In May 2024, Fintech Farm, a UK-based neobank development company founded by three Ukrainians — Dmytro Dubilet, Oleksandr Vityaz and Mykola Bezkrovnyi — raised $32 million in funding to enter the Indian market. The investment is a combination of a Series B round and a Series B Extension round led by the Bank of Georgia.
AIN‘s English-language editor-in-chief, Rostyslav Sobachynskyi, spoke with the company’s co-founder, Dmytro Dubilet, about the recent investment, the company’s main plans, the entrepreneur’s other projects, and the future of the Ukrainian fintech industry.
Let’s start with the recent $32 million investment. How did you manage to raise such an amount?
The deal followed several hundred meetings with potential investors. It was quite a long process. This investment is a combination of Round B and Round B Extension, which took almost a year to complete. And when we received the last portion of the investment from the Bank of Georgia, we decided to share this information with the world.
How does the “Neobank in a Box” model that your company currently operates differ from other BaaS (banking-as-a-service) providers?
If we look at our competitors, perhaps the company that is most similar to us is a neobank in the UK called Starling Bank. They recently launched a sister company called Engine. This is almost the only company with a business model similar to ours. Because most technology companies in this market offer one or more of the solutions you need to run and maintain a bank. We offer a solution that consists of almost 30 to 40 software suites that you do not have to buy from the outside. These are back-end complexes, from CRM to anti-fraud, from a program for managing plastic card balances to a customer support service. And, of course, the key is our mobile application, which in itself is often a key driver of customer loyalty.
The uniqueness of our offering is that it is a truly comprehensive solution. In addition, there are specific banks that have already implemented it and become successful. Our first project was Leobank in Azerbaijan, where we actually became one of the market leaders in a year and a half.
You mentioned that Fintech Farm is different in that it provides operational support rather than regulatory or infrastructure services. Why did you choose this approach and what are the benefits?
In an ideal scenario, of course, we would like to create our own banks and launch them in different countries around the world. But that is impossible because you need a banking license in each country. That’s why we decided to take a key aspect of digital banking startups — technology, which is 80% of success — and sell our product that way.
Our model assumes having only one exclusive partner in each country. And we dream of being represented in at least 50 locations in the next 5-7 years.
Fintech Farm cooperates with banks based on a performance model. What does that mean in practice?
We have a formula that calculates what we get from this digital bank based on operational and business metrics. First of all, the number of customers.
This is not a revolutionary model; in fact, it is used by many vendors, including in the technology industry. If we came in and sold our solution to any bank for a fixed fee, it would be much more difficult.
We have a very simple message: “If your bank and Fintech Farm roll it out, your bank will become super successful.” And we are willing to take the risk that it will become successful.
This often finds a positive response among potential customers. After all, if you come and just sell them a solution and ask them to pay several million dollars for it, it would be difficult for them to take the chance. We say, “Let’s start everything together, and if this bank is successful, we’ll get the main revenue for it.”
Much has been written about the launch of Leobank in Azerbaijan and Liobank in Vietnam. What other markets have you entered and have you managed to gain a strong foothold so far?
To date, we have only fully launched in the two countries you just mentioned — Azerbaijan and Vietnam. A year and a half ago we had an unsuccessful attempt to launch in Nigeria, we quickly closed the business because we couldn’t come to an agreement with the local banks [couldn’t find a full-fledged partner – ed]. On the other hand, Vietnam started very well and we decided to focus on that market.
I would like to say in advance that this year we are launching in two Central Asian countries. It will be Kyrgyzstan and another country — I don’t want to name it now until we sign a formal contract. But we also really hope to launch in India this year.
Why did you choose India? And how exactly do you choose the countries you want to enter?
To be honest, we don’t choose just one country and don’t look at other countries. Absolutely all countries are suitable for us, except those that are part of the “Axis of Evil”.
But of course, markets have their own priorities, depending on the level of competition, the local fintech, the banking system, the size of the population, and many other factors. And according to these criteria, India and Vietnam have always been on our top list.
At one point, we went directly to India, met with many banks and found a very cool partner there. We have been working on this project for the last six months. Now all is left is to “dot all the i’s”, and we will finally sign the contract and announce it. We are very lucky to have a partner who has big ambitions for the Indian market based on our solution.
In terms of numbers, what are the prospects for Fintech Farm in India?
Our target customers are 200 million middle class people in India.
Do you have a strategy for entering a country and finding a strong bank? Or do you have a specific approach for each country?
Typically, when we enter a new country, we look for all kinds of contacts to communicate with those who make important decisions for banks. First of all, we communicate with medium-sized banks. Again, the message is very simple: “Let us do this for you, and you have every chance of becoming the big bank in your country.” And at the same time, we refer to the experience that we have.
On the one hand, there are some personal contacts, and on the other hand, Visa and MasterCard help us a lot with introductions in local markets. With me personally, they had the experience of cooperation in Ukraine, they cooperated with Fintech Farm in Azerbaijan and Vietnam. And they see that when we enter a new market, everything works for us — and this really affects the redistribution of market share among payment systems. We have a kind of deal with them: “If you help us get to know the banks, we will start with an exclusive contract [cooperation of newly established neobanks with Mastercard or Visa – ed.] It’s a win-win for everyone.
Speaking of experience, in your latest post, you noted that “a part of me regrets that I once left monobank to serve in the Cabinet of Ministers of Ukraine, only to be fired within six months”. What is your current relationship with the monobank team? Do you think about returning?
My relationship with the monobank team is excellent. They are my friends. But I have no will to return. If you have already left, what will you do here?
It was a very big decision for me. If you dare to join the civil service, it changes your life a lot. Both in the household and in the business aspect. This is a very serious decision about how your business life will change. For a long time, I could not dare, but when I was invited to join the cabinet, I accepted. In retrospect, it looks like a mistake. This happens.
And what went wrong with the civil service? Do you currently have a relationship with anyone in the current government?
No, I do no have any relationships left. Things did not go so well because the cabinet resigned. It’s not that I was fired personally, it’s that the whole government [Oleksii Honcharuk] resigned. This is a complex question that is difficult to answer in one sentence. Obviously, this government did not have good relations with the presidential administration and the parliament [according to the official version —because of the president’s loss of confidence in the prime minister due to the slow implementation of reforms, according to another version — because of the so-called Honcharuk tapes, in which a person with a voice similar to that of the then prime minister talked about the president’s “primitive understanding of economic processes” — ed.].
Your brother Oleksiy Dubilet has the largest share of 33.74% in Fintech Band, which is developing monobank. Do you often exchange experience with him?
Of course we communicate. That is, we communicate not only with Oleksiy, but also with [the co-founders of the project — ed.] Misha [Mykhailo Rogalskyi, — ed] and Oleh Horohovskyi. We exchange what we can so as not to harm other shareholders and partners. Although it’s so transparent now, to be honest [information about business operations — ed.]. If you watch Misha’s blog and read Oleg’s telegram, you can get enough insight into the business.
Let’s go back to Fintech Farm. How has the company changed since its launch in 2020? How did the start of the war in 2022 affect it? What has been accomplished in that time? And if you can share, what is the current valuation of the company?
Unfortunately, I cannot share the valuation. We have agreed with our Board of Directors that we will not disclose this information for the time being. Mykola Bezkrovnyi once shared a range. You can probably refer to these figures [according to AIN.UA, the company’s valuation exceeded $100 million as of April 19, 2023 — ed.]
In terms of how the company changed, in 2021 and 2022, we were just starting out, and we had nothing to refer to except the experience of one of the co-founders, which was me. And after that, in 2022, when it became obvious that the bank had become a resounding success in Azerbaijan, and then the solution had taken off in Vietnam, it became much easier to communicate with both investors and potential partner banks.
As for the war factor, of course it affected the business and all of us. Currently, due to our recruitment strategy, a certain part of our staff lives outside Ukraine, because it is important for both our partners and investors.
Despite all the good news, raised investments and successful projects, it is generally interesting to hear about the difficulties that Fintech Farm faced and how you overcame them?
I would say that the biggest difficulty is that when a potential partner or investor hears about Ukraine, they immediately think that it is an additional risk. After all, if a bank ventures into such a big project with us, it is a risk in itself, even without the war factor. That is why we describe the whole situation in detail and very openly, so that the partner is not worried.
I believe that we have managed to build such an organization that there is almost no operational risk for any, even the worst scenarios of war development. But of course this is a big factor. And it is even difficult for me to say how many rejections we have received from potential partners or potential investors because of this.
I’m not even talking about the fact that when the war started, I personally and many employees of the company were mostly engaged in volunteer work, not business. In the first 4-5 months of the war, I had almost no focus on business.
And what is the main challenge for Fintech Farm today?
I would say that the main challenge, as in any project, is the issue of implementation. In other words, how do we get up and running as quickly as possible with the resources that we have agreed upon with our partners beforehand?
We have a rule of thumb that we launch a new neobank in six months from the moment of signing the contract. And we have done a lot of work within the team to meet these deadlines, even when we are working on several projects in parallel. I would say this is the biggest operational challenge we face.
But we managed to build a very cool platform and an approach on how to customize it for different markets. I can say that we are able to meet these deadlines. We are even thinking about reducing the time to launch a new bank to only four months.
And how are your other projects — the business automation ecosystem Navkolo and the traveltech startup Flat Planet — doing? What is their current value?
There is no valuation for either of them because there was no investment involved.
Navkolo is part of the Checkbox project, which works with software cash registers. It is the market leader. It turned out to be a very successful project, at least in Ukraine. But now, unfortunately, I am not so much involved in it operationally.
As for Flat Planet, we’ve only just started. I don’t see it as a big project that will make us all rich. But we talked to my brother about starting it a long time ago. And actually, as soon as we started to make it, the war started and everything stopped. Recently we decided to try to finish it. Again, I’m not going to reveal the numbers at this time, but they’re not going to blow your mind yet.
Generally speaking, how do you see the future of the Ukrainian fintech industry and what is the place of neobanks in it?
The future of the Ukrainian fintech industry depends very much on the future of Ukraine. Now, of course, everything is tied to the war. When it ends, we will have a breakthrough. I hope. This will also be true for the fintech industry. But, now… it’s survival mode.
In conclusion, what future plans for Fintech Farm can you share?
We have two main aspects to work on:
- Consolidate success in key markets and launch in India.
- Open new markets.
We should be operationally profitable this year. And accordingly, the need to attract new investment will not be so urgent. We can focus solely on the business. And strategically, we have very big ambitions to create at least one cool neobank in every corner of the world.
In general, I think Ukrainian banking is very advanced. It was like that even before mobonank appeared. Ukraine really has a very cool experience that can be shared with all countries in the world. And we are using it: these are technologies and, above all, people who have worked in various banks and fintech companies with Ukrainian roots. And thanks to that, we really have something to say to the world.
