FinTech Innovations and Banking Solutions in Ukraine: Interview With Yuriy Kostiv
Financial industry is relatively stiff and sluggish. Nevertheless, innovations are slowly transforming it too. FinTech innovations make complex banking systems easier and more down-to-earth.
Instead of getting to a bank department in the other part of the city, you can simply access your bank account via phone. Dozens of apps help people to track and control their expenditures. And world-known decentralized systems are applied not only to finance but to other industries that require accuracy and transparency.
How about FinTech innovations in Ukraine? What is so peculiar about this market and how is it developing?
Yuriy Kostiv, CEO at Team Harbour gave us an interview to answer these questions.
What Is Team Harbour?
Could you please tell us about yourself and your company?
I’ve been working as an IT Manager for more than 20 years gradually growing from developer and IT engineer into a regional CTO at Fortune 500 company. Then I moved to banking for CIO roles.
6 years ago I decided to try myself as an IT entrepreneur and I have been building software business since then. My current company is called Team Harbour. It’s a global software house and we specialize in FinTech and enterprise integration primarily. We also have a few ongoing e-commerce projects. Our company is interested in the projects, presuming at least 3 participants: PM and 2 developers – this makes sense economically at our size, as the gross profit is not eaten by administration costs.
We consider ourselves as boutique: we have 29 persons in our organization globally at the moment with ⅔ of “production” people who actually work on the projects. We are happy to have some good clients and we’re only limited by the speed of hiring process right now.
There is huge amount of outsourcing houses in the world. Why would the clients choose you? What’s your plan? Can you share your growth strategy?
True, as much as we all want to distinguish ourselves in IT outsourcing, we’re all the same in the eyes of the customers. Hundreds of software companies sell pretty much the same thing. It’s a real mystery how to build a distinction point and do something really different.
We believe to have three things. First of all, we’re not strictly a development company, we’re happy to take care of the boring activities like IT service and support and leave exciting project activities for the in-house employees.
Second, we’re really competent in what we do and we believe in quality: marketing is a great thing, but if there is a good product. The word of mouth starts working for you and brings more sustainable results.
And the last and most important point is that we’re not just providing software services, we’re also investing in some of our clients. We’re critical about each of our customers and if there is an obvious potential, we approach and offer an investment. This is our growth strategy; it is going to give us better spin than anything else.
FinTech Innovations by Team Harbour
As we know, you offer ready-to-go banking solutions for businesses. What is Digital Harbour and who can benefit from it?
Yes, it is a white label omni-channel digital banking platform. It provides great add-on package for a bank or financial institution that would like to let the consumers access their contracted products and personal settings online. In fact, the use of it is not limited by finance, it is completely suitable to automate the relationship with the clients for virtually every industry and every area of human activity, assuming longer term contractual relationship with its clients.
#digitalharbour consists of 3 modules:
- Online Bay, an omnichannel access platform;
- e-Purse – a classic multi-currency multi-tenant e-Wallet;
- AutoBPM – a process automation engine.
Why these 3 things? Because the rest is normally a part of traditional financial institution systems landscape and we’re taking care of the digital part.
What are the advantages of your product, Digital Harbour, if compared to competitors’ solutions?
There are two main benefits:
1) It is way more advanced in terms of technology
2) it is cheaper.
#digitalharbour has been developed just recently using best-of-breed technology and composed according to the latest trends in software architecture. It consists of microservices, talking to each other via secured channels and REST APIs. There are several API’s looking at the outside world, providing high-level services for other systems and devices, web interface and admin dashboard.
Our development center is located in Ukraine which gives us a great benefit of inexpensive yet highly competent and proficient resources. That’s the reason why we can afford dropping our prices below the market.
Actually, Ukrainian FinTech specialists are in the top rank of the world’s best, the level of innovative thinking and knowledge is massive there.
You’ve been working with VISA. How Digital Harbour helped them to transform their business?
First of all, our team was working under the different brand back then. Second – we’ve been unlucky to hit the times of crisis and heavy changes in the banking system of Ukraine and surrounding geographies, forming 17-country region of VISA international, covering part of the Eastern Europe, Balkans and Caucasus all the way down to Mongolia.
We have developed an absolutely great system for Global Bonus, a company providing loyalty services for VISA. It lets the consumers register their VISA cards and start collecting bonuses for each and every card transaction, and then use it for discounts or certificates.
The system has been connected to a number of banks, Global Bonus was marketing the loyalty program and everything seemed right, but the market shrank dramatically, squeezing consumer off the grid in distrust.
Anyway, Global Bonus is still there up and running, people are still registering, despite VISA has already taken another strategic direction in this area.
And we’re marketing the core software as the module of #digitalharbour, called e-Purse.
In the era of digital fraud and data leakages, how can you guarantee security to your clients?
Well, we are banking IT people, so we know our files and design our software in certain way, minimizing security flaws and potential issues.
In short, we have a certain culture in designing the right architecture and product features that we inherited from banking. Our production process is automated according to the world best practices. And we do reviews and periodic audits of our own code.
For instance, we have passed rigorous PCI/DSS certification for e-Purse, that was created by VISA security experts from all around the world, including penetration testing.
We are designing our systems in accordance with ISO27001, even tougher banking security standard.
As security is a multi-layer and multi-aspect term, Team Harbour normally provides the clients with a comprehensive set of recommendations on the system itself and also the implementation and support processes. Those recommendations include:
- User account: signup, activity, block, re-activate etc. — relevant processes;
- Asset management;
- Network security;
- Transaction processing security;
- Software security;
The most reliable parameter is time, the best guarantee is experience. Two our oldest systems: MyAlfabank and VISA Global Bonus have never had any security issues and survived the years of flawless operations.
Future of FinTech Industry
How does FinTech disrupt the business world? What is the major impact of this industry?
This is massive right now. Yes, we are in the world where some people are still writing paper cheques, but the impact of the FinTech is out there and the trend is set.
We don’t go to a branch anymore, we’ve gone totally cashless and we pay by the smartphones instead of cards. We hold global multi-currency accounts, we manage our assets with the finger on the screen, we get impatient if we have to wait 24 hours for money as we are spoiled to get all of that instantly nowadays. We choose our financial providers by better apps and online services availability. We’re used to talk to robots, powered by AI, we’re about to get a financial advisory generated by Artificial Intelligence.
I think the financial services will go layers, same as insurance and telecom. Front office must be separated, and the banks should turn into the “financial factories”, providing their services to the rest of the world via standardized APIs.
Open banking is the future, PSD2 is about to open the access to the young creative generation that is much better in building the new mechanisms of trust with the target audience.
Trends for 2019. What’s going to change in the FinTech industry?
I believe 2019 is going to be the year of matured AI. We will get tools and capabilities that would let us use AI without involvement of professional data scientists and AI specialists.
Regular developers will start using AI in their programs. On the other hand, AI will start producing the code and automate a lot of other human-driven automation tasks. No worries – there is no danger that AI will take the place of a developer. Same as rich frameworks don’t actually mean there is no need to program anymore.
You use AI in your FinTech solution and digital transformation, can you tell more about that?
Yes, we have the whole company in our group that specializes in AI. We have created plenty of great solutions, including comprehensive document analysis and categorization system.
In the context of #digitalharbour AI has several uses, mainly linked to the needs of the banks: face recognition, document categorization, sales optimization and personalization of the proposition, behavior tracking, alerts/reminders, various security uses.
AI in general has 2 main qualities: it is not comprehensive like human brain, but it’s really good in taking narrow decisions on a specific subject, and it is unbiased like humans are.
You’re automating financial & banking industry. What technologies do you use for automation?
We’re mostly on Java on the back-end side, because banks were using Oracle traditionally.
Sometimes, especially in the case of clients from Ukraine or Russia, there is certain Microsoft incline, so it requires C#.
The evil side of automation is stealing jobs from people. What do you think about it?
I guess this question is about AI mainly.
I have grown by the times when FoxPro came out. I was really depressed as this development environment allowed non-programmers build pretty complex automation. But the time passed, and it’s just turned the way that there was just more work as the appetites grown.
I’ve been watching numerous waves like this and there is one common trend: with every new automation wave comes even more of the automation needs. So there is no reason to worry at all.
New AI capabilities will open new horizons, the amount of work will increase and the need in professionals will grow.
Ukrainain FinTech Market
How do you feel about Ukrainian IT talent pool for FinTech?
As discussed above, I believe Ukrainian FinTech talent is one of the best in the world. The level of innovation at our banks is a way higher than in most of the American banks, for instance, and rare European banks have it as well.
Fair to remember that many of the world famous disruptors have their operational teams in Ukraine as well.
Can you comment on Ukrainian FinTech market – both local product companies and outsourcing companies? Advantages, drawbacks?
The market has been dead since 2014, but now it’s slowly waking up as the country has passed the corner of crisis.
The banks start to breathe and open the budgets, not yet fast enough to call it a real growth though. Unfortunately, very rare players survived the changes and stayed alive, and those who left have already turned towards the West and Asia. Of course, with the current market size and so many years of negative experience, it is early to talk about the interest of Ukrainian companies to the domestic market. Let’s hope it will change soon enough and we’ll all enjoy the rapid growth as it was in 2007.