Paul Kemp: Welcome to another episode of The App Guy Podcast. I am your host, it's Paul Kemp. As you know by now, I go around the world and visit lots of different locations, looking for great entrepreneurs.
In the last episode we touched on the trends going on in some of the wonderful tech communities around the world. One of those is a tech entrepreneurial community that is really growing in Israel, and I've had many episodes in the past talking about Israel - you can go and listen to those in my past episodes.
Today I wanted to visit an entrepreneur in the fintech space who is based in Israel and who is doing a lot of very groundbreaking work. She is a serial fintech entrepreneur - her name is Alicia Roisman. She is based in Israel, and in fact she has developed some technology that only the banks now are catching up with; she's been early in the game, six years at least doing this payment syste. We're going to find out more about her, her journey and what we can learn in the fintech space, so let me welcome Alicia... Welcome to The App Guy Podcast.
Alicia Roisman Ismach: Hi, thank you for having me here.
Paul Kemp: Thank you for coming on. Let's go straight into fintech then, let's learn about you. What is the fintech space in your mind? When people say fintech, what does that mean?
Alicia Roisman Ismach: Well, actually fintech is a very broad space today. It started as the technology to support banks and payment systems, but today fintech also applies to most of our life experiences, like when we need to manage our finances and when we need to pay each other, or when we just need to have a better access to our insurance and pension funds.
As you know, money is all around us, and fintech is trying to make it more secure, easy to access, and cost-efficient for all.
Paul Kemp: What's really exciting to me is that there was a long period where the only technology was from the big financial institutions; they had the money to invest in their systems. But is it right to say now that there's lots of smaller startups who are making ground-breaking technology revolutions and coming into the space and offering great services without those huge financial investments required from the large institutions?
Alicia Roisman Ismach: Yes, that's amazing how technology has changed for all. You know that today our phones have more technology than the first flight to the moon... Today we have more access to speed for a low cost, tech computing that can bring us amazing solutions, and the internet, of course; the internet has changed also, with fast communications and access to data that didn't exist before. You needed to put very expensive systems in order to communicate between just the branch and a bank. Today you can have fast access all around the world over the blockchain for any instant transactions.
Technology has made it possible for startups to not only improve the financial institutions' capabilities and systems, but also to disrupt part of them, of course.
Paul Kemp: Yes, let's talk about that disruption, because you're doing some disrupting yourself. Let's understand what you're actually doing. I know from reading your biography you were doing some really interesting things with payments from account to account instantly, so maybe you could describe a little bit more about the current project you're working on in the fintech space.
Alicia Roisman Ismach: Yes. In 2007 I created a startup with my co-founder Eldad Aharoni. We really believed that the payment system was probed for financial institutions and we saw that when you wanted to use a bank account for payments, you needed to go through third-party access like credit cards or (at the moment) PayPal, and you couldn't use your actual account for anything in real time.
We embarked on a journey to make sure that there is instant access to bank accounts and transactions between bank accounts in real time, so it will lower the cost and make all these payments much more efficient. By 2011 we were already up and running in the U.S. with a few banks with real-time, account-to-account payment.
We had a really long journey together. It was hard to get banks on-board with us in that journey. They are very risk-averse; they don't like it very much to try technologies early, but we managed to do it and already then you had the real-time account-to-account payments.
That journey actually brought us at the end of the day to Africa, where the largest bank in Nigeria and another 19 countries are using that same technology we developed for omni-channel payments. So people can pay not only between bank accounts over the mobile phones, they can do it in any social environments, and even the cardless ATMs. So they are recreating the omni-channel experience over our platform that we dreamed back then for the U.S. and couldn't make it there because of the way banks perceive this kind of disruptive innovations and were afraid that it will take from them some power.
Paul Kemp: We love learning about journeys, and your journey. You are a female founder in the fintech space, which is wonderful to learn about your journey. What were you doing before 2007 when you started the company? Were you working in a corporate environment, or still working in the tech entrepreneurial space?
Alicia Roisman Ismach: I go a little farther in my story just to say that I am originally from Argentina, and at 16 years old I moved to Israel alone.
Paul Kemp: Wow.
Alicia Roisman Ismach: Yes, I wanted to try a new adventure and finish my high school in another country, and I had a lot of romantic ideas of changing the world and doing new things even then. So my journey started then by facing that, you know, you have some rollercoasters in life, and things don't go as romantic as a teenager may dream.
I tried many times to do things for my own, to establish new companies, have new projects, I developed games (board games, not applications) and tried to sell them... I did a lot of things over time, until 2001. That's when I entered the electronic payments world. I discovered a world full of opportunities - a lot to do, a lot of things that have not been done yet, emerging technologies and emerging markets and industries, and I found my true love. I stayed there since then.
In 2007, as I mentioned, I also founded my first fintech company... Although I've had a few companies before, I really only founded a fintech company in 2007. Now I am in another startup called Amaryllis, that is changing also the world of payments for what today is called a "multisided payment" that is normally known as marketplaces, and platforms on demand or sharing economy.
Paul Kemp: I'm so inspired by your journey... Let me just summarize what I've gained from you. At the very young age of 16 - and we have many of the appster tribe listening who are also at that age where you really do believe you can change the world, and it's wonderful because you have that naivety of youth, and dreams, and we always love dreams... And at 16 you went to a foreign country to then start learning the world of startups and tech. Did you decide then to opt to go to university, or did you prefer to learn the trade through just starting your own thing and learning independently?
Alicia Roisman Ismach: I actually did both. I learned a lot independently and also tried to go to a regular university. At the beginning I was a dropout.
Paul Kemp: Oh, we love dropouts.
Alicia Roisman Ismach: [laughs] Yes, we all do. I learned a partial first degree in computer science, and then later on in time, after I did already a few things and learned on my own, I completed that certificate and did a second degree on entrepreneurial innovation. That's much more relevant for entrepreneurship and what I am doing today.
So I did a mix of both - learning along the way and not waiting for formal studies to start anything. I always was impatient. I needed things to be done on the way, I could not wait a few years until I started something. So I did both, as I mentioned.
Paul Kemp: You're so inspirational, because here you are, from Argentina, going to a foreign country... I'm honestly blown away by the fact that -- if you could do it in those circumstances, then a lot of people sitting on the fence listening to this can make their own transition. Would you recommend to anyone who is thinking about going into higher education, getting themselves into lots of debt - we know that U.S. universities are extremely expensive; in fact, most of university education now is expensive... Would you recommend getting into debt and finding a formal education, or would you recommend going into the world of startups and learning whilst actually doing something?
Alicia Roisman Ismach: I think that the world of startups needs both. The world of startups needs the ones that are meant to research and study things very deeply - if it's a data scientist, if it's in physics, in nanotechnologies etc. We need the scientists, we need the ones that can afford and are built to learn for many years very complex issues and topics, and we need the ones that just jump and want to explore and innovate and change things and don't have the time, in their minds, in the way they are, to study for a few years before they do something.
I think that the world of startups actually grows because we have a mix of these two types of personalities and interests.
Paul Kemp: What's interesting then is if we move forward in your journey along this timeline - so you reached 2007, you have already done several years in startups and doing your own thing... How difficult was it then when you had this idea about changing the world of payments, how challenging was it to get funding, get the thing off the ground, meet your team and co-founders... Talk us through the challenges you had in 2007, actually getting it started.
Alicia Roisman Ismach: The first thing for me was to find my co-founder, the person that can go with me through this journey and have the abilities that complement me, and that's what I did. I met with Eldad Aharoni and we understood immediately we not only have a mutual interest, but we also have the capabilities to make it through together.
We worked together for many years to bring this system to life, and today also to multiple countries around Africa.
Once you have the team, once you have the people that can go with your on this journey, only then you can face the complexities of bringing this startup to life, that include the funding, but not only... Funding is only a part of it.
If you have all the other pieces in place, you will be able to convince and bring the funding as well, but it doesn't begin with funding. Funding is always hard, it's a full-time job sometimes, but it's really available and possible if you have put in place the rest of the pieces you need to successfully bring a startup to life.
Paul Kemp: Yes, and I love the fact that you mentioned the importance of a co-founder and sharing the journey with a co-founder. One of the big themes over many of the 500+ episodes of this podcast is the importance of networking and meeting people through your network.
So you started the company then... Talk us through maybe the things that you believed in 2007 where others did not agree with you, because you must have then really been fighting against the status quo.
Alicia Roisman Ismach: Yes, I actually have a few of [unintelligible 00:15:18.17] One of the things we believed is that putting your credit card numbers on a website to pay was completely illogical; that was in 2007. The internet had brought already all the necessary tools in order to communicate between you and your funds, wherever they are, without putting an external plastic card number in order to point to your bank account or other types of funding.
It was for us really something we couldn't understand - why are you still using it and why are you still putting that number of something that was created for physical payments on the point of sale?
People didn't believe in it. Most people would look at that and say "But it's a credit card... Everyone has it, and there is no reason not to pay through a credit card. Why are you trying to make payments from the bank account directly, in real time? What's the point of it? Just put in your credit card data and it works."
It took many years until financial institutions and the industry itself understood that that was a third-party network, that it's one of many, and there are other options that people may prefer better, where they can access their actual funds, the real funds they have available - in real time, they can really use this, and the merchants, the ones that are selling, can pay lower fees and have the ability to get the funding from the customer also in real time in their bank account.
It took time for the industry to accept that approach as valid and to allow those kinds of solutions and systems to be a part of the methods that the customers can use. That's one of the things we were facing.
Paul Kemp: Yes, I was going to say that I'm sure that a lot of the appster tribe listening to this are thinking about fintech opportunities themselves, and I wondered if you could share with us the challenges that you may have had to grow in the fintech space. Just immediately I'm thinking of the challenge of trust, getting consumers, users and other institutions to trust the transaction, but also there must have been other challenges as well. Talk us through some of those challenges and how you overcame them.
Alicia Roisman Ismach: Yes, there are many challenges, and as you said, trust is one of the main ones. Trust is not only from the consumer side; when you are bringing a new banking system forward, the financial institutions needed to trust it, and how can they trust something that no other financial institutions have even tried?
Bringing to life a system that affects banking accounts without trying it with an actual financial institution is a chicken and egg situation. You need to find one institution that has more interest in innovation and understands that maybe they are the underdog, or maybe they are the ones that want to change things in their industry, that are able to think differently and bring you the opportunity to try your system and show that it's really trustworthy and you can then put the stamp on it for other financial institutions.
But not all startups go through the path of financial institutions. When you are bringing a system directly to consumers, you need to build trust for the consumer to use it, as well as for the merchants.
Building trust is really one of the main issues for any startup that is touching funds, touching a financial instrument and the consumers, or financial institutions need to use it. The key to it really is to find what makes a system like the one that that startup is developing trustworthy? What will make it really look as something people can trust, if they do it before they launch it or if they do it before they approach the financial institution with their offering?
It can be a partnership with, for example, one of the top five accounting firms, it can be some kind of auditing, it can be another type of branding that they can acquire through channels... It's very important to build trust around your solution before you approach your market.
Paul Kemp: Yes, and I can imagine regulation is quite challenging as well, to overcome a lot of the regulation in finance, which is more burdensome than other niches and markets.
Alicia Roisman Ismach: Yes, regulation has two sides - one is a part of what we talked before, the trust. If you can work with regulations, you will also partly gain from it. They trust you can bill for your product.
On the other hand, sometimes regulation is a barrier and you need to work around in order to bring your product through some institution that has already been regulated or has already all the audits in place, so you don't need to do it for your won product, and you can offer it as an OEM or white label.
The issue with regulation is that in our space regulation is very important because otherwise no system and no solution will have trust from anybody. But on the side, if it's not made right, the regulation goes through, for example, a path of trying to support the legacy institutions, to not let new systems come into the industry... Then the regulation becomes a barrier instead of an instrument that can help the startups.
Paul Kemp: Alicia, I wanted to just talk about two more things in the few minutes that we have left together. One is the trends in fintech... It's a very exciting space - what excites you most in fintech right now?
Alicia Roisman Ismach: Right now what excites me most is really the sharing economy. We are seeing how platforms are disrupting large industries by connecting directly different constituents. For example in the insurance industry you can see how Lemonade is doing it and bringing directly the ones that want insurance with the funds, and they don't need so many intermediaries.
You see the same in the transportation industry with companies like taxi and Uber, you see the same happening with the lodging industry, with Airbnb and others, but it's in every industry. There is no industry today that you can mention that there are not companies trying to bring these platforms that will connect directly every side of it.
It's much more direct, streamlined, cost-efficient, and of course, it works better for all the parties. But those platforms are complex, require a lot of attention in all the details in order to bring a good solution for everybody, for all the sides on it; it's a multi-sided platform, of course.
That's the industry that I am today focused on, in bringing the efficiencies to it with Amaryllis. It's a very exciting industry with a lot of potential for a lot of startups around the world.
Paul Kemp: Yes, and we've had a few chats in the past about blockchain technology... I remember the managing director of TechStars (the accelerator) talking about blockchain many years ago, and I wish I'd looked into that a bit more then... But blockchain is so disruptive in that, as far as I understand, it's taking the ledger system and the trust that you get from an institution and enabling that level of trust, but on a distributed, worldwide platform. What does blockchain mean to you? Do you see it as revolutionary as I do?
Alicia Roisman Ismach: Yes, blockchain is revolutionary as a platform, not necessarily the coins that are running over it. It's much more important what the platform itself can bring in terms of efficiencies in connecting everything. For example, when you're talking about health care records - you can connect the health care records with the patients and doctors in a secure way, and only the persons that are relevant will see it, without any central system or servers having all that information for one institution only.
There is a lot to do with blockchain technology as a platform. Banks are already deploying it for overcoming the intermediary banks they currently need to make a transfer between one bank in Asia to one bank in the U.S. Currently, they go through other banks in the middle until the money gets to the final destination. With blockchain, they are already trying to disrupt that and make that transaction between banks direct and secure.
So the blockchain platform may have a lot of potential for a lot of industries. It needs to be applied, of course, for the specific model they are trying to bring efficiencies. We are already enjoying from it.
It still is evolving in terms of trust. I think that the institutions actually are becoming part of it, instead of being completely disrupted. At the end, everybody will really enjoy from it, including the institutions themselves.
Paul Kemp: Yes, and I wanted to appeal for the listeners - if you're interested in blockchain, definitely go and have a search for some of those past episodes... Just type in "techstars" into the App Guy, and you'll hear that chat we had, which is still relevant today. Very exciting stuff.
The final thing - I noticed that you are a mentor, and I wanted to ask you the importance of getting a mentor as you're starting, or even if you're experienced in this whole space. How important is having a mentor to guide you through the decisions that you have to take?
Alicia Roisman Ismach: A mentor is very important, and I have my own mentors. Everybody is actually being mentored at some point or another by someone else. I think that the more we are open to be mentored and mentor, we are also evolving as a person and as a professional, and we learn much more about how we can do things better in our industry, in our startup and also for our future plans.
I also encourage others that have experience, that have done things, to mentor others. It brings value to yourself, it's not only that you are bringing value to others and helping them through their journey... It really gives you back, you gain a lot from it, so mentor as much as you can.
Paul Kemp: This has been such an inspiring chat... Sadly, it's come to an end and we have to finish. In the mean time, Alicia, how is the best way of contact you? What's the best way of reaching out and getting in touch?
Alicia Roisman Ismach: Of course I have a LinkedIn profile and I accept gladly invitations when a person has a true profile, of course. If you have a LinkedIn profile, just connect to me. I am a very open person, I connect to anyone that wants to invite me, and of course, you can write me there a message and I will respond.
I like to be in contact with people and help and be helped, of course, when it's possible.
Paul Kemp: And hopefully, we've inspired some 16-year-olds who are thinking about what to do with their life... Go ahead and change the world, that's what I would say!
Alicia Roisman Ismach: Absolutely.
Paul Kemp: Alicia, there will be a link to your LinkedIn profile at theappguy.co. Just search for episode 529 and you'll see a link to Alicia, and also the other kind of ways of reaching out.
Alicia, thank you very much for coming on The App Guy Podcast and sharing your journey and inspiring us so much with what you've been able to achieve from that young age. Thank you very much!
Alicia Roisman Ismach: Thank you very much, it was a real pleasure.