keep working on their interesting projects. At this weekend’s hackathon, Modex came with an interesting topic, which promises to solve a big drawback of the banking system: a theme related to the ownership of data. More precisely: a data ownership system based on blockchain technology from Modex destined for the Credit Bureau, a system which allows the ownership of data by the person who generated it (the user) while eliminating the known errors of a traditional Credit Bureau. An interesting topic!

We are very pleased by the partnership with Moneymailme / Modex and, as I’ve said before, we want to continue that in the long term. What I’ve seen recently is that the tech universities from Romania have also started to look at blockchain technology and offer classes on this. True, not many are doing that, but it’s a start. For the hackathons we’ll organize next year we want to show more use cases of blockchain technology in the financial industry so decision makers from this field better understand its utility. Our objective is to have representatives of BNR (Romania’s National Bank) attend these future events and interact with talented students and developers. Besides this, we also want to bring representatives of universities to the table. Judging by the feedback we’ve received so far, I’m confident we’ll manage to achieve that.