Artem Genkin spoke with the Chairman of the Russian Electronic Money and Remittance Association Viktor Dostov.
– In my eyes, you embody the ideal of a St. Petersburger, with many small details and traits of character. Do you find yourself caught up in the eternal debate between the two capitals about which one is better? Which one would you say takes the crown? And is it really possible for an active person today to live in two cities?
– Being called a model St. Petersburger is certainly a compliment. Yes, living in two cities has its appeal. I’ve long stopped choosing a favorite. St. Petersburg is beautiful, though a bit melancholic; Moscow is great, but the winters are harsh. I adore Madrid, though in August, it’s unbearably hot. It’s the dynamic pace of life that suits me best. The last five years have been a bit more challenging, but the world is large, and planes are still flying.
– Your education wasn’t originally in economics. What influenced your shift in direction, and how did you end up specializing in finance, electronic money, and payments?
– It’s quite an interesting story. Back when I was a physicist, I came across an article about one-way functions, which absolutely fascinated me. Today, this topic is relatively well-known (encompassing RSA, mining, digital signatures), but 30 years ago, I was captivated by the sheer mathematical elegance of the concept. At the time, it had no practical application in my life. After my physics career, I spent a significant period working in communications, establishing some of the first Internet providers – a field I planned to pursue long-term and with great enthusiasm. Then, unexpectedly, I was approached by a team from Tavrichesky Holding, who introduced me to the concept of Internet payments based on one-way functions. It felt like fate, so I transitioned into this new field without much hesitation, and I’ve never regretted it. Interestingly, the fintech industry has very few traditional economists; it’s filled with individuals from the exact sciences, as well as teachers and even military personnel.
– Among professionals in the payment industry, your name is closely linked to PayCash, the technological foundation behind services like Yandex.Money, Beeline Mobile Commerce, iDealer, Mobi.Money, and others. What is it like to see your developments powering successful projects where others are the primary beneficiaries? Have you ever felt the urge to create your own “Singer sewing machine”?
– No, I haven’t had that urge. I consider myself a strong strategic manager and managing partner, but not an entrepreneur. To seriously invest in Internet payments back in 1998, one needed a true entrepreneurial spirit. By that time, I had already realized that wasn’t my calling – I tended to overanalyze and calculate risks too much. While I didn’t develop my own groundbreaking ideas, I worked quite effectively with the ideas of others.
– Since its inception, you have led the Russian Electronic Money and Remittance Association (REMA). Compared to other associations representing various guilds within the domestic financial market, how would you assess the effectiveness and productivity of your organization? What accomplishments do you consider its most notable achievements?
– Among our standout achievements, I would highlight our significant involvement in the drafting of Federal Law 161, advancements in remote identification, and introducing the OpenAPI concept to Russia. Assessing efficiency in government relations is challenging, as these are long-term processes involving numerous stakeholders. However, we are undoubtedly the oldest payment association in Russia and likely the most effective in terms of output per team member.
– In recent years, you and your colleagues have been actively and successfully engaging in consulting across the CIS and beyond. Within the post-Soviet space, which country currently stands out as a leader in fintech innovation and relevant regulation?
– We work extensively in Central Asia, where the regulatory landscape combines elements of Russian and European practices. Historically, the region leaned towards Russia, and much of its regulatory framework mirrored Russian approaches. Over time, these models have diversified, incorporating numerous Western consulting practices and methodologies. For example, the regulation of non-bank payment organizations, remote identification, and virtual asset management have been influenced by Western practices – approaches that Russia could also consider adopting. In Islamic banking, countries tend to look to the Gulf states for guidance. Additionally, Chinese innovations, such as QR-based payments and Central Bank Digital Currencies (CBDCs), are gaining traction in the region. In other parts of the world where we work, European regulatory frameworks and Western business models remain the gold standard. However, both regulators and business leaders are eager to adopt effective solutions from a variety of global sources.
– I understand you lived in China for about two years in the 1990s. Experiencing a different culture and mentality often provides valuable insights into one’s own perspective. At that time, were there already signs of the economic miracle we associate with China today? And looking at the present, would you say modern China has established itself as a leader in the fintech market?
– Great question. I would say yes, the first signs of growth were apparent, even though China at the time was still a country of bicycles and food rationing. What stood out was the nation’s relentless drive to develop, its eagerness to absorb useful knowledge from all over the world, and its active collaboration with other countries to adopt models and technologies. While success wasn’t guaranteed, China certainly took off. As for fintech, I wouldn’t describe China as a miracle. There’s nothing particularly unique about its approach. That said, it is undoubtedly a leader in ultra-scalable solutions and QR code adoption. While China has many interesting developments, equally innovative projects are happening in Russia and the West – from the Faster Payments System (SBP) to specialized niche fintech initiatives.
– What were your initial feelings and expectations as to how things would unfold when you learned that Pavel Durov had been detained by French authorities? Have they changed since then?
– I’m not particularly impressed by this story; obviously, it is scandalous and somewhat obscure. But few people believe that we will have islands of anonymity remaining. Another thing is whether it is necessary to tackle it with such methods, I am not sure. It is difficult to judge as an outside observer.
– In my view, the most extensively advancing segment of fintech – the crypto industry – is now dominated by 25-30-year-olds. Is it challenging to feel older, wiser, and more experienced? Can you connect with this audience, and are there any particular aspects to consider when building communication with it?
– I’d say there are mostly those in their 30s to 40s, although it involves plenty of older people as well, although they are not so prominent. I believe that mining, for instance, is a business that involves relatively older entrepreneurs. As to being older – no, it is not hard, although you do have to curb your obvious age-related tendencies such as telling stories to claim that “today’s fintech is not what it used to be.” This is a natural process, with new niches always emerging for earning new money, such as steam and electricity production, internet startups, blockchain, AI and so on – and they engage young, energetic and ambitious people.
– I remembered reading one of your articles where you provided a vivid image of the future, where one has the cost of their life insurance policy automatically increasing every time they buy a chocolate bar with their card. In today’s reality, it is possible that a smart contract will not allow you to buy a chocolate bar in case an IoT-embedded glucometer reports your high blood sugar. What is your view on the idea of specific purpose money? Is it potentially more beneficial or detrimental?
– People were overly enthusiastic about it, but this enthusiasm has since faded away. As regards the digital ruble, the core problem is obvious – by law and common sense, money should be a universally accepted means of payment. We will probably see certain niche solutions for specific purpose money such as maternity capital or the Pushkin Card, but there’s going to be only a few ones under the current monetary model; their effectiveness should not be exaggerated either as frauds involving maternity capital and the Pushkin Card are well-known.
– Many of your works and reports were made in collaboration with Pavel Shust. Given classical examples such as Yevgeny Petrov’s memoirs and speaking from my personal experience, I know that working with co-authors can often be challenging. What about you? Do you find it easy to write collaboratively?
– I do; for us it is the same as it was for Ilf and Petrov, with one running errands at regulatory authorities and the other writing, and then we switch roles. I cannot tell about Pavel’s impressions; I really enjoy working with him, he is a very good person with a highly organized and powerful mind.
– In my opinion, blockchain, or distributed ledger technology, has already passed the hype test, undergoing the scrutiny in mass media, and now we can assess it objectively. Is it actually a solution to every problem or does it highlight the existing issues and create new ones?
– No, blockchain is not a magic pill – just like big data, AI, and so on. Most likely, it will be here in the financial sector for the long haul; we are only making attempts to explore usage models outside of it. Indeed, you can use it to develop excellent solutions for notaries or logistics; however, we are so used to centralization and the markets are so saturated with proven centralized solutions that newcomers who offer new unconventional models simply cannot enter them. You understand that, say, Apple Pay essentially emulates EMV protocols from half a century ago, while SAP has provided centralized solutions for 50 years as well. There is simply no space for new ideas. Most likely, on the contrary, we are observing some sort of distributed finance centralization. I believe that the current concept of distributed ledgers has run its course globally. A new takeoff is possible only with new ideas. I think that combining distributed ledgers with the Internet of Things is a good idea as they complement each other. However, I am not sure toothbrushes will be used for mining or drones will communicate with each other through blockchain technology.
– Do you have any insider knowledge as to who could be hiding under the pseudonym Satoshi Nakamoto and whether this person (or group of people) has Russian roots?
– No, I don’t.
– In Notes on Sleeves, your Telegram channel which is very popular among market professionals, you ask many renowned people for recommendations of the lists of must-read books. Is there any particular book that shaped your life path?
– No, there is no such book, but there are bunches. As regards finance books, along with those for professionals, these are The Economist on the Couch, Freakonomics, and Naked Money. But everyone has their own list; we post such lists of favorite books from people we love and respect in our Telegram channel on a regular basis.
– What are the plans for the Association’s development in this ever-changing world?
– The main challenge for us is changing the name. Obviously, we have long since gone beyond electronic money and money transfers, with our activities concerning general problems in the financial sector, digitalization, distributed finance, and AI. Our current projects involve OpenAPI, remote identification, platform regulation and many others; they are underway in different geographic locations in parallel. Yet, everyone has long been accustomed to the acronym REMA, and parting with it would be very tough. So the name persists.