The year of 2021 has been memorable to HES, a fintech providing end-to-end loan management software for banks, credit bureaus, financials, and alternative lenders, as well as advanced automation and AI-powered loan decisions and enhanced analytics. The start-up waded into new international markets, even in Africa, and is set to flex muscle this year too. The Baltic Times Magazine sat down to speak about what is next for HES to Ivan Kovalenko, entrepreneur in fintech software engineering with a solid 10+ years’ experience in IT projects and product assessment, development, and delivery. He is also co-founder and chief executive officer of HES FinTech and GiniMachine AI.
This year, HES is celebrating its 10th anniversary of operation. Can you talk about HES’ achievements?
We started a small fintech software development company with a dozen developers and testers. Now HES FinTech is a mature business with headquarters in Vilnius, Lithuania. We provide more than 100 workplaces and have 160+ completed and active projects in more than 30 countries worldwide. In the last few years, the company became an associate member of the American Bankers Association and Canadian Lenders Association. It is amazing to compare the before and after when planning the business activities for the future.
How different is the fintech market landscape now than that of 10 years ago?
The fintech market 10 years ago was full of ideas but lacked experience in the development of B2B and B2C solutions, lacked actionable market insights. As for today, I guess, the only barrier for fintechs is compliance. The EU and the North American markets are strictly regulated, and it may be an issue for the payment and lending start-ups. At the same time, we can see a fantastic growth of fintechs in the number of deals, in funding size, and in the growth of the customer base.
What qualities and capacities are attributable to fintech companies that came out as winners over the stretch?
Just like for any other business: flexibility, analytical skills, and timely decision-making are the key. If we are talking about external success factors, the primary ones are ecosystem, market, and regulations.
The ecosystem means opportunities to cooperate with incumbents at the early stage, to acquire experience and capacities. Sure, fintechs can exist on the market with low competition with banks, but traditional market players can act as compliance and security advisors.
The market means the structure of financial services available. An interesting thing about the success of fintech offerings is that customers may be willing to try neo-banks or alternative lending providers because of good experience with traditional financial institutions (as in the Scandinavian countries), since they have a high level of trust. At the same time, customers may use fintech services due to unsatisfactory or insufficient experience with traditional institutions (as in South Eastern Asia).
Regulators are trying to make the fintech market innovation-friendly and secure at the same time, sometimes it works and sometimes it doesn’t. As the financial regulation is becoming more balanced, the business climate is turning more favourable to fintechs.
Tell us more about your clients, please.
HES lending software is a great fit for traditional and alternative lenders: we work with incumbents (banks, credit unions) and fintechs. Our customers automate consumer and SME lending, P2P, POS, asset-based lending, or Investment businesses.
Most of our customer offers require short time-to-market along with a substantial degree of customization. Their goals include entering a new market, outperforming competitors by launching a new product faster, or even trying a new business model. And this is exactly what we can help them with.
How has the COVID-19 pandemic impacted HES activity?
Like any other business we were cautious and puzzled back then in March 2020. However, in a few months it became clear that most of our existing customers keep their projects active, while the number of leads quickly recovered after the temporary drop. We admit that 2020 rather demonstrated our flexibility and priorities instead of ambitious growth, but we are proud to keep our team and support their health and wellbeing without compromising teamwork effectiveness.
The COVID-19 pandemic is a reminder that there is nothing more valuable than people and their ideas. The numbers, percentages and titles always remain a ‘nice-to-have’.
In 2020-2021, HES signed new contracts with clients willing to expand their digital presence and opened up new regions, like the Middle East or Africa. Can you please talk about that?
We decided that pandemic times are best for obtaining a few certificates: In 2020-2021 the company received the AWS Technology Partner Status in the Amazon Partner Network (APN) and received an official ISO 27001 certification. It helped us to win a few important contracts. We believe that any crisis is an opportunity to invest in new skills, new marketing and sales strategies, so our team was supported and motivated to work harder.
As a result, in 2021 HES became a software vendor of Wa’ed, the entrepreneurship arm of Saudi Aramco, one of the world’s largest companies by revenue. Our team started automating the company’s financial operations to fuel business growth and grant collateral-free loans. In addition to this major project in the Middle East, we opened up Africa and started our first project for the African market.
As we're talking amidst the tumultuous events in Ukraine, what is the fallout from the crisis for the fintech sector?
From the point of view of a businessman, it’s difficult to predict anything for sure: such predictions may be way too pessimistic or unreasonably optimistic. The crisis seems inevitable, but nobody can plan for a long time ahead. We all need some time and additional facts about the market state to plan our next step.
What can one expect in the fintech sector, and from HES, in 2022? In the foreseeable future?
Among the recent trends we would like to mention inclusive finance and especially inclusive lending. Technologies help borrowers become ‘visible’ for credit institutions. Lenders can accept loan applications even from thin-file borrowers with no credit history with the help of alternative lending data, such as telecom info or the information from utility services organizations about timely paid bills.
My business partner, HES FinTech Co-Founder Dmitry Dolgorukov, has recently written an article for Bank Administration Institute about the potential of AI in inclusive lending explaining the value of tech for social needs.
We research this topic while our start-up - GiniMachine AI-based decision-making platform has a great potential to bring benefits both to lenders and borrowers.
In a digital age such as the one we are in, HES has offices in UK and US. Why?
The answer is simple: it can facilitate document management with customers around the world and has a substantial reputational impact. At the same time we are comfortable having headquarters in Lithuania.
Who are the brightest people on your team?
I would say if someone receives a job offer from HES, he or she is a very talented, skilled and highly motivated person. The best thing to notice in our corporate culture is how people communicate, cooperate and celebrate results with each other. Hiring a star with amazing leadership qualities is a great deal. However, we prefer hiring a team of stars able to support each other or take over a task, because it allows providing full-fledged vacations and leaves without compromising the team’s productivity. As I said before: people and their ideas are our greatest value.