The Direct Banking offer in the 21-25 Strategic Plan

5 July 2021

Carlo Panella's editorial

Head of Direct Banking

illimity’s Direct Bank has achieved many milestones since its beginning such as:
· Funding goals for the whole group, with 1.5 billion euros achieved
· Create a best of breed, fully fledged and innovative Retail Direct Bank, achieved through
· Scale customer base: accelerated growth through HYPE (1.4 million customers)
· Sound all market opportunities offered by open banking.

From a “financing machine”, the direct banking will transform into a real line of business, contributing to the excellent results of the illimity Group, made possible by the initial investments.

Concerning the Secure Funding, we expect to move from 1.5 bn to 4.4 bn euros in 5 years, with funding costs decreasing thanks to a savvy mix of channels and a full implementation of the banking strategy.

Another goal, which we have set ourselves from the beginning, is to develop a state-of-the-art digital and open banking platform by:
· Providing a complete offering, both for illimity and third parties’ products
· Designing a user experience with the consumer community
· Having 87% of active customers
· Having a Net Promoter Score (NPS) of 43 points against a market average of 12.

An unmatched level of engagement and loyalty.

And then, HYPE, one of the most relevant and strategically important initiatives of the business plan.

HYPE is the fintech in which we have invested together with Gruppo Sella with two main objectives: generate important synergies of revenues and costs and make the young fintech the Italian company with the highest potential in “light” banking services. We want to be where the future high value banking customers are now.

Thanks to our commitment, the number of customers and revenues are increasing while the transactions are almost doubling.

But the real innovation will happen in July with “The New Hype”, which will be a multi-bank with a complete offering, a new CRM and a new technology in cloud.

All of this has been, and will be, possible thanks to the strong synergy in illimity, between people and technology.

Another big objective is about innovation. Could you imagine a bank capable of promoting sporting experience or obtain the trust of financial advisory firm customers?

illimity made it. Thanks to the open IT architecture, illimity developed a new banking paradigm, where banking meets other services, and products are embedded in the partner’s offering. All of this creates a new value and allows us to seize huge market opportunities.

Finally, the real game changer for Direct Banking is the creation of the first direct bank dedicated to small companies up to a turnover of 10 million euros.

It will propose a complete offering that integrates digital skills. The three main components of the project are:
· A simple product offering, designed for the needs of small corporations:
  - Digital interaction and full set of transactions
  - Financing solutions (Factoring, Short & Mid Term)
  - High value-added services like insurance or ERP
· The advanced credit engine, based on AI and PSD2 scoring models that guarantee a fully digital evaluation and underwriting process
· Dedicated account managers, working on the premises and with digital interaction tools.

Another innovation consists in the open banking approach which will be able to create value together with some leading companies: some of these will enrich the customer experience through product offering, while others will contribute to the growth of business origination by sharing customer base and sales networks.

To conclude I would like to share the contribution that the Direct Bank dedicated to small corporates will bring to illimity’s results in the next years:
- Over 30 thousand small corporate customers by the end of 2025
- 1.1 billion loans by 2023 and 1.9 billion by 2025; with a total origination of 3.7 billion
- 80-90 million revenues
- 25% average RWA Density
- Cost/income ratio between 30-35%.

All these results will be achieved thanks to the combination of an efficient digital platform with credit management capabilities.