When it comes to cooking, serving up a completely new vision of a tried and tested recipe is not something a chef undertakes lightly. Banking is no different, but three years ago, the team at illimity set out to do just that with a radically new digital bank.
Founded in 2019 by CEO Corrado Passera (Italy’s former Minister of Economic Development who previously reshaped Intesa Sanpaolo, and Poste Italiane into twenty-first century businesses), illimity was launched through one of Europe’s first SPACs, raising €600 million. In less than three years, it has transformed from little more than a PowerPoint presentation to a bank of over 760 people, a balance sheet of almost €5billion and a net profit last year of €66million with a 10% return on equity.
What is illimity’s secret recipe for success? At its heart lies the fact that it is one of the first “new paradigm” banks - operating without any legacy constraints, with a totally new business model and a sustainable strategy. Retaining the solidity and gravitas of a traditional banking offering, it is fully digital and in cloud, has entirely modular IT infrastructures (open to further FinTech integration), and is API-based, allowing cost and time savings of 80-90% compared to more traditional institutions. It also possesses the know-how to integrate the world’s best apps into its offerings as most of its staff have backgrounds outside of banking, in sectors which have already experienced digitalisation.
Another key ingredient is its highly specialised nature, focusing on the needs of the historically underserved market of small and medium-sized enterprises (SMEs), long the backbone of Italy’s economy, supporting their growth and helping them to emerge stronger from the COVID-19 pandemic.
The bank serves SMEs in several different ways. First, with growth credit: loans to companies that have ambitious projects to grow, in performing situations. Second, with turnaround or restructuring loans for companies that have encountered some problems, helping them relaunch and return to generate sustainable profits. And third, through distressed credit.
Importantly, illimity doesn’t just loan SMEs money, but actively participates in their growth strategies.
Volume growth in the bank’s Growth Credit Division, with net loans to customers up by more than 64% year-on-year in 2022 to €1.4 billion, drove illimity’s increased profitability.
The Distressed Credit Division, with its servicing company neprix that also acts on behalf of third parties, is the largest contributor to the bank's results thanks to its specialisation in corporate secured loans, end-to-end business model and growing role in the UTP sector. This has been further strengthened by the acquisition of AREC, a company specialised in the management of Unlikely to Pay ('UTP') loans with a focus on the corporate real estate segment. With the end of the “moratoria”, a temporary freeze on loan repayments for SMEs, and banks preparing for a new wave of non-performing loans, the bank is set to continue its growth trajectory. illimity is emerging as a leading player with more than €9 billion in assets under management and a high focus on UTPs, which account for more than one third of the portfolio.
With its’ eyes fixed squarely on the future, illimity continues to grow in every area of its business, becoming an incubator of innovative projects: such as, HYPE, b-ilty and Quimmo.
HYPE, an open banking platform, is a joint venture with Gruppo Banca Sella, the largest Italian retail FinTech with over 1.6 million users, with all services available through the app and transactions increasing by 50% year-on-year to 76 million by the end of 2021. illimity has worked on ‘The New HYPE’, which will provide customers with a complete offering of financial services, with a new CRM and new cloud technology.
Launched in February, b-ilty is the first fully fledged digital store of financial services designed around SME needs: short and medium-term credits, combining specialist expertise and cutting-edge technology to speed up credit transactions and offer a subscription-based service to SME customers to optimize small corporate management and development. Each customer receives personalised assistance from a Relationship Manager, who responds to the different needs of each entrepreneur and specific sector. This is an element that mark the difference between the peer-to-peer lending platform and b-ilty.
Quimmo is another recently unveiled illimity innovation. A next-generation PropTech platform set up to respond to the needs of both private and institutional buyers and sellers, and to simplify the purchase and sale of real estate, it hopes to see a significant growth in volumes in 2022, aiming for 34 million visits, 1.4 million registered users and deals involving more than 3,000 properties.
For illimity, real estate is nothing new. In 2021, the bank generated 26 million visits to its network of real estate portals, 900,000 registered users and 2,000 transacted properties. With Quimmo, it has decided to unify the offer. illimity has as an advantage due to its experience within the judicial segment. In 2022, the platform aims to expand to the free market, covering the needs of other sellers, including: real estate developers, builders, funds, banks, insurance companies or simply households.
