Finbites #25: Future Banking Documentary [TEASER] + a short analysis of the fintech landscape
Be the first to watch the Future Banking Documentary and the director's cuts starting June 10th.
It has been a while since the last newsletter, and I have to say that I’m deeply sorry for stretching the delivery of the Finbites to once a month.
I have to admit that few big projects keep me up at night, but my time management skills are still to be improved.
Now, I’m happy to present to you the tip of the iceberg, the most absorbing and challenging project I’ve embarked on so far - The Future Banking Documentary.
I hope you’ll find this teaser enjoyable and good enough to stay tuned for the complete work that will premiere on June 10th.
The Finbites subscribers will be the first to watch the full documentary and also the director’s cuts. If you are not a subscriber, give it a try, and you’ll get early access to Future Banking Documentary.
Is Revolut's banking proposition convincing?
Recently, I've had an interview with Revolut Bank's CEO, Virgilijus Mirkės. You can read the Romanian piece of news on Wall-Street.ro, but here I've put some of the answers into perspective.
10% of Romanian customers have switched to Revolut Bank
Although Romania is "among the top-performing countries by the number of customers who joined Revolut Bank," I think this is quite a low figure considering you can opt in to Revolut Bank in just two clicks.
I have a sense of what type of customers have been using Revolut, at least in Romania, and I'm not surprised by the number. To say the least, I'm sure that without a credit card offering or good interest on deposits, when these banking products will be available, a majority of Revolut's customers in Romania will prefer the anonymity (allegedly) of doing transactions through an EMI (E-money institution).
Take our poll and see what others are saying about switching to Revolut Bank!
attracting new customers who are interested in banking services
With 1.3 million accounts in Romania, I think the low-hanging fruit effect has gone for Revolut. The challenge will be to convince these customers that Revolut can be a daily financial partner and boost the sense of security, at least for those who are willing to join the Revolut Bank.
With over 14 million deposit accounts protected by the Romanian Bank Deposit Guarantee Fund, Revolut can find new growth avenues if it will offer above-average interest on deposits.
Yet, Virgilijus Mirkės said in the interview that "they are constantly looking into options to offer deposit services with positive rates and we might have more news later this year."
launching consumer loans and credit cards
Revolut Bank's CEO didn't share any specific date when these financial propositions will be available in Romania, but they are working on it already.
Looking at Lithuania and Poland, where they launched the credit propositions, the offering might be appealing for Romanian customers too, considering the Annual Percentage Rate (APR) is 17.23%, and you'll pay no interest on your purchases until the end of the following calendar month.
Considering it will be a EUR credit card, the rate might seem reasonable compared with the 25-28 average rates of the RON credit cards in Romania.
However, most credit card users in Romania are used to up to 18 zero interest installments for their purchases. If Revolut doesn't offer the same installments proposition with more than six months, the product will not be so appealing for the Romanians.
Regarding the flexible credit, which is the equivalent of the overdraft facility, the credit limit is low (2x monthly salary, up to a maximum of €6,000), and the annual interest is very high (24%) compared with the local banks' offerings (12-16%). In conclusion, most Romanian banks could give you at least 10k in an overdraft facility with interest as low as 12% per annum.
Why do we have such a small number of fintechs in Romania?
Before Easter, I had the honor to be invited to the "Irish Fintech Goes East," a webinar organized by Enterprise Ireland, the Government agency in Ireland responsible for supporting Irish businesses, including hundreds of fintechs.
During the webinar, some of the panelists from CEE presented insights and reports about their local fintech landscapes, with key numbers and the advantages of doing fintech in the respective markets.
So I thought about Romania's competitive advantage on the European fintech stage. Unfortunately, I couldn't find enough resources to share with the Irish interested parties, besides our Fintech Map, where you could find quite a small number of fintechs.
By comparison, Lithuania has 230 fintechs, with startups in the payments sector being the largest segment, while in Poland operate around 250 fintechs.
Then I asked myself what other countries are doing better so the fintech vertical flourishes with hundreds of startups.
I think I had at least 3 answers, but I hope to challenge my findings and add more reasons to stress the need and raise the debate to higher levels.
The state and government agencies are absent or don't know how to sell Romania as a place to incorporate a fintech
A telltale sign of the state's engagement in the sector is the lack of promoting websites like "Invest in…" or "How to do Fintech in…", which are part of the strategies through which other countries are seducing investors or founders to incorporate their startups.
Building a vibrant startup landscape by leveraging marketing and brand strategies is not a short-term effort. However, the results will be seen in the economy through foreign direct investments (FDI) and more revenues to the state's budget from the financial services.
For example, the Baltics have an excellent and organized infrastructure to promote investments in their economies.
Lithuania has the Invest Lithuania website, an insight-rich platform that answers investors' inquires; Poland has a 72-page report on "How to do fintech," while Estonia also has an "Invest in Estonia" website and the e-Estonia platform.
Find out the other two reasons on Finbites.
By the way, what's new on Romania's Fintech Map?
Last week, the Recursive published a piece of news about Romania's Fintech Map. Although this was not the 2021 final update (we'll publish the 3rd edition on the 6th of October), I discussed some of the fintech mapping methodologies and ventured into a sort of prediction.
I think that outsourcing fintechs will continue to maintain traction, and companies like FintechOS, Druid, or Typing DNA (listed under the Enablers' category on our Map) will remain investors' darlings.
I have to overstress that the project is a "work-in-progress", not a finite presentation, with minor releases during the year and a big update in the fall. It only covers 60-70% of the market, considering some companies didn't answer or didn't want to be part of it.
But if you have a newly-established fintech that operates in Romania, please reach to us, and we'll start building the profile and updating the Map.
Listing your fintech in the Map is free, and it will always be free!
Apple's M&A business is quiet and different, focusing on buying talent
Did you know that Apple acquired about 100 tech companies in the last six years, most of them small and under the radar?
Apart from getting a better knowledge in what technologies Apple is betting on (augmented and virtual reality, artificial intelligence, maps, health, and semiconductors), the CNBC piece of news sheds light on the "acquihire" strategy (buying companies for their engineers), that is discretely done by the 2.2 trillion dollar tech giant.
Apple acknowledges in this way that talent is one of the most valued resources, and it can be found everywhere, in large or small companies. That's why Apple tends to put a price tag on the workforce, not on the technologies or other intangible assets.
"Some people familiar with Apple's process say that it assigns value to companies based on the number of technical employees, with a price tag of around $3 million per engineer, instead of basing it on the start-up's revenue or fundraising track record. "
BCR prepares some interesting releases: Google Pay, open banking, and a digital loan for the microenterprises
BCR clients can use their George cards in Google Pay. With the official release, this will happen through in-app provisioning from the mobile banking app. Still, I managed to enroll my card directly in my Android phone, following this path in the Settings: Google / Account Services / Google Pay.
Also, according to a couple of persons involved in the project, BCR will soon announce a digital loan facility for the microenterprises that will ease the lending process and shorten the time of approval.
Regarding the multi-banking feature, some of the clients have already tested it, and it will be soon deployed.
The Moldovan P2P lending platform Fagura is crowdfunding on Seedrs
In mid-May, Fagura will be listed on Seedrs.com. The team aims to raise an investment of about 250,000 Euros, which would be equal to approximately 11% equity of the business.
Fagura.com is the first P2P lending platform (alternative investments in loans) launched in the Republic of Moldova, with an automated scoring that allows decisions to be made in less than 1 second.
According to its founders, the company has about 22,000 registered users on the platform, over 300 active investors who have generated financing worth around 0.5 MLN euros for another 640 individuals.
Recently, another fintech from Romania's Fintech Map - iFactor - raised EUR 700,000 on Seedrs in a round led by ROCA X.
Last year, two other startups from the Map - Seedblink and Oveit, raised EUR 500,00 each on Seedblink, suggesting that equity crowdfunding is getting traction in Romania.
Bad Habits That Prevent Banks from Delighting Customers
Running a bank and simultaneously creating a world-class digital experience is hard work. But Mike Parsons, the CEO of Qualitance, will identify the blockers banks experience amidst digital transformation and embrace an agility mindset as we explore solutions.
Based on this BottomUp course, Mike delved into the agility mindset and explored the solutions to break these bad habits.
Join the conversation about customer experience at the Future Banking conference on May 18th, where Mike and I will have a 30 min fireside chat.
Jobs in Fintech & startups
Revolut is looking for a Business Development Manager for the Romanian market
Project manager with sales skills for our virtual event platform
Finally, we have the first registered TPP in Romania
Smart Fintech has become the first Romanian PISP (Payment Initiation Service Provider) to get the central bank's license. The PSD2 compliant payment proposition is called Smart Pay, and it will enable account-to-account transfers.
Currently, the use case requires the IBAN and your bank's name to initiate an open banking payment. Still, the IBAN won't be mandatory in the future, said Alexandru Cociu, one of Smart Fintech's co-founders.
After the authorization, he revealed some of Smart Pay's use cases, like e-commerce payments or payroll transfers.
Also, Smart Fintech could become the gateway for unlicensed players that could benefit from the account to account payments without going through the regulation treadmill.
Listen to the Smart Open Banking podcast to get more insights from the authorization process.
Check other worth mentioning Finbites on Future Banking’s Linkedin page.
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