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Are former bankers building the next Polish unicorn in Poland? – FinTech Futures

Are former bankers building the next Polish unicorn in Poland? - FinTech Futures

Piotr Jan Pietrzak

The wave of start-up corporations in the banking business is spreading round the world as the number of initiatives carried by the fintech wave appears countless. Many of those distractions comply with an identical pattern of improvement. Step one is to construct a robust consumer base and then steadily ask for extra money from buyers. When the money runs out throughout product improvement, getting a license for banking is the next step. Finally, start-ups turn out to be banks (on paper)

Regardless of all the considerations and restrictions, a banking license provides scale and access to a larger customer base, especially in retail area. This interprets into an extended-time period efficient capital base in the form of deposits. An analogous path is to bunq (Netherlands), N26 (Germany), Atom (United Kingdom) and a number of other different begin-ups

What about changing this technique? First, fill the pockets with cash (massive cash), get a financial institution license, and then find clients? Three former Polish banks are already fascinated by this. They are building their own challenger banks in Poland right now as you read this text.

In all probability one among the greatest supported fintechs in Europe

To know why so much attention is being paid to the undertaking, we should always first return to 2008. Think about you’re getting ready to start out buying and selling for your enterprise quickly. Just some days after launch, the whole market you needed to return to break down, worldwide. Everyone is afraid, massive players are taking place, markets are colliding, everyone is making an attempt to save lots of what they will (including getting themselves behind bars).

What are you ready for a startup undertaking? Most of us are more likely to end up. At that time, Wojciech Sobieraj opened Alior Financial institution in Poland, when the monetary markets have been in dire straits. Might you make investments in the success of such a challenge at such occasions? In all probability not.

I’m going again to 2019. The company is a 10-year-previous fintech with more than 4 million retail clients, providers to 2 hundred thousand corporations, and manages about $ 17 billion in belongings (8th in Poland). Maintain in thoughts that the financial institution solely operates in one country. Mr. Sobieraj is not the chief of Alior. Now he’s dreaming of the success of this venture in different European nations

By the end of 2018, the first jobs have been on the Web – Vodeno began to develop and it is going quick.

Why this fintech as a result of the media has so much attention? This is mainly resulting from two causes – group and funding. Vodeno is led by an area superhero workforce that gathered round Mr. Sobieraj like the Avengers around Captain America or Iron Man. These names is probably not acquainted to the wider international viewers, but these individuals are answerable for building the banking sector in the nation. As far as funding is worried, we will get an answer from the listing of board members where we see a couple of representatives of Warburg Pincus.

Warburg Pincus is predicted to take a position between 450 and 500 million euros in Vodeno. It is one among the largest sums invested in European fintech, if we examine it to the "mere" EUR 336 million owed to Revolut over three years. Warburg Pincus is one among the world's largest personal fairness companies. The company raised 18 personal fairness funds which have invested greater than $ 74 billion in over 860 corporations in greater than 40 nations. Its investment portfolio consists of Go-Jek, Momo and Ant Finance. One factor is for certain, Vodeno's comparison with other fintechs is properly funded.

As an alternative of globalization, the development of economic regionalization continues to be engaging, especially in Europe. A regulatory regulatory place mixed with the confidence of incumbents (as a consequence of the international financial disaster) offers a fertile floor for the progress of problem banks. It is astonishing that a variety of Polish challenger banks are making vital efforts in this state with pan-European objectives – Chia Hock Lai, chairman of the Singapore FinTech Association.

The worth proposition and merchandise are nonetheless unknown. Just lately unconfirmed sources revealed two enterprise strains within Vodeno. The primary was the provision of monetary providers to retail and SME shoppers, supported by the newest technologies resembling machine learning and synthetic intelligence. The opposite was white stickers for different corporations planning to launch their own fintec. This is just like what the German Solaris Bank does. The beginning-up deliberate later this yr is probably one in every of the Benelux nations based mostly on the current jobs of Dutch and French-talking professionals.

"It's great to hear about a banking project entirely based on blockchain"

investing in huge blockchain

One other mysterious identify – Horum Bank. Horum is a multilingual form of the Latin demographic identify vary hic, haec, hoc. So Horum Bank translates to "own bank". Whom? It’s a part of a gaggle of experienced ex-executives of Poland's largest financial institution, PKO BP (EUR 70 billion). The challenge started when Jacek Obłękowski resigned as PKO BP vice chairman in March 2016. At the moment, insiders unfold the rumor that he was not going to retire, however slightly to construct his sleeves and construct a cellular-only bank. But then he disappeared into the skinny air. In Might 2018, information started to appear that Obłękowski had returned and, with the help of his former colleagues, opened a challenger-panoramic financial institution utilizing blockchain

There are several ways in which the shared ledger know-how of the financial world is already in use. The most important space the place we see change is the digitalisation of contract instruments and the use of sensible contracts. Saving one thing to a shared ledger and, as soon as it’s saved, is plain digital proof that this happened. Provenance is a case of the blockchain protocol and banks like this. One other use is for sensible belongings, especially in commerce finance, where clear dates and timestamps make transactions bullet-proof. There are a number of modifications in financing like blockchain: clearing, clearing and payments, however who thought of utilizing it to set up most of their banking actions?

Based on anonymous sources cited by the media, 60% of course of problem banks use blockchain. The Bank's common ledger, funds, transfers and document change use all decentralized accounting methods. Some areas, reminiscent of danger-associated processes, are managed by way of traditional core techniques, as are all the conventional banks everyone knows. Why blockchain? We will assume that the fundamental cause is the potential operational security and the estimated decrease value of system improvement and maintenance. This could present aggressive pricing and better reductions in comparison with different players.

It's great to hear a few banking venture that relies completely on its providers. It might be even more effective if it might be introduced with secure euro cash, that are used not only internally or with bank clients but in addition with different banks.

How a lot money do it is advisable to open a bank on blockchain? Numerous sources inform us about € 150 million. This is much lower than opening a standard bank with IT methods on website 10 years ago. Cash comes from conventional mutual funds, but in addition from the first coin providing (ICO). It is a cryptocurrency roughly equivalent basic promoting firm recognized in the basic investee nation.

What’s the current state? The group polishes its business plan, refines product strains, and has a timeline for market entry and investor shows. The primary buyer segments that Obłękowski sees are small and medium-sized companies and wealthy clients (wealth phase). If all goes nicely, shut family and friends will start testing at the end of 2019. It isn’t clear which market is the first, but it might be one among the Baltic nations with high confidence in new technologies.

Polish Ideas Supported by Chinese Cash

"It is astonishing to see many Polish challenger banks gaining considerable capacity." The financial institution launched in 2000 and disrupted local markets by investing closely in digital channels. In five years, it had turn out to be the third largest financial institution in Poland for patrons. Every thing went nicely until Commerzbank, the essential shareholder of mBank, stopped making an attempt to broaden overseas. This determination would presumably lead to Lachowski's resignation. He in all probability thought "if not Commerzbank, I'll do it myself!".

The first business plan of the new financial institution was to set up a world foreign money trade and transaction discussion board to help rich shoppers across Asia. Hong Kong buyers bought this concept from GSR Capital – buyers in gaming corporations corresponding to: Lattice Power, Didi Chuxing and Philips Lumileds LED. This occurred in the spring of 2016 and was not recognized just lately.

We now know that Golden Sand Financial institution is nearly able to launch and provide cellular first personal banking and asset management. The bank is licensed by the Gibraltar Monetary Providers Fee. The staff utilized for a license some time ago, however it took a while to get the essential rights. At the similar time, we’ve got to cope with Brexit, which can undermine the risk of doing business on the foundation of a single EU nation passport (Gibraltar is a British overseas territory).

Current news stories that Germany is the first market to launch its Golden Sand Financial institution. On the other hand, it is the most conservative financial market in Europe. On the other hand, it is certainly one of the most successful challenger banks like Fiodor Bank or N26. And once more, the Gibraltar license will not be as helpful in the EU when Brexit takes place. Nonetheless, Golden Sand Bank seems to be the first or at the least to start out its software for pre-production servers before the banks of Vodeno and Horum.

Will there be one unicorn in the future?

Ex-bankers have left their jobs Financial providers are pursuing their objectives in fintech mode. This consists of, inter alia: Antony Jenkins (former Barclays chief), Vikram Pandit (former Citii CEO) or John Mack (former Morgan Stanley chairman). Some of them run into banking and are available again to banking, but many have discovered great success in fintech mode. Will the former Polish bankers achieve their huge bitter merciless objective of conquering Europe?

By: Piotr Jan Pietrzak

This text can also be featured in Banking Know-how Journal in the summer time of July-August 2019

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