Vendor watch: Finbetween

Finbetween has emerged of late as a new player in the Benelux market. Set up by mainly ex-Business Architects staff, it has built front and back office solutions in the consumer lending sector. IBS spoke to two initial users for these, Krefima and Stater.

One challenge when looking at any lending market is to work out the country-specifics, in terms of the products, the regulations, the market practices and the players. Household names in one country are likely to be unheard of elsewhere, while the business models can vary a great deal. The idea of a standard market in Europe is only a dream, even if a few of the anomalies are being ironed out, particularly on the payments side by SEPA. 

The situation means that the technology is also often country specific. In many ways lending is the last bastion of the long-standing, domestic provider, whether focused on licence software or bureau services. However, those domestic suppliers often only have a handful of customers and relatively old solutions, without the deep pockets to invest and overhaul. And while they have sometimes tried to break out of their home countries, this has seldom been achieved. 

Into the mix in Benelux has come Antwerp-based Finbetween (now owned by the Netherlands-based lending vendor, Davinci, see IBS, January 2014, Davinci and Finbetween join forces for front-to-back lending offering). By virtue of starting its software development from scratch, but with considerable market knowledge within the company, it has sought to make its solutions applicable for…continues (login/subscribe to read in full).

Finbetween has emerged of late as a new player in the Benelux market. Set up by mainly ex-Business Architects staff, it has built front and back office solutions in the consumer lending sector. IBS spoke to two initial users for these, Krefima and Stater.

One challenge when looking at any lending market is to work out the country-specifics, in terms of the products, the regulations, the market practices and the players. Household names in one country are likely to be unheard of elsewhere, while the business models can vary a great deal. The idea of a standard market in Europe is only a dream, even if a few of the anomalies are being ironed out, particularly on the payments side by SEPA.

The situation means that the technology is also often country specific. In many ways lending is the last bastion of the long-standing, domestic provider, whether focused on licence software or bureau services. However, those domestic suppliers often only have a handful of customers and relatively old solutions, without the deep pockets to invest and overhaul. And while they have sometimes tried to break out of their home countries, this has seldom been achieved.

Antwerp, BelgiumInto the mix in Benelux has come Antwerp-based Finbetween (now owned by the Netherlands-based lending vendor, Davinci, see IBS, January 2014, Davinci and Finbetween join forces for front-to-back lending offering). By virtue of starting its software development from scratch, but with considerable market knowledge within the company, it has sought to make its solutions applicable for the wider geographical market, even if the starting point is with institutions in its own backyard.

Among its initial projects, it has built a broker front-end for Krefima and a back office for service provider, Stater. The latter, majority owned by ABN Amro and a major service provider in the Dutch mortgage lending market, has worked with Finbetween to build a consumer lending solution for its Belgian operation. This is now live and, largely coincidentally, Stater’s first customer for consumer loans is Krefima. Stater is also eyeing moving into consumer lending in the Netherlands and the system that has been built with Finbetween had this potential requirement in mind from the outset.

Chronologically, the broker front-end development at Krefima happened first. As is typically the case in the small Belgian market, the project came about largely based on contacts. The two founders of Finbetween were known to Krefima, with one of these, Jo Triest, having been the IT director at parent company, Amodo Consumer Finance, moving here from Business Architects. The other co-founder, Gunter Serneels, also ex-Business Architects, had likewise worked on projects within the group (Krefima had Business Architects’ ComponentBanker system for its back office). When the need arose to modernise Krefima’s front-end for its brokers, it ultimately turned to these individuals’ new company.

One reason for the major focus on the front office stemmed from a significant shift in Krefima’s own operations. Pre-crisis, it was able to fund its lending on the commercial market, but is now directly reliant on the banks, with the main funder being Record Bank. This means it no longer has its own back office (ComponentBanker), effectively selling on its loans as soon as the contracts are generated and signed. As such, in what could be construed as a ‘super-broker’ model, it now has to focus primarily on the service model for its broker network. 

The previous front-end solution was 16 years old and had been built by a small Belgian company, C&C. It was written in Progress, used Citrix – which was proving particularly expensive, with the licence policy bringing €3-400,000 in annual expenses with no business benefit – and was not web-enabled. Krefima wanted the new solution to be compatible with all browsers and devices, including tablets and smartphones.

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‘We want to be at the steering wheel.’
Walter Van Praet, Krefima

[/blockquote]Walter Van Praet, KrefimaIt also wanted to add functionality but, at the same time, says COO, Walter Van Praet, it wanted to take its brokers with it, so needed to ensure that there wasn’t a radical change to the support and functions of the new system (it wanted, for instance, to keep the same shortcut codes). The know-how of the existing system, Flexi, should be carried over into its replacement, dubbed Flexiweb by Krefima.

Krefima also wanted to make it easy to sell loans alongside insurance, with the latter from ZA Insurance, which was previously part of the same group as Krefima, owned by Amodo, but has been sold off of late to Delta Lloyd. The previous system brought in the products at the end of the application process, after all of the customer’s details had been captured, but with the new system it was intended to have the products driving the process.

Finally, Krefima wanted to be independent of the software provider so it wanted a fixed price project and to own the IPR at the end. While still turning to Finbetween for support and maintenance, it didn’t want to find itself in a Citrix-type situation, where it could be held hostage by a supplier. When Krefima had ComponentBanker from Business Architects (subsequently bought by Sopra), it had been taken on a licence basis but had ended up heavily customised and expensive.

This time, ‘we want to be at the steering wheel’, says Van Praet. The Finbetween solution for Krefima, as for Stater, is built on Finbetween’s range of standard .Net/C# components, and these can be used by the supplier to build other bespoke solutions or to build a standard commercial offering with similar functionality and using the know-how from the Krefima project, albeit with this user wanting a one-year head start in relation to Finbetween working with its competitors.

As well as Finbetween, Krefima considered its existing supplier, C&C, or another Belgian supplier, Cegeka. As Krefima’s ICT director, Michael Moens, points out, Finbetween didn’t have much to show but it looked as though it had the knowledge, including related to Krefima’s own business, and the project management and processes to deliver. The latter comprised business analysts in Antwerp and software developers in Pune, India. ‘We trusted them, we knew their competences, but there was still a risk,’ he says. In fact, although fixed price, Finbetween wasn’t the cheapest offering, as C&C came in below this, as it fought to retain its largest customer.

The development started, with Finbetween using the Scrum/Agile development methodology, which meant a lot of prototyping and small releases. This was markedly different from the traditional way of working, says Moens, where there is a lot of analysis and talk at the start, then a long wait during the development, before delivery back of something that may or may not be what you wanted. Over the eight month project, Krefima had a lot of input, so too a number of its brokers. With the latter, there was a brain-storming session at the outset and then they received early versions of the solution to test.

The broker requirements varied depending on size. The smallest often wanted functions such as simulation to calculate insurance premiums; larger ones wanted facilities to speed up data entry, such as shortcuts; for some, retaining historical data about the customers was important. There was always the need, from all brokers, for clear segregation and Chinese walls between each of them on the system. But there were also a few that didn’t want to change, with Krefima still working with a couple, including its largest broker, to move them to the new platform. On the technology side, Finbetween was using Silverlight for the user interface but Krefima felt this was too Microsoft-specific and wanted HTML 5, with the switch taking somewhat longer than envisaged. Krefima was keen on a Windows 8-type look and feel, albeit still balancing this with the data entry requirements.  

In terms of what Krefima would have done differently, it would have taken a bit longer with the project, says Van Praet, and it wouldn’t have exposed the brokers to the system so early, as they tended to expect that everything would be working from the start, not allowing for the fact that the software was still a work in progress, with this sometimes eroding early enthusiasm. Piloting during the summer holiday period also didn’t work well. There were some improvements needed to the performance at the start and some bugs, but Finbetween was fast to address them, says Van Praet. There were problems with one particular release, which seemed to be linked to some changes and unavailability within the Indian team, but overall Krefima is clearly happy with its relationship with Finbetween.

The front-end is interfaced to Krefima’s middle office, which is from C&C and has been retained, at least for the time being. The business case is being put together to replace this, which would be another blow to C&C as it is likely that Krefima would turn to Finbetween. It would be a major project, says Moens, particularly with the need to interface to ZA Insurance, Record Bank and any other future funders, the national bank, and credit scoring agencies. With the front-end, as well as feeding the middle office, there are also interfaces to an external system called Clip that links to credit providers, and to ZA Insurance. With regards to Stater, Krefima signed with the service bureau to manage the existing, pre-Record Bank lending book, which is being run down (see below).

The front-end system for Krefima is hosted on a cloud basis, using Microsoft Azure, which makes it scalable, says Moens. There are potentially 4000 brokers who could use the system but there are around 700 regularly active ones, with typically between 400 and 500 concurrent users. The first cutover came with the brokers that had been involved in the testing, on 12th November 2012. Bar the couple of laggards, the rest were moved across between January and April 2013. Krefima went with the smaller ones at the start and had a checklist for each, related to tasks such as data migration, user set-up, and security. Initial training was done by Krefima’s sales staff as they were onsite and had the relationships with the brokers.

There are now small releases every three weeks, bringing new functions and occasional bug fixes. As a small entity (it has 48 staff), Krefima wants to be flexible and not be restricted by the type of large but quarterly releases of its large bank rivals. It is undoubtedly a tough market for Krefima and its brokers, with less demand and greater acceptance criteria for consumer lending in Belgium, as elsewhere. It competes against the banks, including its own funder, and against a couple of other Belgian ‘super-brokers’. However, Krefima has now moved into the internet and mobile age, with more and more of its brokers, particularly younger ones, taking advantage of this, and feels that it has a solution and provider to support its next chapter.

Over at Stater, the need for a new back office system stemmed from this service provider’s intention to move into the consumer lending market. The decision was made two years ago and seemed to be a natural broadening of the organisation’s existing mortgage processing in Belgium. The existing space is not large, with the options for Belgian players being to build an in-house solution, take a package or outsource, with Stater more or less the only option in the latter category, aside from a subsidiary of Belfius Bank (previously part of Dexia). Belfius Bank has been seeking to offer mortgage processing services for the last three years, using ComponentBanker, once more, but with the only known taker to date being its parent. ComponentBanker was considered by Stater before it opted for Finbetween (there were lengthy discussions with Sopra but, while ComponentBanker was proven, Stater would not have owned the solution and it was considerably more expensive than the Finbetween route).

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‘We decided that if we did consumer loans then we’d have a broader potential market.’
Philippe Légat, Stater

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Why was there the idea to move into consumer loans in Belgium in the first place? ‘We decided that if we did consumer loans then we’d have a broader potential market,’ says Stater’s managing director, Belgium, Philippe Légat. Particularly in Belgium, there is often the tendency of lenders to handle mortgages and consumer loans on the same platform, he says, so by offering to support one part of this and not the other, it was often the case that customers could not retire their platforms. ‘We had a number of potential outsource customers for whom this was the reason not to outsource,’ he says.

As with Krefima, Stater was influenced by the expertise and way of working of Finbetween. Also similar was the insistence of owning its IPR. Stater visited the development team in Pune as part of the due diligence. The development started ahead of Stater gaining a customer but it was already in discussions with Krefima. The fact that this potential client was working with Finbetween added to the confidence at Stater.  

The project has been on time, with Krefima’s loan book migrated by 1st May 2012, around one year after the project started, following a three month selection process. As at Krefima, there was a lot of interaction between supplier and customer during the development, including weekly steering committee meetings. Once signed, Krefima was involved as well, aiding definitions, identifying gaps and adding to the requirements. Usually, there is a charge to incorporate specific user requirements, says Légat, but this was waived for Krefima, on the basis that it was the first client and was providing input into the overall project.

Converting Krefima to the new system was run of the mill for Stater. ‘It was completely comparable with conversions in the mortgage business,’ says Légat, albeit with mortgages having more data than consumer loans. Since initial go-live, there has been work to add more functionality, which was not essential at the outset or arose as a requirement during the initial roll-out. Everything was set to be finished by the end of 2013, says Légat. Interfaces are to the national bank, for notifications for both bad and positive loans and defaults on payments, and to clients’ systems, as well as to internal systems such as accounting and document management. Unlike at Krefima, Stater’s system is installed onsite, not delivered via the cloud.

What about the possible extension of the Finbetween system to Stater in the Netherlands for consumer lending and to more of Stater Belgium’s operation? Both sound as though they are on the cards.

Amsterdam, NetherlandsFor the Netherlands, the back office development with Finbetween was done with this possible extension in mind, says Légat. The adaptions for the neighbouring country will be limited and, as in Belgium, it will be a business decision, as Stater does not support consumer loans at present in its home country. It is easier to consider and build in additional country requirements at the start of a development, he adds, than trying to tack them on to an existing system. There are differences in mortgage and consumer lending between Belgium and the Netherlands, but not major ones. 

In Belgium, Finbetween is likely to be used to develop middle office functionality for both consumer loans and mortgages. The mid-office in the latter area is a Cobol-based system but there is not felt to be any need to replace the back office at present, which is in-house developed and stable, says Légat. The middle office layer would allow brokers or bank branches to introduce mortgages or consumer loan applications and handle everything themselves ahead of signing deeds and making payments as well as viewing all customer information. As with the back office, it will be a collaborative project, with Stater staff alongside those of Finbetween.

Finbetween cannot sell the software developed for Stater per se, says Légat, but can ‘of course’ use its knowledge and applications to build a commercial offering for this area. Stater has worked on this basis in the past with a previous vendor, Cimad, subsequently sold to IBM in the 1990s, and this worked fine, he says. Emphasising the incestuous nature of the Benelux market, some of the ex-Cimad staff were instrumental in the development of a new system after their company was taken over by IBM… Business Architects’ ComponentBanker.

There are no other takers at present of the consumer lending service from Stater but there are prospects, says Légat, including from the existing mortgage user base. For the mortgage service itself, changes to mortgage legislation this year in Belgium could unlock more customers, with such disruption always presenting an opportunity, from Stater’s point of view, he says. 

It remains to be seen where Finbetween heads from here with the systems it has built for these two clients. It is certainly talking about having standard software offerings in both areas and it has a number of other customers where it has provided a mix of software and consulting. It emphasises the fact that it has a set of standard components, FinOffice, which it uses for bespoke developments and will underpin its commercial offerings.

Finbetween is not the only new supplier to be surfacing in the Benelux region. There is also Netherlands-based Five Degrees, which is a front and middle office consumer lending provider, with a back office under development, and is used by Knab, among a small number of others (IBS, May 2013, Case study: Knab). The roots of its technology are in failed Icelandic financial institution, Icesave. There is another Dutch company, Ohpen, with a front-to-back office system for savings accounts and mutual funds, with a first live site (IBS, October 2013, Case study: Robeco). It is unlikely that any of these will be able to grow without going outside their relatively small domestic markets, with the most likely route being into neighbouring ones before, perhaps, going further afield. Hopefully there is a place for all of them, thereby extending the number of offerings from which to choose, not only for users in Benelux but elsewhere in the fullness of time.   

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by IBS Intelligence
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