“I don’t want to think about “banking products”, I just want to live my life without thinking about banks. Invisible banking is the future.
I follow new challenger banks with great interest. Will they change our understanding of the purpose of banks, or do they just provide a more convenient approach to banking as we know it?” — Kęstutis Gardžiulis
Kęstutis Gardžiulis, Co-Founder and Director of Innovation at ETRONIKA
What is your current position, and what has your journey there involved in terms of finance/tech experience?
Currently I am Co-founder and Director of Innovation at ETRONIKA.
It was a long and interesting journey into FinTech. After graduating in Visual Arts then Quantum Electronics (Laser physics), and starting to work in forensic examination with voice recognition, I made a sudden turn and landed in a bank’s IT department.
After a few years in banking, and launching of one of the first internet banking solutions for the Baltics, we decided to build our own company. That is how ETRONIKA was created, in the year 2000, and I was CEO for many years. A garage company with a 12 square meter office, but great passion and a strong belief that the internet is the only future for finance.
Completely different profiles, skills and experience of the founders and our first team members made it possible to launch new online banks for several customers in early 2000s. There were some similarities with the current FinTech movement, though at that time we provided everything to the banks: software solution, UX, consultancy, hardware, security, education and training. We moved the whole brick and mortar institution to a digital space. Nowadays FinTechs target more focused areas, and banks collaborate with many providers for their digital journey.
ETRONIKA’s single-platform digital banking solution.
Could you describe what your company offers? What differentiates it, and what has enabled that?
When we started ETRONIKA, we managed to do what we thought to be right, and customers were happy with what they got. It sounds crazy, but we didn’t think a lot about our client’s problems and needs — our business was our passion and hobby. We lived in real Blue Oceans.
We started to explore different areas, still focused on financial technology. Our key offering remains our Digital Banking Platform. It grew into rich platform that allows clients to create a digital presence and build new innovative financial services and experiences for customers. Our passion and experiments helped us to win Best of Show awards at Finovate Europe for a couple years in a row. Now with the emergence of Open APIs, Open Banking concepts and PSD2, we feel that our ecosystem concepts are gaining even greater traction. This year we were covered in the IDC MarketScape: European Mobile Banking Software Solutions 2017 Vendor Assessment.
Kęstutis Gardžiulis at the Finovate conference.
The second part of our offering is Smart Retailing platform. We allowed our retail customers and telco operators to offer one of the first electronic prepaid top-up solutions in Europe, and today our retail solution is serving over 1000 different partner products, including a variety of financial offerings: bill payments, SEPA agent payments, money transfers via different Fintech providers, cash-in and cash-out services, etc.
The third component of our offering is identity management. More than 10 years ago we questioned the need for different passwords and electronic devices for every single e-service. So in 2004 we collaborated with a bank and one of the biggest telcos to launch one of first commercial pilots of mobile digital signature. The idea to store the private electronic key of a person inside their SIM card gained traction, and is now a national standard in Lithuania.
Clients can authenticate themselves in different e-services, like banks, e-government portals, e-commerce applications, sign e-documents or contracts just using a phone.
What have been the major challenges in the development of that concept?
When what you do is your passion, hobby and your life, you must not forget that it is also your business and that profitability comes first. In our journey we had occasions where we didn’t think about monetisation, pursued fancy ideas without solid reasoning, and unfortunately those ideas proved not to be a commercial success.
Back in 2012 we focused our R&D activities on Natural User Interface, and developed an NUI prototype on top of our Digital Banking Platform. The solution allowed customers to run daily banking activities using voice commands and gestures, including voice and face recognition. We managed to generate buzz, got noticed by Wired Magazine, Yahoo Finance, PC World and others. Unfortunately, it was too early for the market to accept the solution, and we didn’t have a plan how to make a commercial product out of the prototype.
Are there any technology or regulatory changes on the horizon that excite or concern you?
“As technology evolves, and the speed of evolution grows, it becomes more and more difficult to apply rules and regulations to new developments fast enough. I can only joke, and state that entropy grows in the universe.”
Change definitely excites me.
Banks are not happy with the regulatory burden, and say that big chunk of their investment and effort goes into compliance projects, so RegTech appeared and there are new opportunities there.
The next big thing in Europe is PSD2, which has triggered a lot of discussion, excitement and frustration. The biggest question I hear is how to monetise this new reality. Some financial companies are just waiting it out, some are building APIs, and others are creating Open Banking concepts. We see new business models, collaboration schemes, and alliances.
What I like with PSD2 is that compliance is fuelling competition, and creating new opportunities. On the other hand I have concerns about the security behind new financial technologies. Let’s see what standards for APIs will prevail under PSD2 umbrella. Will it be easy for new players just jump and create value for clients across EU, or will there be a zoo of new standards aiming for compliance?
I think that the true competition will be in how the data is used, and hopefully we will start to see a real personalised approach to customers. Having set up accounts in different banks and Fintech services, I have yet to see any specific understanding of my needs from any of them. PSD2 is a good catalyser for amazing things that can be done there.
Blockchain and distributed ledger technology could be a new beginning for some applications within financial technology, though it is still in its infancy. The buzz is intense, and I hear a lot that “we will do this on blockchain and it will solve all the problems we have with legacy technologies”. Oh, no. First, you have understand the problem you want to solve, and then choose the technology.
Blockchain ignited another movement, ICOs, and now we see how they are disrupting access to the finance for new businesses. Right now it’s a Wild West scenario, but it fascinates me. It reminds me of 1998 – 1999 and what happened after we already know, but those who survived became unicorns. The snowball is rolling down the hill, will it explode or be guided by regulations and rules? How many trees will it take out on the way?
Artificial intelligence. I love this topic, and it will definitely play a part in every e-solution in a few years. Humanity invented computers with difficult and unintuitive artificial interfaces. Only mathematicians and engineers were able to manage those beasts. Artificial intelligence, voice first and augmented reality interfaces are the future. Imagine you can just describe in your own words your problem and a solution will be built. Funny? Yes, but we have to wait a little while.
I do not want to argue over whether AI is a threat or an opportunity for humanity. Great thinker Kevin Kelly sees technology as an extension of evolutionary life — a selfish system with its own urges and desires. And we can argue, fight, but it is a reality and natural evolution of humanity. We started to use fire in the dawn of our civilisation and it has been used for good and bad. The same goes for technology.
The Internet of Things will produce new methods of financial interaction, and great opportunities lie there too, like banks for smart AI driven IoT devices and services.
As technology evolves, and the speed of evolution grows, it becomes more and more difficult to apply rules and regulations to new developments fast enough. I can only joke, and state that entropy grows in the universe.
In a broader sense, what excites you about the future of financial technology?
“Just as the iPhone revolutionised that market, I’m looking forward to a bank which will draw new lines and change our perception of what banking is.”
There’s a lot of talk around what the future holds for financial technology. Are we already in a truly new era, or do we still transform the same hundreds of years old financial services and products (telling the truth, I don’t like terms like “services” and “products” as they point us to legacy thinking from the financial institution perspective). I think the real tipping point is still ahead. I don’t want to think about “banking products”, I just want to live my life without thinking about banks. Invisible banking is the future. I love what Chris Skinner tells us about Semantic Web and especially Semantic Bank.
I follow new challenger banks with great interest. Will they change our understanding of the purpose of banks, or do they just provide a more convenient approach to banking as we know it? Just as the iPhone revolutionised that market, I’m looking forward to a bank which will draw new lines and change our perception of what banking is.
A lot of technologies are already available, we just have to mix them — creating new wonderful tools for the digital journey of our customers in the financial world. Maybe it will allow our customers to forget the financial institutions behind. It fascinates me, and I want to be a part of this revolution.
Outside of your own market, what startups or founders do you look to for inspiration?
There are plenty of startups doing great things which I find exciting, and of course I love the work of Jeff Bezos and Elon Musk… But I would rather say that I admire thinkers (the other word is influencers, but I don’t like this term), like Chris Skinner who stays firmly on Fintech ground with his critical and sometimes ironic thinking, but has a vision. Bret King, who flies high talking about augmented future, but has also launched his own bank. Jason Bates from 11:FS, who says that digital banking is 1% finished — I completely agree with him. Duena Blomstorm with her “Emotional Banking”. Thoughtful Daniel Gusev. Multi-instrumentalist in Fintech orchestra Jim Marous. Technology preacher Kevin Kelly. I love the passion of Brian Roemmele when he speaks about the ‘voice first’ revolution. Payments and identity guru David Birch. There are a lot of interesting people I follow on Twitter.
You are granted one wish to change the financial technology industry in 2018 — what do you wish for?
I really want to see the first steps of Semantic Banking, and would love to be a part of this movement. I believe that financial services should adapt to every situation of our lives and be invisible. I want to forget about balances, statements and all of the other terms which came from accounting.
If you could give one piece of advice to the aspiring Fintech folk reading this interview, what would it be?
For everybody creating new and exciting applications, I want to say that an interdisciplinary, multicultural team and combination of completely opposite skills and competences empowers you and allows to create something completely unexpected, wonderful, useful and life changing. So be brave, crazy, combine business skills with psychology, art, science, dream a lot, believe that everything is possible. Have dreamers and executors in one room, ask questions, look for answers, discuss. Move forward.