An interview with Lode Vermeersch

Lode Vermeersch, the Head of AREA42, talks trade, trade finance, fintechs, compliance and AI.

In this interview from Digital Finance Summit 2024, Lode addresses these hot fintech topics:

• What’s the biggest challenge in fintech today?
• How is AI changing the fintech environment?
• Which fintech trends show the most potential?
• How to balance innovation with staying compliant in fintech?
• What’s your top tip for fintech newcomers?

Overall, Lode points out there’s still a lot of work to be done to make trade fluid and risk-savvy.

And, in particular, there's a lot of work and opportunity for intermediaries such as financial services like AREA42 to improve the trade environment.

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Interview conducted and video created by Rafal Kruczek at Scalac – thank you, Rafal!

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What’s the biggest challenge in fintech today?

Basically, we're all new, and we all think that we know what finance is about. We constantly have to be careful that we don’t underestimate the traditional players, the traditional banks, the traditional insurance companies, because they have a lot of knowledge. 

At the same time, we have a big advantage. Namely, we see problems and we try to solve them fast – and in a user-friendly way. Another big advantage that most fintechs have is that they don't have legacy. So, they don't have to take care of their legacy. They can start from scratch. That basically means you can come up with a solution that’s a really nice solution.

"You come up with a solution, but did you really challenge the problem?"

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But then again, another big challenge is this: you come with a solution, but did you really challenge the problem? Is it a real problem that you’re solving? Meaning, is it a problem where you can earn money when you solve it? And then, your solution – is it a real solution? Or, is it just some kind of dressing up exercise?

And, those are some of the really basic challenges that I see for fintech. 

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How is AI changing the fintech environment?

A lot – and not a lot – at the same time, I would say. I think a lot of people in whatever industry are still trying to find out, ‘Yeah, but what can AI actually do?’

I've been in AI for more than 25 years. I know the intrinsics of AI. I think I understand the capabilities. But, I also understand the limits. 

A mathematician would basically say, ‘An AI is a nonlinear interpolation algorithm and a little bit of nonlinear extrapolation.’ Now, for non mathematicians that doesn't say a thing, but it means that an AI can basically not yet come up with new knowledge. It can’t basically explain why it gives a certain result. 

Yeah, it can give you some references – ‘I deducted it from this or that.’ It's very, very hard. People are working on that, but they cannot say whether its reasoning is really correct or not. It's still corrected by a human. And that's where I see the limitations of AI.

How will AI change payments? How will it change fintech? 

Well, that depends a bit. Here at Digital Finance Summit, it's a lot about payments. When I heard the first presentations, it's still down to the basics. Making sure that when you initiate a payment, that the payment is finished. When you want to get paid, that you can ask for a payment.

Those are so basic, such simple things that are still not solved. Yeah, so how will AI help with that? I don't know. I will see. 

When you look at the fintechs that are more on the, let's say, investment side or lending side, that's different. It already has a very big impact.

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Which fintech trends show the most potential?

I can only talk for AREA42, for us. The trends that we try to follow – we chase problems. We don't look for ideas. We actually chase for problems, and it's the problems that will generate the ideas. What we also do is just browsing all the innovations because any kind of innovation can impact us.

For example, I had quite an interesting discussion internally about how 3D printing can influence credit insurance. Those are two words that are totally apart.

We'll not explain it here because otherwise it would take too long. But, just accept from me that 3D printing can have as an impact that you don't need credit insurance anymore. That's how big the impact can be. 

"With a little bit of creative thinking, you might come up with a scenario that says, 'Ah, that will impact you.'"

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Well, in reality, it will never happen, but theoretically, it’s possible. So that's why we in AREA42 look at problems because we want to provide solutions.

But at the same time, we look at almost anything that is happening because with a little bit of creative thinking, you might come up with a scenario that says, ‘Ah, that will impact you.’

And then you have to be prepared for that.

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How to balance innovation with staying compliant in fintech?

It's always a pendulum. 

We come from a period where there were no rules. And, then a lot of customers, be it business customers, be it private customers – they were complaining about the abuse of their data, for example. Then Europe comes up with a regulation. And, then it's a bit over the top. 

And, what you see now with the new EU government, how they say, ‘Wait, wait, wait. It's not about lots and lots of new regulations now. It's about making those regulations more efficient.’

So there will be some reductions here and there. A big thank you to the National Bank of Belgium. For example, we can have really good discussions with them. They show us the limits, but they also think with us.

"A regulator is not necessarily the enemy."

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So a regulator is not necessarily the enemy. But, sometimes you need a bit of luck – whether your regulator is a good one or not.

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What’s your top tip for fintech newcomers?

Make sure that you really solve a problem. That's the biggest one! 

If you're not really solving a problem, it will be hard to find customers. And, especially, it will be hard to find customers that are willing to pay for it. And then, it's a waste … of your time.