Proper business model as the basis of competitiveness in the fast-changing business environment

September 25, 2019 7:25 pm

Olga Dolzhenko, Chairman of Management Board PJSC “Bank Familny”, PS “FlashPay”, alumnus of MBA programme of Edinburgh Business School.

There are recurrent discussions on what is more important for stable entrepreneurial and professional success: high-quality education or still innate natural abilities and emotional intelligence skills – creativity, willingness to leave the comfort zone, stress tolerance, charisma, sociability, self-confidence. As always, the truth is somewhere in between.

When I enrolled in Edinburgh Business School MBA programme in 2012, I already held the position of Chairman of the Management Board of Bank Familny, a regional bank with a niche business model of a payment solutions integrator for the B2B segment. There was a request for additional management tools, leadership tools, organizational changes, as well as a deeper understanding of marketing tools and strategic planning tools. In addition, I was interested to understand the roots of success and defeat of world-class companies and their leaders

I experienced the real value of knowledge and practical tools already in 2014, when for well-known reasons the crisis unfolded in Ukraine, which immediately affected the banking system. So in May 2014, an unexpected challenge arose – the need to quickly move the Bank’s head office from Donetsk to Kyiv. It was a value and professional choice. At that time the Bank’s payment project had already served several thousand customers 24/7 for on-line payments, and it was necessary to arrange the transfer of technological, material and human resources in 2 weeks unnoticed by customers. The clear position of the shareholders, the set goal to preserve the business and key personnel and the focused business model, defined back in 2010, helped a lot. As a result: out of 11 banks-legal entities of the Donetsk region, Bank Familny remained among 3 ones that retained their presence in the market by now and, accordingly, currently it is included in 76 out of 180 banks remaining in the market after the process of clearing the banking system of Ukraine.

The Bank continues to successfully develop the selected business model, being essentially a unique purely settlement bank in the Ukrainian banking market, which has refused from credit and deposit products not related to the main payment business. To strengthen our competitive advantage in the payment business, we have registered the FlashPay payment system, which for 5 years has been confidently in the top 5 Ukrainian payment systems according to NBU statistics. I believe that we managed to break the prevailing stereotype and association of a banking institution only with credit and deposit products and in practice proved the viability of a niche focused business model of a settlement bank in synergy with the payment system.

Bank Familny and FlashPay payment system occupy a confident place on the map of Ukrainian fintech companies. This is, in fact, a specialized system with open payment APIs, which allows other participants in the Ukrainian payment market join to use its products. Currently, more than 100 partners (banks, financial companies and agents) and about 3,000 recipients of regular payments (utilities, telecommunications, transportation and entertainment) are already working in our system. The value and relevance of our business model is based on the vision that market leadership, including the payment market, will be kept by the most efficient companies that can provide a high-quality product at the lowest price in the long run, and at the same time generate a mid-market return on investment in business. In order to reduce the costs of the financial industry and compete with such giants as Facebook, Amazon, Apple, which claim and demonstrate their ambitions to squeeze traditional participants of the financial market, at least in the payment segment, it is necessary to quickly and significantly reduce the costs of supporting the payment business for each market participant and outsource this function to a specialist. Such a specialist is Bank Familny and PS FlashPay.

In this context, the tasks of the Bank Family and FlashPay at this stage are as follows:

– building effective corporate governance on the basis of flattening organizational structure and strengthening horizontal relationships;

– retention and development of a market position in the fintech payment segment;

– rebranding of the Bank and PS to transfer more precise positioning;

– focus on the optimization and automation of processes and, accordingly, improving efficiency;

– introduction of motivational programs aimed at involving key personnel in long-term financial goals.

The arsenal of tools and cases received at the Edinburgh Business School helps a lot as a good basis for understanding and developing any business case.