Digital Banking becomes Multiservice Provider

Giorgi Kapanadze and Oksana Leonova
Giorgi Kapanadze and Oksana Leonova at Caucasus SME Banking Club Conference 2019

The banking needs of small and medium enterprises (SMEs) are changing dramatically, and the banks’ responses evolve accordingly. While SMEs use digital platforms for their businesses, banks are offering banking and non-banking services on these platforms too. Moreover, banks started aggregating a wide range of products and services so that customers gain insights that help them make informed decisions. Through aggregation, banks’ interaction with customers becomes broader and richer and extends beyond banking: banks want to help customers on their entire journey, including outside the narrow confines of what used to constitute banking.

“Digital banking should be like ecosystem. It should cover different aspects of business. Banking, lending, accounting, switching from one service to the other,” said Andrey Gidulyan, CEO and Founder of SME Banking Club.

According to Gidulyan, during recent five years we are observing the change of consumer behavior, which are going more digital. “From this point it means that people would like to have banking through digital channels. It means that banks need to offer financing via digital channels. Ordinary, it took consumers sometimes weeks to get positive or negative response for loan. Digital financing is the service that nowadays banks need to offer to at least customers with good financial performance. So, while offering better access to finances for businesses, online lending is beneficial for banks and will help them to boost their credit portfolio by acquiring digital customers,” said Gidulyan.

Andrey Gidulyan
Andrey Gidulyan, CEO and Founder of SME Banking Club, at Caucasus SME Banking Club Conference 2019

Existed big number of entrepreneurs on Ukrainian market gave incentive to Alfa-Bank to the development of digital platform. “Customers involved in SME sector amounts over 1.2 million. The main share or over 90% is SMEs. Standard, classic banking is not suitable for such clients. Some remote, simple services are the best solutions for them and this is what digital platform exactly provides,” said Oksana Leonova, VP, and SME Digital Lead at Alfa-Bank Ukraine.

In 2018, Alfa-Bank Ukraine has launched a new online banking for individual entrepreneurs, OK, Alpha. The purpose of which is to save businessmen from routine paperwork and help them focus on business development.

As Leonova explained, OK, Alpha is first of all optimization of costs. Consumers no longer have to reach a bank branch for some transactions. “We decided not to limit this platform only with banking services but allow customers to solve other issues related to their own business. In this regard, we created a cabinet, which we call virtual office OK, Alfa. Consumers can make tax payment, print any legislative document, sell or buy product online. So, by building this ecosystem we aimed at creating a virtual space which would include all the requirements of SME clients. Indeed, banking services take a too small share of the demands that is included in daily operations of entrepreneurs”.

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Oksana Leonova
Oksana Leonova, VP, and SME Digital Lead at Alfa-Bank Ukraine, at Caucasus SME Banking Club Conference 2019

“We are witnessing transformation of banking system. The banks are transforming their business models. Some of them do it faster, others slower. But we cannot find a bank that remained in its old model and continue succeeding,” Leonova added.

Space, the first digital-only bank in Georgia has been launched on May 2018. It took its founders less than a year to build this app with MVP features. Since then Space is gradually upgrading and new customer oriented functions are added.

Giorgi Kapanadze, 33, is currently a Head of Space Georgia. The core team of Space consisted of four people. “The team behind Space is not traditional bankers. Accordingly we started building this app acceptable for us, as consumers,” said Kapanadze.

The main difference between traditional banking and Space is that Space does not have branches. Every operation required for financial management is conducted via app. “The key issue is that the service is affordable 24/7 and all the operations are snappy. All these were not applicable through traditional banking and even mobile apps. The other big difference from consumers’ viewpoint is overall experience that clients get from Space. You can find customers having 10 or even fifteen accounts. At some point it becomes confusing. In our case, we decided to simplify this process and offer one card, one account”.

Giorgi Kapanadze
Giorgi Kapanadze, Head of Space Georgia, at Caucasus SME Banking Club Conference 2019

“Other differences are also at operation model. Human involvement at Space is zero at any process. If we do not talk about a situation requiring some support. All the products are automated that’s why the app is momentary,” Kapanadze added.

Currently Space has over 200, 000 registered customers, more than 120,000 open accounts and over 30,000 active clients daily.

We all know what kind of procedures consumer passes while taking a loan from bank. At Space consumers get it in seconds, by clicking several buttons.

“For business segment, we are currently developing products, which will be conducted of non-traditional methods, non-traditional banking products. We are focused on developing services that will solve exact problem of business segment, like QR installment which we offered to e-commerce shops. We will soon launch the same product for off-line shops. Consumers will be able to scan a product and purchase it with installment. Another tool will be offering discounts and some offers to our app users. It will allow companies to make relevant suggestions to their target audience from retail users of Space. This way, we are trying to link retail consumers of Space with business consumers of Space by adding value to both of them,” said Kapanadze.

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According to Kapanadze, Georgian market is ready for non-traditional services.

“The philosophy of Space is offering all the services that are required for daily management of finances. Accordingly, there is no mortgage or auto loan at Space. Therefore, we see the future in simplification rather than sophistication,” Kapanadze told.

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