We got to interview Michal Smida just several weeks after his Series A Round in October 2017. Our first impression: he’s a man of details who appreciates timely manners. His company, Twisto, proposes an alternative to traditional credit cards for online shoppers. Initially launched in June 2013, Twisto has successfully earned a steady base of more than 250,000 customers in Czech Republic. Michal enthusiastically started our conversation by explaining his expansion plan for next year, both in terms of product portfolio and market.
Twisto Payment and Where to Find It
The emergence of “Buy now – Pay later” services is a huge boost to e-commerce sales. While Klarna (a Swedish solution) is on the rise in Western Europe and PayID covers Eastern Europe well, Central or Mid-Europe is left vacant. That’s where Twisto stepped in. Taking off from Prague, Michal and his team plan to expand to Warsaw, Poland in 2018.
“Poland is a very competitive market. Its population is around 40 million, compared to only 10.5 million in Czechia. E-commerce there is growing at 20% per year, twice the rate in Czechia, with a yearly turnover of €7.5 – 8 billion. That’s why we are working very actively with ING Bank, and investor in the Series A for the launching of our payment solution in Poland next year”.
What exactly are Twisto’s solutions?
“To make it simple, we are a credit card”, Michal explains. Twisto currently offers two services: Twisto Now and Twisto Account. Twisto Now is a payment method that can be integrated into e-shops. Twisto pays the merchants on behalf of customers after running a credit check. They then have a 14-day product trial before paying Twisto back. Twisto Account, on the other hand, is the follow-up product. With a Twisto Account, customers enjoy a full month of shopping on credit (extendable, can be paid in installments) and an online finance management platform (including the ability to pay utilities bills by uploading photos of the invoices).
“Recently – beginning of December – we have launched with a German bank the Wirecard Twisto card and payment bracelet, which will allow holders to pay anywhere in the world with a Twisto account.”
What makes Twisto different?
Michal spent 11 years abroad before setting up Twisto in Prague. “I lived in the US, then Moscow and went to King’s College in London. After working 3 years for Barclays Capital London, I decided to come back to my home country and start a business. The bank is a great start. Yet I just felt unfit with the culture and how banks are moving away from real customers.”
Michal and his team are on a mission towards a simple and fair financing for the online generation. “The market of consumer finance is dominated by banks, which often reject young students, freelancers and young families. The strict risk scoring models of banks opt for profiles with stable employment or certain level of education. Those ignored customers will be able to finance their daily purchases with Twisto instead of banks because we use alternative data sources and apply different statistical models to determine risks.”
At Twisto, machine learning and neural network replace the simple logistic regression models used by traditional banks. Online transactions history becomes the major determinant of risk management. “Twisto simply offers a different approach to credit scoring. Without a banking license and its strict tag-along regulations, we can be more creative in determining the credit risk of clients and tackle new groups of customers.”
Twisto’s risk engine is named Nikita. “For now, Twisto services are only available to Czech citizens. But as we are going to Poland next year, Nikita will be adjusted to fit with local risk patterns.”
Why does it have to be Czech?
Mid 2013, Twisto took their first steps in Prague, Czech. However, Michal seemed a bit surprised when being asked about setting up a business in Czech Republic. “I mean, Czech is a great country, but a small market with only around 10.5 million people. Here you will find talents with good technical skills at a fraction of the cost in other European countries. Plus, big communities of investors increase your chance of getting funds at early stage. The thing is: Czech is good place to start. But if you want to raise money for your business, a global ambition is vital.”, Michal concluded.