Join George Koukis, International Business Development Director of Factoring and Supply Chain Finance at QUALCO, as he speaks with Tamara Khizanishvili, Director of Trade Finance and Factoring at TBC, about:
1️⃣ The challenges of manual factoring and the turning point for change
2️⃣ The role of technology in enhancing efficiency, security, and scalability
3️⃣ Lessons learned from TBC's digital transformation journey
4️⃣ Advice for banks looking to implement similar solutions
📕 Are you more of a reader? We've got you covered.
Read how QUALCO helped TBC transform its factoring operations:
George Koukis: Today, we are diving into the incredible transformation of TBC Bank's factoring business. Joining me is Mrs. Tamara Khizanishvili, Director of Trade Finance and Factoring Department, with more than 20 years of industry experience. Welcome, Tamara.
Tamara Khizanishvili: Thank you, George, for inviting me to your podcast to discuss digital solutions for factoring. I appreciate the opportunity to share insights on this important topic and look forward to an engaging conversation.
George: TBC has been a major player in factoring services in Georgia, supporting large corporates and SMEs with working capital solutions. Can you walk us through the evolution of TBC's factoring business?
Tamara: TBC financed its first factoring transaction back in 2007, but since this first transaction, only a few factorings were executed until 2018. Then, the bank decided to boost the product and increase access to finance for SMEs and corporate clients by offering factoring products. It's not difficult to guess that the product was fully manual and paper-based. Therefore, the number of transactions remained very low, and we were more focused on high-value tickets.
"The turning point for our factoring business was the decision to digitise. After launching the platform, the number of transactions increased rapidly, reaching several thousand transactions per month."
That's how we started and where we are now.
George: That's interesting. It sounds like the factoring business at TBC has come a long way. So please tell us how factoring has contributed to your corporate and SME customers and, in general, to the wider economy of Georgia.
Tamara: Businesses need working capital to ensure a smooth supply chain. Suppliers need liquidity, and buyers need extended payment terms. Factoring and reverse factoring benefit both. Moreover, small businesses often experience a lack of collateral. Large corporates might need to clean their balance sheet from bank loans. Some need collection services for receivables, while others need credit cover against bad debts. Factoring solves all these challenges.
"When clients start using the factoring product, they realise the benefits and continue using it consistently. Factoring has largely benefited our clients, and now we have a steady turnover of factoring, with businesses using it daily."
George: Fantastic. Great point. You mentioned before that TBC has shifted from a traditional approach to a more digitised approach. That means that TBC has certainly been evolving in this area. That brings me to the next question: TBC Bank transitioned into TBC. I noticed that you removed the word "Bank" from your branding. I'm very eager to hear from you: was this change mainly about marketing and branding, or was it related to any other fundamental changes? Was there a particular message that you wanted to pass to the market by doing that?
Tamara: For clarification, we still use the TBC Bank logo, but in most cases, we use only TBC because TBC is more than just a bank. It's a technology company, and the main goal and philosophy of the bank is to make clients' lives easy in every way. This approach covers all segments—corporates, SMEs, and retail. TBC goes far beyond traditional banking services for large businesses and offers them consultancy services. We are the biggest supporters and contributors to the growth of our clients' businesses, and we support our clients in any way they want to grow their business.
George: That's really interesting, Tamara. Have you faced any major challenges during this digital transition? I mean, as a bank and as a factoring department.
Tamara: The biggest challenge is always a human capital issue. Going beyond traditional services requires more qualification and dedication. Georgia is a small market, and finding such professionals is very difficult. Therefore, we decided to start sourcing people from all over the world. Of course, it is a challenge to find and attract people outside the country. Naturally, language barriers are also often a challenge. But we can attract these people since TBC is an international company with different cultures. It's not easy—it's a challenge—but it's possible.
George: That's a great insight. Speaking of digital transformation, let's talk about the bank's digitisation journey. When did TBC decide to digitise its factoring operations? What was the driving force behind this decision?
Tamara: At the end of 2018, TBC decided to boost the factoring product. But soon, we realised that developing the product without digitalisation was impossible. It just wasn't realistic. Our aim was to reach almost all sectors, and mainly, it was the FMCG sector, where we faced thousands of invoices and more than 10 financing requests from clients daily. Manual processing of documents, then the agreement with the seller and the buyer signing the documents, was time-consuming and very slow. So, clients were very unsatisfied and, therefore, preferred credit lines. They already had two factorings.
"We had to make a decision: either close the product and say goodbye or start digitalising it. We decided to digitalise the product and purchase a platform."
George: I imagine it was not just about adopting new technology but also about getting employees and customers on board and aligned with a new reality. Was it?
Tamara: Yes, that transition was not easy. Adopting the platform internally was related to 24/7 hours of hard work, doubts, and often arguing with the vendors and bank IT. We made many mistakes, went through a learning process, and finally, we got a product that we think is worth our valuable time and energy. And you know, George, because we were working together on that.
George: We all know that change can sometimes be met with resistance, especially from customers who are used to traditional processes. I wonder how your corporate and SME clients reacted to this digital transition.
Tamara: Clients also received the digital factoring product well. They were very satisfied and pleased with the online experience we offered, especially because it didn't require them to visit bank premises - particularly after the COVID period. All products went online. So, we offered customers a fully digital, end-to-end journey. This includes signing documents, uploading invoices, confirmation, financing, and repayment. So, all the actions that clients need to do are online.
George: This is fantastic. So it sounds like digitalisation not only streamlined operations internally but also significantly improved the customer experience. That brings me to the next topic. How has technology's overall impact on TBC's factoring business, and how has it transformed your operations? I believe there was an effect on your team as well. Have you found any significant and tangible benefits from this transition within your team?
Tamara: Yes, I will say a few words about the platform itself. The platform enables us to onboard all the participants in one digital space – the bank, the seller and the buyer. The status of each transaction can be traced in live mode. The seller or buyer uploads the invoices for financing; the other party checks the validity, and either confirms or rejects the invoice. The bank gets the validation immediately and, with one click, authorises the financing.
"The time of financing reduced from 1 - or sometimes 2 or 3 - days to just 30 minutes."
The system notifies the seller and the buyer about the financing. On the end date, the system sends reminders to the buyer that the payment is due in five days. Buyers can then log into the internet bank, where all invoices are visible, and repay with a single click.
"The platform saves time for both the factoring team and the clients. Now, our team has enough time for self-development, training corporate and SME bankers, pitching to clients, and exploring new opportunities."
George: Ok, that's impressive. It seems like a game changer for the business. From what you say, technology hasn't just made things faster but also created a more intelligent and user-friendly experience for your customers. Is that the case?
Tamara: Yes, of course.
"It's a very good case for the bank - how we improved the product through digitalisation. And what's important is that it also improved operational risk and fraud prevention."
The platform processes and verifies thousands of invoices for double financing. If such cases are identified, it rejects them and notifies the parties about the double financing. The system has several authorisation levels for the clients, the seller and the buyer.
"Our clients are protected from unauthorised financing requests or confirmation of invalid invoices. The bank applies the four-eyes principle to every action."
As mentioned, the platform sends reminders to buyers before and on the due date, helping us eliminate human error and risk as much as possible.
George: That is very important.
Tamara: Very important because technology played an important role and significantly improved our risk assessment and fraud prevention methodologies and mechanisms.
George: Fantastic. So let me ask you - technology is a key driver of TBC's Factoring Department growth. Speaking of partnerships, a few years ago, TBC trusted QUALCO with its digital transformation of factoring. Can you tell us what led to that decision and how this partnership has evolved?
Tamara: When TBC decided to digitalise the product, we started exploring different opportunities and solutions. There were a number of vendors of factoring platforms. After detailed study and assessment – looking at features, product variety, security, ease of use, fraud prevention, price, of course, and the vendors' willingness to meet TBC requirements, we decided that QUALCO was the best. QUALCO was chosen as a partner. The partnership started in December 2019, and it's been about five years. And even though TBC had specific factoring products tailored to client needs,
"QUALCO has always been trying to accept the challenge, solve issues, and find the most appropriate solution. We are very happy to have QUALCO as a partner, and we're confident that together we can improve and develop our platform to the next level - to make our customers' lives easier."
George: It's great to hear that from you, Tamara. So, to conclude our podcast, I have a last question. Considering TBC's successful use of technology, what key advice would you offer to other banks seeking to follow your digital transformation journey?
Tamara Khizanishvili: The main advice is to understand your customers' needs and identify the weaknesses of the customer journey. Prepare detailed product description and process flow. Explore the market for different solutions. Spend time studying and assessing all possible vendors and compare them with your needs. Don't be fascinated by well-known names with expensive solutions that might include products you don't need and won't use. You'll end up paying more for features that bring no value. Last but not least,
"The vendor should be a true partner, always ready to support you. That's partnership. And partnership means everything."
George Koukis: I think that's a very valid point. That's a wrap for today's podcast. We covered some fascinating insights into the digitalisation of TBC's factoring business. A huge thank you, Tamara, for sharing your expertise with us. It's been a real pleasure.
Tamara Khizanishvili: Thank you very much.
George Koukis: Goodbye, and see you soon.
Tamara Khizanishvili: Goodbye.
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