Keks Pay Plans to Enter the Fund and ETF Segment

Domestic fintech Keks Pay, which was established under the auspices of Erste Bank, announced last month that it is spinning off into an independent company. As they stated at the time, the spin-off is a result of exceptional success and strong growth over the past six years, and the main goal of the newly established company is independent growth, innovation, and expansion into new markets. The news about the separation of the payment app ‘as quick as you can say cookie’ was the reason for our interview with the creator of this innovation Dejan Donev, who told us how they started, what their plans are for expansion beyond Croatia, and what new possibilities they plan within the popular domestic app.

To start, in short: how did Keks Pay come about?

– Keks Pay was created by gathering seven to eight people who were tasked with thinking about the app in a classic startup style, that is, the problem we can solve for users, but in a new way, which is to solve the problem of any citizen here in Croatia, not necessarily a client of Erste Bank. This type of app in our beginnings was something different from everything classic that banks did for their clients. All banks have their mobile banking, and we wanted to solve some of the most common problems, such as how to split the cost of coffee for ten people or how to collect money for a birthday gift for a colleague. We decided to create a fun app that would solve that problem, and so we started, and later we added new functionalities that logically followed.

How long did it take from the initial idea to the market launch?

– Unlike today’s version of the app, which has about twenty functionalities, the first version only had a QR code for payments at points of sale, as well as what we started with, namely sending money for coffees and birthdays and parking. We developed the app from idea to final product for about a year and a half. After that, we still had to choose a name and complete the entire branding part, so we ultimately launched our product on the market at the end of 2018.

What were the key milestones from the beginning to today, that is, to the spin-off of Keks Pay into an independent company?

– Well, some were positive, and some negative. At the very beginning, we quickly reached ten thousand users, which was our first milestone, and we didn’t even have a campaign, yet we managed to reach that number. Then we almost equally quickly reached twenty thousand users, and when we reached one hundred thousand, we became aware that the whole project has a future. I didn’t make any promises from the start about how it would end, but I believed in the project because we also did an excellent job on the technical side of the app, everything worked very well, and after that, we started branding just as well, and there we were at one hundred thousand. After that, merchants started approaching us on their own, while before we were the ones initiating cooperation.

When we reached that number of one hundred thousand, entrepreneurs wanted to be part of the Keks story themselves. On the other hand, a negative milestone was the COVID-19 pandemic, which significantly shook us. To put it that way, it killed our entire use-case, that is, the splitting of lunch costs because, of course, there were no lunches or celebrations, so we experienced a slight shock there, even though we were continuously growing at that time. I believe that if it weren’t for that crisis, we would have grown significantly faster, but at that moment we extracted the maximum we could. And in the end, our key milestone was the introduction of new functionalities; first online shopping, then payments in cafes, after which we launched our ‘keksica’ which also contributed to our branding. Along with all that, I must not forget about digital bills, that is, when we entered the utility payment segment, and that is the functionality that is the most popular among our users, alongside, of course, peer-to-peer payments, or splitting costs.

How many companies do you collaborate with?

– We collaborate with about a thousand companies, but we have around eight thousand points of sale, both physical and online.

 And how many users do you currently have?

– Currently, there are about 520 thousand active users of Keks Pay. In the last couple of years, that number has been increasing by about 90 thousand annually.

Of the total number of users, how many are clients of Erste Bank?

– Approximately 25 percent are clients of Erste Bank, that is, they have an account opened at Erste Bank.

How many people are currently working on the development of Keks Pay?

– That’s a bit more complex to answer. We have a team that deals with support, developing new ideas, negotiations, and similar tasks, so that’s a non-development part of Keks Pay. Recently, as we prepare to enter new markets, our team has grown, and we have approached a number of about 25 team members, with great support from other colleagues in the bank when needed. Along with our employees, there are also external collaborators who work on development, testing, design, and similar tasks.

When did you decide to separate from Erste Bank?

– At the moment we decided to expand into other markets. That was a logical step that was inevitable.

Regarding expansion, you announced first North Macedonia, Bosnia and Herzegovina, and Montenegro, right?

– Yes, that is the first wave. In the long term, we also plan to expand into Serbia, but first, we need to take care of those three markets, and then we will think about others depending on how we are doing and how the citizens of those countries accept us. I hope that by the end of this year or the beginning of next year, we will enter the market of either Bosnia and Herzegovina or North Macedonia.

Are there any competitors to Keks Pay there?

– Not really. That is one of the reasons why those markets are interesting to us. They are quite analog and based on cash, just like Croatia when we launched this project. That’s why our market fit is quite good there, and they don’t even have these apps that have spread globally, like Revolut, for example. All of this is challenging on one hand, but on the other hand, we look at how we succeeded in Croatia, and we are convinced that those markets have also matured for that leap. Our main competition is mostly old habits, that is, cash payments, distrust of digital applications, and those are the problems of all other apps entering such markets. We don’t worry too much about competition because we have a different approach to the market. We have a local approach, cooperation with utility companies and parking services, for example, while big players do not have the patience for such things.

Will it be a problem to teach the market about such a product?

– Well, that’s the point of it all. We have learned a lot in the domestic market, and we will apply that to regional markets that are similar to us. We know what might work and what might not, and we know how to break into such markets. We start from the capitals and then we will expand further. We will not be an app for mass markets that the entire country will download at once, but step by step we are learning the market. In Croatia, for example, we have users for whom Keks Pay is their first digital application. So, they do not use their bank’s mobile banking, but they use us. Of course, it takes time to reach that level where people trust us.

Now that you are entering other markets, do you have plans for new services within the app?

– We are now going out with a smaller number of functionalities than we have in Croatia, but what will generally be new is the transfer of money between countries, which has not been the case so far. Well, we have Croats living abroad who exchange some money through our app, but now the exchange of money between citizens of different countries will be more pronounced. We are now a single-country solution, and we are becoming a multi-country one, and we will have the ability to transfer money from anywhere, so we are becoming a global app. As for Croatia itself, we regularly release new functionalities and continue with that. The first next service we are launching is Keksich, which is for children aged seven to 18 years, and it is intended for parents who want to give their children a card but also have full control over that card through transaction tracking, limits, and similar features.

Will they be able to block transactions?

– Yes, at any time, a parent will be able to block transactions, as well as the card. Generally, that card will be different from this standard one, it will have a different design and will be tailored to a younger population, just like the app we will adapt for them. In addition, starting in October, we are introducing instant payments like all banks.

What about the capital market and cryptocurrencies? Will you step into those segments as well?

– We will enter the capital market, that is, we will enter the segment of funds, ETFs, and similar. That is in our plans, although we have not yet taken concrete steps because our current focus is on entering other markets. As for cryptocurrencies, that is currently not in our plans, and we do not see much interest from our users in that. We constantly receive feedback from our users, conduct surveys, ask them what they want, and cryptocurrencies occasionally appear as a potential idea, but not very often. What our users want are utility payments. Everyone wants to pay their bills in one place, and that is what we are working on.

And finally, what would you highlight as the key goals you are now striving for? What challenges do you need to address in the upcoming period?

– There are two key challenges: the first is the Croatian market, and the second is expansion. We need to carry out the expansion, and we want to have one hundred thousand users in North Macedonia and, say, 150 or two hundred thousand users in Bosnia and Herzegovina. Also, when we enter Serbia, we are targeting about half a million users because it is a really large country. So we want to grow in the number of users in basic functionalities in those countries. Whether we will also have digital bills there, we will see, although we probably will, but we need to find local partners to work with, but our first and primary goal is to create a user base. While in Croatia, we need to monetize the users we have, and that does not mean we have to charge them a subscription, but we need to encourage them to use the services that bring us revenue, which is everything except splitting costs. We also need to educate existing users about the services we offer because they are always surprised when they discover some new functionalities. So, Keks Pay is not just an app for splitting costs at coffee but we really have a whole range of services.