Kalin Radev,CEO, Software Group
Software Group, founded in 2009, is a global technology company specialised in digitalization and integration solutions for institutions that provide financial services. The company, headquartered in Sofia, serves a worldwide client base from nine regional offices located in Australia, Egypt, Ghana, India, Kenya, Mexico, the Philippines and the U.S. Software Group’s customer list includes Bill & Melinda Gates Foundation, MasterCard & MasterCard Foundation, International Finance Corporation (IFC), World Bank, Asia Development Bank, and seven of the ten biggest microfinancing networks in the world, among others. In March, the company signed an 18 million euro loan agreement with the European Investment Bank (EIB), supported by the Juncker Plan – the EIB’s first venture debt operation in Bulgaria.
How does your omnichannel digital platform solve problems for financial institutions?
Actually, we solve two main types of problems which are structurally related to either the optimisation of internal systems, or the launch of new channels – efficiency and out- reach. We do this though our omnichannel digital banking platform that has several key elements. One is an enterprise integration platform which automates links between systems, such as core banking, mobile wallet, agency banking, etc., and the second one is an omnichannel infrastructure that helps financial institutions launch any sales or end- client service channels. These channels can be used by the employees, the agents of the bank or the insurance institution, end customers, etc.
Some clients from the banking sector come to us and say things such as for example, they have 182 systems and close to 90% of the IT budget goes for maintenance but they want to carry out innovations. Another bank has eleven systems providing 360-degree customer view that are delivered by four vendors. The moment they decide to do some- thing new, they need to coordinate everything with these four vendors. In such cases, we can help by reducing the number of the systems, retiring some of them, optimizing others, automating the links between third ones, etc.
We will also be launching a new service on the Bulgarian market- a chatbot for WhatsApp, Viber and Facebook Messenger that can answer questions people ask the institutions in compliance with all anti-fraud, anti-money laundering and strong customer authentication regulations. Although there is nothing revolutionary in this service, in the past we had to meet with officials and try to convince them that we have the technology and that it is safe, while now we no longer need to convince anyone. Organisations come to us and tell us they want to launch a mobile wallet, for example, that is easy to use, features insurance coverage and supports any type of payments, as well as allows clients to apply for loans, check their accounts with several banks, etc. All of this is possible through our solutions.
Earlier this year you signed an 18 million euro loan agreement with the European Investment Bank (EIB). What are you going to do with the funding?
We are going to use the EIB funds to continue developing in line with our business plan. We have a five-year plan which covers the 2018-2023 period that we review once in three years. The funding will support our current strategy.
The money will go into two main areas. We are a strongly product-oriented company and we are mainly investing in R&D and in developing new versions of our platform.
The other area in which we will invest is business development and marketing – we will reach more clients and enhance even further our offering for them. A lot of things are related here such as building an ecosystem of partners – complementary solutions, technology and service partners, sales, digital marketing, entry on new markets, etc.
You mentioned entry into new markets. Which markets are you eyeing?
We have clients on all continents, and we will have new markets on all continents. Speaking about Europe, the German and French markets are very interesting, and in the Balkan region we are focusing on markets such as Romania and Serbia.
In terms of sectors, where are you going to seek new clients?
We are working mostly with financial institutions, insurers, telecoms and factoring companies, all of which could offer financial services.
We do not plan to come up with some brand new products that are unrelated to what we have been doing so far. We will continue to develop the same platform, making it more mature and enterprise-ready.
How would you comment on Bulgarian organisations’ readiness to embrace innovations?
Institutions that have flexible platforms allowing them to respond quickly to the needs of the market are best positioned to succeed. In my opinion, some banks that are strong enough, big enough and with enough cash will probably continue to follow the traditional approach. Another group that will probably do well are the banks that will evolve into in- vestment companies. The third group that we think will have serious success are the so called digital banks. And it is not so much banks but rather fintech companies that are moving in that direction. All the others need to reconsider their strategies.
In my opinion, things are developing faster and faster and there are institutions willing to embrace change but the problem is that it doesn’t happen overnight. When you have to replace the key elements of a bank system in order to allow it to carry out innovations, to enter the investment or digital market, this cannot happen in three or six months. From our experience, if banks follow their standard approach, in the best case scenario, the process takes 18 to 24 months.
In Bulgaria, we are witnessing a serious increase in activity. We hope that it is driven by the willingness of some key market players to innovate and enter the European markets, and not only by regulations such as PSD 2, GDPR and others, even though they are indeed a strong motivator. Competition too is intensifying, we have disrupters like Revolut starting operations here. Furthermore, the so called anti-banking roaming law is entering into force in the beginning of next year and no organisation will be able to charge any longer 10, 20, 30 or more euro per money transfer from Bulgaria to the Netherlands, for example, which will obviously deal a strong blow on the revenues of certain institutions.
A lot of projects are happening on the Bulgarian market. Allianz, for example, is carrying out a very good innovation, other banks have launched projects together with us as well. There will be more interesting news coming up later this year.
What I personally find most interesting are customer expectations which are growing drastically both globally and regionally. Clients expect that when things have reached a certain point in other areas of life, banks with all their financial power and big IT departments, should be on par.
In conclusion, where do you see your company in three years?
Ten years ago we were the first to provide certain technologies, we are the first ones now to benefit from the EIB instrument. In the future, we hope to become the first unicorn in Bulgaria.