The Business Year

Jorge Carvalho

PORTUGAL - Telecoms & IT

Jorge Carvalho

President, SoftFinança


Jorge Carvalho is Chairman of the Board of Directors of SoftFinança, SA. With a background in Civil Engineering, Jorge Carvalho began his career as a Systems Engineer at NCR Portugal in 1985. In 1987, at Olivetti Portuguesa, he was part of the factory team that developed the software for the ATM Olivetti 6400 that would later equip the Multibanco network in Portugal. He moved into commercial management positions for the financial sector at NCR Portugal and RIMA. As an independent consultant, he was responsible for the software development of the Ford Loyalty Program at European level, one of the first CRMs offered in Direct Marketing. He founded SoftFinança, SA. in 1990, focusing on the complementarity of services to financial customers, with particular emphasis on relationship channels, and establishing lasting relationships with all the main banks operating in Portugal. He has diversified SoftFinança’s business both industry and market wise, while remaining focused on a lifelong commitment and knowledge of financial institutions IT needs and evolution.

TBY talks to Jorge Carvalho, President of SoftFinança, about the evolution of the company, international markets, and goals for the coming year.

Can you give us a brief summary on the evolution of SoftFinança?

€¨I founded the company 31 years ago in 1990. We perceived an opportunity for a company to be focused on developing software for the financial market. Fintechs didn’t exist when we started, but today we see what they are all about. There were only two companies in Portugal at that time focused solely on the financial market, and we were one of them. We started as a project company developing projects for the financial market, namely banks and insurance companies, covering solutions from the mainframe to the branch. We’ve been doing this for many years, so we’ve acquired the knowledge and skills to make the shift that we made some seven, eight years ago to being a product driven company. With the majority of the projects we have done at SoftFinança, we realized there was a middle ground between the institution and the client. That wasn’t a strategy as such, just something that happened a couple of times, and from then on we capitalized on that specific know-how. Those were and are the channels of the bank or institution. This kind of relationship between the institution and the client is even more relevant today. Key factors in this business are user experience, convenience, and ubiquity. 80% of physical banks could well disappear by 2030.

Considering this premise, what is the impact of digitalization on local financial institutions?

€¨That vision would be the trend and I also agree with it. Things are moving more in that direction daily. That’s the reason why the relationship between the institutions and clients is so important. We’re specialists in self-service solutions at SoftFinança. To simplify, let’s say that we have fewer bank notes in our wallet, even though there are still some ATMs in operation. We are constantly heading toward a paperless world. We have seen many changes with the relationship dynamics between customers and the banking industry with customers coming in and out of their branches. One example is having ATMs outside the financial institutions. Even though it takes the customer out of the branch, it speeds up the transaction process, provides convenience and is less expensive. Then, all of a sudden, clients were pushed out of the branch and started to do other things like online banking from their home computer. Again, that took clients out of the branch, so banks didn’t have them on their premises and were struggling to get them back. Since they couldn’t speak with the clients, how could they sell their products? This is the cycle of an app, as the relationship between institutions and clients is a delicate balance. When we look into the evolution of the number of bank branches per inhabitant in Madrid, for example, we see branches from the same institution on both sides of the street in close proximity. The same phenomenon exists in Portugal. The ongoing challenge is to establish a digital connection with your customer. I have no doubt that physical banks will tend to disappear, and banks for day-to-day retail banking lean more toward digital options for cost-effectiveness.

Aside from banking and finance in general, where do you see the biggest potential coming from in other sectors, and what sectors can your innovative solutions support?

€¨We are focused on the financial market, but other activities are also backed by our knowledge and long years of experience. When it comes to health or retail, there’s always a connection to a payment or transaction, and the link comes from that connection. With the health sector and especially with pharmacies, we’re changing the experience of a customer going to a pharmacy; pharmacists invest in OTC (over the counter) products, and pricewise they are the most interesting. Current trends are focused on customer’s health and wellbeing. The customer can physically go there to control their diabetes or blood pressure. Now, instead of shelves with boxes of medicine there are convenient digital displays and the customer can purchase products online. This already exists and it is all about innovation. It is the combination of gadgets that really provide a new experience and the outcome of that is really exciting. We are in an industry where the balance must be workable. It is a discipline and a way of doing things that can’t be done in another way, giving us an advantage when we go to less sophisticated environments. With the retail sector, we entered a partnership with Sonae Financial Services and MasterCard for the UNIVERSO card. It is more than about credit cards now, its cross selling, its couponing and much more, which is relevant considering the size of our country. We took care of all the development for the UNIVERSO card both the app and web portal allowing users to have a complete solution in their hands. It is an emblematic example when it comes to innovation: a card that is simultaneously a credit card, a debit card and a loyalty card all in one, and it was the very first card that offered installments thru any EMV device in the world, be it an ATM or a POS, regardless of the owner on the device, network or acquirer. Clients know what they get from us. SoftFinança is a B2B, not a B2C company so it’s a matter of providing the best service, not judging whose contribution is more significant. We must now look abroad for new opportunities. The pandemic wasn’t the greatest thing that could happen to us on that front, of course, but we’re headed in that direction now. We believe that our products are appealing, and we have an excellent chance of selling them abroad. Again, the reason is simple. We are a small country with highly skilled people in the IT sector.

What countries are you targeting to sell your products abroad?۬

We have two main focuses: Latin America and French speaking countries in Africa, but also considering Europe as an important target. Eastern and Central Africa have the same currency indexed to the Euro, so there’s stability. Africa is a continent of opportunities. Banks in Africa are typically multinational and allow you to sell both locally and regionally. Latin America is also a fantastic opportunity for us and we were already prospecting pre-pandemic. We were also preparing to open in Miami in mid-2019 but didn’t because of COVID. Latin America has as a significant influence from the US, especially when it comes to financial transactions and compliance, totally different from the European market. The financial system in the US is conservative. Meanwhile, we opened SoftFinança Afrique in Senegal and installed a small team in Dakar. In 2021, we won our first client in the Dominican Republic. This changed little in terms of SoftFinança’s strategy as there is not a huge difference between Miami and the Dominican Republic. It is an important financial market, the region is pretty homogeneous and we have a very reliable local partner. We’re still deciding whether to remain present there as a company. Meanwhile, differently from remote work, remote selling is particularly challenging: SoftFinança doesn’t aim to be the biggest company in the world, but we have never lost a client in our 31 years; relations in our business are fundamental. We believe that the relationship with our clients is crucial, and always establish a close connection. This is something that only some companies can do. It depends on the company size, its management, its people and its partnerships. All of these factors help to define us.

What are your main targets for 2022-23?۬

We are focused on selling abroad, but we are not looking to open offices here and there. We believe that one of the keys to success is having good local partners because there is a culture and a local network that you can’t ensure yourself in another country. You share what you should share, build trust through relationships and you’ll reap the return on that. We opened in Senegal because we thought it was the best path, and the objective is to broaden our client base there and sell abroad. We’re selling increasingly in Portugal even though the market is not particularly elastic. We could always sell more, but we’re not alone in the market. Competitors aren’t the bad guys, and this is important to keep in mind. I believe that in 2022 we will significantly increase our international revenue.



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