Summary
Financial sector negotiations | Kirsi Larkiala | #neuvottelija 3. Sami Miettinen talks with Kirsi Larkiala, a change leader and reformer of the financial sector ecosystem. Kirsi has worked at major international banks and in recent years has driven the growth of the fintech industry in the Nordic countries. Sami and Kirsi were both at SEB at the same time, where Kirsi completed the Wallenberg Institute as only the second Finn to do so. The episode discusses commercial banking and its negotiation challenges as the industry changes shape. The discussion also covers the differences between the Swedish and Finnish fintech ecosystems, as well as Kirsi’s encounter with JPMorgan Chase CEO Jamie Dimon in Davos.
Transcript
English transcript derived from validated English subtitles (WebVTT · SRT). Timestamps link to the original video.
00:00 I was at Davos last week, so I had the pleasure and honor of meeting Jamie Dimon, so it was iconic. Yeah, amazing. And JP Morgan’s. Yes. So, welcome here to the Negotiator channel. I’m negotiator Sami Miettinen. Today I have as my guest Kirsi Larkiala, change leader in the financial sector and a long-time, experienced banker in global banks. Welcome. Thank you, Sami. Nice to be here. Yeah, we were even at the same bank at the same time, at SEB, and I was there in the corporate finance unit, or the investment bank, and I think it was global head of transaction services for Finnish clients. Across all stages, quite broadly, really. Well, for Finnish clients, but then I also was responsible for group packaging, meaning these solutions, and the modern term is service design, for 21 countries, so it was quite a role, an interesting role.
01:00 Yeah, and indeed when we were there at SEB, I myself noticed that it’s actually steered by this Swedish powerful family, the Wallenbergs. And I then took a Swedish course myself and I was there with this Niina Äikäs, by the way, who then got into this Wallenberg Institute in Sweden. And that was probably the road to success there at SEB — did things go so well for you that you Yeah, they did. I was number two from Finland at the Wallenberg institute. It was a very, very interesting experience, because it also let me get a channel of dialogue with Markus Wallenberg. and we were at their cabin X kilometers from Örhus for a couple of weeks, totally without network connections. And at [unclear] of course there were closing dinners and it became a really, really good tight-knit group, like 20 people, most of whom were Swedish, with whom we still keep in touch.
02:03 Yeah, I bet the Wallenbergs turned up there in the corridors and so on. Yes. Yeah, and they had funny nicknames, by the way. The Finland-Swedes, by the way, like Sweden-Swedes too, often have these silly nicknames, with which they show that inner circle, that this is fun. And then if you’re not in that inner circle, you don’t know their nicknames. I find that a fun detail. Yeah, so from there you then went to Danske, doing kind of the same thing, but then at some point, like for me too, these global bank jobs ran out, and you decided that now you had to move to more agile fintech companies. Hadn’t you already been on that path for a while by then? Yeah, well look, November 14th, I remember that day well, we held a really big technology seminar for our biggest client and institutional client, and that’s actually where this fire started, like, wait a minute, how come here in Finland, when Finland claims to be a pioneer of the financial sector,
03:04 how come this fintech, meaning financial technology, is so much in its infancy here. And that’s when a long road began, five and a half years, almost six years now. And we’re still on that road. Yeah, and you’ve been running this Finnish fintech scene since then, in leadership roles. Indeed the Swedes are ahead in that too, by the way. Actually even the ECB has ECB-X, which is trying to disrupt the parent bank, which is quite interesting. But there’s been all sorts there, Klarna and top-tier Izettle and others, which have then gone on to the world with huge sums, or are still independent. So Finland still seems to be the little brother or little sister in these things. Yes, unfortunately that’s how it is. Well, there’s a bit of the same phenomenon there as there once was with Apple’s arrival versus Nokia. in this fintech space it’s the same phenomenon, meaning Finns are extremely skilled and the competence level is really high,
04:06 but maybe a bit too much of an engineering mindset thinking through all the functions and details and wanting to be fully ready, before daring to come out and say we have something new. Whereas the Swedes do it with big money and marketing means, they go much further. If you think about it, there’s Klarna, which once came to market, there was nothing sensible about it really. There was, if you think from the individual’s point of view, meaning the consumer, a really shoddy product, where you had to enter your personal ID somewhere and you get an invoice to your email, an e-invoice, so, a totally raw, unfinished product. But there they just keep chugging along and have banking licenses and so on. Totally incomprehensible. It also came with a lot of marketing budget behind it. Yeah, the Swedes sure know how. Maybe it could be interesting to talk a bit about traditional banking, where we were both at big Nordic banks. I was then also at Credit Suisse there in London, where I was for a long time and saw that side too.
05:08 And in a way, back then in the late 90s, early 2000s, there was a lot of struggling with investment banking and this commercial banking, meaning combining it with retail/commercial banking, and they were combined and separated and worried about, whether it’s right, and whether the U.S. was right after all, which then separated the two. But if you look at, say, the commercial banking side, then really, now, if you’re at some kind of organization like SEB or Nordea or maybe even Visa-type, then in the past the game was such that you had big clients, and then you tried to get as many services as possible from them under the same roof, and then there were things like transactions, like M&A deals, which I still do, and share issues, and currency exchanges, derivatives, and bonds, and more. And then the banking business was in a way, in a certain sense, a loss-making mass business, so you’d give, say, half a billion of balance sheet to some giant company,
06:12 as long as it does these nice things. And now it’s moved on to this breaking up of the ecosystem, so in a way this fintech is precisely about trying to grab different slices from the banks’ overall pie. Maybe that traditional banking, do you see it as still having a lot of future ahead, since the scale and relationships are just so good. Yeah, absolutely, I’d add to, or slightly correct, your analysis from when we were both bankers. I myself have long, long represented transaction banking, meaning all these basic banking products like cash management, liquidity management, generally payment traffic, trade finance, all short-term financing products, supply chain financing and so on. Transaction banking was always the so-called gateway product in the bank. So when a client chose the transaction banking product family, especially cash management,
07:15 then it was said that the client had made such-and-such bank, say SEB, their housebank. Then internally in the bank it was calculated that a client who is a housebank client, generates 9 to 15 times more money than a non-housebank client. So transaction banking ties the client to the bank, after which it’s much easier and the client automatically starts using precisely markets and treasury products, all these basic complex expensive products. And of course wealth management and all the other stuff too, so that’s the sort of foundation everything starts from. It’s still the foundation, but what’s interesting is if you think, say, about these short-term financing products among Transaction Banking’s products, I myself do a lot of projects where I specifically try to help traditional players so that they don’t need to use their own balance sheet, but also not their legacy systems, because those are so old-fashioned and they still need to be modernized.
08:21 So instead of modernizing their legacy systems, they look at various fintech consortiums, with whom they can come to market more easily, faster and more agile. Yeah, that was interesting, that you treated transaction service there as a housebank marker. I had somehow learned that it was the loan, sort of the syndicated loan, that would be it. No, no, no. Okay, well, right. Transaction banking is, because that’s also put out to tender, generated and tendered. And then there are six providers, or five providers, or even ten providers. Well then that stickiness is admittedly better. Maybe this was just an excuse from these global banks. Yeah, but the reason why transaction banking has that stickiness, and why I also have a passion for this technology, comes from the fact that transaction banking’s stickiness comes from, that a lot of technical solutions are used there, meaning they get implemented. For example, at a large corporate, think of some Nokia or Stora or UPM, well it’s the implementation project itself, that you switch, from some [unclear] or, say, [unclear], it quickly becomes a two-year project,
09:23 which is why it then sticks, once it’s been switched. Yeah, and the Nordic banks were and still are terribly good at that, at that side. I remember when I was at an international bank, it was quite the uphill battle trying to get them to switch. The Nordic countries, they never really switched, but say, some England, they’d switch a bit more easily, since execution with the Nordics there wasn’t maybe quite as perfect. that execution with the Nordics there. Yeah, but this has moved forward since then, but this kind of cross-subsidy world matters in negotiation, that that of course is the the bank’s guy who sells this whole the corporate banking service, well he tries to find that certain kind of synergy and stickiness with that client and channel all those products. And then again the lone guy who offers just one clean thing, well that’s a bit like that kind of synergy stickiness with the client, so that product probably needs to be quite a lot better for that client to take it on its own. Yes, exactly. And then like you’d say, what is actually changing here, that technology technologies come and go. That’s where the pace just keeps accelerating.
10:23 But then in the end, if we think about that at the bank, say that client relationship manager for that corporate client, then instead of, before it used to be that all along, you knew your own bank’s products, you knew how to sell them. Now you have to, and then elsewhere too came the need that you know how to cross-sell a bit, meaning you know how to already sell markets products a bit, or a bit of transaction banking products. Now we’re in a state, where the client relationship manager has to steer the client’s ecosystem. So realizing that, say, Nokia is already currently using three fintechs, so of course you have to steer those, and then still the bank’s own products and the competing bank’s products. Great, yeah. Fortunately I’m no longer at a bank. Exactly, the client relationship manager. The organizational and job-description shift here is actually much bigger. That’s going to be the pain point here. No longer, with [unclear]. [unclear] you can get pretty far there. No, no. And besides, these cheese slicers are already a bit thicker cheese slicers, so what you can use for these kinds of lunches, well those have just gotten thinner still.
11:29 Yeah. It’s a tough spot to be a client relationship manager now. Right, even then there was already this internal bank competition, like [unclear], and an example is this balance-sheet banker, who sells syndicated loans or other bilateral loans. Then there’s this new technology thing, like the bond guys came to sell, then, this kind of capital markets product too, so you borrow from the capital markets instead, and this balance-sheet type thing. Yeah, there have been conflicts like that within the bank itself, and then also alliances with other banks and professional organizations. But if we move on now from that banking world to that. One more thing besides. What especially interests me here in this transformation, isn’t really my former area of responsibility on the transaction banking side, but the markets operations. Now we’re seeing in the Nordic banks that structured products, for example, are the kind of thing that SEB, the Wallenberg bank, has suddenly decided to discontinue. Tell us again, what is a ‘struksi’. That’s structured products. It’s hard to say. ‘Struksi’ is much better.
12:34 ‘Struksi’ is better, yes, yes. [unclear] has a bit of that same world. But [unclear] has the same situation. Actually I was discussing, I was at Davos last week, so I had the pleasure and honor of meeting Jamie Dimon, the one and only. Amazing, JP Morgan’s. Yes, and I talked with him for a long time and specifically asked what he thinks about this transformation in the markets space. He said that there can of course be regional things, like some banks are small enough that they end up having to outsource. But he does see that investment banking, of course, he’s always been an investment banker at heart. so he sees that it will stay. There will just be new products coming through digital channels. Through that new platforms will come again. And people’s competence of course has to shift a bit. But the human is still needed. So he sees it as a new markets arrival with different product repertoires. Yeah, that was interesting by the way.
13:34 So, this networking, we could actually jump into that. I haven’t been to Davos, unfortunately, I haven’t gotten into those halls of power, but networking is terribly important, and actually here quite a few women have been mentioned who already got into that Wallenberg Institute, while men were left out, and actually Annika Falkengren was the one running this SEB. There are quite a lot of women in the leadership of these banks. On this investment banking markets side there are unfortunately few women. Come on and join, we could use a bit of diversity here. In this power position, maybe up there at the top level. We’re actually also there at the Stock Exchange Club, by the way. Wonderful that you got in there too. Yes. It was nice to be among the first batch, so to speak. From the financial sector, two people were mentioned in the evening news, so of course Juliana Porsos, who has had a long career.
14:34 Hi there. Then me, and that was a bit funny, because I’ve still been in a somewhat different role than Juliana. Juliana has, I think, been more visible. I’ve done a long line of transaction banking and other investor-facing work. Those in the know, know. And then this fintech, which hasn’t been all that popular, but now the golden age is starting here. Yeah. of the Stock Exchange Club. I can’t help but mention that coming up there is Nalle as a guest there, who caused a Dalai Lama-level audience crush. The Dalai Lama visited the Stock Exchange Club. That was in a way impressive too, but I passed on that one myself. I unfortunately won’t be able to make it, because next week is again one of those weeks where I’m in Monaco. We have in Monaco over the years built up this kind of pool good investors, who are, meaning they’ve ended up being registered in Monaco for a reason haven’t they sold one tech one, two or three tech connections
15:35 and they still want to be involved a bit in something exciting and now we’ve actually gotten here over the years, really the last two years there’s been this awakened interest, meaning them, they’re interested in Nordic fintech and that’s exactly it, that we need more money here for fintechs this has always invested in Supercells and generally Games and Health Tech and Clean Tech. Now fintech needs to have a new upswing. Yeah, great places, Monaco and Davos. Can’t help it. Yeah, well, that’s where the money moves around, yes. Yeah, but then this Nalle also appeared in this, by the way. I wrote this new negotiation mandate book with Johanna Torkki, and she was interviewed too. He is of course an influencer in the financial sector, and I think you could say that behind this Nordea homecoming is him, even though he denies it. It’s still the biggest Nordic bank, Nordea. But now we have OP and Nordea as the big strong banks.
16:38 And it depends which part of the world you’re looking from. Yeah, right. If you look from Stockholm, where I also spend quite a lot of time, since we have a lot of buzz with Swedish fintechs, and precisely that even though Nordea’s head office is in Finland, many global head roles are still in Stockholm and probably will be, in Stockholm and Denmark. And especially on the technology side, the IT side, there’s an emphasis in Denmark, and the whole markets operation, its head office is in Copenhagen. Yeah, I’ve written a lot about this euro topic, and I think the euro, euros have good and bad sides, but with fintech somehow it feels like since the Swedes have the krona, they’re kind of able to test everything with a home market bias, and otherwise people can’t be bothered coming there with a weird, funny currency, and then it’s much easier to jump from there to some euro than the other way around. so you’d actually think that krona would be a slowdown for them, but I think it’s the opposite, especially in fintech.
17:41 It hasn’t been at all, quite the opposite. And then I’d say, if you look at it from the direction of Silicon Valley, the Nordics are reliable and interesting, but the Nordics are as big as Stockholm. Yeah, amazing. An exceptional Saxo Bank, which is of course a fintech too, but it’s grown past that a bit by now. Yeah, but in that fintech space, I was looking at those lists of what’s there. My favorite is maybe this Alphasense, which is a Vendep-backed SaaS. the company that helped it grow back in the day, and now it’s this kind of AI-based data-flow finder, which finds trends for supporting stock trading, what’s happening there, and it’s worth a billion or thereabouts. So we do have big successes, and then when you scroll the list down, give us a couple of interesting ones. Well that’s exciting.
18:42 First of all, if you think about it, this whole time I’ve been around in this fintech scene, probably something like 450 million has been raised in fintech funding rounds. Then you have to remember it sounds like quite a lot, that on a Finnish scale into one area, but when you take out 190 million for Mash, which had whatever happened to it happen, so then it’s not really that huge. But then if we look, Alpha Sense got already last year 40-plus million, so Ukko put in 540 million, 41 million if I remember correctly, exactly. But then the next pump-fairytale is 10 million, Silo AI, and then it drops to 5 million, that’s Enfuse. Yeah, yeah, right, maybe. There’s a few of those, but then it’s quite, quite, you get into pretty small numbers. And then if we go back to Enfuse, Enfuse is absolutely, definitely my, if you think about this Open Banking and the arrival of the PSD2 regulation, it’s my absolute favorite,
19:43 because they have a really huge advantage in that both the consumer side and the corporate client solutions, but unfortunately when Nordea was involved in a funding round, they got the first 5 million, and their competitor in Sweden, Tink, got 56 million. Then when they got a second 5 million round, at the same time Tink got a 90 million round. That makes you think, that no matter how good you are, the amount of money the other one has, brings a whole different kind of credibility. Since of course it lets you do all kinds of things, much more. Yeah, that’s unfortunately how it is, but good. And then I have to say, I do a bit want to call out, without naming names, a certain Finnish bank CEO here. that when choosing open banking, a Finnish bank really should choose a Finnish open banking player,
20:46 meaning Enfuse, favor it, keep the Finnish flag high, instead of choosing a Danish one. Oh, oh, oh, shame, shame, you out there, you know who you are. Yeah, well that’s just how it is. That’s how it is. This is some color for you. Oh, oh, oh, that went a bit too far now, but yeah, that’s how it is, that the ecosystem should… If Finns don’t keep the flag flying, then who will? Yeah, that’s how it is. You could say international competition refines things, but in that situation it probably doesn’t refine much. Yeah, so the ecosystem needs to be built up, and then with those successes, then the investors get on board too. And maybe the foreign money comes then too. And technology know-how at least, that reputation Finland has always had, that you can find these tough coders who know how to do it. We just need to get up alongside the Swedes, since the Swedes have a really good reputation in the fintech scene. We need to get up alongside them. And then the other thing is, on the other side of the scale, if we think about large corporates and the services they choose,
21:50 we should get exactly the same phenomenon. Back when I was at SEB, there was, actually Mika Ihamuotila was chairman of the board at what was then the Finland-Sweden Chamber of Commerce. And at SEB there was Jan Steenström, who was of course Swedish-speaking, so he couldn’t go there to the Finland-Sweden Chamber of Commerce. So I was there representing on his behalf. It was indeed the case back then that there are these ‘real’ banks and then there are these foreign banks. Like they come and they go. And that has of course happened to some extent, but for example SEB has come and stayed. And that’s when I just realized that there are actually similar synergies now in this arrival of fintechs, that if someone imagines that fintechs won’t arrive or stay, that’s just undeveloped thinking, because they arrive and stay, and it’s relative, you look first at who uses it, and it flows in every direction, and of course we’ve talked about how then people go back to using their own things, and SMEs their own, that same phenomenon, that foreign fintechs arrive with their service ranges,
22:57 and then they stay, and their products start getting used. So it’s a false illusion to imagine that some Finnish fintech ecosystem will emerge, rather it’s an ecosystem from the Finnish customer’s point of view, in which there are players from many countries. Yeah. Well, one segment that hasn’t been mentioned is crypto. There we have good expertise, like this Prasos out of Jyväskylä. And then there’s more generally there in crypto money, bitcoins and around those. And I can’t help but mention myself, Lifeline asked me onto that Realstocks.io, like sending greetings from the Advisory Board there, well, to Terry Roberts, who runs it, they’re trying to use this kind of blockchain-based settlement or trading to create these kinds of safe investment targets, which could partly appeal to institutional investors, that they get yield, and then the secondary market performance is fairly stable.
24:03 that could possibly be, if real-estate backed, quite a good substitute for a bank deposit or a money market investment. And that blockchain in general, I think it’s actually more important as a settlement technology than as a basis for money. There’s a lot happening on the custody side too, for example in custody services. But then I have to say, when you mention those specific things, Finland’s Prasos and then this thing where you’re on the advisory board, that’s almost exactly where the concrete examples are, so now I’m going back to Stockholm again. There’s for example a company like Enigio Time, which does this kind of original document work using blockchain technology. It’s a good example of that, if you think about the bigger picture, since it always gets tied to virtual currencies and some trading hype, this is right at the core of it.
25:08 So, original documentation, the original document, how it stays unchanged. And that’s when you’re talking about things that are also possible outside the financial sector, but it applies to really many business areas, specifically also within the financial sector. There are all kinds of pilot trials going on now, where for example Nokia is involved, and SEB and OP banks, specifically on the trade finance side. Yeah, well, we can’t praise the Swedes too much now. It’s those sympathetic Swedes who also support the Finnish scene and channel money, but we should just go to Stockholm more often to raise that money too. I have really good experiences working with Swedes. They’re easy and fast in decision-making. Maybe it’s exactly that speed, and there isn’t that kind of bureaucracy that you often run into in this country.
26:09 Yeah, there’s at least double the wealth there anyway. Exactly, that helps a bit too. Yeah, that’s how it is. On the negotiation side then, when you start pushing these towards platform or economic sector market leadership, or some kind of economies-of-scale situation, you have to do an insane number of funding rounds for that, because often these fintechs, tend to be pretty money-hungry, since developing and scaling the technology takes money, even before that, the pilot phases can eat up a huge amount of money. Yeah, and then there’s the problem that the time span is terribly long. So we have, say, on this side, we have fintechs that are incredibly ready and fast and flexible at doing that cooperation with traditional players, say the banks. But then at the banks, getting meetings still takes an insanely long time.
27:10 So once the fintech has had the first meeting, they imagine, ah, now surely in two weeks we’ll hear something. Nothing’s heard even after three months. When one side is thinking six months and the other side is thinking two weeks. That’s often maybe the core problem, that yeah, we’ve invested a lot in developing the technology, money has been poured into it. Then you’d want to get into that cooperation and the implementation pipeline really fast, and more from there. But the fact that you get to the signing stage and get it negotiated, that agreement, well then only the big, laborious implementation phase begins. And since both of them are laborious phases, the pre-signing phase and the post-signing phase, there’s plenty of room for things to trip up along the way. Yeah, that’s how it is. And do the financiers or investors then also have to get involved in helping out with this? Yeah, yeah. You probably also end up in there sometimes, in these actual implementation streams. Well, if I look at where my daily time goes, it’s really like my daily bread is exactly that, I try to push through contacts on the traditional-player side, saying hey, how could we get this taught now.
28:19 And then I try to push from the fintech end too, and do a bit of financing talk, like hey, now you need to think about other channels and next partners for this, because you could get stuck, since it just takes so long and they’re used to it. Could you talk about regulation there, that there’s this PSD or the payment services directive specifically, and Open Banking, doesn’t it in a certain way force banks to open up some interfaces, so maybe in some app pairing you could do without the bank and just take that interface from there? Yes, but that’s a mosquito in the Baltic Sea. Like in that whole picture, of legacy systems, traditional players and fintech working together, that’s the intention. Well what about this pilot phase, at least in London, where I was for a long time, there’s this kind of working sandbox system, where you’re allowed to operate below the regulatory radar up to a certain commercial limit, without some financial supervisory authority immediately coming down on you with compliance requirements. Has this come to Finland?
29:19 It hasn’t come to Finland. It was said about that London model, that it’s at least, if we use global investments as the measure, the UK has risen to number one, which is quite interesting, given we still have the constant Brexit threat looming. Well, greetings to Fiva then, that a sandbox would be possible, that it would make things easier here with the ecosystem. But if you think about this new operating model of Klarna’s, how they’re using PSD2, the financial supervisory authority gave approval there, and there’s many more coming too, so they really have picked up the pace, I take my hat off to them for that. There’s a lot to do, after all. Yeah, yeah. Then if you think about those negotiations, is it really the case that you need to get a few banks to adopt the systems, or could part of it maybe also happen on the customer side, a company adopting some system? Yeah, I mean the end customer is the best pusher.
30:19 So at the bank there’s always the thinking that there has to be a business case. Or with any traditional player. There has to be some business case. And the best business case is always built when there’s some big enough end customer, or a cluster of end customers. So that’s maybe the easiest way. And even that’s not easy, since it requires both muscle and patience and precisely those negotiation skills. Yeah, and you probably have to negotiate those customer agreements, and then in a way that brings the critical mass, so the bank has to kind of kneel down for the customer in a way. If I look at this ecosystem, well here, where I was visiting just earlier this week, at Finnvera, which has been an important part especially in enabling financing for SMEs, but of course also for big customers too, and we have this… and… Right, export guarantees. I go through all these, so I check in with them too, on where things stand,
31:19 so as I open up that picture, of what this financial sector and ecosystem looks like right now, well there for example these law firms are in a central role, because contract practices are changing. And we too do a lot of cooperation with, for example, Dittis, because of that, because when you suddenly have a platform where goods flow in, and a decision should come out via AI in a matter of seconds, then you really have to think about contract practices in a somewhat new way when it comes to financing. That’s how it is, and templates get made out of those. By the way, Dittis’s Jan Nollila might come here, whom I interviewed for the book, since he has great theories about contract law and its negotiations. But yeah, that’s actually a certain kind of template. In London there’s long been this kind of LMA template, this heavy-duty bank financing documentation. They’ve then tried to bring those in a somewhat lighter model to the Nordics. Actually in Norway quite a lot of this streamlining has been brought in.
32:22 Since Norway has a lot of that dollar money going into the oil industry, they’ve created these kinds of good documentation practices. This was then imported into Finland bypassing Sweden. I myself am also CEO of this Nordic Trustee, which brought this bond representative model, so you can have a security agent or collateral agent or covenant monitor acting on behalf of the bondholders collectively or other investors collectively, this kind of agent. But this brings us exactly to the point, that when you talk about financial technology and fintech, this actually changes business, doing things, revenue logic, business models, organizations, people’s competencies. This is a really big thing, where you just have to be involved in everything. Yeah, and actually even that collateral management. With blockchain you can have smart contracts, which in a way regulate that collateral management or covenant management without you having some safe full of stacks of paper that lawyers then read whenever some situation comes up that requires moving things around.
33:30 This is really changing wildly. The Finnish language has probably pretty much disappeared from that financial documentation, yes. Yeah, I tell everyone that it’s worth writing everything in English right from the start. If you imagine, if we think that you’re a fintech, and you start off thinking, yeah, I’ll just be here in the Finnish market first and try something out. then you start making slides. For example, an investor deck. Right. Surprisingly often you see those in Finnish. Oh, oh, oh. Then you have to do the whole thing over again right from the start. When really those financiers are also out there, say, on the other side of Lahti. Yeah. Do smart investors ever come in to help with those, who join the board or otherwise? Yeah. Of course that would be pretty desirable. Yeah. Because fintech needs good contacts, good innovators, and people who also speak up for fintech.
34:37 The more proven, trusted, long-experienced seniors there are, the better. Yeah, right, right. There don’t seem to be all that many angel investors from the financial sector in Finland though. We do have some, and that’s good. This is an inspiring topic, and I’ve thought about this a lot this past year too. I talked about this with Jamie Dimon too, that here in the Nordic banking sector there’s now this thing that’s been going on for a long time, actually it’s almost been ten years now, this phenomenon, but it’s only accelerated over the last five years, that first of all Finland is the smallest of the Nordic countries, and then when the cost savings come, someone comes about every three months from head office, and you have to do something. So then the easiest way to get cost savings, is when you cut the most expensive one, meaning the senior. So we have an awful lot of good seniors out there in this country,
35:39 and they’re exactly the kind of people who are good at helping fintechs, in advisory points and boards and other things, because first of all they were among the best, they were the top people there. They’re just too expensive on the cost-cutting slicer. Yeah, that’s maybe still in the collective agreement, where that hard base salary has inflated there, so then you get to sit on the sidelines. I do still have to say something about the Swedes, that they’re really tough players in the financial sector, especially this hub game. They always centralize those certain hub functions there in Stockholm. And then when the cost hunt comes, surprisingly the easy savings targets are found there in the neighboring countries, and a couple of sharp Finns and Danes get invited there to Stockholm. And the job stays put, that’s been seen many times, yes. Yes, exactly. That’s unfortunately just the tactic. But that’s a plus for the fintech side again, that you can use these seniors for different projects, and specifically bring them onto advisory boards and board seats.
36:52 They still have strong expertise, and I’ve had this idea that whenever someone becomes free from somewhere, I try to invite them to our info sessions and events, or just for coffee, because of course I want everyone to stay up to date on this. Yeah, that’s great. In general this networking really does pay off. Over the last five and a half years, almost six years now, I haven’t gotten a single project or a single job, if I hadn’t been well networked. Then I’ll add on top of that, that you have to go, you have to go out the door, if you sit in the office, if you sit at home, nothing happens. It’s always worth going out. And then the other thing is social media, it sounds boring and it sounds a bit clichéd, but if you’re not active there, nothing happens. Yeah, let’s see how well this video blogging and podcasting thing goes. That’s good. Good project.
37:53 Yeah, bleeding edge. And by the way, just for fun I looked on LinkedIn, and we had 340 close mutual contacts. No, 430. 430, sorry. Wow. Yeah, that’s not that few. Not that few, yeah. Yeah, right, right. But that’s… I mean, you could say networking has kept me alive. Yeah. And if I think about, say, my time at SEB, where I was for over seven years, just one of those little career stints, which used to be the norm back in the day, these seven-year chunks. Yes, yes. All those contacts that came out of that still keep spawning different things. Yeah, that was it. I had a great time both in London and in Finland. Yeah, exactly. It was actually a pretty big bank, and it’s still big. Yes. Otherwise, just a side note, some board seat of Berner’s, no wonder it gets this demonizing mockery.
38:53 What a childish country, to make something shameful out of a thing like that. As if those were some kind of miracle. Right, first of all it’s no small thing that there’s a Finn who’s been good enough to get in there. And then it’s actually kind of nice that it’s always eternal. Right, exactly. Yeah, that’s, I don’t think that whole thing was handled very well at all. But of course I understand that bankers don’t exactly spark a lot of sympathy with the general public, but that’s a bit of a mistake too. Well, bankers are always needed. That’s how it is. In the end. Yeah. None of them, like if you imagine you’ll get rid of bankers, that’s a foolish notion. Yeah. Banks are and will always remain, seeking new roles and new products. And of course, if you think just from the perspective of large corporates, they always have a role in financing. No one else can just handle that instead of them. Yeah, that’s true. Payment traffic somehow goes past this fiat money. Or I mean, then you start settling something other than money. Yeah, but bankers will find a way. Bankers are good, they’ll find a role in that anyway.
39:57 Right. Absolutely certain. Yeah, and then in a way now a lot of banks have moved into that custody and wealth management era, which is also partly a natural place for a bank. Yes. Yeah, and then that kind of service for individuals and companies. Maybe on the retail side of fintech, that’s where that thing came, the payday loan cap came to 20 percent, which, as many know, was actually a really radical change. It’s really radical, and it affects, like, well right now, like, I have to say, I’m always a bit annoyed that when you look at, say, Kauppalehti, they talk a lot about fintechs, using the term shadow bank. And we really have such a wide range within fintech, there’s compliance, regulatory technology, there’s open banking, then there’s trade finance, for example as an example of short-term financing.
41:03 Working capital management. Yeah, working capital management, all this, and then there’s trading, there’s wealth management, but then of course one sub-area is this consumer lending, and that’s exactly the payday loan. And Finns, who are a nation of lottery players, haven’t really grasped this basic development even on top of interest rates, nor have they grasped these undeveloped 250-350 percent interest rates on these payday loans. so as I said, a really, really great thing that now this 2 percent came in, but then if you think about it from the perspective of those payday loan provider platforms, meaning the fintechs, that’s where the pain is, because suddenly, whoa, how did their revenues disappear. Right, of course you can operate abroad, but that Finnish customer base changes. Right, you can operate abroad, yeah. And many of them are indeed also in Poland, for example. Right, that’s how it is. Yeah, there’s all sorts there. Of course this debt collection agency is probably next, so if the debt goes to collection, then there’s the interest, the interest might grow quite a lot chasing that collection fee.
42:13 The debt collection agency is really in a business where it feels like they always win here. Right, yeah. Either way, whatever happens, happens. Now here at [unclear], the Bank of Finland announced that they’ll be joining this financial management project, Yeah, what’s that like then? I haven’t had time to look into it much yet, but they’re indeed starting to coordinate this kind of project now. Yeah. There’s some involvement there. Yeah. Olli Rehn himself. Okay, amazing. Well, there. Came out yesterday with that news. Yeah, this kind of citizens’ financial literacy really should be raised up, so we don’t end up in totally dumb situations. But fintechs can help there too. If you think about it, you have all kinds of subscriptions through the App Store, and where all you’ve entered your credit cards and so on, we already have these fintechs that can show you what your monthly subscription fees are. That’s usually, if you think of some 25-year-old young person, it might be a surprise when you add those up for them.
43:19 So hey, take a look at how much goes each month into these kinds of automatic recurring charges. Yeah. That’s a big chunk out of a young person’s paycheck. Yeah. That’s how it is. I’m myself really old-school, I try to finance everything I can through my mortgage, and then I don’t really take on anything else. Right, exactly. It’s nicely cheap, so you kind of get that from it. And in the capital region, owning an apartment is fairly low-risk too. Yeah, on the wealth management side then of course these technologies and offerings develop. Actually, Martin Paasi comes in from there. With Nordnet. With Nordnet, or as a guest here on the money podcast. I was thinking I’d let him grill a bit on small ETFs too. Nordnet has actually been the winner here lately. A lot has been outsourced to them. Right, and S-Bank too. [unclear], S-Bank, [unclear].
44:19 It’s starting to become that kind of thing for everyone. Yeah, they’re the agile one. And they managed to meet that equity savings account thing too. Yeah. The more human banks didn’t bother, or are still working on it together. It’s actually a pretty complicated and expensive system. You really do have to think about it, since you can get almost the same end result with funds. Do you really need to do that? That’s right. But that’s maybe just an image thing. Yeah, and maybe the biggest thing there is that you lose the assumed acquisition cost. Right. That can bite you on long-term investments though. But if we move to fintech and wealth management, I have to say that leading the pack there, we have two, meaning Evli, Evli has actually been running certain things on the Evli bank side with a robo-advisor for going on six years now, not many people know that. And then Evli is also at the forefront in the sense that because they have a robo-advisor on the bank side, they also have Evli Investment Solutions, where they do this kind of boutique advisory, meaning more complex products and personal service.
45:24 Then we have another one, Taaleri, which did this Evervest acquisition and is trying, more than anyone, to digitalize wealth management. Yeah, and they have this kind of target-specific thematic funds thing, which is quite fun. In a way they’re pretty regional, so money gets channeled into some shipyards or others. Or energy. And energy, so those are quite fun. And then they’re accessible with fairly small amounts of wealth too. But that’s just an example, that two well-known good wealth management houses have already been doing this fintech thing for a long time. Yeah, and like EQ, which used to be built on Nordnet’s technology and sold that off, but now they’re a wealth management house and offer products there. There’s been a certain amount of these popping up alongside the banks’ wealth management side, to manage some of Finns’ wealth. Then there’s also a fintech that often gets forgotten and that ordinary people don’t know about, specifically on the wealth management side, FA Solutions, which has been around for over 20 years already.
46:28 So there’s Hannes Helenius, who came from Danske Bank and left and jumped over to that side, and has indeed been doing that work for 20 years. And that brings us exactly to the point, that in the end, 10 years is actually quite a short time for fintech, to really get to a position where you’re globally known, like FA Solutions, they have clients all around the world, this has taken off from there. Yeah. We’ve talked here a fair bit about influential women, and it’s really great that you’re on personal terms with Jamie Dimon. So would you have some encouragement to give to women in this financial sector? Yeah. Well I have to say, I’ve always tried, or attempted, to have the mentality of being a man among others. And why is that? Good guy. Yeah, I’d rather that, because I have to say, in all kinds of recruitment situations I’ve been in myself, I’ve heard directly from headhunters, when references are being checked.
47:37 I always try to give male and female references fairly equally, though I’ve worked a lot more with men, since there have always been men in the leadership teams and elsewhere. If you try to give references fairly for both, men always remember all the good, tight points and paint with a really broad brush, that he’s a really good guy, and you’re left thinking he must be a really good change leader. Then the topic starts to shift, when the headhunter asks if there’s anything else that comes to mind. Right, well, yeah. Then some strange little details come out, which of course exist in all of us. We all have pluses and minuses. There’s a special place in hell for women who don’t get along with one another. Right, but there are actually quite a few of them over the course of a lifetime. I’ve been in the financial sector for over 35 years, so I can name, from Finland, and now I’ll mention Swedish ones too, I can name from Finland two women who have helped me in my career, everyone else has stabbed me in the back. Oh, that’s terrible, yeah. That’s a bad thing among women, they should support each other, but nobody gets anywhere. Yeah, that’s actually true.
48:38 And our children and godchildren and grandchildren, nobody gets anywhere. Yeah. And I myself don’t want to be some kind of quota woman. Right, yeah. That’s exactly why women should be supported, so they can advance in their careers. That’s right, and come on and join this markets business, this stuff is actually fun. Well, that would be quite interesting. The evenings are sometimes a bit long, but interesting. But that’s a bit seasonal, isn’t it. Right, yeah, that’s how it is. And it’s not the worst grind anymore either. In that way that unhealthy culture, where you’d work through every weekend, that’s thankfully disappeared. so like work-life balance has really improved. Exactly. Yeah, but thank you. We’ve had Kirsi Larkiala here as our guest talking about fintech and its negotiations, and women in the banking sector, and Jamie Dimon. And thanks indeed for this interview. And do leave comments and suggest interesting people to interview, so we go through both negotiations and negotiators.
49:41 Thank you for this interview. Thank you. It was a pleasure to come. Bye bye.