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How to launch a full-fledged digital bank in six months. The case of Home Credit Bank and red_mad_robot Central Asia. Part 1

Home Credit Bank and red_mad_robot Central Asia have created a digital bank for entrepreneurs in six months with convenient and fast transactions, the ability to conduct foreign trade and a personal sales account.

We tell you how we managed to meet record deadlines and launch a fully functional digital bank from scratch, managing a team of 70+ people.

Home Credit Bank is a bank with strong expertise in consumer lending and an active partner base of 119.6 million customers worldwide.

  1. It is among the top 10 banks in terms of the number of retail customers. insert a link in the line - Is in the top 10 banks -
  2. Assets as of February 1, 2023 — 538 billion tenge, equity — 132.8 billion tenge.
  3. 426.9 thousand points of sale and service offices around the world.

By the summer of 2022, the banking market for SMEs in Kazakhstan began to change due to the departure of several major players who occupied top ratings and provided ready-made solutions and services for SMEs - Alfa—Bank, SME Banking, Sberbank. A niche was freed up, quickly and efficiently occupying which banks would gain an advantage among competitors. 

Less than a year ago, the SME direction appeared in the structure of Home Credit Bank — with the arrival of the ex-Digital SME team of Alfa-Bank headed by Damir Kakiev as a business leader and Arina Lepikhova as a digital leader. Before that, the group built a business only on working with individuals. Choosing a company to create a new product, the bank analyzed the experience of different technology companies in developing and launching similar applications. The choice fell on red_mad_robot Central Asia as a company that can enter the project as a full-fledged digital partner who not only performs the task, but is involved in all aspects of product design from market analysis with a business case to development and launch.

"We saw great prospects in the market for the new Home Credit Bank product. We had a lot of accumulated expertise in working with entrepreneurs in Kazakhstan both from the business side and from the development side, and at all stages of the project we attracted leading experts who helped to conduct research, write strategies and implement development," said Agiis Konkabayeva, CEO of red_mad_robot Central Asia.

The mission of the Home Credit Bank SME team is to help entrepreneurs develop their business.  For the company, this meant launching a new line of business — to create a highly competitive digital bank that would solve all the tasks of entrepreneurs in the best way. 

"Flexibility and quick response to market changes and challenges are key factors for the successful growth of business indicators. Trends in the development of fintech open up huge opportunities for banks to develop the service and increase the customer base. The most important thing here is to be able to adapt existing and launch new products at the intersection of business tasks, user needs and technological capabilities," says Arina Lepikhova, Head of Digital SME Home Credit Bank.

There are almost 2 million entrepreneurs in the Kazakhstan market, 1.6 million of them are representatives of small businesses, more than 300 thousand are merchants. All of them are active bank users, but most of them are serviced in 2-4 banks, because none of the existing ones covers all the needs. 

The task was seemingly impossible — to launch the application in a little less than six months from the start of development, creating a high-level customer experience, and all three main value propositions had to work simultaneously and equally well. The average market rate for the creation of such a product is 2.5 years, and the process usually develops iteratively.

"There was no point in creating another daily bank - it was necessary to increase revenue from the user's needs," says Agiis Konkabayeva, CEO of red_mad_robot Central Asia.

In the search for the best way to cover the key needs of entrepreneurs, the logic of the application was based on four aspects: 

  1. Take over the routine related to financial activities.
  2. Simplify interaction with non-financial services and help develop business. 
  3. To offer complex competitive products: foreign trade and foreign exchange contracts. 
  4. To package this functionality into a convenient and high-quality service.

At the same time, the Bank received a new turn-key business line, new customers from the SME segment and increased the loyalty of existing customers.

"SMEs are what motivates us. There are almost 2 million small companies in Kazakhstan, 400 thousand open annually. Almost 4 million Kazakhstanis are employed in this sector. E-commerce is growing by 80% per year, the level of non-cash turnover is about 85%," explained Damir Kakiev, head of the SME block at Home Credit Bank.

The final product

In the first release, Home Credit Bank and r_m_r CA launched a new digital bank that helps users conduct business in one application. Its functionality includes: 

  1. Basic daily banking, 
  2. The ability to conduct foreign trade and conclude foreign exchange contracts,
  3. Personal sales account.

Gradually, the bank's team plans to develop a web direction for large businesses, expand the functionality of foreign economic activity with automated currency control and incoming payments from abroad. And also — to launch online accounting: automatic calculation and payment of taxes, personnel administration and primary documentation.

The project developed in three stages: 

  1. Market analytics, product research and business case, 
  2. Designing, 
  3. Development. 

At each stage, the r_m_r CA team attracted the best specialists of the market. The expertise and long—term experience in digital banking of CEO Agiis Konkabayeva helped to build the process correctly - in the first months, the entire management staff of red_mad_robot Central Asia and red_mad_robot MSC were involved in business analysis, design and construction of all CJMS.

Market analysis has shown that the SME segment is the most dynamic in terms of growth in Kazakhstan, it accounts for about a third of the country's GDP (36% according to 2022 data), the e—commerce market is growing annually, and digital banks are actively developing in retail trade - non—financial services are becoming an upward trend.

Together, the bank's team and r_m_r CA identified the deep needs of users and formulated a product hypothesis. We conducted in-depth interviews with B2C and B2B entrepreneurs from major cities of Kazakhstan in trade and services, made a portrait of the client and that's what we found: 

  1. Users are attracted by the availability of installments. But the commission is often unprofitable for the seller, so there is a need for an installment plan in the subscription format.
  2. Foreign economic activity and cross–border transfers are now long, expensive and inconvenient. There is a request for a bank for foreign trade with convenient and profitable international transfers at maximum speed.
  3. Transfers between legal entities require the use of EDS keys and access to a PC. And they should be as simple as between individuals, and be carried out without delay — with instant dispatch and enrollment.
  4. The mode of operation of banks is not synchronized with the lifestyle of an entrepreneur. They work only on weekdays, so business-critical operations cannot be done on weekends or in the evening.
  5. Each bank has its own QR code and an impressive commission, and transfer transactions take a lot of time — the seller and the buyer lose time and money. Therefore, it is relevant to accept payments from individuals, regardless of the buyer's bank and with a reasonable commission, accepting funds by QR from any bank account and instant crediting. 
  6. Entrepreneurs are worried about contracting and interacting with legal entities due to a lack of expertise. Therefore, there is a need for a partner bank that shares responsibility and risks with the business, helps to conclude contracts with counterparties on its platform, informs about the progress of the contract and monitors the fulfillment of obligations.

Therefore , the value proposition of the new product was based on three main functions: 

  1. Simple and fast transfers between legal entities. 
  2. International bank, the best for foreign trade: convenient and profitable cross-border transfers.
  3. Personal sales account, which helps to track statistics and increase business turnover with the help of installment programs. 

"The result of the work of Home Credit Bank and red_mad_robot Central Asia shows that in the conditions of rapid restructuring of the market, it is possible to launch breakthrough products even in a short time, making effective decisions together with the best experts. And rapidly promote the market of Kazakhstan to the world level," Agiis Konkabayeva said.

Read about the best user scenarios on the market, experimental design concepts, the trending Flutter technical stack and progressive microservice architecture in the second part of the material.

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