Lav Odorovic - Co-Founder & CEO, Penta (UK)

As Europe enters an open API world, financial institutions are under more pressure to deliver a sophisticated and tailored customer experience. Small-to-medium (SME) business banking is an area ripe for great disruption, and many new players have already entered the market, ready to steal market share. Ahead of their launch this Autumn, Penta is just one of these start-ups looking to seize the opportunity. Built by a group of tech entrepreneurs, rattled by their own experiences with poor business banking services, Penta is looking to break the mould through strategic partnerships, in the hopes of offering a much better offering for German and UK banking customers. RFi Group’s Sarah Hollinshead met with Penta Co-founder and CEO, Lav Odorovic, to understand their journey so far and what their intentions are for success.

How would you define your goal for the business?

Our goal at Penta is to make business banking really easy while offering a one stop shop for start-ups.

Why did you decide to target high tech companies?

We’re building Penta for start-ups that use Slack or Trello on an everyday basis.

We decided to build Penta for high-tech start-ups for several reasons. Firstly, because we know high-tech start-ups, because we’ve had many high-tech start-ups ourselves. And we understand that this group feels the most pain with business banking. Because all the tools they use are really modern, fast and beautiful. So why shouldn’t their business banking be as convenient?

These start-ups usually make below €2 million in revenue and have between 3-30 employees. With this type of business, a bank would usually not assign an account manager, so the business has to fight the bureaucracy of the bank on their own. This is where we can offer the right service.

Also, this type of entrepreneur has automated the majority of their business processes anyhow on a non-banking level—like Slack or Trello. Therefore, they’re more keen on using more tech based solutions that are easy to use with their banking, such as digital-only banks, FinTech apps or artificial intelligence.

Lastly, we know that most start-ups use Beta products or new technologies on an everyday basis. When the iPhone came out in 2007, the people who were lining up for 9 hours were people who had a high-tech mindset and wanted to be the first to try this crazy new device. And these people with high-tech mindsets are the people who adopt these new banking products, like Penta. They also believe in the vision and the value, even if the product is not fully ready. They’re also great at giving feedback, and become great evangelists, which helps us spread the word and reach those who need us most.

With tech focused companies, there is far less of a track record to help determine your risk decisions. How do you deal with that?

We chose to only focus on things where we can actually add value, and this is not through creating new FinTech or business products. Therefore, to combat the risk, we look to partner with developers or companies who create these brilliant products. In other words, we’re integrating the best FinTech providers and business apps in one place: your bank account. So that you can spend less time banking and more time focusing on your business. We work as a user interface layer that connects our users with FinTech and business apps that people already use.

Yes, it might sound easy, but even banks are aware that they could improve their offering dramatically, but it is just difficult to build from the ground up.

What are you offering to these business owners once the banks have provided their funding?

The challenge for banks is that their model is built around product silos, which does not allow for the best analysis of what a customer wants.

At Penta, we can offer a much better offering that high street banks, as we can pick and choose the best FinTechs that are doing one single function better than banks, i.e. international payments, cash flow solutions etc. Furthermore, for these FinTechs, they usually struggle to reach customers, as switching is costly and lengthy. At Penta, we do all of the KYC and onboarding once and share this with all of the partners in the network. Therefore, we are creating value on both sides; FinTechs can reach the market and small businesses benefit from a better curated experience without spending time on looking for alternative ways to do their financial tasks.

The full range of services that can be offered through a Penta account can be best summarised as:
1.Sign up in minutes
2.Deposit account
3.Debit cards Low cost international transfers
4.Roles and permissions
5.Transaction classification and budgeting
6.Accounting integration

You have partnered with SolarisBank in Germany, are you looking to do the same in other European countries?

SolarisBank is a bank with a Pan-European banking license, so throughout the process of passporting, we are able to serve customers even outside of Germany from day one. However, we are starting in Germany and we are taking it slow before expanding. Ultimately, we don’t want to rush because business owners are trusting us with their money, so we want to make sure that everything is working as expected.

Has Brexit impacting your strategy in the UK at all?

It has not made our lives easier, but we still have to see how things are going to develop. In the case of a hard Brexit and the stopping of passporting, our ability to serve customers in the UK will be directly impacted, at least in the short term.

How was your experience going through the Startupbootcamp process, and what were the biggest learnings?

It was a really great experience and I can say that if it was not for Startupbootcamp, we would not be where we are today.

Even though we are still at the beginning of the journey, this is the point where start-ups need to be in contact with experts from different fields, such as technical, legal, compliance, banking, etc. All of these issues would normally be too expensive to solve or take a huge amount of time. Whereas in the program, I could raise my hand when we came across a compliance issue, for example, and 5 minutes later, we would have this solved with the help of a mentor.

In terms of learning, one of the things Startupbootcamp ask you to do is completely rethink everything. So, you look at the business model canvas and think – does this really make sense? Do all parties benefit from this? What is our customer development process?

We spoke to friends and colleagues about what they thought was wrong with their business bank accounts, how could it be fixed, what we do could differently – but this is not the way to extract valuable information. So, we set up a hypothesis and went to speak with 100 businesses (50 in Germany, 50 in the UK), face-to-face, and this is how we learnt most of the things we know and use today. There were ten points in our original hypothesis, and we ended up rejecting seven.

Are you working with any new technologies?

We’re using the newest frontend and backend technologies developed by Amazon and Facebook to help us build the most optimal product for our customers. However, our focus is not to build FinTech and business apps as I mentioned, but instead, we need to scan what are the best products out there and bring this to our customers as soon as we can.

What have you enjoyed most about the process of setting up Penta so far?

The process that excites me the most is always talking to the customers. This is the only task that, whenever taken, I never feel like wasting a single second. If we talk about the product, it really excites me how quickly we are moving and how everything is taking shape in a dramatic way.

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