Illimity-Fabrick bolster customer base in fintech space
Through the combination of Illimity, Fabrick, and HYPE, a new age of digital platforms could influence the future of Italian banking.
Illimity and Fabrick, both part of the Sella Group and focused on developing open banking and the Italian fintech ecosystem, have come together in a Joint Venture agreement in the fintech HYPE.
HYPE is a subsidiary of Banca Sella and a popular mobile banking platform in the Italian 'challenger bank' sector. The platform allows the legacy bank to expand its customer base and demonstrate its new bitcoin trading service in an effort to “build on its popularity with a largely millennial [and Gen Z] audience.”
HYPE is growing increasingly popular among young people and, after combining forces with fintech firm, Conio, the Italian challenger bank, which services 1.2 million customers, recently introduced the ability to buy bitcoin within its app. This means that, if you have a debit card with the firm, you will have the opportunity to “buy, sell, spend, and store the world’s largest cryptocurrency by market cap.”
The Joint Venture will be mutually beneficial for all parties, with the combined power of the three firms making the most of the new opportunities in the digital financial services and open banking markets, where a client segment is rapidly emerging. “In Italy alone, there are already over 2.5 million fast-growing clients: these clients are not interested in a bank, but in simple and ‘light’, easy-to-use solutions that respond differently to their financial needs.”
This move will achieve four key things:
- From a strategic perspective, HYPE’s ability to acquire new customers from more youthful generations will unlock a market that Illimity struggles to cater for, but will give HYPE access to Illimity’s customer engagement capability. This means that they will be able to “attract a growing number of customers”, thanks to Illimity’s full suite of services, channelled through commercial partnerships with third-party operators.
- When it comes to technology, “the common evolutionary vision, key components of the shared open banking systems [introduced by Fabrick], [and the] use of the same modern core banking system (Centrico), as well as the similar architectural design of the two platforms illimitybank.com and HYPE in both banking and non-financial products, will ensure that integration is more immediate than is generally the case in these type of deals, without sacrificing market presence.”
- On the sustainability of the business model itself, the venture will create become more economically sustainable and profitable, courtesy of the “synergies related to marketing investments, commercial partnerships with financial and industrial operators, and developments in technology.”
- And, finally, from a managerial perspective, by fusing the combination of experts and specialists, all of whom have honed their crafts for a myriad of years whilst working at both Illimity and HYPE, “a team with an experience that is almost unique on the market”, will be born.
“Overall, this initiative - between the pro-rata profit contribution from HYPE, funding synergies and lower cost of direct banking activities - will immediately generate a positive incremental impact on Illimity net result, estimated to be around €10m in 2023 and around €20m in 2025.
"Moreover, the deal is estimated to generate a slightly positive impact on Illimitiy’s regulatory capital at the closing date, set to increase thanks to the positive contribution of the initiative to the expected net results in the period 2021-25."
CMA warns UK and Irish banks over bank transaction histories
Specifically, the CMA named prominent challenger bank Monzo, the Bank of Ireland, NatWest Group, and Virgin Money as not providing customers with records of their bank transactions within the maximum outlined timescale (40 days after closing the account).
Such information is crucial not only for ensuring a smooth transition from one bank to another, but also to provide a foundation for credit applications in the future.
According to the Retail Banking Market Investigation Order 2017, 95% of bank and building society customers should receive their bank transaction histories in at least 10 days.
Reputation: A bank’s greatest asset?
Of the 150,000 customers affected, Monzo was by far the main contributor - 143,000 (95.3%) - with the other three dividing the remaining 7,000.
The extent to which the magnitude of its mistake is attributable to being a digital-only bank is not clear, although it may give some customers pause for thought. With a superior customer experience being among the bank’s greatest assets, continued reputational damage is something that it cannot afford to sustain.
Although the CMA’s action in this instance has been to issue each bank a warning and order the immediate dispatch of all outstanding information, it has warned that future breaches will carry heavier consequences. Measures could include legally enforceable compliance audits on a yearly basis.
Helping customers get a better deal
Condemning the banks for negligence that could negatively impact customers’ desires to take out loans or mortgages, Adam Land, CMA Senior Director of Remedies Business and Financial Analysis, promised that his organisation would remain vigilant to similar behaviour moving forward.
“Banks must comply with all the rules – that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.
Image source: gov.uk