Challenges of the newcomers

As a digital-first fintech, Rauva is immune from the traditional challenges and obstacles incumbent financial institutions in Portugal and around Europe face. The benefits of building a financial super-app in 2022 allow us to harness tried and tested technologies to come out of the digital banking revolution in the past decade. These technologies enable Rauva to build a customer-first, fully digital product. While most incumbent financial institutions would like and need to implement these technologies to stay competitive, legacy systems, legacy thinking, legacy ways of working, and legacy products stime digital innovation. For this reason, our challenges are starkly different from the incumbent banks.

We think of ourselves as a technology company operating in the financial services industry. Therefore, the by-products of digital transformation in financial services technology sit at the heart of our systems, products, ways of working, and other facets of our business. These technologies and new business models include; partnering with a Bank-as-a-Service (BaaS) provider, using APIs to build our core banking system, harnessing Open Banking technology, and partnering with KYC/KYB companies leveraging cutting-edge technologies like AI/ML all over a banking value chain.

So, where do our challenges lie? It does not live in the tech, or the need to embark on a 5-year transformation program, nor the regulation given we are pursuing a BaaS business model but in the product itself. However, the challenges we face in building the product we see as a massive opportunity and believe will lead to our success throughout Portugal and Southern Europe.?

Given our lack of tech debt and our ability to quickly engage with leading vendors, we have a blank canvas to build a super-app to solve the many challenges freelancers, and SMEs face in Portugal and Southern Europe. Rauva is in a unique position to solve the almost limitless problems faced by our customers. And herein lies the problem. With so many potential solutions to empower entrepreneurs, where do we start? What do we pick up next? While the end product, a super-app that seamlessly integrates banking, tax management, bookkeeping, credit, and business ops, is clear, we must carefully prioritize how we get there.?

This is why we take a customer-first approach to building Rauva. While we speak weekly with entrepreneurs in Portugal, Rauva is also newly incorporated, and our staff are freelancers and small business owners. We are, therefore, in a fantastic position; we share the same problems as our customers.?

Our challenge is where to start. Banking sits at the heart of a financial super-app for entrepreneurs and poses one of the most significant pain points; there is no painless way to open a business bank account. Focusing specifically on the freelancer segment, Portugal, there is no dedicated, localized product for freelancers. This leaves this segment stuck using retail accounts to fulfill their financial jobs.?

The anecdotes confirm our approach to building banking first. Accountants advise small businesses to open a non-Portuguese bank account due to the lengthy application. We believe in launching a simple card and account that provides immediate payments and card access. The small business owner will set up newly incorporated businesses and freelancers to hit the ground.?

“Beyond banking” lies the value we can provide to entrepreneurs in Portugal and Southern Europe.?In 2023, digital banking should be a commodity. After we get the “commodity” part right, Rauva will begin implementing simple tools and features to empower small businesses and freelancers and tackle highly complex and regulated features around bookkeeping and tax management.?

Our prioritization challenge for the “beyond banking” phase becomes increasingly complex as we must ensure our bookkeeping products and services are 110% compliant with local and EU tax regulations. Portugal and Spain, in particular, maintain strict compliance with the issuance of invoices. Finding the right partner that can allow us to maintain compliance while providing an innovative, seamless experience around invoicing issuing is one of the largest challenges we face. However, we see this as a massive opportunity, as the existing invoice issuance experiences offer minimal innovation, customization, and optimization for businesses and freelancers.?

The second challenge we face during the “beyond banking” phase is the battle to offer local payment methods. Portugal, Italy, and Spain are all markets with closed domestic payment schemes, which stimes innovation for newcomers. While Rauva would love access to the Multibanco and MB Way payment methods in Portugal or Bizum in Spain, the reality is that, as outsiders, we are excluded. Thus we need to prioritize how we offer alternatives to ensure our customers can pay their utility bills, taxes, social security payments, and other services,?

Rauva, like our customers, is a hungry entrepreneur. We believe in the power of technology and that digital banking, including instant card issuance and digital onboarding, should be a commodity and available on Day 1 for a business. Entrepreneurs have more important problems to consider, such as finding customers, hiring the right staff, and applying for grants and funding. Opening a bank account should not be one of these challenges. Once we have the banking foundation, the opportunities are endless, albeit challenging for Rauva to be the companion and partner for the 1.6 million freelancers and small business owners in Portugal and eventually Southern Europe, home to 50% of all small businesses within Europe.?