On August 22, 2016, CEELM reported that Raidla Ellex had advised fintech company DataMe OU on the creation of a new credit register in Estonia. The co-founder and CEO of DataMe, Marko Vaik, agreed to answer our questions on the subject.
CEELM: When you first set out to create this new register, what led you to work with external counsel?
M.V.: DataMe collects and shares personal credit data and this area is regulated by the Personal Data Protection Act. To collect, share, and analyze personal credit data we needed a legal framework to get permission for data processing and we needed to do it without any external risks for banks and other credit providers. Setting up a business in this sensitive area for lenders needed to be without any legal problems. As a Fintech start-up company we have to operate as effectively and fast as possible so we decided to involve a legal advice partner who would help us to create necessary documents so that all aspects in our business model would be in accordance with the law.
CEELM: Were there other or unexpected problems or challenges that arose after the initial instruction that required their assistance?
M.V.: Yes, as we started consultations with Raidla-Ellex we thought that we only needed to concentrate on the terms and conditions agreement text under the loan application. But shortly it turned out be bit more complicated that we first thought. To process personal data in accordance with the law we also needed to create terms and conditions for DataMe data processing.
CEELM: According to Raidla Ellex, the register was meant to also make "it easier to comply with regulatory obligations.” What regulatory obligations specifically were targeted and how does this register help?
M.V.: Lenders are obliged to check customer credit worthiness before signing a loan contract, but before DataMe there was no register that aggregated all the information about customer obligations and monthly payments. The only way available was a historical debt register, and different studies made it clear that it is not enough to predict client payment behaviour. Historical debt data just is not enough in our quickly changing economic environment, as lenders need information about existing obligations and payment behavior. This is the place where DataMe can help to comply with regulatory obligations.
CEELM: Fintech is an ever-increasing buzz-word. To what extent do you feel the regulatory framework in Estonia is comprehensive enough — do you still feel there are ambiguities that make your operations difficult at times?
M.V.: I think that Fintech is much more than just a buzz-word. We are talking about a sector that has operated without any major upgrades for decades. Changes in finance are just getting started and everybody is waiting for a company that would give a whole sector new breathing room, like Tesla has done in the automotive industry. For DataMe Estonian regulations are not an obstacle, as until we exchange data, we are operating under the Data Protection Act. If we are planning to offer loan recommendations in the near future, then our Financial Supervision Authority has been open to give us advice with the regulations.
CEELM: Why did you choose Raidla Ellex as your external adviser on this matter?
M.V.: As we started with DataMe it was clear that we can’t allow any mistakes in programming, compliance, or choosing a right partner to outsource some of the work. We were looking for an adviser who would have excellent knowledge in data protection but also in finance to understand the specifics when it comes to doing business with highly regulated partners. After market research we found that Raidla Ellex covered all our terms.