"TBI Bank will approve loans in Bulgaria entirely online in 9 minutes": Petr Baron talks to Forbes
13.12.2018 Share +
TBI Bank's acquisition of a 9% share in Norwegian Monobank came as a surprise for the market and attracted a lot of media attention towards us. We were flatered by Forbes Bulgaria's interest and the opportunity to explain the details behind the deal and some insights on our current projects.
Here's the full text of the interview Petr Baron, gave to leading Bulgarian finance journalist Nikolay Neychev:
About a month ago, the Bulgarian TBI Bank, landed an unusual deal for the local market. It acquired a 9% stake in the Norwegian bank Monobank ASA, a digital bank with no offices, with all services offered entirely in the digital world and through a mobile application. Monobank manages a portfolio of net consumer loans for over 360 million euros.
This is perfect occasion to talk about the digital future of TBI Bank with Petr Baron, Chief Executive Director of TBIF Financial Services, the copmany which owns the lender.
Before we begin our conversation, let me first clarify something. The first digital bank in Ukraine, which already has 500.000 users, is also called Monobank. Is there a link between it and the Norwegian bank Monobank ASA, in which you acquired a stake?
By no means, except for the coincidence in the name. In fact, the Norwegian bank was in operation already in 2015, while the Ukrainian project was launched in 2017. Moreover, the Ukrainian mobile application Monobank is not a bank in itself, as it uses the bank license and the capital of the Ukrainian Universal Bank. Similarly, the popular British Revolut is not a bank, but many people think it is only because it offers financial services. This is because consumers are increasingly focusing on what services at what price are provided, as opposed to whether the provider of these services is a bank or not.
How did you decide to buy a share specifically in Monobank?
We strive to participate in various events, conferences, round tables to keep up with what is happening in the sector. In addition, the new CEO of the 4finance Holding, the corporation owner of TBIF Financial Services, Oyvind Oanes, who took office in June, used to be a member of the board of directors of Monobank ASA. We noticed that Monobank has been developing very successfully and growing at a healthy pace in recent years in the Nordic region, traditionally very strong in digitization. In addition to Norway, they also work in Finland and have a plan to start operations in Sweden.
Monobank ASA and TBI Bank manage approximately the same amount of assets, but at the same time while we employ more than 1.000 people, Monobank has 46 employees. The main reason for this development is, of course, the fact that consumers are looking to use new channels for financial services, especially digital channels. This allows the bank to optimize its costs.
What does this deal mean for you - an investment or is it a request for a partnership?
We consider it the first step in a long-term partnership. But there is no formal agreement at the moment. We are now considering which of their ways of work can be implemented in our organizational ecosystem. At the moment, Monobank focuses mainly on consumer credit, which is fully functional over the Internet, and has no physical branches. They also issue virtual payment cards, planning to develop B2B and POS business solutions. By number of clients, TBI Bank is larger than Monobank, but we are comparable in terms of volume of assets and total amount of loans, because in the Nordic region people on average take out significantly larger credits than here. As far as markets are concerned, Monobank currently operates on two markets, while TBI Bank – besides branches Bulgaria and Romania also has a passportization to gather deposits in Germany where we partner with Raisin’s online deposit platform. In terms of products, we already have what they offer. The same goes for the attitude and customer experience. But what interests us is how they optimize their processes in the back-end, and there we can learn a lot from them so that we become more flexible.
How do you see the digitalization of financial services in our region?
Still the main share of the business is offline. However, I do not believe that the future belongs solely to online or offline services alone. We have different groups of clients with different preferences and this is quite understandable.
Last year, TBI Bank has already introduced a technology platform for point-of-sale lending over the internet in Romania. This service is now integrated in 400 online stores in Romania and over 45.000 users have already taken advantage of our service. We are already implementing the solution with a large retailer in Bulgaria, and the launch should happen in a few weeks. It then goes through an application process that takes no more than 9 minutes. The system carries out all credit checks and it requires a one-time authentication of the applicant's identity using the camera of the device they are holding. This is concurrently validated by a bank employee, but for the customer the convenience lies in that the whole process is done at home or even via the smartphone without requiring him to visit a bank branch at all. The optimized process allows the customer to find out if he has been approved for the credit on average for 9 minutes. The main reason for this is that much of our risk assessment and credit profile decisions are already automated and do not require human intervention in any way.
How will the system's security be used when entering the account?
Currently, we use a one-time code that is sent to an email upon request from the user. But in the future there will be new, more sophisticated technologies. Now, for example, we are testing the possibility that the user can be recognized by re-entering the system not by entering a password but by the way he types on the keyboard of his laptop. An algorithm has been developed that can recognize differences in the character input model of the keyboard, which is unique to each individual. This would be very convenient for customers. In my opinion, fingerprint authentication begins to fade away. Apple first introduced this technology and we now see that they are starting to bet more on facial recognition. So I'm not sure that this technology will continue to exist for a long time.