Zvilo

Idea

Introduction

In the EU, the top 50 fintech companies are collectively valued at over $92bn. Yet, there are signs that the market is heading towards maturity.

Challenger banks are present in most of Western Europe. However, the Balkans have been overlooked and we believe are poised to become the next major growth market in Europe.

With a population of >21m and rapid growth in card and digital payments, we believe there is an opportunity for Zvilo to become the first major challenger bank in this unpenetrated region.

According to Cambridge University, banks in the Balkans tend to only compete on margin and interest and not on user experience, forcing customers to accept cumbersome banking processes. A great opportunity also exists with the unbanked, as demonstrated by low account ownership levels in the Balkans vs the EEA (61.3% and 95.3%).

Zvilo plans to disrupt the outdated Balkan banking sector, offering digital financial solutions based on cost-saving, convenience, connectivity and accessibility.

Substantial accomplishments to date

● Established a letter of intent for a pilot program, which would enable us to:

- Offer business lending (via SCF) to a network of 200+ suppliers and 600+ SME buyers

- Promote our lending and digital personal banking offering to 45,000+ customers

- Disburse €15m across a diversified pool of SME’s and consumers

● Mastercard (“MC”) partnership – having selected MC as the card scheme and built a strong working relationship, MC are expressing interest in supporting us in implementation and launch

● Initiated licensing application with the Central Bank of Kosovo

● After 9+ months of discussions with leading technology enablers, we conducted a comprehensive due diligence and financial modelling of their propositions – includes Railbanks, Modulr, Transact Payments, Paymentology, i2C, TransferWise, Currencycloud and other market leaders. This was essential for mapping a clear execution strategy after our first public fundraise.

● Conducted in-depth market research, including the development of a 5-year strategic plan and an understanding of the regulatory requirements for key target countries/markets.

● Established an experienced and diverse management & advisory team

Monetisation strategy

Under the freemium model, we aim to generate a large portion of revenue through interest on overdraft and microloans issued on the back of a debit card. However, what sets us apart from other challenger banks is:

●Business lending (post-licensing) - we will lend to corporate retailers & their SME suppliers, providing short-term working capital facilities (“Supply Chain Finance” or “SCF”). This not only gives us a direct path to revenue generation, but the relationship we build with retailers allows us to promote our banking service to their customers. To that end, we can lower our customer acquisition costs.

●Money transfer service (powered by P2P tech) is est. to offer >85% savings in transaction fees. Since the Balkans have some of the highest inbound remittance volumes in Europe (~€14bn p.a in 2019), we expect this to be an integral solution for incumbent bank users.

●Lending from day 1 (post-licensing) - this enables us to combine growth and profitability in the early stages of business.

Use of proceeds

Post-funding, we will:

● Formalise our application for SCF licensing in Kosovo

● Execute the strategic partnership agreement with our Kosovar partner retailer, enabling us to launch business lending services

● Preparations for a second round of fundraising

The second round of fundraising will be used for E-money licensing while we ramp up card launch preparations. Between the launch of our business lending and E-money license, we also aim to obtain our Mastercard license for the Kosovo market. During this time, we also plan to formalise our partnerships with:

● A Banking as a Service (“BaaS”) provider in the UK and EU.

● Other technology partners for issuing cards and current accounts to Kosovars and other Balkan communities who live and work in the UK and EEA.