Dimiter Prodanski is the CEO and member of the MB of MFG Digital, which unites Access Finance Bulgaria (Biala Karta), Axi Romania, Axi Poland, Access Finance Spain, and Access Finance USA. He has an essential role in the expansion of the card business of the MFG group on five foreign markets. Prodanski is a CFA charterholder since 2006. He speaks six languages and holds a master’s degree in business administration from Sofia university St. Kliment Ohridski.
What developments led you to set up MFG Digital within the MFG group?
When MFG group was founded in 2015 it included two business lines – home collected lending and alternative channels. Since then, the group grew a lot. If we consider only the credit cards, back in 2016 we had operations only in Bulgaria and only with the brand Biala Karta. Now we have successful businesses also in Romania, Poland and Spain. And we set up our business in the US, having an office in San Francisco. Also, in Bulgaria we added new card products such as Biala Karta Gold and A1 card. And we grew our
customer base from 40,000 to over 200,000 cardholders.
The development to MFG Digital was gradual and strategic. As a first step MFG formed a sub-division of the group to manage the credit card businesses with its own divisional board. Part of the high management decisions started to be taken by this board and smaller number of issues started to be referred to the board of MFG group. Then one day, our investors and MFG board decided that this part of the business has higher potential to grow faster because of its higher scalability and this required even fore focus and autonomy. So, we created MFG Digital – a part of MFG group that is responsible for the development of one main business line – credit card lending through Access Finance and its subsidiaries. Additionally, we work closely with our own B2B card and payment services provider – the e-money licensed company, Easy Payment Services, and iuvo – one of Europe’s leading P2P investment platforms, as some of the companies within MFG Digital are very successful originators on the platform.
What are MFG Digital’s strategic goals?
Our goal is to offer to the clients of all the three business lines superior products at fair prices. We want to achieve that through a mix of innovation, technology, constant focus on our clients’ needs and management experience. The goals of MFG Digital will be realized by its companies. One of our dreams is to make Access Finance a unicorn. We believe to have a business model that would allow us to conquer that vast and competitive US market. But to do that we need the support of external investors, especially such ones who have experience in our business and who could support us both with funding and strategic advice. So the goal of Access Finance of becoming the preferred credit card for clients underserved by banks in all of its markets goes through achieving strong unit economics and convincing investment funds.
The strategic goal of Easy Payment Services (EPS) is to become the leading embedded finance company in Europe and why not on a wider stage! By virtue of its team, licenses, platform and integrations, EPS may deliver financial technologies and multiply the revenues of many different businesses. Embedded finance is already strong in the US but it’s just gaining traction in Europe and EPS should be one of the leading players.
And the goal of iuvo is similar to that of the famous US fintech, Robinhood. We want to make highyield investments accessible to ordinary people with no investment experience. And unlike Robinhood we started with P2P that offers fixed yields and is much easier for the majority of people to understand.
Could you share any details about your planned financial performance in 2022 and 2023?
For the credit card business, we plan to close 2022 with 46 mln. EUR revenue and 2023 – with 80 mln. EUR revenue. In both years we would have EBITDA at just about break-even. This means that all our profits from Bulgaria, Romania and Poland will be just enough to cover our losses in Spain and the US.
What are your expansion plans? Where do you see biggest growth potential at the moment?
I believe that we will be able to realize our dream of setting up a successful business in the US. We have already agreed with a card issuing bank and we have the main technology provider. Although the market is generally very competitive, credit cards for the underserved segment are very uncommon and this gives us a great opportunity.
Regarding our partners from iuvo, I see huge potential there as bank interest rates stay historically low and inflation is on the rise. So people start to look for alternative investment options and iuvo is one of the best, relatively safe and easy to manage. Traditionally, we’ve had most clients from Bulgaria but we feel there is strong growth potential in Germany.
Where does MFG Digital’s strategic focus lie?
Maybe our main strategic focus now is developing our management team. We opened three new markets – Romania, Poland and Spain practically with the same people. I feel that we have reached our limits of successful growth and we needed ambitious, bright and hard-working people to make us better. I’m very happy that this year we already joined to our team several top managers, including new heads of Access Romania and Access Spain as well as CFO, CMO and chief data science officer. In the coming months we have a lot of work to further integrate all of them and join some new bright minds, especially for the US project.
How did consumer habits change over the past few years and what key trends do you see impacting the global markets in 2022 and 2023?
Consumers use more and more services through mobile devices. I’d say that desktops and laptops are more of an exotic nowadays when it comes to retail financial services in Europe. And that in turn drives the usage of mobile apps. The challenge here is how to make your clients engage more with the company through the app. Because if the clients don’t really feel its benefits, they will not use it and will likely delete it. So the hard task we have is how to bring to the client additional value through the app.
And in terms of global markets, we see that the valuations of fintech companies fell sharply. So, management focus has changed from growth to profitability. This requires a change in the mindset of the entrepreneurs and not everyone will survive. As investment funds and some fintechs have their bank accounts full, I expect to see rising M&A activity. The more successful businesses will be taking over less successful competitors to get access to new technologies, markets and people. I also expect to see more vertical integration.