Dmytro Dubilet, 32, the former information technology director at PrivatBank and son of the bank’s ex-CEO, has launched Ukraine’s first mobile-only bank, which is now operating in test mode.
Dubilet and two other PrivatBank ex-executives designed the plug-in internet bank to help Ukrainain tycoon Sergiy Tigipko’s Universal Bank compete with PrivatBank’s Privat24 service.
That might be a problem for some: The multimillionaire Tigipko was once an ally of runaway former Ukrainian President Viktor Yanukovych. He ran in the 2014 special presidential election after Yanukovych fled to Russia, finishing with 5 percent of the vote. Since then he has kept a low profile politically.
Dubilet insists there should be less politics and more commercially driven agreements in business like this one.
“There is too much politics in our lives,” he said. “We brought the best product to the market, why should you reject it just because of politics?”
But many Ukrainians still mistrust politicans and anyone connected to politics, as it has too often been used as a tool to promote the vested interests of businesspeople, instead of representing the people’s interests.
Ukraine’s largest bank PrivatBank is just one example.
The recently nationalized bank was viewed by many as a massive pocket bank for oligarch Ihor Kolomoisky, who also uses members of parliament to promote his business interests. Under Kolomoisky, PrivatBank was plagued by unpaid insider loans that left at least $3.39 billion hole in its ledger, according to the National Bank of Ukraine, part of $6 billion in losses that Ukrainian taxpayers will have to cover.
The bank’s assets were exaggerated and many of its loans went bad. The news of its nationalization was welcomed by the International Monetary Fund, which has provided Ukraine with a low-interest, $17.5 billion stabilization loan.
PrivatBank provides its clients with online banking through a service called Privat24. Dubilet headed the service’s development, and until recently Privat24 was the country’s most modern internet banking system.
Post-PrivatBank
But after the nationalization of PrivatBank in December 2016, most of the bank’s management left. Dmytro Dubilet, together with two other colleagues from PrivatBank – the head of the payments business, Mikhail Rogalskiy, and First Deputy Chairman of the Board Oleg Gorokhovskiy – also left.
Unemployed, all three co-founded a firm called Fintech Band to consult and develop retail banking services for other banks.
“We know how to create a neat retail bank, and are ready to share this knowledge,” Dubilet said back in January. It didn’t take long for the bank to strike its first big deal – after 10 months Fintech Band announced that its first mobile-only banking system, called Monobank, would launch on Nov. 10. Monobank will operate on the basis of Tigipko’s Universal Bank and will compete mainly against the top 20 Ukrainian banks, including PrivatBank.
Dubilet is confident that Monobank will be a success.
The bank will focus on retail lending and has already issued 6,500 bank cards and Hr 150 million in credit through Universal Bank.
Dubilet says that Tigipko’s bank was ready to “actively develop its retail business” explaining that “their strategies coincided with (Fintech Band’s) capabilities.”
Controversial Tigipko
Dubilet refused to elaborate on the terms of Monobank’s agreement with Universal Bank, saying only that the conditions are “commercial.” What is known is that Monobank works under Universal Bank’s banking licence, meaning that Universal will deal with National Bank of Ukraine on the mobile-bank’s behalf.
Politician and financier Sergiy Tigipko talks to attendees of a round table organized by his political party Strong Ukraine entitled “Economic patriotism as a basis for national integrity.” (tigipko.com)
After Yanukovych fled in February 2014 during the EuroMaidan Revolution, Tigipko quit the Party of Regions and resurrected his own political force Strong Ukraine, which had merged with the Party of Regions in 2012.
Now the politician heads the supervisory council of TAScombank, in which he holds a controlling stake of nearly 49 percent. It is part of TAS Group, founded and owned by Tigipko. Universal Bank is a part of the group.
Dubilet admits that his close relationship with Tigipko helped reach an agreement on Monobank, but says it did not guarantee that there would be a deal.
“Our team met with Tigipko, and presented him our product,” Dubilet said. “After a couple of months of negotiations, we shook hands.”
And Universal Bank won’t be Fintech Band’s only client for long: their next customer is expected to be the small Ukrainian bank iBox Bank.
Online banking
While online banking has become a key service of most of the world’s top banks, Ukrainian banks are still lagging behind, leaving PrivatBank as an undisputed leader on the local market.
But more of Ukraine’s top banks want to enter the market now, and Monobank is just the first of many to come. The mobile-only internet bank is very similar to Privat24, and has many of the same functions: users can make online transfers and top up mobile phone accounts, and pay utility bills. There is also a 24-hour online support service.
After filling out all of the required forms in a Monobank application and sending in passport photographs, users get a Monobank credit card serviced by Universal Bank using the U.S. Mastercard payment system. (photo by AIN.ua)
Customers can also order a bank card over the internet without having to visit a bank branch. Users simply download an app, fill out the required information, and send the bank a photo of their passport. The card is delivered to their house by courier.
The card is free and there is no charge for making transfers or paying bills. One can even get a personal loan of up to Hr 100,000 ($3,773) with no interest if the money is paid back within two months.
One of the main features is cash back, where a cardholder can have up to 10 percent of the value of purchases in a certain category of goods or services, which is chosen every month by the user, immediately returned to their card, with a monthly cap of Hr 500 ($20).
Despite granting its users more favorable conditions than most other banks in Ukraine, Dubilet said Monobank would earn money through retail lending, which the businessman described as “a very profitable business.”
Monobank cardholders are also now able to receive transfers in dollars or euros. The foreign currency is converted to hryvnias in accordance with the exchange rate shown in the app, although additional fees from Mastercard may be charged.
Dubilets is already pleased with his product. “I like to create products that will be valued by a lot of people,” he said.
“It seems to me that our team is great at it.”
The Kyiv Post’s IT coverage is sponsored by Ciklum. The content is independent of the donors.
