First steps for fintech in Romania

First steps for fintech in Romania
TripWithMojo is part of a growing fintech industry in Romania.
By Clare Nuttall in Bucharest November 29, 2016

With just a handful of success stories so far, Romania’s financial technology scene is still at a very early stage. But initiatives like Bucharest TechHub’s recent Fintech Month and support from major companies and banks are intended to help foster startups and build a wider fintech community.

Standing in Bucharest’s tiny but ultra-hip STEAM Coffee Shop, the co-founder of one of these startups, TripWithMojo’s Andrei Florian, eschews the narrow wooden bench at one of the two tables. He and his three colleagues “have all our meetings standing up; it’s more productive”, he explains.

TripWithMojo is a savings app that helps users save money to travel – to get their “travel mojo” back, Florian and co-founder Bari Ayhan say. While there are other savings apps out there, TripWithMojo is specifically focused on saving for travel and offers incentives such as guaranteed prices for holidays (to avoid last-minute price hikes), the possibility for groups of savers to secure discounts, and lower interest rates for savers who meet or exceed their targets.

Ayhan had the original inspiration when his female colleagues complained that they tried to save up for holidays, but were always distracted by impulse purchases. Florian chimes in to say that he heard the same story from his own colleagues when Romania’s first branch of Cos opened near their office. Despite his long hair and designer stubble, which give him a modern-day hippie look, Florian says he himself has a meticulous approach to budgeting, tracking his expenses and spending plans, but for less disciplined users TripWithMojo takes a gamified approach to incentivise saving.

The app spans travel and finance, but its founders stress that it falls under the fintech umbrella because of the sheer amount of financial modelling underlying the product. One of their first hires was a risk analysis specialist.

Both Ayhan and Florian are adventurous travellers who plan to use the app themselves. Florian sailed from Romania to Greece this summer, while Ayhan likes to “switch off the GPS and see where the road takes me”. The pair are also fizzing with ideas for where TripWithMojo – which is due to launch in early 2017 – will go in future, including potentially a TripWithMojo payment card for travellers.

At present they are looking for investment, which Ayhan stresses is important not just for the money, but for advice and expertise. TripWithMojo has already been attracting attention; the startup was selected as the winner at Bucharest TechHub’s Fintech Demo Night on September 29. The two founders stress the importance of TechHub for support and networking, and say Fintech Month in September was extremely helpful.

The event was launched by TechHub in collaboration with Raiffeisen Bank with the aim of educating the local tech community about what fintech is and what the opportunities are, explains Tudor Stanciu, project manager for Fintech Month. “It’s a big space with a lot of untapped potential. We wanted to give a feel for what we could build in the fintech area and to identify if there are promising projects, products and startups in the fintech area,” he tells bne IntelliNews. “We hope that, as a result, we have created at least a starting point for the fintech community in Bucharest – but we need to stay engaged.”

Stanciu believes it’s too early to say whether there is any Romanian fintech startup with global potential, but says there is a lot of room to build major companies. For example, while there are many personal finance apps in various countries, “there is no clear winner in this category globally, nothing on the scale of Instagram or Facebook… Our role is to try to support companies and ideas which can grow to a global scale.”

Paypal for time

Aside from TripWithMojo, presenters at the fintech startup showcase also included Minutizer Pay Per Minute, which adds a payment layer on top of Skype and other online chat apps. Dubbed “Paypal for time” by its founders, the app tracks the length of time spent talking and at the end of the conversation moves the money to the provider’s account.

Co-founder Alexandru Negru says the idea was inspired by his work with providers of online horoscopes and tarot readings – an industry worth around $2bn a year. “There are other business verticals,” he tells bne IntelliNews after giving his presentation, listing telehealth, learning foreign languages from native speakers and online tutoring for children, which is a huge and growing market in Asia. “We haven't entered Asia yet, but it’s a perfect market for our products; it’s about exchanging time and knowledge through online channels like Skype, and paying for that time.”

Startups like TripWithMojo and Minutizer are hoping to join the tiny roster of Romanian fintech companies that include more established players such as mobile payments company NETOPIA mobilPay, which has already expanded into Mexico and is eyeing the rest of Latin America.

However, NETOPIA mobilPay founder Antonio Eram points out that the number of fintech companies is much smaller than those in areas that do not require such deep and specialist knowledge. “Fintech is complicated. You need to know about payment methods and how the systems work, and because of that there is a high entry point. Young entrepreneurs lack this knowledge and they cannot compensate with enthusiasm.”

“The issue in Romania is that few people have knowledge of the ‘fin’ part of fintech, and those who do tend to opt for big companies or big banks,” agrees Negru. However, he believes more startups will be launched in Romania “because it’s cheaper and the quality of the developers and businesspeople is high”.

Romania has become an attractive destination for large outsourcing companies in IT and shared services, which many believe are a fertile source of talent for startups. However, this view is not shared by everyone. Eram believes that the snapping up of young talent by multinationals actually stifles innovation. “People in Romania are still looking for comfort and unfortunately a lot of young people are working for big companies rather than smaller companies or startups where they could learn a lot. Even if they want to start their own businesses after 10 years, they no longer have the flexibility,” he argues, claiming that big companies with rigid procedures are “killing the minds” of their young employees. “I am not very happy with Romania becoming the sweatshop for software development… Together with the traditional attitude that if you have a good job you have to keep it, this is a lethal combination.”

However, TechHub’s Stanciu takes an opposing view. He firmly believes in working with the big companies and banks in Romania to help develop local startups. Unlike Eram, he believes people leave large companies to start up their own businesses, and points to the 40-50 independent game development studios set up in Romania in the last few years, which he attributes to “the pool of up to 7,000 people working in gaming in Bucharest alone”.

The other factor, according to Stanciu, is the availability of experts to support new entrepreneurs. This is one of the reasons why TechHub worked with Raiffeisen on fintech month. “If you want to grow a local startup community, you have to learn and understand how things work in the big companies,” he says. “If you want to reach out to an expert, you are most definitely going to want to reach out to someone in an established company. The founding team of a startup rarely has the time to develop expertise in one area or another, because the startup has to keep moving with limited resources, and hiring an expert is expensive. As a result, it’s really important that we have these big companies because they allow experts to evolve.”