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Estonia’s Icefire: the fine art of financial technology

There are currently over 6,000 financial institutions in Europe. The number has declined over the past few decades but these organisations still affect each and every one of us. Although their country of operations, regulatory space, markets, products, and clients vary, they often share similar problems and challenges. Especially when it comes to technical solutions. Estonian company Icefirehas been witnessing all of this and building their know-how on it for the past 16 years. If you own a bank account in Finland, Sweden, Latvia, Lithuania, or Estonia there is a good chance you have already used services developed by them.

Vilve Vene, the CEO of Icefire, explains the fundamentals of their business. ‘We avoid tasks where we’re ordered a simple puzzle piece missing from the big picture. We help our customers, mostly banks and financial institutions solve complex problems that in most cases include not only technical but also business and management related challenges,’ she explains.

Going for the core

The list of clients under Icefire’s belt is, regionally speaking, all-inclusive. On the international level, their collaborations include Swedbank Group, Skype and Arvato Financial Services as well as many smaller companies. When talking to the team, I get the feeling that some of their clients and solutions have been more technically challenging to them than others. One of these is their collaboration with Bigbank.

Back at the end of 2015, Bigbank, a consumer loan oriented international banking group from Estonia, made the decision to discontinue its existing systems, started building a new information system called Nest and chose Icefire as the key partner supporting its delivery. The aim was a modern tailor-made banking system owned by Bigbank. The scope of the system ranged from time deposits to loan initiation, loan administration and debt collection all the way to financial accounting and reporting.

‘We are constantly monitoring our business and at that time we were painfully aware of the imperfect customer experience, missed business opportunities and low level of automation in our operations,’ explains Sven Raba, the CEO of Bigbank. ‘In practice, it meant constraints in customising existing products, longer time-to-market for new products, difficulties in integrating our services to external sources and providing them to our partners. I was not happy with the data quality, lack of real-time financial data and reporting. This all has changed now for the better.’

As a result, existing IT systems were fully replaced, starting from user interfaces down to the hosting platform, while replacing all banking-critical core modules and doing a full data migration from old systems to the new solution.

‘The number of quarterly processed loan applications grew by 35%, several tasks were sped up 3-10 times and manual loan decisions were already decreased by 3 times in the first branch to migrate,’ Raba explains the first-hand results, adding that the operational cost decrease is significant but, most of all, the bank’s own IT teams reached a whole new level of competence and delivery during the cooperation.

Icefire’s CTO, Jan Lakspere elaborates that the uniqueness of the project lies in using a microservices pattern as its technical architecture and the organisational setup of the development teams. ‘Continuous integration, automated testing, frequent releases of independent microservices without downtime are the keywords that describe the work of Bigbank technology.’

Instead of the expected industry standard, i.e. years of development, it took only 16 months from planning to getting the new solution up and running. Today, if Bigbank decides to expand its business to a new country, the highly automated system can be deployed in a few months.

Back in December 2017, the project was shortlisted for the best tech overhaul project at the International Banking Technology Awards.

Right time for banking-as-a-service

After 16 years in business, Icefire has launched its first product – a banking-as-a-service platform for existing as well as new banks and financial institutions. Vene explains that after building rather similar technical solutions for a large number of different clients, it only seemed like a logical next step. The platform, called Modularbank, enables both radical transformations of entire organizations, launching new products on the side of existing systems or starting from zero as well as making Modularbank the core of banking business. Depending on the scope of the project it takes around 4-12 weeks to get the new solution up and running.

Modularbank’s first customers include small retail lending focused bank as well as a Frankfurt stock exchange listed international banking group, there are a number of proofs-of-concept already done as well as in the pipeline.

Moving further from the region

Vilve Vene sees decades of experience, vast know-how and trust by the biggest banks of the region as Icefire’s key strengths. All of the development is done in-house by the 110 employees working at Icefire’s office in Tallinn. They have rather knowingly kept the number small and avoid hiring more than 10-15 people a year. Vene explains that their main source of new people is their own employees, who have numerous times been brought on board by their spouses, relatives and friends. We’ve also had several cases over the years where people who have left return to the company. ‘Instead of simply hiring more we believe in helping our people work smarter. Be it through constant sharing of know-how, encouraging cross-disciplinary skills, minimizing organizational bureaucracy or simply actively analysing our processes,’ she adds.

At the moment, Icefire is focusing on scaling Modularbank as well as generally increasing its export volumes, which have grown from a plain 0% to over 40% within the past few years. At any given moment the company has around 6-10 projects under development.

One of the biggest projects in process right now and eagerly anticipated by tech-savvy Estonians is the new e-Tax and e-Customs portal. Considering the state of online tax and customs solutions in other countries, the one used in Estonia right now is already light years ahead, but that does not seem to be good enough – there is obviously room for a better user experience. The completely new portal will have all of its new services up and running by 2020.

Although 2020 is almost around the corner, Icefire has not yet made any revolutionary plans for that time. ‘For us, it has always been about delivering the best solutions for our customers. That mindset has been the cornerstone of the company that my co-founders and I created and this is also something all our employees highly appreciate. In most cases, it has meant solid but not reckless growth, neither in the number of employees nor in the turnover. It really is about the journey,’ explains Vene.

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