Alex: Hello, everyone. Welcome to today's episode of the Curiosity Code podcast, where we dive deep into the world of fintech. With us today from Helsinki, Finland, is Tuomas Louhela. A standout in the fintech world, Thomas brings over five years of CEO experience to the table. Alongside deep expertise in Paytech and strategic consulting. His track of records includes launching startups, navigating companies through regulatory shifts, and leading innovative pricing strategies in various industries. I'm glad to see you, Thomas.

Guest: Very nice to be here and always happy to spread the gospel.

Alex: Hey, it's time for a short break. This episode is brought to you by product Terra, your fintech innovation partner. And this is why that matters. Over seven years ago, I created an agency to help fintech entrepreneurs create exceptional user experiences and cutting edge software. And over the years, our team has expanded to over 30 experts in machine learning, engineering, and cloud architecture. We've guided our clients through all stages, from idea conception to multimillion dollar acquisition. When it comes to secure fintech solutions, products are easier choice. Now, back to the show. Cool. Let's get it going. Can you tell a bit about your career journey? You've held so many executive positions across a variety of industries. What led you to fintech? Can you just briefly cover your beautiful journey so far?

Guest: Well, of course, I have a degree in economics. And once I was graduating, I thought what might be useful to do. I started in banking. I saw the finance crisis, and then I decided that it's time to move on. And I became a country manager of finnish operations, one of the consumer lenders. That's where it all started, and I got to see how the business is done.

Alex: So why fintech? Why financial services? How did you get in there?

Guest: Well, it's very interesting because when you look at normal people in their everyday lives, they, of course, need money. They need to do their payments, they need to get their bicycle fixed, they need to get their rental payments done, and so on. Of course, there needs to be someone supporting them, making those transactions possible, and so their opportunity.

Alex: Interesting. What was your first real challenge in the fintech world? Running as a senior leader. Can you walk us through the challenges that you faced, if you can recall them?

Guest: Well, I would say that any leader who is working in constantly changing industry will find it out that what you know today might not be true tomorrow anymore. And you need to have everyone with you. I'm talking about stakeholders like employees, all the subcontractors who deliver different types of services, like whether it's credit bureaus or debt collection agencies. And of course, consumers using those fintech solutions. Everyone needs to be on the board on the same page. That's not always so easy when things change fast, especially from a regulatory perspective.

Alex: So at the moment you are busy your own freelance consultancy, right?

Guest: Yes, correct.

Alex: Can you tell a bit about that? What are you up to, what kind of projects you're working on?

Guest: Well I have advised number of clients when it comes to for example having an auction platform where cars are sold then they need their some sort of financing solution. So I have built a business case, I have found potential partners and basically created idea for top management, what could be done and how much money they make if there would be financing directly available on their platform. That's just one of the examples. Of course there's also a lot of pricing projects, optimizing the pricing and making sure that operations are profitable enough. And that's also interesting thing to do.

Alex: Let's chat a bit about price optimization. What kind of aspects of business do you usually take into account what impacts pricing when you dealing with pricing optimization projects?

Guest: Well of course everything starts from understanding what is the cost structure at the moment. So you need to understand unit economics. Unit economics is a key thing here. And once you have unit economics under control, then you can think of how much extra you can put on top of that and in some cases there is not enough competition. You can put really a lot of extra on top of the cost and make a good margin for yourself. In other cases, either because of the regulation or competition, prices might be already on very low level and there is not that much space for your own margin.

Alex: Are we mainly talking about e commerce business or that applies to any business?

Guest: Well of course these are personal experience dealing with apply to any business. Of course my background is mainly in e commerce and applications.

Alex: Can you share any challenging project that you dealt with in terms of pricing optimization?

Guest: Well of course from nordic and baltic perspective, challenges at the moment that there's very tight price regulation in place for the consumer finance. So when the regulators have decided that there is a price ceiling, then if you want to offer such a product you either need to decrease your own costs or you need to move to some other industry. That's the only way to survive. I have seen both cases. Some of these lenders have been able to decrease for example their funding cost, which has made it possible that they have been continuing in consumer lending. Then other lenders have switched the industry. They have been traditional cash buyer financing business and then they have transferred to for example car financing or some other type of lending like business lending. So there are these type of factors in place as well. If regulators, besides some top price, no can do. You have to find some new way if you are going to continue in business.

Alex: By the way, speaking about geography, like you mentioned, nordic and baltic region, I see from your experience here on your LinkedIn profile that you've been working quite a lot of places around the world. Like I see activities in London and Hong Kong. What maybe unique insights have you gained from working in markets, in these markets and how different regulatory requirements impacted your decisions there?

Guest: Well, what is interesting in financial services is that every country have their own way of looking at things. Something that might not be allowed in Finland might be allowed in Estonia, for example, or something that is allowed in UK might not be allowed in rest of the Europe. So that's a special thing in financial services, that regulators are very closely following operators in this industry and they make up their own rules in every single single country. So that's both good and bad thing. Then you can find some special opportunities in one country that are not in elsewhere. But it's very difficult to scale up over the countries because exactly same type of solution might not be allowed in the unattractive country. I think that's the main takeaway here. When you talk about cultural perspectives, how people behave, how is it to operate in other countries? I would say that people are pretty much the same. Everyone has their needs and wants and so there's need financing products everywhere. That's how it is.

Alex: Sure. How do you personally stay ahead of the regulatory shifts, specifically in our industry? In Fintech?

Guest: I of course know the best finnish market in Finland, there has been very big change, let's say during the last eight years. There didn't used to be any price restrictions, for example, or marketing restrictions. There didn't used to be any positive credit register. There wasn't financial service authority looking after this company. So all of that has changed. I think that this tightening will continue. If we look at, let's say, three years ahead, it's very likely in Finland that there will be first time regulation about how much person will be allowed to borrow. Looking at his current salary level, his current open loan amount, those facts are now publicly available for the lenders and probably regulators will say, okay, person has income of €3000 per month and person has already borrowed, let's say €10,000. Then the regulator said this type person is allowed to borrow only €2000 extra or whatever. We don't exactly know what those limits will be like, but it's likely that such a regulation will come in three years or so. And I also think that regulator will continue refining what type of voluntary fees are allowed to be charged with the loans. And of course there is always some collection in debt collection laws. So regulation will continue tightening. And of course next year we'll ask is it possible to operate in such conditions? I would say there's huge business opportunity for those lenders who are able to decrease their funding costs if they are able to sell their loans. Let's say with 12% nominal annual interest rate or car financing, with 8% nominal annual interest rate, there is a huge business opportunity. And for those lenders who are willing to go for business lending as a small business lending, very nice opportunities for there as well. Like regular recycle of eight years that I was talking about, consumer lending has increased €1.5 billion in infinite. So there are definitely opportunities for those who have funding under control. So I'm not worried about this. I would say that there is still a still market, even in small country like Finland.

Alex: Makes sense. By looking at your professional history, I see that you led several high impact pricing projects. Specifically, firstly, at banks, what complexities do pricing strategies in fintech involve and what has been your most innovative or effective pricing strategy to date?

Guest: When we talk about pricing, we of course need to understand who is the client. If we talk about, for example, markets pricing, that's very, very competitive market. And over there there is an asset behind mortgage. So consumer must have a good asset valuation for the real estate he or she is purchasing. And then the question is on the financing side, how much margin can bank put on top of that? And it's very thin margins in finnish market and usually banks per share. If a person has already very wide amount of services in the bank, like for example, they might have credit card, they might have consumer loan, they might have some investments, because that brings the total profitability on the good level. So that's how it works in banking. Then of course you can look at pricing from other industry perspective. Like for example in the payment industry. If we talk about digital payments, over there we could do pricing of order acquiring services. And over there it's about how much business volumes mercant has and how many terminals they will have. Do they have also e commerce transaction needs? And again, bundling all of that together, it would be a good idea to optimize total profitability instead of just arguing what the price for acquiring service should be like.

Alex: In your opinion, and based on your past experience, where are we going with all of this? Where do you see the future of digital payments and fintech in general heading in the next, I don't know, five to ten years?

Guest: I would say that in the short term, what we will see is basically digital wallets will become common way of everyone. So for example, when people visit grocery stores or whatever stores, they will be either paying from their digital wallets or doing mobile payments on way or other. That will be the main way of paying. So instead of carrying credit card or debit card, they will carry their mobile phone and do the payments from there. I think that's a main thing within payment services. And of course, there is this initiative that within European Union, there would be some sort of new scheme set up by European Union to compete with Wisdom Mastercard. Whether that will really take place, we will see, but that's also from the regulatory perspective, new initiative.

Alex: Hello. Just a quick question about regulatory, because I had a guest a couple episodes ago from Spain, and we were chatting about regulatory challenges, how Finland is different from other european countries in terms of regulatory or. There is not much difference.

Guest: Referring now to the consumer lending regulation or something else in general, very, very generic question.

Alex: I think it can speak to the regulations that you dealt with in your projects.

Guest: I would say from a consumer lending perspective, Spain doesn't have such price restrictions like Finland has. That's, I think, one of the key things I can give. Otherwise difficult to comment, because I'm not so familiar with the spanish regulations.

Alex: No, Spain was just an example. You know, I was just trying to understand how Finland fans, in terms of like the whole european domain, more regulated. Less regulated.

Guest: Yeah. I would say that in general, there is this european trend at the moment, that consumer loans, consumer lending industry is becoming more regulated than what it used to be. So there are some countries that are not as strict or as fast to implement those regulations. But in general, in all of Europe, consumer lending regulation is becoming tougher than what it used to be.

Alex: Yeah. Okay. Well, I think we're getting closer to the end, usually closer to the end of the conversation. I'm trying to get more inspiration from our guests so that you can inspire the listeners of the podcast you founded and let several companies. And if you were giving an advice to someone who is looking to start their own fintech venture today, what would be that advice be for someone who.

Guest: Is entering the fintech space? I would say that they should know what they would like to do exactly. Whether it's analytics or marketing or product development or team leadership or whatever it is, it's always easier once there is some kind of idea in mind what exactly to do. Another thing is to think about where. I know that nowadays everyone can work remotely everywhere but through this, that there are a couple of places that there are more fintechs than other places. So select location and get networked with wintech entrepreneurs and find your spot from there. There are still a lot of opportunities for fresh minds who are really willing to make a move.

Alex: If you were to select the location from scratch, what would be still Finland?

Guest: I would say London is a good choice in baltic states. Riga is definitely a big fintech hub in northern Europe. Stockholm has a lot of things happening in fintech space. Why not Berlin as well? So a lot of options to choose from in Europe.

Alex: Nice. Thank you. Thank you for sharing. Well, that's more or less it for this episode. Thomas, I really appreciate you coming over to the show and sharing lots of information about fintech in Finland. Pricing. Thank you.

Guest: We're really happy to be here. All the best for everyone. Bye bye.

Alex: Thank you. And for the listeners, don't forget to like the episodes and subscribe to the channel. See you next time. Bye.