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Finanza.tech helps Banca UBAE with its Tax Credit Management

December 29, 2022

Finanza.tech was able to build and implement an integrated tax credit management platform for Banca UBAE and its clients.

As part of Italy’s post pandemic recovery strategy, the country launched its ‘110% scheme’ in July 2020. As the name implies, homeowners are eligible for a tax credit of up to 110% on the cost of home improvements including installing insulation systems, heat pumps, solar panels, or replacing an outdated boiler, as well as conducting works that lower the risk of earthquake damage.

People can claim the subsidy by deducting the expenses of the works from their tax returns over the course of five years, or they can transfer the tax credit to a bank, Italian post office or insurance company. Thus, banks can buy these credits from clients in return of income-tax-free cash subject to a processing fee which usually ranges between 7% and 15%.

Since its founding in 1972, Banca UBAE, an Italian Bank, has offered a wide range of specialised services in trade and non-trade finance to companies and financial institutions operating in North and Sub-Saharan Africa, the Middle East, the Indian subcontinent, and some regions of the Commonwealth of Independent States.

Finanza.tech is a FinTech company, headquartered in Italy, which specialises in corporate finance with medium size companies as its main target. It offers advice in ordinary and extra-ordinary corporate finance operations. When UBAE Bank decided to start purchasing tax credits, Finanza.tech became the enabler for the operation by providing its Tax Credit Dashboard for managing the entire process.

Project and Solution Overview

Finanza.tech’s Tax Credits Dashboard aimed to provide a seamless experience for clients where all their needs were met in a single place. The solution has the following features:

  • Clients (third parties who sell credits) can upload all the required documents online and proceed with potential integrations.
  • E-signature procedures are embedded in the platform in order to sign contracts digitally.
  • The FT dashboard allows users to check the status of each project, from the contract signing to the bank’s approval.
  • Full time customer service is available to support users in each step of the operating process.
  • Clients can directly receive the payment to their bank account once the project is closed.
  • Banca UBAE is enabled to see the purchase projects in the dashboard, allowing them to proceed with the acquisition.
  • The Dashboard also allows for inspection of the credits for auditing and analysis purposes.
  • Automatic update of residue after paying the bank’s credits when they upload the F24 (tax receipt).

Implementation Process

The implementation of the project was extremely successful, thanks to some preliminary activities that prepared the field for a smooth work. In particular, two steps were crucial:

  • The ex-ante assessment of the total amount to be offset through the years for a proper definition of the credit line(s) to be activated.
  • The definition of a list of preliminary controls to be carried out by the bank during the acquisition process, as part of credit risk and compliance analysis.

To achieve the end result, following modules were implemented:

  • A third-party digital signature system fully embedded into the main application that allows the user to sign contracts in a digital way, with OTP signature.

“Entering the tax credits business segment was a target for Banca UBAE, but the resources to be allocated were not enough, in term of workforce and IT tools. The positive alliance with SCM SIM and Finanza.tech, with facilitation by the law firm Mitidieri, finally allowed us to enter this business sector with reasonable efforts and investments. In particular, a preliminary credit risk and compliance analysis, based on AI techniques, of the massive set of documentation and a digital platform to efficiently handle it and successfully support the different steps of the process have been the milestones of the project.” Antonio Fanelli, Head of Administration Division – Banca UBAE S.p.A

 

  • A fully compatible PDF embedded in the digital signature process to allow the user to have full accountability of information provided.
  • Integration with a lot of third parties that provide information about physical and businesspersons.
  • Direct origination through the Finanza.tech platform and the network of its ecosystem.
  • Presence of a dedicated user dashboard to monitor and manage the portfolio positions.
  • Efficient management of paperwork by using a dashboard that gathers all the documents and information at hand.
  • Limited human capital absorption, thanks to a smart information check, which is fully covered by Finanza.tech, supporting due diligence activities.
  • Return on investment calculation: return based on the haircut applied to the purchase price from UBAE.

Challenges

Some uncertainties/changes in the legal framework made the process even more complicated, but the pragmatic approach and the strong commitment of all the parties involved were crucial in properly building up and implementing the platform. Additional fine tunings in a post-activation phase were also very helpful in consolidating the process in line with operating requirements.

Benefits Achieved

The Finanza.tech Tax Credit Dashboard enabled both clients and the Banca UBAE to reduce frictions in the operating process, minimising time consumption and managing all the steps behind in a more efficient way. Finanza.tech’s return is based on a profit-sharing mechanism due to the implementation and servicing of the dashboard, which allows the bank to benefit from cost savings associated to the streamlining of commercial and human efforts and a zero initial investment for technical development.

Key Benefits achieved were:

  • Over €20 million of tax credits were traded in three months, with a simple and secure process.
  • A great result achieved with limited operational impact on the ordinary activity of UBAE Bank and low effort in terms of time and money to activate the platform.
  • A new business segment that is now available for Banca UBAE.

Conclusion

The Finanza.tech platform represents a unique tool to manage the bank’s paperwork and support the due diligence activities, by gathering and verifying all the documents and information about clients.

In conclusion, users may enjoy the benefits of a seamless and entirely digital experience, fully covered inside the ecosystem of the Finanza.tech platform, accessing the assignment of tax claim service, and covering all the necessary phases of the procedure in a simple, quick, and intuitive manner. Banca UBAE, which profits from a one-stop
shop solution for the tax claim buying activity, by optimising its investment process and due diligence activities, experiences the same smoothness.

 

Key Facts

  • Supplier: Finanza.tech
  • Headquarters: Milan, Italy
  • Founded: 2012
  • Client: Banca UBAE
  • Solution: Tax Credits Dashboard
  • Timeline: 4 months with go-live in June 2022
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