Although W.UP is only four years old, the banking IT and software development firm has already grown into an SME in Hungarian terms. As founders Béla Bodnár and Eszter Kolozsvári say, the international software firm Misys had acquired banking solutions firm IND in early 2014. The new owner focused, and still focuses, on “packaged” software solutions.
“I worked for the company for 12 years, but after the acquisition, we left within half a year”, recalls Béla Bodnár. Along with his business partner, Eszter Kolozsvári, he invited a dozen of their co-workers to join the new company. Luckily, one of the major bank customers insisted on this more customer-centric view, and was happy to rely on the old guard for a major software acquisition. Their starting capital of approximately HUF 50 million was enough, seeing as the software installation and implementation tasks from this major client ensured the required revenues right from the start. One telling fact of their operations is that the start-up, now on its way to becoming a medium-sized enterprise, has operated since then on cash flow, without external resources. On the long run, they would like to raise capital if they want to acquire companies that fit into their strategy. However, they have no plans to this effect on the short term.
The fintech start-up started with only a few employees in Autumn 2014, and began work in earnest in 2015. As they had a stable, major banking customer, the small team has able to, even in its early days, take the time to calmly decide in which direction to develop the company. They have greater ambitions than working on customised banking IT solutions. The mobile application division was a given; they gained three major Hungarian banks, MKB, Budapest Bank, and TakarékBank as customers, and now also have several foreign partners. After lots of internal meetings and conversation, they decided to start product development in the banking digital sales field, and on coming up with something that would also be considered cutting edge at the international level. They envisioned a software to recommend banking products and services automatically, based on the life situation of each individual, and which would support digital sales. The solution is based on the financial institution’s pre-existing data on the customer and on the given segment. As Béla Bodnár says, the banking industry is an especially conservative sector, and change generally happens very slowly. Astoundingly, at a global level, banks realise profits of USD 700 million from selling loan products, investment packages, insurance, and other financial and related products. Incredibly, the vast majority of these are sold in person at branch offices.
W.UP’s innovation is that it takes an innovative, data-driven marketing view into banks. According to the managing director, financial institutions still approach sales from the product side – i.e. personal loans, mortgages, various forms of insurance, etc. – while in e-commerce, it has been realised a long time ago that the key is a detailed understanding of customers’ circumstances. The product to advertise, recommend, and sell, is the one that the client needs at the moment, phase, or life situation in question. Sales driven in this manner work well, even exceedingly well. That is, there is no need to flood the entire world with ads for personal loans, mortgages, or a new debit card through all forms of media. Loan companies should instead use the massive amount of data they are sitting on. For people who have mobile banking applications, their bank might know much more about them than anyone would first guess. Naturally, the customer’s consent has to be requested for this, in a retractable way, as per the GDPR. Let us say that the customer makes repeated purchases in DIY or furniture stores, and this data is automatically retrieved from bank transaction data. What does this tell us? That they are moving into a new home or renovating a home, therefore they may need this type of a loan. This is especially true if expenditures and the account balance show us that the credit margin or funds are getting low. What is more, a bank’s mobile application can access photographs stored on the telephone, and an automatic programme could even notice when someone starts taking pictures of home interiors. Or we might also learn from the phone that they are spending a lot of time on real estate sites, which probably means that they are looking for a new home. Especially if the customer is in the age when expenditures include “digital footprints” that imply that they will soon become new parents. This is what we call “understanding the circumstances”, and the bank needs no better “entry point” to start offering loan products or even personalised offers. W.UP’s “Sales.UP” banking products model dozens of similar situations.
These are excellent for use by marketing divisions to incentivise sales. If enough signals point at buying a flat, the bank can dramaticaly increase its sales with an offer that “lands” just at the right time. This sales logic is used very efficiently by major digital companies such as Google, Facebook, Amazon, etc.
However, introducing such a new idea into the conservative world of banking has its challenges. As Béla Bodnár says, because of the novel approach, financial institutions do not yet have a dedicated area for this field. This task gets allocated to marketing, or IT, or the rapidly growing digitisation teams. Luckily, they already have competitors, which is a good indicator that they are in a good place, and that their work is worthwhile. The international field includes companies such as Moneythor, FlyBits, and Personetics from Israel. Béla and Eszter, along with their management team, are going to the major expos and conferences diligently, which has resulted in them gaining many new customers. In February, the professional audience rewarded their solution with a “Best of Show” award at the major European fintech conference, Finovate Europe.
They are not only in touch with the banks of the region, but they travel more and more to Switzerland, Milan, Paris, and Vienna. This fall, they will go to New York to test the American waters for their innovative Sales.UP solution. So far, they have invested more than HUF 500 million in its development.