Multitude AG (0R4W) Earnings Call Transcript

Yes. So primarily, we're looking for revolving credit portfolios and especially on our focus markets. That means no extra capital is required for that. But we are also open for other business opportunities when they emerge. And to answer the second part of the question about organic growth, I mean then there's only a short answer that, no, not of course. We are -- as I presented to you before, our underlying business is still growing. But when our market gives us an extra opportunity to boost the growth, then, of course, we use the moment and grab it.

Makes total sense. Thank you, Kristjan. Final question to you. You've mentioned that you've suspended markets but also entered new ones. So can you explain this in a little bit more detail?

Yes. First of all, I would like to clarify the point that when Ferratum Tribe is suspended from the market, and it does not mean that the Multitude Group is leaving. As you know, we are covering different market segments with SweepBank and CapitalBox. Our business, we are in a changing environment. And in case the macroeconomic situation is not supporting our targets in the market, then we have now learned to say stop and to refocus our resources and activities. As we have a scalable setup having minimum local presence, then we are able to launch quickly without any extensive hover at any new market, where we see bigger potential for profitable growth. So I hope I explained now the logic.

You did very well. Thank you so much, Kristjan. It's been a pleasure speaking with you.

Thank you.

All right. Time for me to introduce our next speaker. So next, we'll hear from Scott Donnelly, who's Chairman of the Board at CapitalBox, and he will be talking more about CapitalBox. So let's hear it from Scott.

Hi. I'm Scott Donnelly. I'm the CEO of CapitalBox. We are the SME planet in the Multitude universe that Jorma discussed with you a little bit earlier. We're going to talk today a bit about where we've been in the past, how things are going currently and where we see ourselves moving in the future in this SME online lending space. So in terms of our story, we've been a really fast-growing, profitable success story. We started in 2015, 6 years ago, simply as a pilot. We wanted to test out in Sweden that would this online lending proposition work for small SMEs and could we take some of the knowledge that we have from the consumer business in terms of online processes underwriting, payments digitally serving the loan market to this business lending side and not just the consumer side. Wound up to be something of a success in the first year, and then we decided to expand to Finland and Lithuania next. In 2016, we launched Netherlands and Denmark as well. In 2017, we really sort of dug deeper into the markets we're in. You can see the revenue essentially tripled during that time from EUR 4 million to EUR 13 million. And then in 2018, we continued this big growth trajectory, and we really kind of doubled down a bit. We increased the max loan amount from EUR 100,000 to EUR 250,000 and increased the terms from 1 year to 24 months. So then moving ahead to 2019, we've always had this technology platform essentially driving the whole thing, but we really did an intensive focus on increasing automation across all the parts of the business. We have an artificial intelligence-driven decision engine that helps us do the underwriting really efficiently, automated collections processes, automated marketing processes, payments. So we really put a lot of work into building this up and making sure this will become even more scalable across multiple markets, multiple countries using multiple currencies, multi-language as well and laying the groundwork to the future for the business to grow. You can see in 2020, sales dipped a bit. But actually, profitability increased, and we'll discuss a bit of that. Obviously, 2020 was something of a stress test for everybody, and this was something we passed with flying colors. The business did quite well in 2020 in terms of weathering the storm, and we're really well positioned to move into the future without really skipping a beat as things start to normalize again. So what is our proposition and what do we do? So the whole idea behind CapitalBox was the idea that EU micro SMEs are vastly underserved by conventional banks. So there's a lot of statistics out there about the funding gap between how much SMEs get from banks versus how much they need. One estimate we have here is the gap is EUR 276 billion. There's other estimates I've seen that are upwards of EUR 400 billion. If you look to the right, this is the number of SMEs in the EU. So total is about 25 million. But of that 25 million, 23 million are micro SMEs. So micro SMEs are small businesses with less than EUR 1 million in revenue and less than 10 employees. So these are the smallest segment, but absolutely the largest chunk of SMEs that are out there. And this is a segment that's actually very neglected by conventional banks. The reason being, conventional banks are limited by their legacy systems, legacy processes that sort of gotten by not being able to serve this customer base with more forward-thinking, tech-driven processes. And that's left an opportunity for us to step in and really be able to service this segment because we do it in a really efficient way. I mean that's essentially the value add here for the customer and for us as a business. But anecdotally, there's a lot of statistics again about this funding gap. We -- when we first opened in Finland, we did a mystery shopping campaign where we found 4 companies. They were essentially all companies that we would lend to. They were a couple of hundred thousand in revenue, good credit, been in business for years. And they applied to all 4 of the big banks in Finland. And this was -- so 4 companies, 4 banks, 16 applications. That came back with 16 rejections. So this was a quite eye-opening experiment that we did and made it pretty clear to us. We were already seeing a lot of demand for the product, but made it pretty clear to us why there is a market here and why we're able to serve it when the banks simply are not capable of handling these customers, even though there's a huge opportunity in serving them. So again, who are our customers exactly? So the micro SMEs that we're working with, we're squarely in that space. So average revenue of our customers, EUR 445,000, average number of employees is 3, average time in business, however, is 7 years. So we're not doing start-ups, right? We're not doing new companies that are being formed. These are established businesses that are just on the small side. Not every business is necessarily -- the intention is to grow huge, right? In many cases, it's a lifestyle business, it's a living that the owner and the employees around the business make. They're not trying to become the next tech unicorn. And there's a lot of these. And that's the businesses that we want to serve. So the most common use for the loans is liquidity and working capital. If we've done our job right, then essentially we're working with companies that have liquidity problems, not solvency problems. For small businesses, many times, they're not paid for 90 days or longer, but they still have to put up money for materials, for staff, for all the other essentials of just running the business. So a lot of times, these cash flows don't match, and we're there to fill that gap for them. So what is the solution? What is the product itself? And our main goal is to have something that's fast, flexible and easy to understand that's tailored just for these micro SMEs. So the loan sizes vary quite a bit. It's EUR 5,000 up to EUR 350,000, average of EUR 18,000. Terms are 12 months to 36 months, average is 19 months. So we do short-term loans to cover working capital. We do longer-term loans now as the businesses evolve, more getting towards even the investment side, right? APRs are between 14% and 48%, average is 37%. This is mostly risk-based based on our perceived risk and then the size of the company in many cases. Turning to the product line. We have 2 product lines now. Up until 2020, we had all these working capital loans. So this is 5-minute application. Loans are paid out as fast as 1 day. It's a quick solution. It's an amortized loan with fixed payments, super easy to understand, very transparent. In many cases, the owner of the company is the CEO, the CFO, the Head of Marketing and the Chief Product Officer. So they don't have a lot of time to spend, so we try to make this as simple and easy to understand as possible for them. And then our new product that we started in 2020 was CapitalBox Pro. So this is larger loans, EUR 100,000 or more typically with a slightly more intensive underwriting process. And these are paid out in as fast as 3 days, which is still much faster than the conventional bank, but gives customers access to larger loans that they can use for things like investments and longer-term expenses. So really, again, the idea here is convenience. We have a 5-minute application, decision within hours and money within 1 day. It is all possible. 70% of our loans are approved in less than 1 day. And then the way we're able to do this is we have fully digital underwriting. There's no paperwork involved. There's no sitdown where we have to go back and forth through manual processes with the customer. The AML, KYC processes are all digital as well. So it really makes it easier for the customer, and it's also easier for us, right? We're able to run the business much more efficiently with this in place. So we have heavily automated processes across the business, our CRM and marketing. And again, this is multilingual, multicurrency across 6 different countries, which is harder than it sounds when you want to try to automate everything. Our collections processes are really heavily automated. We don't have to manually deal with each case that comes across. And then the underwriting goes through, we have a decision engine where we have artificial intelligence algorithms that make a lot of the decisions in the process. But at the same time, we have a hybrid model where we do sanity check every loan that we approve, but we're able to do that super efficiently with a sort of underwriting cockpit for an underwriter to assess the loan at the same time. Payments processes as well. These are all heavily automated. So again, this leads to a much better experience for the customer overall and opens up the ability to lend to this segment efficiently, which is something that commercial banks have not been managing to do well. So we're operating in 6 markets: Finland, Sweden, Denmark, Netherlands, U.K., Lithuania. We have 65 full-time employees currently. The 2 products we talked about, [ Working Capital ] and CapitalBox Pro. So what happened in 2020? So yes, I mean, when we first started, we really didn't know how this is going to end up. We expected maybe high demand for loans by bad customers and horrible payment behavior, but it was kind of the opposite. We tightened up our lending quite a bit, obviously, at the beginning of the year. And then slowly, as we saw things were not looking bad at all, we started loosening up and lending to our existing customer base and then the safest new customers. And then slowly, we've opened it up after the beginning of the year, starting to get it completely back to the normal. But the surprising takeaway is the payment behavior didn't suffer at all. So if you look on the bottom right, this is the payback rates before 2020 and then during and up to now, essentially. And this stage straight as an arrow, essentially. So this is partly due to us being able to move and adapt really quickly. I mean I would attribute our success here, again, back to the platform that we could change overnight, all of our underwriting processes, loosen up our rescheduling rules to give a little more room to the customers to be able to get through this and pay back on time, adjusting the collections processes, which, of course, we needed to take into account the cash burns the company were in. So yes, that was something that was a real test of our risk management of the loans we've made and the test on our ability to pivot and adapt super quickly. And we passed them all really well. And if you look on the top right, this is the portfolio. Like I said, we tightened up the lending at the beginning of COVID and slowly loosened it. And now we're back on the upward trend again in terms of the portfolio size. So this is the accounts receivable. So we're heading back in the right direction and things haven't even fully normalized yet. So we're seeing that in the next probably 3 months, 4 months, this will really start taking off. And we can get back to the levels we were at pre COVID and then keep the trajectory going that we had before COVID as well. So we're very optimistic and happy with the performance through this pretty tough period for a lot of companies. How are we positioned competitively? So we see ourselves positioned uniquely, and we want to move to an even more unique position. So looking at this axis here, so the x-axis back and forth is sort of loan size and yield. So bigger loans, lower yields over here. Smaller loans, higher yields on the other side. And then agile, meaning how quick and easy is it for the customer, right? So the bottom right is conventional banks. Some are more agile than others. They're typically doing bigger loans at low yields, but not approving a lot of the micro customers and not approving anybody particularly efficiently and quickly. On the top left, we have the other alternative lenders, many of whom are doing pretty fast loans, but often at higher pricing, smaller sizes and shorter terms than we currently do. And we want to position ourselves moving more towards even bigger loans with lower yields. So some hybrid space between like a conventional bank and then alternative lenders. So currently, we go up to EUR 350,000. We'd like to get up to EUR 600,000 very shortly and then even up to EUR 1 million. So we see the gap where the conventional banks aren't serving from EUR 1 million and below. So there's some alternative lenders doing a really small stuff on the other side, but we see that we can service this other stuff and be in a pretty unique space. Also in that space is [ off north ]. They're doing somewhat bigger loans, several millions. It's even EUR 10-plus million, but faster and easier than the banks, but they're focused on the U.K. We would like to do this kind of up to EUR 1 million on the continent, and we see that as a pretty unique space that we're in. So how do we succeed going forward? Where do we want to be? We want to be the leading SME digital fintech lender in Europe. That's our objective. So there's really 3 pillars here on what we're trying to do going forward: is to maintain the growth trajectory and get back to where we were before. We're going to do that by moving into this larger loan segment that we discussed. We have our eye on several new markets, the new geographies that we'd like to enter over the next sort of medium term. We want to invest in building the brand. We rebranded as CapitalBox in 2020 kind of at the beginning, and then COVID hit. So then we really want to invest in building this brand up now that we're starting to ramp up the sales again. So we have a lot of ideas on how to sort of push this forward and get things back on the same sort of growth line that we were in before COVID. Part of that is optimizing the funding structure. So we need to lower the cost of capital to be able to enter this lower-yield, lower-risk, larger-loan segment. We have 2 pillars to that, and Bernd will speak about one of those, which is to utilize external fundings via an SPV model to invest in the portfolio and also to utilize the bank deposits inside of Multitude for the portfolio. And this will give us access to these lower-yield segments, but also increase the profitability of the current segments that we're in as well. And then the last pillar is that the customers continue to love us. So retention is a huge part of the game here. We want to have the fastest, friendliest onboarding process. We have really a fast and friendly onboarding processes so far. But we've put a lot of time in over the past 6 months to make it even shorter, even easier, even more friendly, talking to customers, figuring out what they want from us. And then in that process, we also have come up with some new flexible product features that we want to add to the existing products, again, to increase customer satisfaction which increases retention, which of course, increases the overall profitability of the business. And then we also want to increase the personal touch. I mean this has been something since the beginning that we've had. We really -- so we talked a lot about digital automated decision engines and AI and all this stuff. But we've really, I think, hit the right balance of customer service and automation at the same time. So every customer when they come in, they get a loan officer assigned to them, and that's the person that they always deal with in the company. If they have a question about their loan, if they'd like to top up the loan, that's the person that they always talk to. And I think small business owners don't want to have a completely faceless experience, but at the same time, they don't want a complex and long and time-consuming experience. So I think we've really struck the balance of super easy process, super easy automation with the right human touch. So we put even more time into doing sales training for our people and customer service training and getting everybody sort of aligned with that vision of -- that we keep these customers satisfied and happy, compared to conventional banks, who don't really treat these customers particularly well. They're not -- they don't usually have a good experience dealing with the conventional bank. We want to be someone that they look at as a pleasure to do business with and not sort of necessarily evil, right? So that's where we're going. So yes, I think we've had a really good 6-year run here with solid profitability, solid growth. We survived a really tough stress test in 2020 and really came out of that without any real headaches or hangover from it. And then as I said, I think we're really poised as things are normalizing again to pick up exactly where we left off in the beginning of 2020 and continue to grow and continue to expand and continue on the track we were in. So thanks, and talk to you later.

Thank you so much, Scott. It was great to hear your presentation. Now we have some questions already that have come in. And Bernd, starting with you. So in the past, you've spoken about business carve-outs. So are you planning on spinning off and selling CapitalBox?

Well, I'm sure that there is quite some interest out there, but I'm afraid, no. We do not have the intention of selling CapitalBox. The carve-out term was rather focusing on giving more independence, more end-to-end responsibility to the business. We have created a new brand. We have increased the visibility of the CapitalBox business significantly. We have a very high ambition to grow. And I've just noted down Scott's terminology, we want to be the leading fintech lender for SMEs in Europe. So from that perspective, if partnerships help us on that way, if equity investments help us, then I think we would be willing to consider that. But no, we're not going to sell.

Thank you. Thank you for your answer. So Scott, over to you. And listening to your presentation, I cannot help but slip this question in for myself. So what would the application process look like if I were to apply for one of your SME loans? Can you hear us all right, Scott?

Hello?

Hey. We hear you loud and clear. Great. Could you hear our question to you?

I did not. I just turned on right now.

All right. Good. Let's take it again. So I have to admit, this one's for me. So listening to your presentation, I could not help but ask this. So what would the application process look like if I were to apply for one of your SME loans?

Yes. The main goal is that it's fast and that it's easy, right? So SME owners are typically rather busy in wearing a lot of hats. So typically, it's -- well, it's a 5-minute application, to start. So it's really easy to apply. Then a lot of work goes on in the background. We have our scoring engine pulling data from different sources, making an initial decision if everything looks viable. Then a loan officer will reach out to the customer. They will verify some things, solidify some features of the loan, and then we'll verify the identity. That's all done digitally, so there's no paperwork involved. And then when everything is done, they'll receive a digital contract, which they can sign electronically, and then the money will be disbursed within hours. Well, 70% of the decisions are made within 1 day, so it's a rather fast process. And we like to say, it's sort of 5-minute application, decision within 1 day and money within 1 day. And that's always been our goal, and that's something we're rather successful at delivering on.

Sounds very impressive. Thank you. So touching a little bit upon something else. So you completed an M&A transaction in 2020. So what's the financial performance?

Yes, it's going according to plan. So this was the Spotcap Netherlands business. Yes, it finalized at the beginning of the year. So we've been doing the operational process, technological integrations. Now that's been really finished and is complete according to schedule, was very successful. It's just a matter now of ramping up the sales, and that's all going according to plan. And then additionally, I mean, there's the business that we acquired in the Netherlands, but the additional value that we saw from the transaction was that we want to apply this model, the underwriting model and the acquisition model, to other countries that we're in, so Sweden and Finland. So we're also beginning the process of moving this business model into those other markets as well. So yes, we see that happening second half of this year. So yes, this is a big part of our strategy going forward, and it's all looking as we planned.

Good, good. Sounds promising. And final question to you, Scott. So how will the suspension of government measures affect your business?

Well, we've been, I think, pretty fortunate that the countries we're in didn't have the sort of helicopter money programs to the same levels as like the U.K. and the U.S. had. So there wasn't as strong reliance and as wide an impact of the government programs. There was some complaining by the SMEs that the government didn't do such a good job in a lot of the markets we're in, but -- so we don't see that being a major factor going forward. And the payment behavior has been straight as an arrow essentially, right? It's been -- it was good before COVID. It was good during COVID. As we're coming out, it remains level and flat, and we don't see any deviation from that going forward.

All right. Thank you so much, Scott. It's been a pleasure speaking with you.

Thank you.

Next we've heard a lot about SweepBank bank already today. But next, we're going to hear from the Tribe CEO of SweepBank, Julie Chatterjee. So let's hear it from Julie.

Hi, everyone. Hope you all are well. Within the next 15 minutes, I will introduce you to the wonderful and amazing world of SweepBank. We are the small planet that Jorma talked about in the beginning of the S curve. Of course, our ambition is to climb this S curve and become the biggest planet within the Multitude solar system. My name is Julie Chatterjee, and I am the CTO and the Deputy CEO of Ferratum Bank. I am also responsible for the SweepBank brand. [Presentation]

So a little bit about my background. I have 16 years of experience both between the retail and the banking industry. And my latest position, I was the CEO of OK-Q8 Bank, a role which I held for 6 years. I started at Ferratum 1st of December last year, so I'm still new. And why I chose Ferratum was due to 2 reasons. The first one was Jorma's amazing story of starting with micro loans and building this company into today what we call the Multitude Group. That is and was and is really inspiring to me. The second reason was that I really got attracted by the vision of us becoming the most valuable financial platform. Of course, this is a really challenging vision. But after working within the group for 6 months, meeting with people, the capabilities and also the mindset of everyone that I met, very open to change. I feel that the vision is totally reachable. I also feel that we stand on a really stable foundation to be able to reach our vision. Today, we are present in 20 countries, which means that we have local know-how, and that is a prerequisite to be able to scale a banking platform within the EU. Also, we have 15 years of lending experience. We know lending. We know underwriting. We know risk management, as Daniel will tell about later on. And this is also, of course, a must if you want to offer innovative financing options. And of course, our ticket to play is our banking license. And as a former CEO for a bank, I know how hard the regulatory environment within EU already is, and it is only going to increase in the future. Here, we, as the Ferratum or Multitude Group, we have really solid compliance capabilities, both within the group and within the bank. And last but not least, before I joined Ferratum, several years ago, we already launched our Mobile Wallet. So we have done this in real life in real-time in several countries. And we have, of course, learned from the past. What we have done during the past few years is that we have reengineered our app. We have also unified our tech stack, which Ari told you about. Also, we have put a lot of time into identifying our customer segment, which I will talk more about later on in the presentation. And also, we have a brand, a new brand, SweepBank, which will give a clarity when it comes to our market position, but also a clarity within our position in the group. And also, the group has adopted an agile way of working, and this is a prerequisite to execute in a very rapid way. And last but not least, in the beginning of the year, we did a really smart organizational change. We merged the Primeloan with the former wallet team into what we today call the SweepBank. And this foundation puts us in an amazing position for growth. So where do we stand now? I will say, we are in growth mode. So if you look at our Primelending, 2021 has really kickstarted. We are growing the portfolio, and the net AR has grown with 40% Q1. At the same time, our payment behavior is really, really good. Only 3% credit losses over the net AR. We are active in 4 markets, the latest being Finland, where we launched the SweepBank app in May, which means also we are in execution mode. Our customers build is growing about 60% during Q1. And at the same time, we are also having a lot of downloads on our app, 60,000 download until today. And as I told you, we have put a lot of time into the customer segmentation part, and we have identified 35 million customers that are going to bring us revenues. Our customer strategy is to cater to a very niche customer segment and through that, grow not just volume, but company revenue. We have identified a customer segment, which we identified with 5 different characteristics. And the first characteristic is that our customer segment is credit hungry and revolving. Credit hungry means that they are open to different kind of credit products as lending like installment loans, but also credit card, and they have a tendency to revolve, meaning that they sometimes do revolve, which means interest revenues for us. Also, they are tech-savvy, so they prefer a digital bank over a traditional bank. And we are a pure digital bank with a mobile-first approach. We also know that they are very busy and young parents. And busy young parents, of course, are very consumption-heavy because they are starting a new life and they need stuff. And when you are busy and tech-savvy, then you need convenience. And our customer segment is convenience-seeking, and they prefer online shopping and are very familiar with platform-based solutions. So the combination of these 5 characteristics we have identified in 35 million potential customers within the EU. So we have created a very customer-centric value proposition. We know the customer behavior. Our customers really prefer online shopping, and they also are very familiar to platform-based solutions, such as Amazon, Spotify and Netflix. We also know that our customer segment, we know their main pains. And one thing is that, when they are shopping online and their behavior here is also changing, they are not only looking for groceries and shoes and clothes when they shop online, they are also actually buying furnitures and, sometimes, even vehicles like a car. And of course, these different purchases have different type of ticket size, but they feel that they don't have one good financial solution to solve all of these purchases. Also, we know that our customer segment finds financial services to be very difficult to understand. They would love to have financial advice, but they don't have the time to go to the bank. And there is no player today that actually in a real good manner offers you financial advice online. So we have taken into consideration the customer behavior, our customer pains. And from that, we have created a value proposition with 3 main solutions: personalization, financing options and partnerships, everything in one app. If we look at our first main solution, we call it our customers' choice. We know that our customers buy different things online. And of course, if you want to buy a car or want to buy clothes, you need different kind of financing options. And here, we will have everything in one app. So you choose if you want to use your debit card, credit card or take installment loan, a Primeloan, to make the purchase. And of course, our payment options and our financing options are also very flexible. So if you made a purchase with your debit card one day and you regret and want to switch that to a credit card purchase, you can easily do that in our app. And also, in end of this year, you will be able to do the same from a credit card purchase to an installment loan. And as we know that our customer segment likes and tends to revolve, we have a flexible payment option as, of course, pay instantly, buy now pay later, end of year also, buy and pay in installments. And all of this, you can do in the comfort of your home from our app, which is very easy and customer-centric. The second solution in our value proposition is personalization. We know our customers want to have financial advice online. And they are also used to platform-based solutions, such as Netflix, Spotify and Amazon, where you always get a next best offer or a next best suggestion. But in the banking industry, this is actually nonexistent. When I worked as a CEO for my former bank, and I knew this was a trend in Sweden 10 years ago, a lot of retailers, they open a bank to get hold of the data so that they could be even better at personalization. So this is what we are going to do with the SweepBank app, you will be able to get a personalized offer depending on your behavior and your wishes. To improve our personalization offering within the app, we are now also connecting third-party partners in the app. This will give us the possibility to offer a wider range of financial services to our specific customer segment. And also, from a business model perspective, we will increase our commission-based revenues, and we are focusing now on getting relevant third parties on board and more to be revealed in the future. We have created a strategic framework with our vision, 5 aspirational objectives and certain strategic choices connected to the objectives. This is, for us -- this is so that we, in a very structured way, can achieve our vision and our 5 objectives. Our first objective is we achieved sustainable growth and profitability. Here, one strategic choice is that we optimize our existing portfolios, meaning we optimize the market shares, we optimize the costs and we also optimize operational excellence. Our second objective, we provide frictionless access and use to our services. Here, one strategic choice is that we unify and reuse our solutions. This is something that Ari already talked about, but just one example here is the onboarding process. This is totally unified for all the countries with, of course, some local variations when it comes to the verification. But with this strategy, we can also reuse the onboarding solution when we scale. Our third objective is that we are the preferred choice for our customers. And here, one strategic choice is to have simplified solutions. And with that, we mean that our solutions that we develop for our customers as features, for example, we will -- we have less features, but they are very relevant for our customers. And the fifth objective that we retain and -- we attract and we retain our top talent within the company. This is, for me, the most important objective. Because without our people, we cannot do anything. We will never be able to reach our vision. And here, the whole group has adapted an agile way of working. And with that said, as a strategic choice, we attract talent that really likes to -- a new country between 4 to 6 months. We have the execution power already, so this is totally doable. And also, another strategic choice that we have is that we want to grow with profit, which means not only grow to gain volume, but also revenues. So I will end with what I began telling you about SweepBank as the smallest planet within the Multitude solar system in the beginning of the S curve, with the strategy that I have presented today to solar system. Thank you.

Thank you so much, Julie. It was great to hear your presentation. And now time to take some questions that have been rolling in. So once again, I'd like to start with you, Bernd. So building up a B2C brand and business is typically expensive. So how much are you currently investing in SweepBank? And do you think this is going to be a profitable business given there's a lot of competition? And final question, if so, when do you see that it will be profitable?

A lot of questions, obviously. To summarize, this question is obviously about cost, about competition and profitability. Now starting with the cost element, yes, clearly, we are investing. So this means -- and I've pointed it out already earlier today that, from a profitability perspective, we will not see profit accretiveness during 2021. However, when it comes to the midterm perspective, I'm obviously totally on the same page as Julie. Julie just mentioned that the midterm target is to achieve profitable growth. So I will not be surprised that we are perfectly well aligned on that. Now when it comes to competition, I think that the value proposition where we combined the wallet with a very strong skill set in terms of credit risk management and underwriting earlier on the segment reporting. So we will introduce a new segment reporting later this year and inform transparently on the profitability for 2021. This means loss, which in our view is an investment, but going forward on the profitability of SweepBank as well.

Thank you so much, Bernd. And Julie, over to you. Here's a question that's actually been on my mind as well. So how can I personally onboard the SweepBank app? And is it available, for example, here in Finland?

Hi, Amel. And I think you also, hi, Bernd. I see you.

Hi, Julie.

So Amel, who's your SweepBank current account? This SweepBank current account is, of course, connected with your virtual debit card, as Jorma mentioned. And you can start shopping immediately both off and online because we are connected to both Apple Pay and NFC payments. Then of course, we have saving plans and also fixed-term deposits that you can use. And one USP that we -- firstly, Ari also presented this. We have been brave enough to invest in our totally new tech stack, which means that we don't have any vendor locked. We have a modern platform that is flexible and scalable. This, together with the agile way of working, has increased our execution power immensely. And one proof of that is that we rolled out or we launched Finland within 4 months from decision to launch, and that with a new brand.

Julie, it's been a pleasure speaking with you, and thank you for sharing your insights.

Now it's time for our final keynote of this afternoon, and we're going to hear more about finance from Bernd Egger, who is the Chief Financial Officer, as has been said. So great to hear more from Bernd. Let's hear him out.

Good afternoon, and thank you very much for your interest in Multitude's Capital Markets Day. My name is Bernd Egger, and I'm Multitude's CFO. Before I joined Multitude, I spent around about 10 years in the banking industry as a Managing Director of an international banking group and in other senior roles. After that, I worked as a CFO in the fintech industry for also around about 10 years. And after that, I owned and ran my own payments performance, both in terms of growth and also in terms of profitability. On the upper right-hand side of this chart, you see the revenue development over the last 10 years. And you see a clear upward trend. This means we have a sustainable track record of growth with a dip in 2020. This is driven by 3 factors. Firstly, we've seen a slight drop in demand during the pandemic. Secondly, we have tightened our underwriting criteria massively as a reaction to the pandemic in order to protect our assets. And thirdly, we have suspended lending and activities in a number of markets. So you can see that the majority of the reasons behind this is actually not that it just happened to us, it is the consequence of proactive managerial actions. Despite the revenue reduction in 2020, if we have a look at compound annual growth rates over 10 years, we see an impressive CAGR of 23%. This means that, on average, over 10 years, our revenue increased by 23% year-on-year. On profitability. The company managed to achieve profitability very early on. And from that point in time, it managed to increase profitability levels step by step almost linearly. Obviously, 2020 had also an impact on profitability. However, I'm proud to say that we managed to keep profitable results also during the difficult year 2020. Let me continue with a look at the resilience of our business model and our improved cost structure. Especially during the past 15 months, we have turned a lot of challenges into positive outcomes. We have reacted quickly to challenging changes in market circumstances by implementing a very comprehensive cost-reduction scheme. To give practical examples, we're focused on core markets, which means we have reduced spending and investments in noncore markets. We have created a leaner, a more streamlined organization. Again, to give a practical example, we have reduced the number of legal entities in our organization by 15. We have also introduced higher automation levels, both in internal processes and in external processes. A practical example would be the introduction of artificial intelligence in our customer service processes, which improved the efficiency of the processes, the quality and customer satisfaction and reduced costs at the same time. Overall, we have reduced total operating expenses by some 20% in only 1 year and personnel expenses by 23%. Most importantly, we have changed the dynamics of our cost development downward. Let me briefly talk about resilience and what we actually mean by that. During the past 1.5 years, we have managed to keep our financial risks very well under control. And even more importantly, we have maintained a very high quality of assets. In fact, we have improved our asset quality. Daniel Kliem, our Chief Risk Officer, has elaborated earlier today on our positive development when it comes to credit loss impairments over net accounts receivable. You can also see a very impressive chart on the lower right-hand side of this slide, which indicates a clear upward trend up until May 2021, which is to be interpreted as an improving payment quality, and that means nothing less than improving asset quality. The combination of both high resilience and improved cost structure pays off. We have maintained very solid financial metrics. We have a consolidated equity ratio of 16.3% and bank CET1 ratio of impressive 17.84%. And that is of interest to our bondholders, the net debt equity ratio of very solid 2.74%. Let me briefly elaborate on our funding strategy. We have implemented a very scalable, future-oriented funding strategy. The core principles of our funding strategy are: firstly, scalability; secondly, diversification; and thirdly, cost efficiency. On scalability, deposit funding is the liquidity engine for our business. In order to optimize the utilization of our deposit funding, we have optimized our group structure. This means that we have funded, we've essentially consolidated our European consumer lending business under the group's own bank. On diversification, we are firm believers in a well-diversified and balanced funding structure. This means that, despite the fact that deposit funding is of crucial importance to us, we do not want to rely upon any single source of funding. Therefore, we will remain active on the capital markets, but we don't want to be dependent upon the capital markets. Thirdly, we are open to new sources of funding and new financial instruments. We have just established a securitization model, which we're going to open to external investors as well. This will help us not only to incur and bring in fresh liquidity, it will also help us to lighten our balance sheet to create an asset-light model. And I can repeat that, this is going to be offered to external investors as well. Finally, cost efficiency. Over the last couple of years, we have step by step decreased our weighted average cost of debt funding. You can see that on the lower right-hand side of this slide. Whilst we had pretty stable cost of funding over the period from 2017 to 2019 at the rate -- at the level between 3% and 3.5%, we have reduced weighted average cost of funding significantly over the last less than 2 years from 3.25% in 2019 to 2.1% in 2021. On the upper right-hand side, you can see our liquidity development. Whilst we have brought down our weighted average cost of debt funding, our liquidity reserves have increased significantly and are waiting to be deployed by our businesses. Let me supplement my statements on debt funding with a few words on equity funding. We are planning to strengthen our equity. More specifically, we are in the process of issuing a new equity instrument. The purpose of that is to increase our equity base in order to support future growth. That means that we do not need additional equity from the last perspective. This is an action that helps us to grow our business going forward, so it is future-oriented. The objective is, on the one hand side, to issue an attractive product to both existing and to new investors. And we have also structured the product in a way that it qualifies as equity under IFRS. An instrument that fulfills both criteria qualifies as equity and is attractive product for investors. It's, for instance, a perpetual bond. So let me briefly elaborate on the process and the product. First of all, on the process, the issuing process starts now literally. We have mandated our investment bank, Pareto, to get the transaction done together with us. The intention is to start roadshow essentially on Monday next week. On the product itself. We're going to raise between EUR 30 million and EUR 50 million on this perpetual bond. The product features are as follows. The product might sound a little bit complicated, but in fact, it's fairly simple. As a bond type of an instrument, we are going to pay a fixed coupon. As this is an equity instrument, the coupon level will be somewhat above the level of the coupon of our outstanding senior debt. As the name perpetual indicates, there is no maturity date, but the issuer, Multitude SE, is going to have the right to call the instrument after 5 years. Should the issuer elect not to call the product and not to repay after 5 years, a step-up on the interest rate level would become applicable. On the use of proceeds, I would like to again reemphasize it is about equity, it's not about liquidity. You have seen on the previous slide that our liquidity base is extremely strong. We don't need additional liquidity. We just want to raise our equity in order to push future growth. So the intention is to reduce outstanding debt with the proceeds from this transaction. Now from our equity planet, let me move on to our growth planets. I think I need to explain this slide a little bit. Jorma has used the metaphor of planets in his presentation. The way we look at our business has changed over the last 1.5 years. We don't look at our business as a single business, we look at it as a portfolio of businesses on our growth S curve. Following Jorma's presentation, I decided also to use his metaphor on this slide. So on this slide, you can see our 3 tribes, our 3 planets, SweepBank, CapitalBox and Ferratum on our growth curve. The ring around each of those planets symbolizes the strategic value creation potential that we see. Now how could a future scenario look like? Obviously, we want all 3 planets to grow. We want all business units to grow. Our growth drivers, and this is also something Jorma has elaborated on, our financial inclusion, a continuing trend to online transactions and an economic post-COVID boost, and finally, the increasing importance of customer experience of our products. Now why do we think that those tribes, those planets have the potential to grow? SweepBank is currently fairly small, but we think that the combination between a wallet and the lending model proposition, a Primelending model proposition, is extremely strong and, in fact, unique. And the business has gained a lot of traction over the last 9 months. Julie Chatterjee and her team have increased the Primelending portfolio by the factor of 3 within only 9 months. CapitalBox is a planet that has already provided evidence to its ability to achieve growth and not only growth, but profitable growth over the last couple of years. In addition to that, we think that the role as a dominant player in the European SME online lending space is vacant. And in fact, we want to apply for this position where I would like to say and state we are going to take this role. On Ferratum, Ferratum is a very stable planet. It has been growing profitably over many years. It has a great potential to progress on its growth trajectory. And I have to say it is very well managed by Kristjan Kajakas and his team. Now let me move on to the road ahead and to our financial guidance. When we discuss the topic of financial guidance in our leadership team, it was very clear to us that we need to focus on growth, on profitability, but also on future value creation. Our common view on growth is as follows: We expect the business to go back to growth mode on a revenue basis in the second half of 2021 quarter-on-quarter. This means that either in Q3 or in Q4, we expect revenue to grow compared to the previous quarter. For 2022, we expect all business tribes to grow from a revenue perspective, adjusted for inactive markets. From a profitability perspective, I would like to make 2 statements. Firstly, from a short-term perspective, we feel comfortable with an EBIT guidance for 2021 of EUR 20 million. Having said that, we need to take into consideration that we are currently investing a lot in future growth drivers, which obviously has an impact on profitability. To give you precise examples, we just went live with the SweepBank offering in Finland. So the Mobile Wallet is now live in Finland. We are also accelerating the market penetration in our Primelending business, and we're preparing additional and new market entries. And we are also accelerating business growth in the CapitalBox business. Not all of those initiatives are going to be profit-accretive during 2021. However, we are convinced that those are going to be paying off in the future, also in financial terms. This means that our view on future profitability is very positive. More specifically, we expect EBIT to grow at a rate of 50% per year for the period from 2022 to 2024. With that, I would like to conclude my statement, and I would like to thank you very much for your interest in our Capital Markets Day.

And thank you very much, Bernd. So time for our final Q&A. And we have quite a few questions which have come up, so let me start with this one. You have reduced costs by 20% during the pandemic. Now you have presented ambitious growth strategies. So what will that do to your cost base?

Well, our ambition is clear. Our ambition is to grow profitability, especially during 2022 to 2024. This means that, on the one hand side, we're going to push our planets, to use the terminology again, up the S curve. And secondly, we need to manage risks and manage costs efficiently and effectively. So from that perspective, I would like to add that the cost reductions that we have been completing during 2020 and earlier 2021 is not a cost-cutting exercise, it's about increasing efficiency. We have introduced a lot of improved processes also in areas we have not touched upon today as, for instance, customer service. Ari Tiukkanen and his team have introduced a lot of artificial intelligence in customer service, which has a positive impact on costs. So we are permanently working on cost reduction, which is an attitude more than a short-term action. And from that perspective, I think growth and cost management go together pretty well.

Sounds good. Our next question is that you mentioned that your plans are to issue a hybrid instrument to enable growth. So what exactly do you mean with that? Portfolio growth or M&A transactions?

Well, as I've pointed out in the presentation, the ambition is not to raise equity as we need equity to finance our balance sheet as of today. That's not the case. We have a very solid equity ratio both on a group level, but also in the bank and the group. What I'm referring to is future growth. And in order to achieve our growth targets, we are open to both, to organic growth, but also to making use of M&A opportunities. So whatever helps us to achieve our targets more efficiently, more quickly is acceptable to us. And that, obviously, growth needs equity, and that is what we are preparing for.

All right. And time for our final question. Actually, the final question of the event today. So what are your plans with regard to your currently outstanding capital markets instruments? And will you issue a new bond to replace the bond expiring in 2022? And if so, how much?

Well, first of all, on the expiring bond, the one expiring in 2022. It will, to a certain extent, depend upon the success we will hopefully have with the perpetual bond that we're issuing now. But from a high-level perspective, the situation is fairly simple. We have, over the last 2 years, reorganized the group. We have consolidated the consumer lending business under the bank. We have implemented a securitization model, which frees up a lot of liquidity, especially in nonbank sphere. That means that we don't have any liquidity pressure. So in other words, if we were to issue a new product in 2022, it's going to be a small one, might well be the case that we don't need to issue that capital market instrument at all during 2020.

Okay. Thank you. Thank you so much, Bernd. It's been great speaking with you.

Thank you. Likewise.

And it's time to start wrapping up our event. What a day we've had and what a lineup of great speakers. So I'd like to invite all of you, Jorma and all of you, other speakers back to the stage as well. And with that, I'd like to hand over the virtual microphone to Jorma one more time and hear your thoughts.

Thanks, Amel. Thanks, Amel. And I have to say that an amazing day. It's a really amazing day. I hope you all have enjoyed this day as much I have done and our team. And I have to say that our team have had that amazing journey to preparation this second Capital Markets Day. We have really enjoyed it. We are working a lot to try to really bring our new story for you. But let's do it this sort like a catch-up and really like a main takeaway, what we have from today, our session. So the first one, our new strategy. I think we have amazing strong tailwind, what's coming for those 4 positive trends, what we can see on the market. We have a new brand strategy where we have each of our customer segment had a [ takeover independent ] really, really own plan there, and that's supporting even the best customer experience for the customer in this segment. Where the SweepBank, they focused the price segment, mobile banking and of course, the financial platform and planned consumer loans. And where the capital folks is focused to digitalized SME lending and the banking and Ferratum is focused on Near Prime segment, small and short-term unplanned financial needs. And of course, our new brand Multitude as a true brand, and I really, really have to now learn to present myself as Multitude CEO. But yes, it might take a time. So if I make a mistake here in the future, I'm sorry about that one. Under Multitude, we will focus the confidence development, Banking as a Service and tech and data platform. What we hear today to Ari's presentation and how really scalable and more in our new tech platform it is. It is really, really something unique. And after that, we hear Daniel's presentation, how we utilize all data, what we have to supporting all type of the decision really end-to-end process there, not only just the risk, but on the marketing and the product development and so on as well. After that, we went to go and look more like a tribes or planet, what we use the metaphor there. The Kristjan presentation relate to Ferratum Tribe, I think key takeaway for me was that we have, after many, many years, we have still the really strong profitability growth behind. And that's something really unique. And I have to say that it's good evidence for resilience for this type of the hard time what we have all faced over the last few years. After that, Scott presentation, the capital books, where I think the key takeaway for me is that there's a huge number of the small companies who are just underserved from conventional banks. And our offering is just -- solve those customer needs, and we are just the fastest and easiest and most simple and customer-friendly on this segment. And of course, we can see already that the demand has started growing that segment as well. And then Julie's presentation about the SweepBank, I think for me, the key takeaway there is that we have -- the first rule, we have an amazing 40%, plus 40% growth over the last 6 months from the net AR point of view. That's something that's really, really good evidence that we really find the right sweet spot and we're doing things right there. Of course, we have something unique in our mobile banking as well because it starts to scale so easily and nicely on the new markets as well. Of course, the one very important key takeaway for me is that we focus the profitability customer base, not just a number of the customers what is very typical on the rivals on this segment. And I think if I have to like leave like a last takeaway from the Julie presentation is that it's a mobile bank that's built by customers and [ based by creed ]. I think that's the like -- what I take from your presentation. And then the last one, to Bernd, your presentation, I think it's -- there was like my key takeaway is that we have a really strong liquidity position. We have lower cost base. And I think the most important thing is that we are so comfortable of our future profitability growth that we are really ready to give the financial guidance on this year, but actually coming 3 years as well. And that's a very, very, very strong signal from the how comfortable. And what I think is supporting this our comfortable is that we want -- we are positioned that we want to strengthen our equity to raise the new equity bond or the hybrid instrument to support our profitability growth and equity of the future as well. And I think that's a really, really good signal from my point of view. But that's it, that's more or less my key takeaways, how I can like to summarize that one. I think the last point that we have always delivered what we have promised, and we will do that on the future as well. Thanks to everybody from my side and my team point of view. And I hope we can really see you soon.

Thank you so much, Jorma. That's a great message to end on. So thank you all, and bye.

Thanks, everybody. See you.