We met with Rolands Mesters, co-founder and CEO of Nordigen, to catch up about Nordigen and the Latvian ecosystem. Rolands is one of the most well-known Baltic founders in fintech, and not just because of Nordigen’s recent exit to British fintech unicorn GoCardless. In late 2020, Riga-based Nordigen changed the European open banking landscape by making basic access to PSD2 data free. We also discussed open banking, PSD3 and more.
How did you end up in the startup world?
I’m a product of two entrepreneurial parents and I have always been fascinated by tech. As a teenager I was reading Wired and Fast Company, avidly following tech blogs and attending local tech meetings. After graduating with a degree in finance, I decided to start my first company, which I ran for several years until we co-founded Nordigen together with my classmate Roberts Bernans.
How did the idea for Nordigen come about?
It was 2015 and the lending market in Europe was complicated. We saw Europe struggling to regulate payday lending. We saw banks spending millions to acquire new lending customers only to reject the vast majority of loan applications. We saw fintech on the rise, but being limited by legacy financial infrastructure.
What made us start Nordigen was the moment that we realized that banks and lenders across Europe were still relying on bank statements to verify loan applicant income and active liabilities, despite the presence of credit bureaus. Open banking was not yet live and there was no way for people to connect their bank accounts securely to lending apps so lenders were asking people to mail their bank statements for manual review.
What’s the current state of open banking? What impact has it had?
Open banking is alive, free and available across Europe. Today open banking allows developers to build apps that can access bank account data (e.g. account numbers, transaction histories, account balances) and automatically initiate bank payments. This is all possible because of a law that Europe passed a few years ago and all regulated payment service providers (e.g. retail banks, neobanks) are required to comply with.
The immediate effect has been that all European developers can now access financial data infrastructure that was previously available only to the big banks. We have seen a growth in new projects that are powered by open banking.
Where is open banking going in the medium and long term? What are you most excited about?
The value of open banking will be 1% of Europe’s GDP by 2030, which is a lot. How we get there is by making sure that open banking is accessible to all developers and businesses of any size and they will do great things with this new technology.
What I’m most excited about is that open banking is no longer a “best kept secret” among the fintech developers, but has spilled over to other industries such as real estate. I hope to see more of these spillovers in the next 12 months.
What will change with PSD3?
It’s not clear yet. What we’d live to see is that developers would have access to more APIs than just payments data, but also information about investments, pensions and savings. A lot of the financial data we use and generate is still kept in silos, which creates a barrier for innovation. I truly hope that PSD3 will change that.
Nordigen has marketed itself in a completely different way than other startups in the open banking space. Why did you choose that path?
When we started Nordigen, open banking was eye-wateringly expensive – it was not uncommon for fintechs to have to pay huge fixed fees just to get access to banking data APIs.
Around 2019 the situation slightly improved, but open banking was still far from being widely available to all developers. In 2020 we figured out a way to offer open banking connectivity free of charge, by choosing to offer premium services on top of the free data streams. We never looked back ever since.
What was your biggest challenge with Nordigen? And your biggest moment of euphoria?
Building a startup is never not a challenge. We’ve had plenty of those along the way. Getting the first customers. Hiring the first engineers. Finding the right investors. Engineering our way to a product-market-fit and constantly iterating to keep growing.
Luckily building a startup entails having plenty of euphoria moments as well. Our first non-Baltic customer. First mention on Financial Times. First cover post on Hacker News. First M&A.
GoCardless, a British fintech unicorn, recently announced it would acquire Nordigen (congrats!). How did the acquisition come about and how did you get noticed by them?
Thank you! We were introduced to GoCardless by Tom Hulme of Google Ventures. After a few conversations and meetings with their executive team we realized that joining GoCardless would allow us to make open banking available to even more developers and small businesses.
What did they see in Nordigen?
Nordigen has been a data company, but we had a lot of customers asking us about open banking payments, which was a product we did not offer. GoCardless was a payments company, but it had customers asking them about open banking data. What GoCardless saw was the immediate synergy of joining forces.
How was it dealing with the GoCardless team during the process?
Working with the GC team has been amazing all through the process. The caliber of experts we’ve met has been astounding.
What does the Baltic startup ecosystem need more of? And Latvia?
We need more people building startups. There’s now an abundance of capital available for great ideas and the Baltics region has had a solid track record of successful startups.
For those that are not yet ready to build a startup, join one. The Baltic countries have the best employee stock options laws in the world, which means that startup employees can become shareholders with more ease.
What would be your advice for founders (Baltic or otherwise) during these more turbulent times?
Never stop talking to your customers.
What is the best way to stay updated with the latest from you?
I frequently post stuff on LinkedIn.