Aprila Bank ASA | Company Presentation | February 2020
Recognition Recognised as a leading fintech – despite low profile and very limited marketing spend Fintech Switzerland CB Insights 2
Aprila in brief Product and technology company aiming to reinvent SME banking and enable new job creation Making credit available for a large underserved SME market Key figures • Offering credit to customers where they are, when they need it • Transparent and understandable pricing; no access fees or lock-in periods • Credit assessment based on live data from online accounting systems # of SME customers 901 (12 Feb 2020) Leveraging technology to create competitive advantage Average loan per customer • ~53 000 Scalable architecture developed in-house; integrations through APIs (NOK, 31 Dec 2019) • In-house developed data warehouse; enables data-driven decision making and facilitates powerful predictive analytics Gross income per customer • Real-time credit scoring and pricing based on machine-learning technology ~18 000 (NOK, annual run-rate Dec 2019) Two products and access to ~130,000 SMEs from Q1 2020 Yield on net loans 37.0% • Commenced operations in Q2 2018, launching spot factoring integrated in (Q4 19, annualised) Tripletex (online accounting system) • Expanding from one product in one distribution channel to three products and Funding cost six channels during 2020 2.1% (p.a.) • Credit line up to NOK 500k launched in Tripletex on 16 Dec 2019 and in own channels (kassekreditt.no) 20 Dec 2019 3
Market opportunity A large market with few challengers Market size 1 (EUR, outstanding credit) Market status TRADITIONAL BANKING Euro area consumer credit 1,3 European SME credit 1,4 12 % BUSINESSES 33 % 33% of the total 12% of total Small 2 5.9bn 3.5bn RETAIL Large Medium SME SME lending household lending 67 % market 88 % Digital, Manual and Manual and Digital, Non-existing Processes paper-based paper-based automated automated EUR ~720 bn 5 EUR ~1,200 bn Re-active, Pro-active, Self service, Self service, slow, Customer relationship Non-existing easily relationship easily available experience available banking Selected challengers Selected challengers banking Competition High High Medium Low Low 2 % Captured 14 % 25 % share of market 1 75 % 86 % 100 % 100 % 98 % Automating Automated Manual Manual processes Large funding processes where processes processes require high gap loan margins required for justified by loan margins reflect manual (EUR 450 bn) profitability large loan sizes for profitability processes Note 1: Company estimates based on EBA Consumer trends report 2018/2019, ECB Statistical Data Warehouse, OECD Financing SMEs and Entrepreneurs 2019 and The View 2019 (Euler Hermes, Allianz), Filling the bank financing gap. | | Note 2: Small (<50 FTES and turnover <= EUR 10m) and Micro (<10 FTEs and turnover <= EUR 2m) | | Note 3: Credit not guaranteed by mortgages, i.e. personal loans, car finance and revolving credit. | | Note 4: Short-term SME credit estimated to 1/3 of the total SME lending market of EUR 3,500 bn, 4 of which EUR 3,000 bn is captured. | | Note 5: ECB: EUR 717 bn in the Euro area as of Oct 2019.
Products Three initial products to unlock the market for SME credit Spot factoring (from Q2 18) Credit line (from ultimo Q4 19) Pay with Aprila (from Q3 20) • • • Spot sale of invoices inside online accounting Credit line up to NOK 500k Ecommerce payment solution, B2B systems, with immediate settlement and • • In Tripletex and own channels from late Q4 19 Online merchant gets paid instantly upon check- automatic bookkeeping out, the customer receives an invoice from Aprila • Backed by personal guarantee 2 • In Tripletex from Q2 18, NOK ~550m purchased LTD • Basket size up to NOK 500k • No access or limit fee, no lock-in period • Product/market fit achieved; 98% of customers • Instant credit approval would be «disappointed» if feature removed, of • Monthly interest rate: 1-2% which >50% «very disappointed» • Up to 90 days deferral • Our first product to be distributed through own • Average margin Q4 19: 2.96%, implying >40% EIR 1 • channels, but will also be available inside partner MVP currently up and running in cooperation with ERP systems Arctic Securities (purchase of LEI numbers) • Leveraging latest generation machine-learning to continuously optimise pricing, risk management and take-up rates Note 1: Based on 30 days to payment. | | Note 2: NO: “ Næringskausjon ” 5
Technology Advanced and highly scalable API-based architecture Proven plug and play – ready for more partners Published content and marketing pages Standardised APIs - DISTRIBUTION N PARTNE NERS extremely scalable model Onboarding Tailored customer solution for Products seamlessly Truly open banking, balance solution any channel - web, mobile, integrated into partners sheet products via API Microsoft Azure platform tablet and other agent Self-service online solutions banking (web / mobile) OWN CHANNELS Infrastructure-less with PaaS and FaaS based solution Modern, distributed and automated Standardized on .NET Core Onboarding and Real-time view in cloud platform based on solid, and C# origination process client general ledger future-proof technology Dynamic risk score, Aprila core - supports full Create functionality Automatic transfer of INFRA pricing and policy automation of all processes, once - use everywhere customer ledger Pure easily integrated with API-driven bank Integrations with ERP solutions, credit external data sources and Security, monitoring, Automated AML Integrated with powered by Azure future providers of data and logging – out of the box information and use of unstructured data and KYC credit bureau data Microsoft Azure based data business capabilities sources for credit risk and enhanced API capabilities Highly scalable customer experience Leverage unstructured data amount of data sources CORE from search, Facebook etc. R-based machine learning and product processes DATA INTEGRATION models Petabyte scale data lakes, cost efficient cloud warehouse and Microsoft stream analytics and machine learning Personalised digital reporting communication DATA / AI Identification and Customer Best of breed CRM, chat signature service chat and marketing automation General ledger and Chat-bot ready SALES AND SERVICE CE customer ledger Leverage existing services and use Invoicing, OCR complete off-the-shelf solutions for and collection highly regulated, or non competitive, advantage areas Statutory and regulatory reporting EXTERNAL SERVICE CES 6
Timeline Expanding from one product in one distribution channel to three products and six channels 1 2021 → 2018 2019 2020 Setup Streamline Scale up Expand Equity Funding Deposits (~2% p.a.) Spot factoring Products Credit line Pay With Aprila ERP / Online accounting systems Distribution Accounting offices Own channels Q2 20: + ~35,000 Q1 20: Customer + ~40,000 exposure through Q4 19: + ~15,000 ERPs Q2 18: ~ 40,000 Note 1: Five ERP systems + aprila.no/kassekreditt.no 7
Geographic presence and scaling European banks neglect their SME customers Short-term Mid-term Long-term Norway The Nordics Continental Europe • • • The Nordic countries are Entry to Continental Europe Highly digital home market world-leaders with respect to through existing and new • Online accounting systems digitalisation and have well- partners with established local have integrated Aprila Bank functioning financial markets – presence financing inside their systems, a great starting point for future • Aprila’s banking license can be making this the first fully digital expansion passported across the EU/EEA integration of bank financing • Aprila expects to enter new within ERP markets through distribution agreements with ERP providers International expansion plan 2021 Q2 2018 2023 Commenced Expand to the first Expand to the first operations in Nordic country outside European country Norway of Norway outside of the Nordics 8
Financial outlook (1 / 2) Annual run-rate of NOK 75m in gross income at year-end 2020 and break-even in Q2-21 Drivers YE 2019 12 Feb 20 YE 2020E • New partners # of customers 802 901 3,500 • New products End of period • Relationship-based and in-house 2% of customer exposure 1 ~2% of customer exposure 1 ~2% of customer exposure 2 sales Gross income per • New pricing model for spot factoring customer 17,748 19,400 ~22,000 • Increased conversion rate Annual run-rate 3 • Product mix (NOK) Annual gross 14.2 17.5 ~75 income Break-even expected in Q2 21 Run-rate (NOKm) Note 1: ~40,000 Tripletex customers. | | Note 2: Of which ~2,500 customers via ERP (130 000 customers in Tripletex, Xledger, Uni Economy, Visma eAccounting and Fiken) and ~1000 customers in other channels. | | Note 3: Per average number of 9 customers. YE 2019 = run-rate Q4 19. 12 Feb 20 = run-rate last month. YE 2020 = estimated run-rate Q4 20
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