Who is the richest in the IT industry

• 8th place in Top 100 richest Ukrainians in 2021 is taken by the co-founder of the UK-based fintech startup Revolut, Vlad Yatsenko. His net worth is estimated by NV at $1.277B. In July of 2021, Revolut raised $800M, and its valuation increased sixfold: from $5.5B in 2020 to $33B.
• 14th spot is occupied by the founder of the aerospace firm Firefly Aerospace, Max Polyakov, with a fortune of about $540M. In May of 2021, Firefly Aerospace raised nearly $200M, and its valuation went way beyond $1B.

According to AIN.UA’s estimates, the ranking takes just one of Polyakov’s assets, Firefly Aerospace, into account. It was valued at more than $1B even before its launch. The worth of his other aerospace companies and all the IT businesses are not factored in.

• 17th place is held by the owner of Rozetka Vladyslav Chechotkin. According to NV, Chechotkin’s net worth is $472M.

The share of Vladyslav Chechotkin is often miscalculated, with the total attributed to Chechotkin alone. But this includes shares of two entrepreneurs, Vladyslav and Iryna Chechotkin, who own the company that the stake in Rozetka belongs to. Thus, according to AIN.UA’s own calculations, the figure of $472M reported by Novoye Vremya is in the range of $359M to $526M but should be attributed to both stakeholders.

• Spots 23, 24, and 25 are taken by Alex Shevchenko, Dmytro Lider, and Max Lytvyn, the co-founders of Grammarly, an online spelling and grammar checker. NV estimates each one’s net worth at $386M.

In calculating the wealth of the co-founders of Grammarly, the valuation of the company at $2.3B should be factored in, as cited by PitchBook and confirmed by the American Forbes magazine. Considering that the latest round took place back in 2019 (the co-founders’ shares have remained the same) and their cumulative share being 76%, the valuation of the fortunes of Alex Shevchenko, Dmytro Lider, and Max Lytvyn, according to AIN.UA, should be about $582M each, which is $196M more than cited by Novoye Vremya.

• The founder and CEO of Ajax Systems, Aleksandr Konotopskyi, is in 26th place, with a net worth of about $380M.
• No. 30 is occupied by one of the co-founders of GitLab company, Dmytro Zaporozhets, with a fortune of approximately $375M. On October 14, 2021, Gitlab went public on Nasdaq. Today its shares are listed on the market at $113.75 per share, and its total capitalization exceeds $15B. Dmytro Zaporozhets owns 2.5% of the firm’s stock, hence his high position in the ranking.
• 37th spot is taken by the founder of People.ai, Oleg Rogynskyy. NV estimates his net worth at $279M. In August of 2021, People.ai raised $100M as part of a new investment round and was valued at $1.1B. As such, the company became a unicorn. Besides, Oleg Rogynskyy has mentioned that, given the current size of the company, it is time to think about an IPO.
• 42nd and 51st positions are held by the co-founders of the IT company SoftServe Taras Kytsmey ($245M) and Yaroslav Lyubinets ($199M). Taras Vervega ($167M), Yuriy Vasylyk ($131M), and Oleh Denys ($130M) are ranked 63rd, 77th, and 78th, respectively.
• 48th place in Top 100 richest Ukrainians in 2021 is taken by the founder and director of Terrasoft company, Katherine Kostereva, with a net worth of $207M, according to NV.

The calculations by AIN.UA show that the value of Katherine Kostereva’s share is significantly lower. At the time of leaving Terrasoft, Alexander Popov owned a 44.75% stake, valued at $51M. Based on the information that he and Kostereva had equal shares, hers should be valued at $51M too, instead of the $207M cited in the NV ranking.

• Oleksandr Kosovan, CEO and founder of MacPaw, is ranked 52nd. His net worth is estimated at $196M.
• Spots 53, 98, 99, and 100 are taken by the co-founders of Fintech Band, the developers of monobank Dmytro Dubilet with $196M, Oleg Gorokhovskyi — $100M, Yevheniya Kryvenko (Yatsenko) — $100M, and Mykhaylo Rogalskiy — $100M.

Who else has made it into the Top 100 richest Ukrainians in 2021

• 22nd place is occupied by the director general and co-owner of Fozzy Group, Volodymyr Kostelman. His fortune is estimated at $388M. Beside him, the ranking also features Roman Chyhir ($175M) and Oleh Sotnykov ($175M), ranked 58th and 59th, respectively. Fozzy Group also has an IT subdivision, and recently, they have tested a service to compete with zakaz.ua.
• The net worth of $346M has earned 32nd place to Stepan Chernovetskyi, head of the investment company Chernovetskyi Investment Group having some IT projects in its portfolio.
• No. 39 and No. 40 are taken by the co-founders of Nova Poshta, Volodymyr Popereshnyuk and Viacheslav Klymov, with a fortune of about $273M each.
• The developer Vasyl Khmelnytsky with a net worth of $223M is ranked 43rd. His main asset is UFuture Investment Group.
• 91st spot is occupied by the owner of the multistore Comfy, Stanislav Ronis. His net worth is estimated at $111M.

The richest five

At the top of the ranking, like in the last year, comes Rinat Akhmetov, whose fortune is valued at $11.5B (to put this into context: last year, Akhmetov’s wealth was estimated at nearly just half as much, $6.6m). The top 5 also include Viktor Pinchuk ($2.6B), Vadym Novynskyi ($2.44B), Petro Poroshenko ($1.52B), and Kostyantyn Zhevago ($1.497B).

First, we asked Oleg Gorokhovskyi how a $1+ billion valuation arose – whether it was their calculation or real proposals from buyers. Gorokhovskyi said to AIN.UA that at the moment, he is not ready to share some details of this valuation.

Theoretically, the monobank’s value can be higher than a billion dollars. Sure, if there is a buyer who is ready to pay or invest such an amount. If there are any real investment or purchase offers, it is unknown. The Alfa–Bank Ukraine officials declared in the past that they were thinking about buying monobank, but then they abandoned such an idea. According to the information of AIN.UA, it was not an idea only; there were negotiations. But both parties deny it. According to our info, there was also an interest in monobank from one of the Ukrainian telecom providers. But it did not convert into a deal.

Why more than $1B

One of the sources of AIN.UA, who works in a large investment company and has worked with fintech startups, said that a $1 billion valuation of monobank could be true. And he speaks not of a long-term perspective but about now, at current numbers. According to him, we may find an example in the East — the Russian Tinkoff bank. Its capitalization is $20 billion, the total number of customers is 13 million, and its revenue is about ₴70 billion.

The revenue of Universal Bank, whose license is used by monobank, is much lower. But monobank already has nearly 4 million clients, and the main thing is that the bank is only three years old, not 15 like Universal Bank. In addition, the bank has very recently launched services for individual entrepreneurs (FOP) and is going to introduce new features soon to expand its service portfolio and earn more. For each bank, it is lending that generates the majority of income.

Another example is not so illustrative, but it shows the great interest of investors in fintech — Kaspi.kz. The Kazakhstan company has more products for users by only 10 million customers and a capitalization of $23 billion on the London Stock Exchange. Future achievements play a role here: investors believe that Kaspi.kz will develop and will be able to multiply the number of users.

The same can be said about monobank: the project is rapidly gaining users. It has created the second most popular banking application in the country after only three years. Interest in fintech can be seen both in Europe and in the United States: Revolut ($33 billion), Monzo (£1.24 billion), Chime ($25 billion), Klarna ($45 billion), Afterpay (bought for $29 billion), Checkout ($15 billion) and so on — the list can be very long. All of these companies are worth tens of billions of dollars. And they will be worth even more.

So, the focus on the future is very logical.

“Do you remember Universal Bank five years ago? It was a bank from the third ten. Now it is one of the most profitable banks in the country; it belongs to TOP 10 largest banks by assets,” said another source of AIN.UA in the banking industry. “And it’s all thanks to monobank. Now you can hear the phrase “OK. I’ll send money to your mono” so often as people say: “OK. I’ll send money to your Privat”. It means a lot.”

Even today, monobank, after several years of work, is the largest bank in Ukraine by the number of new clients. PrivatBank is the second.

Universal Bank (monobank) is growing rapidly: in the first half of the year, it is the third-largest in hryvnia inflows — ₴3.1 billion, only state-owned PrivatBank (₴7.9 billion) and Oschadbank (₴4.3 billion) have more according to calculations of minfin.ua (and data from the NBU). Although in the current half of the year, about half of Ukrainian banks faced a foreign currency outflow, Universal Bank is the second after Raiffeisen Bank in attracting funds in foreign currencies — $33.6 million. For comparison, the currency outflow of PrivatBank in the first half of 2021 amounted to $111.2 million.

Another reason why the interviewees of AIN.UA consider monobank to be a billionaire project is a different evaluation approach. “This is more a technological company rather than a normal bank. Hence the figure,” AIN.UA source said. Gorokhovskyi agrees with this: in his opinion, monobank cannot be evaluated as an ordinary bank — by the capital. Following that, the multiplier is no longer 1-3, like by banks, but 7-9, like by technological companies.

According to Yevgen Sysoyev, the co-founders of monobank managed to make a high-frequency product with probably one of the highest return rates of users in the world. Their product is very much loved by users.

“Technological sophistication makes it possible to give the best service with a great unit economy. The world’s neobanks with millions of loyal customers are valued at “billions” of dollars. So, I think that if monobank ever has any round (because they are profitable), it would definitely be valued at over $1 billion. The number of users was publicly announced. Financial figures of the partner bank Universal Bank are publicly available in the statistics of the NBU. Everything is available.”

Sysoyev says companies that are worth billions have several options:

• IPO (as People.ai, Ajax, GitLab are planning);
• M&A for global strategists, who themselves are worth more than tens of billions and can afford it, or for syndicates of major global investment firms.

Why less than $1B

However, not everyone agrees with this evaluation. The representatives of the banking sector questioned by AIN.UA told that according to financial data, Universal Bank and monobank together cost about $500–600 million in 2020.

Minfin.ua quotes Yevhen Dubohryz, an expert at CASE Ukraine and former deputy director of the NBU’s Financial Stability Department, as saying: “I would value the bank, provided it has a monobank project, at ₴9.6–11.7 billion ($350–430 million), or ₴2.4–2.9 billion in equity capital. Without monobank, Universal Bank, judging by the financial indicators, will cost as much as its license (200 million hryvnias — editor) or even less,” says Dubohryz.

All respondents agree that monobank is a huge bank, valued at hundreds of millions of dollars, but not yet a billion. The government desires to sell the unusually big PrivatBank for $3 billion, and it does not help either: the bank has billions of hryvnias of profit and over 10 million clients. This indicates that banking assets in Ukraine are not very attractive.

The most detailed commentary explaining why the bank cannot be worth so much was given by investment analyst Ivan Uhlianytsia:

“In general, monobank itself, despite its strong team, I would not say that it has any great advantages over other banks in this part. The main difference of monobank from the rest of the market, what distinguished PrivatBank too, is its readiness to undertake regulatory risks and go through the disputed area. In principle, this is a typical story for so–called tech companies (Airbnb, Uber, and the like), which is just regulatory arbitrage.

In terms of banking and the actual subject to sale, it has relatively high portfolio growth. But it is not very different from other small Ukrainian banks. They also have high growth rates, i.e., monobank is not unique in this part.

The return on equity (ROE) is relatively high but not very different from many Ukrainian banks that do not call themselves fintech companies.

It is worth mentioning that this eventually high ROE and profit have been achieved by reducing the provisioning of the loan portfolio, from 18% in 2019 to 15% in 2020, and about 11% in the first half of 2021. At the same time, additional provisioning to the previous level would no longer lead to profits in the first half of the year but losses.

But as the loan portfolio of individuals quickly turns around and losses on it appear much faster than on loans to legal entities, monobank has a little time and maneuvering space here. It is necessary either to sell at the desired price or then replenish the capital with own funds and partner funds, resulting positively for the owners.

Additionally, speaking about the rest of the banks and a slight increase in profitability at the moment, we most likely will not and cannot have a sustainable situation at such a polarization of the ownership of deposit resources, the cost of loan funds, the cost of National Bank funds, etc.”

Why “not for sale”

Gorokhovskyi himself said that monobank is not for sale but did not answer AIN.UA why he is not ready to sell it.

In the opinion of ICU investment analyst Mykhaylo Demkiv, the bank is too early to sell: “The bank has not yet reached its maximum point and will continue to grow,” he said in a commentary to minfin.ua.

Ivan Uhlianytsia believes that there are no local and foreign companies that are willing to pay over $1 billion for the banking asset in Ukraine. Just from the point of view of willingness to acquire but not from the point of view of financial capabilities.

However, there is interest in monobank, which is only confirmed by the news from Alfa-Bank Ukraine.

“There is nothing surprising in the interest of companies in monobank. A hugely successful project with a large number of satisfied users and a base that is growing. Who would refuse such an asset?” he concluded.

• Gorokhovskyi also added that “at this valuation, no Ukrainian bank would technically be able to acquire” monobank. Also, he said that such a deal would only be affordable to foreign investment firms.
• The above is a reference to the unofficial news published at the beginning of August 2021 about the possible acquisition of monobank by Alfa-Bank. Both companies have denied this information.
• monobank is the debut project of Fintech Band, which was launched by Dmitriy Dubilet, Oleg Gorokhovskyi, and Misha Rogalskiy after they left PrivatBank. monobank was made for Universal Bank. Previously, AIN.UA published a detailed history of the creation of the project.
• For three years of work, this neobank has grown to almost four million clients, and in October 2020, it became the third largest bank by the number of cards, after PrivatBank and Oschadbank.

The report of the Bureau and the Prosecutor General’s Office says that the ex-Head of the bank’s Board, the Former First Deputy Chairman of the Board, and the Former Head of the Financial Monitoring Department are among the suspects.

“The investigation concluded that in December 2016, the day before PrivatBank was declared insolvent, the suspects, using false documents, transferred more than UAH 136.89 million in favor of an insurance company related to PrivatBank’s ultimate beneficiaries,” stays in the Bureau’s statement.

Neither the Prosecutor General’s Office nor NABU names the former heads of the bank. Given the fact that they both are referring to persons, who held these positions the day before the nationalization of the bank, it could be Alexander Dubilet, Elena Bychikhina, and Vladimir Yatsenko.

Some media have already published the names of the suspects. Several sources have also confirmed the above-mentioned names to AIN.UA.

There is also a photo and video of the moment of reporting the suspicion to one of the ex-Heads of the bank on the NABU Telegram channel. Presumably, it is Vladimir Yatsenko. At the request of AIN.UA, NABU refused to clarify the names of the persons who were declared suspect but confirmed that they held those positions before the nationalization of the bank.

“In accordance with Part 4 of Art. 296 of the Civil Code of Ukraine, the name of an individual who is detained, suspected or charged with a criminal offense, or the person who has committed an administrative offense, can be used (made public) only in the case when the conviction of the court enters into force or a decision in the case of an administrative offense is issued,” the Bureau replied.

Yatsenko and Dubilet are also co-founders of Fintech Band, the developer of the popular mobile bank monobank and Koto (was launched in the UK). Until February 23, they were also the beneficial owners of the company and had 33.74% and 17.18% of shares accordingly. 

AIN.UA sent a request to the Fintech Band for information about how the situation could affect the company’s work but did not receive any comments at the time of the article’s release.

Koto is Fintech Band’s first step beyond the Ukrainian border, driven by their global ambitions. In the interview with AIN.UA, Mykhailo Rohalskyi speaks about what it is like for Ukrainians to work in the British fintech market, what it is like for British people to work for Ukrainian money and under the management of Ukrainians, and what sort of thing is an English-style monobank.

On the creation of Koto

We have always been interested in trying our hands outside Ukraine. We view Fintech Band as a global company. I hope that Koto will be just the beginning of our journey to other markets out there.

We decided to begin with England for several reasons.

Firstly, language and culture. None of us speaks French, German, or Spanish well enough to try working in these countries. We understood that we must be able to speak the same language as the team.

The second reason: in our thinking, out of all European markets, the United Kingdom is the most “foregrounded.” Success in this market means much more further opportunities than success in the Spanish market, for instance. Without diminishing the significance of the Spanish market, we have to consider that most of the world press is English-language, most investment funds are situated in America and also speak English. All this creates some media buzz around the UK market. On succeeding there, it is much easier to find partners in other markets.

The third reason is regulation. On the one hand, in the UK everything is very strict with this, and they tend to regulate such aspects of the business which we couldn’t have thought of in Ukraine. At the same time, there is an opportunity for such companies as ours to obtain a license in a simplified way.

Whereas in Ukraine, for starting monobank we, by all means, needed a partnering bank whose license we would work under, in the UK we just got our own license for crediting activities. It does not allow us to collect deposits, but at the same time allows to work with credits without the involvement of a partnering bank.

So, what is Koto?

Our license does not allow us to call ourselves a bank; it is not a banking license. We cannot call our product an overdraft, because overdraft is a quality of a current account, and it is just banks that can open current accounts. However, we can call ourselves a banking app.

The positioning of our product in the United Kingdom differs from that in Ukraine. Whereas in Ukraine monobank is a full-fledged bank that can cover almost all your financial needs, in the UK, we focus on lending.

Koto is a banking application that allows access to simple and straightforward credit products for those British people who are often unable to get them from traditional banks.

The so-called thin credit profile clients (who did not use credit products ever before, or have just recently moved to the country, or have no credit history, due to their age) are typically refused a loan in the traditional banks. That is why they have to resort to the services of non-banking creditors; this is quite a large market in Britain. This is just what we aim for.

On the UK lending market

All the UK lending market can be broadly divided into three sections.

The first is prime loans. They are provided by large banks. These are credit cards with an interest rate of about 18% per annum. This segment accounts for nearly one-third of all the market.

Just 30% of the British can get a credit card from a bank.

The opposite segment is the sub-prime market. These are loans at the interest rate of 1000% per annum, the very “money till payday” they give you back home at markets and around metro stations. This segment accounts for another third of Britain’s credit market.

And in the middle, there is the near-prime segment. This is where clients with no credit history fall into, as well as those who have had problems with paying back loans, or other reasons for large banks to consider them not reliable enough and grant them no credit.

There are two big players in this market. These are the banks NewDay and Vanquis. There are also different companies providing loans, but everything is not very concentrated there, meaning there are no big players yet.

Koto’s unique selling points

We will compete on technological efficiency.

NewDay and Vanquis have no local branches and provide services remotely as well, however, they were created about 15 years ago, and since then their processes have remained almost unchanged. To their credit, they have built up large businesses. For example, Vanquis Bank has recently cost $5 billion; although they are experiencing problems now, and their capitalization has shrunk fivefold. Still, they have almost 2 million clients.

They are still soliciting customers in traditional ways – via email, aggregator websites, etc. As for their technological efficiency, they already have a sizable legacy, and it is difficult for them to keep up with new players.

We will reduce this process down to just a smartphone, like in Ukraine. Thus, we will grant our clients easier access to credit, making it more stress-free by tossing in our cat, and by providing simpler and more straightforward terms without any hidden commissions. Our commissions will be fixed and easy to remember.

What sort of product is this?

This is an application; on installing, you register on the same principle as with monobank – fill in the form, add documents. But after that, owing to the difference in regulations, you don’t have to meet our representative in person or wait until he or she comes to your place; you get a virtual credit card right away, which you can add to Google Pay and go shopping with it.

We have two credit products linked to the card. One of the credit products is called Extra and is somewhat similar to overdraft, or if we talk in the Ukrainian context, credit limit. Meaning, you can go into the red on your credit card. Our limit is moderate – we offer up to £400 maximum.

This product is useful for cases where you have run a little short before payday, or where you have stepped out leaving cash behind. Such credit is ultra-short-term, and the interest is charged on a daily basis. In fact, your balance doesn’t matter – if you used more than 10 pounds, you pay 25 pence a day.

The second product is the installment plan. In Koto, it is very similar to how it works in monobank. You can choose the number of payments that you want your purchase to split into, and pay with your card. Alternatively, you can later pull out a transaction from your statement and transfer it to installments.

For using this product, we charge a fixed commission – you pay 10 pounds for every month of using the installment plan, regardless of the number of purchases. The limit is higher: up to £2000; the minimum purchase cost is £200.

On the difficulties with the launch

The main obstacle for us was obtaining the license. Initially, when we gathered the documents and the team, we presumed that we would get the license in between 3 and 6 months, but ultimately it took almost a year.

We were greatly hampered by Brexit. No one knows what’s coming next, so all companies that had been using a European license for working in the UK decided to get a local British license just in case. That is why the regulator was overloaded with huge numbers of applications, and our application was just lying there for three months, waiting to be appointed a case officer. Consequently, everything was progressing much slower than the legal advisors who run our registration had promised us.

On over-regulation in the United Kingdom

For instance, to get a license in the UK, we had to write so many internal policies! And that was mandatory. Social media policy, vacation policy: all that one would expect from large corporations only, the regulator demanded of us too.

The way our company is governed is very formalized as well. There are some obligatory functions which should be covered in a company; they can be performed by one and the same person.

When a person holds a position, he or she takes the relevant responsibility. For example, the preventing of money laundering. And if a money-laundering crime happens during their “duty call” and they do nothing about it, they will be criminally liable on equal terms with those who commit the crime, and they can go to jail.

It is possible that for the British as a society this could bear some disadvantages, but who am I to judge them? I live in a country having 14 times smaller GDP than theirs.

On the lender-borrower relationships

In Britain, the social convention is that regulations are more supportive of the borrower. The lender has fairly few tools to recover debt. As soon as the borrower runs into some difficulties in his or her life, the state takes their side – and the lender should “forgive them everything.”

In Britain, there are dedicated organizations a person can appeal to in case he or she owes money to a bank but cannot pay it back due to financial struggles. And if the person makes such an appeal, the bank no longer has a right to communicate with them concerning the debt; from then on, it should communicate with the organization’s mediator.

The mediator starts with examining the situation, and then says something like: “The debtor should have been paying you £200 a month; but they cannot pay that much, that is why they will be paying you £20 a month.” And you can do nothing about it.

On the one hand, this sounds good: a citizen, facing difficulties, is being protected from greedy rich corporations. But in effect, this leads to the situation where just a third of all Britons can obtain credit at a low-interest rate – the others have to take loans on oppressive terms. Because banks grant loans just to those they are sure about.

On the risks of money-lending business

Any lending is risky because it can always happen that you do not get the money back. But this is what business is about – whether or not you can identify clients whom you can provide with a loan.

Unlike in Ukraine, in Britain there are credit bureaus which aggregate customer data from a bunch of different sources: where they have lived, how often they have moved, etc. In order to get the information about a client from such a bureau, you need to obtain consent from the client themselves first. But after that, based on the received data, you can build credit models for the particular customer.

In the UK, we contracted a credit bureau called Experian. We received a large data package from them, which we can use for practicing our algorithms developed back in Ukraine. That is how we came up with models that are about 20% better than those Experian offers by default.

In the course of time, the longer we work in Britain, the more information about the clients and their behavior we can gather, to enhance our models accordingly.

Investments

At this point, we have not brought in outside investors, and have financed Koto at our own expense. It is not so capital-intensive yet, as to bring in investors.

As of today, we have invested nearly $3.5 million.

In the future, to grow and develop faster than organic growth allows, we understand that we will have to attract investment. First of all, as resources for lending – because it is a lending business. But also in equity – to invest more in the advertising and the team.

About the team

We have hired several people from Vanquis Bank. Owing to their work experience in this segment, they have helped us a lot with understanding the market and the regulation.

The London team is not very big. As we are approaching the launch, we begin to expand it. Now there are some 9 people working full-time, plus we hire part-time workers for certain positions.

The UK office is responsible for relations with regulators, product development, for all legal and operational issues. And in Ukraine our company Fintech Band makes the product itself and does the marketing.

Me and Dmytro [Dubilet – Ed.] were spending approximately 50% of the time in London, and 50%, in Ukraine, acting to build bridges between the Ukrainian and the British colleagues, helping them to communicate with each other. Now I am spending most of the time in London.

Dmytro Dubilet was the co-founder of Fintech Band and the projects monobank and Koto together with Horokhovskyi and Rohalsky. But in 2019, he has left the business and went into politics, becoming Minister of the Cabinet of Ministers. Currently, Dubilet implements IT solutions into the government’s practices modernizing outdated processes. He quit the projects monobank and Koto and, as of today, is in no way connected to them.

On Dubilet’s move into politics

It did not influence the launch plans in any way: everything is ready for the full-scale start by March 17. As for me personally, of course, I miss having such a partner and friend at meetings; we had worked together for quite a long time. But I understand his patriotic aspirations and know it was a difficult decision for him. My hat is off for him.

Dmytro decided to quit all the business projects, so as not to have any conflicts of interests and to be able to focus on performing his new role. He has sold his shares in mono and Koto to existing shareholders.

On the particular features of corporate culture in the UK

I must say that, unlike in Ukraine, all the candidates coming to the interview in Britain, were quite well-prepared. They knew about monobank, had seen it, and knew that we were a Ukrainian company. Maybe, some had been put off by the fact (those who did not show up to the interview).

I can speak not about corporate culture in general, but rather about what is happening here in Koto. And here, perhaps, the influence of the Ukrainian colleagues matters a lot, because I cannot see any visible differences. But as regards that which I see through our office windows, overlooking a pub – I can say that in any day, starting from as early as noon, there gathers a crowd of people outside. And on a Friday, starting from 5:00 pm, one gets the impression that all our building pours out towards this pub, and then stands on the street and drinks beer.

Visiting London’s business district on a Friday will help you realize that Ukrainians are actually a non-drinking nation.

On the promotion of Koto

Our story with monobank worked in a viral mode: at first, we did not buy any advertising whatsoever, everything just rushed along by itself. Then gradually we began to bring online advertising into play, and we had some experiments with offline advertising.

We really hope that in Britain we will manage to achieve a similar effect. But we are preparing for a situation where we would need to follow in the footsteps of traditional companies and would not be able to get the first clients without an advertising campaign.

On the regulation of advertising in the UK

In the UK, advertising is highly regulated, like anything, indeed. For example, we cannot advertise loans in such a way to produce the impression that we foster consumption through lending.

So you can’t say in an advertisement, for example, “Afford more!” or “Vacation on credit.” This can prompt a negative reaction from several regulators at once – the advertising regulator, the regulator responsible for financial institutes, etc.

Due to the latest innovations over the GDPR, we must ask for a client’s permission to communicate with them through any channel, even through an application. So, the identification in the app is not enough – aside from that, we must secure their permission, for example, to send marketing information in push notifications.

Differences between mono and Koto

In the UK, we work with Fedoriv Agency. For us, they conducted some research with different focus groups and came to the conclusion that the colors we use in Ukraine, in monobank, we cannot use here – because they are associated with credit companies disbursing onerous loans “till payday.” It is better to use more restrained colors.

Their second recommendation, that we have partially applied, is to make our cat a little bit friendlier. In Ukraine, when we were developing the cat’s personality, it called people “bipedal slaves.” In the UK, they would not get the humor, so the cat is rather a friend than a master.

And, of course, we have adapted the product. It differs quite significantly from monobank.

After nationalization, all the top managers left the bank. Some of them launched their own company called Fintech Band and started to compete with what they themselves worked on a couple of days ago – banking from PrivatBank. The users were promised a mobile bank “like “Privat24,” only better.”

After a couple of years, the joint Fintech Band project with Universal Bank called monobank became one of the most recognizable fintech-brands in Ukraine. The first users of the monobank application vigorously showed off on Facebook with stylish black cards and sets of stickers with branded cats. Over the year, already 600,000 users have acquired these cards, and the team believes that the first million of customers is not far off.

Fintech Band

A day after the official announcement of the nationalization of “PrivatBank”, the already ex-IT director of the bank, Dmytro Dubilet, announced that he was officially unemployed. Other top managers left the bank along with him: the change of leadership was one of the conditions for nationalization. It did not work out without difficulties:

“It was hell, just a hell day. During this day, I, Oleg Gorokhovsky and our team experienced so much stress and humiliation, which is beyond words. Everything is done so that in the end all payments for individuals and corporate clients start working in standard mode,” he said back then.

It was then that they came up with the idea to create the Fintech Band company, which would develop Fintech solutions. The founders and co-owners of the company were: Dmytro Dubilet with his father Oleksandr Dubilet, Oleg Gorokhovsky, former first deputy head of PrivatBank, Mykhaylo Rogalsky, responsible for the business of payments and transfers, Vadym Kovalev, who was involved in risk assessment, Volodymyr Yatsenko, deputy head of the bank, and Lyudmyla Shmalchenko, ex-director of the bank’s treasury.

Mobile bank became the debut project of the new company: the idea of making such a decision seemed obvious to the co-founders. “We understood that we were a strong team, we liked the experience of Tinkov and after nationalization and we realized that we ourselves wanted to try to do something like that. We wanted to create a product like PrivatBank, only better in all respects,” recalls the co-founder of the project, Oleg Gorokhovsky, who headed the card business at PrivatBank.

Universal Bank became the partner of the project. Monobank is not a separate bank, with its license or infrastructure. In fact, Fintech Band created and developed a banking application under a separate brand for Universal Bank. The co-founders say that they started working with Universal for a number of reasons: they appreciated the concept of a mobile bank, the team found a common language with management, the bank was ready to give resources for lending. The owner of the bank is a well-known businessman and politician, Sergiy Tigipko. “We perceive him primarily as a businessman,” says Dmytro Dubilet.

Investments in the creation of a single monobank application are estimated at $2 million, and the total investment in the project is about UAH 150 million, partly from the founders’ own funds, partly from payments from partner banks Universal Bank and iBox Bank.

If you outline the main milestones of the development of the service, you get the following timeline:

On the graphs, the growth dynamics is clearly visible:

monobank: application development

The charts at the top show fairly rapid growth, although the founders themselves do not think so. “It seemed to us that we had given birth to a product for ages,” says Dubilet. All seven co-founders took part in the management, and this did not speed up the process. All key meetings in the company were held with the participation of all managers and co-founders. The five people who are the most actively involved in management are the Dubilet Junior and Senior, Vadym Kovalev, Oleg Gorokhovsky and Mykhaylo Rogalsky. They make all the key decisions together. If someone disagrees with something, they discuss it until they come to common opinion.

“We participate in all discussions on the project together. There is no man whose word is the final. For a team of five people we have at least seven opinions. It turns out that we have verified decisions, however, this reduces the speed of their adoption. Although, it seems to me that it is better to move slowly along the right path than to run quickly along the wrong one,” says Gorokhovsky.

On the one hand, the team wanted to release the MVP as quickly as possible, on the other, it was afraid that the MVP would not fit everything that was needed. The goal is to create a credit card and an application for it, and according to commissions and other conditions it should be better than other products on the market. It had to have a credit limit, the ability to make payments, loyalty programs. Later they planned to add referral programs and deposits.

The founders immediately decided to focus on the design, for which they attracted the agency Alty.

“We wanted to make the best application on the market. We could argue ourselves hoarse about the fonts or the color of the gradient on the start screen, Rogalsky recalls. – We constantly returned to the quote that the application becomes good not from what you add in it, but from what you refuse in it. When we talk about great products, everyone has an iPhone example with that feeling when you take a product in your hand and immediately understand how it works.”

The team did not immediately realize the complexity of this task. First, the application was going to run in May 2017. Already in April, the deadline was shifted to the summer, then – to September 1. Fintech Band at that time has grown to 100 people.

The team wanted to add informality to the product, appeal to the user’s emotions. “We understood that at least the first few hundred thousand customers would be predominantly young people. We allowed ourselves to go to a wittier tone. In “PrivatBank” it was impossible. For example, when setting a credit limit above 1 million hryvnia, the text of the error looks like this: “Whoa-whoa, slow your horses, boy!”, said Dubilet, speaking at last year’s iForum.

Such references are constantly added to products. A recent bonus service – Iron Bank metal VIP cards hint users to the “Iron Bank of Braavos” from the book “A Song of Ice and Fire” and the “The Game of Thrones” series.

Recognizable stickers with cats added emotional coloring to the product. The idea of such a symbol for a product was born by chance, Oleg Gorokhovsky recalls:

“When there was work on the application, PrivatBank massively advertised the payment by the QR code. I said, let’s make a QR cat. People will talk about the QR code and remember our QR cat. So, the QR cat appeared, then the QR part disappeared and just the cat remained.”

According to Dubilet, very many things, similar to stickers with cats, were not part of any strategy, they were made rather on a whim: “There was no calculation, like okay, we’ll make stickers, and there will be such and such return on investments. It was more like this: stickers are cool, let’s do it.”

The difficulty was not only in the development of the banking application itself. One of the key tasks is the creation of software that can adequately determine credit risks. Many machine learning models at monobank work precisely to determine credit risks, accompanying the entire credit decision making process. Mathematician Vadym Kovalev oversees this area. Models analyze how quickly a client fills out a questionnaire, which phone or IP he/she has, etc. In total, more than 2,000 parameters are estimated, and about 20 different models work on it. According to the founders of the company, they have learned to consider risks so well that now the Fintech Band sells risk analysis tools similar to monobank ones within the framework of a separate project, Artificial Intelligence Solutions.

“We use neural networks for image recognition, for analyzing dialogues; there are also many advanced methods, such as gradient boosting (with the help of it we predict credit risks), the “random forest” algorithm, Bayesian optimization. We use quantile regression to determine the client’s solvency, graph analytics works well to determine the connections between clients,” Kovalev said.

Even at the beta test stage, the application received a good advertisement thanks to word of mouth. But the product was also promoted by professionals, this was done by Kharkiv-based Promodo company, which carried out campaigns on Facebook, Instagram, YouTube video campaigns, AdWords promotion, etc. (we published a detailed analysis of this case study). Promodo also emphasizes that feedback from real people attracted new customers and increased interest in monobank.

Example of video advertising service:

The founders themselves actively participated in the promotion. Dmytro Dubilet has more than 112,000 subscribers on Facebook, which is comparable to the coverage of pages of famous Ukrainian media.

“I don’t know how many millions we would have to invest in advertising to get as many customers as we received thanks to my blog and Oleg Gorokhovsky’s blog,” he says.

Facebook has proven to be a useful feedback tool. The team does not monitor social networks specifically for the keyword, but most of the reviews about the product one way or another sees. “Unlike “Privat”, most reviews of monobank are superpositive. In this case, I like the post, put a heart and read on. But if we screwed up somewhere, I’m sure to check if this is not a system error affecting other customers. At the end of the day, I look through all the posts where I’ve been tagged,” says Dubilet.

Speaking about their offspring, the creators often oppose it to the services of PrivatBank. “Frankly speaking, at one time we just took all the positions on PrivatBank and did better. We can afford it, because our business model implies the absence of bank branches, which means that we have no expenses for electricity, gas, cash collection, employees, and so on… Continuing the topic of the price war with PrivatBank: we even wrote a special bot that pulls out their rate and makes ours a few kopecks more profitable,” said Dubilet, introducing monobank on iForum.

Even the branded black monobank card is a consequence of this competition. As Gorokhovsky remembers, in PrivatBank the black card for VIP clients caused a sensation, it was sold for $2,000: “Customers called at night to order this card. Black for some reason is perceived as a sign of elitism. So we made a decision: while the main player sells such cards, and we will distribute them for free.”

600,000 cards

Now there are more than 150 people in the Fintech Band team and the team plans to expand. Most of the employees are IT specialists. In monobank there is agile and flat structure, without hierarchy. “There are no departments, there are project managers who communicate directly with us. If you need to involve a large number of people in some direction, an ad hoc decision is made, and some employees are transferred to new projects. We have the most agile in this regard, it seems to me that we have the spirit of a startup and I hope it will remain for a long time,” says Dubilet.

The main part of the team works at the headquarters in Dnipro, but there are also remote employees. The co-founders travel a lot, so most of the meetings take place in video conferences at Zoom. “If you look at Screen Time in iOS, Zoom is far away in the first place, Telegram comes the second, we use it as a corporate manager,” says Rogalsky.

For about a year, the monobank project was working at a loss, and in the last couple of months it began to make a profit. This is a logical development for the project with a young loan portfolio, notes Gorokhovsky. According to him, growing portfolio accumulates starting backups, which keep the project down, but they are comparable to investment costs. As the portfolio matures, new reserves already have little effect on revenue traffic and the project gradually comes to a profit.

“Earning is not very successful, however, we credit well. The time has come to take care of attracting liabilities, because we have already successfully spent the funding that Universal collected to start the project,” he says.

In Ukraine, the service grows by approximately about 60,000 customers per month, and so far this dynamic continues.

The portrait of the monobank user is the following: this is a young man with a higher education. There are 68.78% male users against 31.22% female users. More than 50% of bank users have higher education degree, about 17.6% have incomplete secondary education degree and 15.4% of users have a secondary education degree. More than half of clients are people aged 16-30 years old, 38.5% of them are 30-45 years old, 8.2% are 45-60 years old and only 1.2% are over 60 years old. Interestingly, for the year monobank came in second place in popularity among Ukrainian freelancers, although it is still far behind “PrivatBank” (data by Freelancehunt).

In the spring of this year, monobank even received a peculiar recognition of popularity from fraudsters: fake “mono-banks” began to appear on the Internet, luring money and data from users.

The team is working on new services, one of the priorities is an application for entrepreneurs. “Among our clients there are many IT specialists, for them this is relevant. We are also working to make it easy to transfer money from abroad to our card, this is important for freelancers. And if we dream up a couple of years ahead, we will try to do for individuals in general everything they need from the bank,” says Rogalsky.

Fintech Band develops new markets. Earlier this year, the team announced that it is entering the UK market with a product similar to monobank, in partnership with local fintech company Prepay Solutions. In general, the team plans to expand to the whole Europe. “If everything goes well in Britain, we will scale to other markets. Our plans are global,” concludes Dubilet.

For him and for the rest of the Fintech Band founders, December 2016 is long past.