How it all began… 5 years ago

An Interview with Fibank‘s Minka Mihaylova

Five years ago, First Investment Bank of Bulgaria became Raisin’s first partner bank. You’re a key reason why we could build up our reputation as a partner for banks across Europe. Why did you decide to put your trust in a fintech startup from Berlin, which back in 2013 couldn’t really prove its business model?

In business, the same as in life, one often has to make decisions about what direction to take. In 2013, Raisin (then Saving Global) was a not-well-known fintech startup company but the project presented by its founders (Tamaz Georgadze, Frank Freund, and Michael Stephan) sounded promising. At Fibank, we have accumulated experience with innovative, versatile projects that brought with them the prospect of success. We were presented with a fresh option for attracting funds in a period following the global crisis of 2008, when the interbank capital market was stagnant. This was a well-balanced project with clear roles and responsibilities, from which all parties involved could benefit. It was not without significance that the supervisory authorities were familiar with it and gave their support. Today, five years later, we can confidently say: Raisin was the right choice and we are proud to have been the first bank to support it.

Raisin was the right choice and we are proud to have been the first bank to support it.

Let’s fast forward: five years later Fibank customers in Germany can put their money in four different Fibank term deposits and save up to 1,05 % p.a. in interest. What are the biggest advantages Fibank has in working with Raisin?

The development of deposit products, their parameterization and tailoring to customer needs are always a priority. Today, in line with the trends in European money markets, interest rates are lower but we have sufficiently developed our deposit products to provide German customers with flexibility and choice. For example, today they can not only roll over their initially selected deposit but also opt for another Fibank deposit offered on the Raisin platform; choose whether they want interest to be capitalized or paid upon maturity to their account with MHB-Bank, etc.

For Fibank, the greatest advantage of working with Raisin is the direct access to as a large market as the German one.

For Fibank, the greatest advantage of working with Raisin is the direct access to as a large market as the German one. The Raisin project implements in practice the opportunities laid down in the European legislation on free movement of capital, with unified regulations and opportunities for development of a common European market. Other advantages are related to the diversification of our borrowed funds which is an important economic indicator for a financial institution. Fibank is among the leading banks in Bulgaria and has repeatedly been awarded for the quality of its service. Attracting deposits from other Member States through the Raisin online platform is a relatively fast and easy way to optimize our funding sources. Moreover, deposit insurance rules are uniform for all Member States (up to € 100,000) which makes deposits offered on the platform even more attractive to customers. Last but not least, we should mention the advantage of exchanging experience, knowledge and ideas. The platform is already used by nearly 60 banks from 19 EU countries which is truly inspiring.

Fibank started out offering 3 % for a term deposit with Raisin in 2013. Since then, interest rates have decreased quite dramatically. Do you think the time has come to reverse this trend and is the ECB on track to raise rates by the end of 2019?

Yes, our forecasts envisage gradual increase in interest rates over the coming years. Bulgaria is not yet part of the Eurozone (this year the country declared its intention to join ERM II which is a step in that direction) but nevertheless our market is closely related to the European one and the ECB policies have significant impact on us. As we know, the ECB has not changed interest rates since March 2016 and according to the latest statements, this policy will continue until mid-2019. The interest rate recovery process is slow and largely depends on positive trends in the macroeconomic environment and credit intermediation that are already visible.

We regard PSD2 as an opportunity to develop the online services tailored to the individual profile of each customer.

A lot has happened in the European fintech sector, and not only regarding savings products. Do you seek cooperations with other fintechs specializing in lending, payment, financing or anything else?

The fintech sector is growing very fast, following the rapid development of information technology. The new PSD2 payment directive will push forward online payment and financing services and open new prospects for lending and other products. As a bank supportive of innovations, Fibank will respond to the new challenges and trends in service development. We regard PSD2 not only as a regulation but as an opportunity to develop the online services tailored to the individual profile of each customer. Whether we want it or not, the virtual world is strengthening its presence and is becoming ever more real.

Is it true that Fibank wants to connect more to business customers and will there be a new product for German businesses?

In implementation of our strategy emphasizing the development of retail and SME banking, Fibank is launching deposit products for small and medium-sized enterprises via the Raisin platform in Germany. We will start with two products: one-year and two-year deposits with annual interest rates of 0.55% and 0.65% respectively. The option for selecting between capitalization of interest or payment on maturity will remain, same as with our retail deposits. Further down the road, our plans are to expand our presence on the Raisin platform to Austria as well other markets.

We believe that mutual cooperation between the banking sector and fintech companies is the right formula for going forward in the field of online services. The Raisin platform is a good example of this.

What are the biggest challenges Fibank has had to overcome in the last five years and what are your plans for development in the next five?

One of the major challenges faced in recent years by the industry, including Fibank, has been the growing importance of digitization in the field of banking services. Banking institutions have the experience and resources to build the new structures but are slowed down by regulations and by paying more attention to observing stability and tradition. Startup companies are flexible and adapt more easily but need support and sustainability. Therefore, we believe that mutual cooperation between the banking sector and fintech companies is the right formula for going forward in the field of online services. The Raisin platform is a good example of this.

This year, Fibank celebrated its 25th anniversary. Over the years, we were able to establish our brand in the Bulgarian market as a standard for high quality. Our future plans are related to sustainable development, including by expanding the Fibank Group, while continuing to place a predominant focus on customer service.

What would you tell other banks if their CEOs asked you whether they should cooperate with Raisin?

We have always looked at relationships with our partners over the long term. Over the past five years, Fibank has been partnering successfully with Raisin. Together we overcame the challenges of the external environment, enjoyed our success, and shared the difficulties. Therefore we would be happy to recommend Raisin as a reliable partner, one of those that remain by your side.

A huge thank you to Minka Mihaylova and FiBank for reminiscing with us and sharing your insight into FiBank’s decision, fintech partnering generally and the outlook for the future!