From Growing up Without Electricity to Transforming the Global Financial System, a Conversation with Ntropy’s Remarkable Founder, Naré Vardanyan

From Growing up Without Electricity to Transforming the Global Financial System, a Conversation with Ntropy’s Remarkable Founder, Naré Vardanyan

Naré Vardanyan’s journey has been remarkable, and she’s only just getting started. She grew up without electricity in Armenia (born right as the USSR collapsed) and taught herself 11 languages (by candlelight). Her journey led her to work for the United Nations and the Ministry of Foreign Affairs of Armenia, where she saw- first hand- how financial inclusion is one of the most powerful tools we have in global development. Today Naré Vardanyan is the co-founder and CEO of Ntropy, the most accurate financial data standardisation and enrichment API. Her first-hand experience of how limited access and understanding of financial data inhibits the movement and distribution of credit was the spark that led her to create a business which has now processed and enriched billions of financial transactions globally, equalising trust and access to money for businesses and individuals anywhere.

In this interview, I speak to Naré Vardanyan about her incredible entrepreneurship journey- growing up without electricity in Armenia, teaching herself 11 languages by candlelight, and going-on to build a business which is using state of the art AI technologies to equalise trust and access to money globally by broadening our understanding of billions of financial transactions.

Q: What is the role that language learning has played in your life?

[Nare Vardanyan]: Throughout the years, I’ve engaged in numerous conversations, yet the topic of languages has never surfaced. It’s fascinating, truly. Reflecting on my childhood, growing up in an environment devoid of electricity and illuminated by candlelight, I didn’t perceive it negatively. Such circumstances become the norm for a child, and the experience is shaped significantly by the parents’ reaction. In our case, my parents transformed it into an adventure. We would eagerly anticipate the hour of electricity we received daily, using it to engage in various activities, which made it exciting rather than a hardship. For me, this period wasn’t marred by negativity, though it undoubtedly posed challenges for my parents.

In the absence of electricity, the range of activities at one’s disposal diminishes considerably. Imagine relying solely on candlelight. Our home was filled with pans and a wealth of books, including collections in various languages, which were my primary sources of entertainment. The scarcity of toys, due to limited import and export options, necessitated creativity. This constraint, I believe, was one of the situation’s unexpected benefits.

My interest in learning languages was sparked by a particular experience at the age of 5. At the time, many Armenians, including a substantial portion of my family, were emigrating in search of better opportunities due to the lack of jobs, ongoing conflict, and the collapse of the Soviet Union. Considering relocation, my father planned a exploratory tourist trip to Greece. This required a visit to the embassy for a visa, a vivid memory for me. I was fascinated by the woman in charge there, possibly a counsel rather than the ambassador. Her authority and the entire experience left a lasting impression on me, marking the first time I witnessed a woman in a significant leadership role. My curiosity about her position and the prerequisites for such a role led my mother to explain the role of a diplomat and the importance of mastering multiple languages and understanding diverse cultures.

This encounter inspired me to pursue a career in diplomacy, aspiring to represent Armenia abroad someday. Moreover, growing up in challenging circumstances instills a belief that one can make a difference, despite limited immediate impact. This belief, coupled with the limited options available, fosters a drive to change things for the better.

My linguistic journey began with English at the age of 3 or 4, followed by French, which I initially studied independently before my mother found a tutor for me. The economic situation in Armenia meant that highly educated individuals were often without employment, making it possible to receive quality tutoring at a low cost. This situation allowed me to also study German and other European languages, given their similarities.

Q: What is the role of financial inclusion in global equality?

[Nare Vardanyan]: Growing up in the Western world, or any region with access to equitable financial services such as credit cards, mortgages, business loans, and student loans, presents its own set of challenges. Access to capital can vary significantly based on one’s birthplace and social status, yet the pathways exist. For those aspiring to attend university, there are bursaries and loan programs available. Yes, these loans must be repaid, but the opportunity to pursue education is there. Similarly, buying a house or starting a business is feasible with the right financial strategies and support.

However, imagine living in a place where such financial avenues are virtually non-existent. Where hard work and ambition offer no promise of progress or escape from economic stagnation. This reality is stark for many. My time with the UN allowed me to witness this first-hand, especially during assignments in Latin America and Cameroon. There, I encountered numerous individuals eager to pursue careers, such as law, only to be met with the harsh reality that even advanced education offered no guarantee of a better life. The prospect of owning a home or starting a business was not just difficult—it was out of reach.

This systemic issue stems from deeply flawed financial systems that limit social mobility. For those of us with access to such services, it’s easy to take them for granted, even to the point of complaint. We bemoan high mortgage rates, burdensome taxes, and the seemingly insurmountable challenge of student loan debt. These are significant issues, no doubt, but the absence of a functional financial system poses an even greater barrier to social mobility for many around the world.

Q: It seems trust & data are central to this?

[Nare Vardanyan]: Initially, I harboured a somewhat naive belief that the system’s failings were largely due to a scarcity of people willing to do the right thing. Working for international organisations, I was caught up in the belief that we could fix broken systems simply by introducing the right resources, processes, and intentions. However, I’ve come to realize that good intentions alone are insufficient. The lack of access to essential services isn’t a matter of moral failing but rather a systemic inability to assess risk and generate profit from these assessments.

Through my experiences, particularly with the UN and similar entities, I’ve learned that without a foundation for profitable and reliable lending systems, and a method for accurately estimating risk, sustainable solutions remain out of reach. A critical gap, even now as we’re just beginning to address it, is the lack of comprehensive data at both consumer and business levels, especially beyond the Western world. While countries like the US, Canada, and the UK have mature credit data systems that inform lending decisions, such information becomes markedly scarcer outside these regions. Even within Europe, in countries like Spain and Portugal, credit data is nearly non-existent, making it exceedingly difficult to provide access to capital.

Accessing capital hinges on two crucial factors: the cost of capital itself, which fluctuates based on a country’s economic conditions, and the ability to assess risk. Without the capability to take calculated risks, offering access to capital becomes nearly impossible. Charity, with its limitations and lack of accountability, rarely leads to significant change.

However, the landscape is shifting with the advent of digital transactions. The digitisation of money movement, transitioning from cash to digital, allows for traceability. This traceability generates data, which can be analysed to inform decisions. In this way, the move towards digital finance offers a glimmer of hope for addressing these systemic challenges by providing the data needed to assess risk and extend capital more effectively.

Q: How does this contribute to equity?

[Nare Vardanyan]: … addressing equity issues in developed economies poses a unique challenge, largely because the data underpinning financial decisions is rooted in historical patterns. These historical records often carry inherent biases. For instance, women have historically participated less in the workforce, received lower wages, and engaged less with credit systems, leading to a skewed repayment history. Similarly, various ethnic groups have faced disparities in financial inclusion. Relying on such data perpetuates a cycle of inequality, necessitating deliberate measures to break free from it.

In contrast, building financial systems from the ground up in a context that emphasises current money movements and digital transactions presents an opportunity to bypass these historical biases. This approach focuses on real-time behaviours, offering a dynamic and inclusive way to assess creditworthiness. It’s interesting to note the impact of newly implemented credit systems in regions like Africa, where, given equal opportunities, women and small to medium-sized businesses (SMBs) have demonstrated significantly higher credit repayment rates. This trend suggests that when traditional biases are removed from the equation, overlooked demographics can and do excel financially. Such insights, previously obscured by historical biases, highlight the potential for more equitable financial systems.

Q: Will improving access to finance also improve credit risk decision making and fraud prevention?

[Nare Vardanyan]: …. the role of data is foundational in every aspect of development, serving as the bedrock for building transparent systems. To effectively harness data, two critical elements are required: an abundance of data and sophisticated methods for its analysis, processing, and integration into functional systems. Currently, we find ourselves at a fascinating juncture technologically, where advancements have vastly expanded our capabilities to manage and interpret large-scale data. The advent of large language models and other recent innovations has not only made data analysis more cost-effective and rapid but has also reduced the reliance on human intervention for reviewing extensive datasets.

Computational methods have now surpassed human abilities in certain areas, a milestone that, until as recently as last year, seemed distant. This achievement indicates that the expense associated with intelligent data processing is decreasing. As a result, we stand on the brink of a transformative era, where the potential to utilise, analyse, and leverage vast quantities of data to devise solutions is not just a possibility but a rapidly approaching reality.

…we’ve never really viewed our approach through the lens of impact. The venture capital model leans heavily towards capitalism, where demonstrating a pathway to substantial returns is key. As a result, there’s been a strong focus on profitability rather than societal impact. My perspective is as follows: if you’re aiming to compete for the same clientele as major banks like JP Morgan Chase, you’re entering a highly competitive arena with slim profit margins. However, targeting a segment that such banks deem too risky or uninteresting presents a lucrative opportunity. In the realm of capitalism, finding profit in overlooked areas is a strategy until the market takes notice and competition intensifies.

Thus, we considered focusing on demographics or small-medium enterprises that were essentially deemed un-fundable by mainstream financial institutions. The idea was to make these groups profitable and easier for any entity, including banks, to underwrite. This approach could potentially carve out a niche for us, offering a competitive edge in a space others might initially ignore. It’s a challenging path, but one we believe could be rewarding.

Q: What is the role of LLMs in finance and banking systems?

[Nare Vardanyan]: … when it comes to leveraging Large Language Models (LLMs) in financial decision-making, placing complete trust in these models as the sole arbiters of financial outcomes is not advisable, nor is it necessary. The true expense lies not in the decision itself but in the preparatory steps: analysing, labelling, and understanding the data. This is where the true utility of LLMs shines, as they excel in processing and preparing data, which is often the most labour-intensive part of the decision-making process.

Moreover, LLMs bring an element of transparency and traceability to the decision-making process. They can outline the logic behind their conclusions, showcasing step-by-step how they arrived at a certain decision. This feature addresses ethical concerns regarding decision-making processes, as seen in recent discussions about the transparency of Google’s models. The ability of LLMs to demonstrate how they processed information, including adjustments made to prompts, is invaluable.

The real power of LLMs lies in streamlining the preliminary stages that lead to financial decisions. Traditional methods, which require extensive human involvement, are often slow, prone to errors, and not scalable. This inefficiency is particularly evident in the banking sector, where the cost of underwriting small loans is disproportionally high compared to larger loans. LLMs can process thousands of small loans efficiently, making smaller lending ventures financially viable for banks.

The conversation around social finance and the use of LLMs raises important questions about ownership, centralisation, governance, and privacy. The prospect of a single, all-encompassing model managing personal data is concerning and could lead to dystopian outcomes. However, there is hope. The growing investment in open-source projects, efforts to decentralise models, and regulations aimed at protecting personal identity information are promising developments. These efforts could help mitigate potential risks, steering the future of LLMs in finance towards a more ethical and transparent direction.


Q: Will digital transformation of financial markets also impact our commodities and core markets too?

[Nare Vardanyan]: We often overlook the fact that the global economy is significantly powered by small businesses, those with 2, 3, 5, or 10 employees. By reducing the costs associated with analysing and understanding these small enterprises, we open the door to capital access, which in turn can revolutionize their efficiency and bring about substantial changes.

For instance, I’ve invested in a venture started by a friend, which has seen considerable growth. They specialise in optimising fish farm feed for small-scale farmers. Initially focusing on small salmon farms in Chile and Scotland, they employ algorithms paired with conventional cameras to assist farmers in monitoring their fish. While it might seem like a minor improvement, this innovation demonstrates how introducing efficiencies at a grassroots level can have a ripple effect, enhancing performance across multiple fish farms and encouraging a greater focus on sustainability. This is all intricately linked to the fish feed, highlighting the interconnected nature of such advancements. Indeed, witnessing these developments unfold is incredibly exciting.

Q: What does legacy mean to you?

[Nare Vardanyan]: Navigating the notion of an endpoint in life is challenging, particularly when you’re the type of person who relentlessly pursues ambitious goals without acknowledging a ceiling to what can be achieved. This mindset is crucial for continuous advancement, making it difficult to consider limitations. However, upon reflection, I recognise there’s one aspiration I hold dear: the desire to leave a lasting impact. Humanity is innately driven to create, innovate, and bring new ideas to life, a trait I deeply value. Throughout my journey, I’ve gathered a myriad of experiences, some more significant than others, which I hope to impart in a meaningful way.

When contemplating my legacy, I envision it manifesting through various avenues—be it the companies I’ve helped to build, wisdom passed down to my child, or the profound connections I’ve made. Writing, despite not considering myself particularly skilled at it, is another channel through which I aim to contribute. The idea that even a fraction of my thoughts and innovations could influence others and spark further creativity is incredibly fulfilling.

Although I haven’t dwelled extensively on the concept of legacy, my ultimate goal is for the insights, creativity, and values I’ve nurtured to resonate and endure beyond my time. Whether through a business, a brand, a product, or simply the knowledge shared, the thought of these elements thriving and inspiring future generations is truly exhilarating.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.