As Home Credit Group is currently the biggest global consumer credit provider, developers in EmbedIT’s Czech offices manage a gigantic IT system working for more than 130 million customers all over the world, most notably in Asian markets. The number of transactions their system processes exceeds 200 million daily, and can be even ten times more during peak times.

This year’s developments were not exactly favourable to Home Credit due to the coronavirus pandemic. Shops with consumer goods were closed for almost three months in most of its nine markets. As a result, the company had to accept losses and lay off many employees in Asia. But the driver behind the downsizing was far from just COVID-19 or a decrease in the sales of goods.

Home Credit took the crisis as an opportunity for accelerating the digitalisation of its entire business, which is increasingly shifting from brick-and-mortar shops to a mobile application, and from traditional call centres towards using chatbots and voicebots. All of this is influenced by EmbedIT, the giant IT division in charge of the digital transformation of the entire Home Credit. The digital transformation also optimises the headcount in the process.

How specifically does such a process work in a group with tens of thousands of employees all over the world, how is the consumer credit market changing, and what is it like to manage a global IT company from the Czech Republic? Khalid Husseini, Chief Information Officer at Home Credit, who is also in charge of EmbedIT, answers in an interview with Czech IT magazine CzechCrunch.

How did consumer behaviour change this year? Did you note greater demand for loans, or did people tend to save instead?

You cannot say in general; changes in shopping behaviour differ market by market. Vietnam, for example, managed COVID differently; they shut the country down at the very beginning of the pandemic, so they could leave shops open and demand remained relatively stable. India introduced a complete lockdown at one time, so the decrease was pronounced and the consumers are more careful there. Today, we certainly cannot say that our sales are down to nothing. We are seeing a rejuvenation of demand, but I don’t want to jinx that.

What has changed on the consumer credit market as such?

We see the biggest change in the transition from offline to online. In all markets where we operate, clients tend to come to brick-and-mortar branches less often. This was even physically impossible in many countries for a long time, so all contact moved to mobile phones. Most markets in Asia skipped the computer age and started living on mobile handsets straight away; their data networks are developed enough for that.

How did you respond to the developments?

COVID caught us in a situation where we had a fully digitalised backend. In the past, the way we operated was that the employees wrote a loan application with our salesperson right in the shop, then printed it and signed it. The decision-making process was digital, though, including the involvement of artificial intelligence and big data. Within about three minutes, we were able to say whether or not they could get the loan. In the second stage, which we called the paperless process, we replaced the printing with a tablet on the counter, to put it in simplified terms. The client arranged everything with the sales representative and signed it on the tablet. Now, in the last stage, the client completes the application in their own mobile, scans their ID, photographs themselves, and selects the duration of the loan and the amount of the payments. Since people were unable to come to brick-and-mortar shops this year, we accelerated the digitalisation of our frontend and moved all the communication with clients to mobile handsets.

Is this related to the fact that you laid off tens of thousands of people?

In our case, digitalisation unfortunately squeezes out workforce and replaces it with user applications and self-service tablets in shops. This is happening in all five Asian markets. The same thing is now beginning to happen in Europe.

Redundancies primarily affected people who worked directly in shops. How about other employees, such as in IT?

We also reduced our IT headcount. The pandemic and lower demand gave us some time to look at our infrastructure and the systems we operate. We started cleaning up, for example, by removing the products we no longer offer, which made the maintenance of the back end faster and more efficient. As a result, we streamlined our overall IT operations this year. We saw the pandemic as an opportunity to prepare for next year.

Do you manage IT development from the Czech Republic?

Yes, we do; we have about 3,500 IT employees, and about one-third of them reside in the Czech Republic. Here at home, we focus on developing our core systems, i.e., on products and the client portfolio. Then we have a separate development division in Russia, focused on Russian-speaking markets.

Why is the development separate in Russia?

We have different licences in different countries, and we are a full-fledged retail bank in Russia and in Kazakhstan. Since this means a different business model, it made more sense to us having IT closer to the bank’s business, rather than developing something, which you cannot really use anywhere else in the group, in the Czech Republic.

Would it make more sense to do it this way in other countries, for which you develop solutions primarily in the Czech Republic?

This way of operation has historic roots. When I joined Home Credit ten years ago, we were present in just a few Asian markets. During the later expansion, we could have built separate teams in each country, but since the business model and the products are virtually the same, we opted for a different procedure.

What procedure was that in particular?

During our entry into the Indian market, we developed a brand-new IT system that can be implemented in all other countries. We built the system in the Czech Republic and then implemented it abroad. That brought economies of scale and faster development, because when we developed one feature, it was immediately available for our other markets as well.

Many companies try to cut costs and boost efficiency by moving their IT operations to India, for example. Did you consider or are you considering something like that?

We never approach a solution using ‘brute force’ or trying to ‘outnumber’ the issue. I’d rather have fewer highly qualified – and better paid – people than an army that is quite difficult to control. This is not to say that we don’t want our teams directly in our markets. We have them there and we foster them to be independent and to be able to work with the Czech Republic. For example, in Indonesia, we have already formed a purely local IT team without any expats involved. We want to pursue this model further. However, this will certainly not mean shifting jobs from the Czech Republic to local markets. We don’t want to increase the numbers of jobs in other countries at the expense of jobs in the Czech Republic.

What benefits does this model of having teams in the Czech Republic and abroad offer?

It allows us to efficiently develop systems in local languages. Earlier, we would develop something in the Czech Republic and send it to another country; they translated it and then sent it back… Nowadays, we are able to create collectively; it maintains the emphasis on quality while accelerating and streamlining delivery for the business.  

Does this also bring financial savings, in particular in terms of IT salaries?

It is a little-known fact that highly qualified people in Asia are paid just as well as those in Europe. The local salaries are on the same level as here these days.

Are salaries being equalised on an international scale?

They certainly are. In IT, this is mostly because you can work from anywhere.

Does it apply to the Czech Republic as well? For example, developers in Silicon Valley and in the US generally have salaries several times higher than Czech ones.  

It depends on what we are talking about. You need to separate the start-up scene from the rest of the market. Start-ups are strongly influenced by the fact that investors do not expect quick returns and that they often speculate. As a result, a lot of money flows into start-ups and salary standards are being distorted, also due to employee options and shares. This cannot really be compared with standard businesses. Even in a standard business, though, you can see that IT is growing every year. The IT market did not slow down in the Czech Republic this year; you can see this in recruitment. Salaries keep on growing and the number of applicants available is decreasing. The growth of IT salaries will not slow down before demand is even with supply, and I don’t think I’ll live to see that [laughs].

You mentioned recruitment; how did you tackle it this year?

We recruited new employees this year. The new experience is that we have yet to meet some of our new colleagues in person. Working from home or from anywhere did not affect us that much. Historically, we’ve had our teams even in cities where we don’t have a physical office, such as in Pilsen. It’s not new to us; it just happens more often now.

How do you see the future of offices?  

What surprised me this year – although maybe I just didn’t pay enough attention to it – was a group of people who wanted us to let them back in the offices as soon as possible during the spring lockdown. Even though their job is individual and they can work from anywhere, there will always be people better suited to working in the office. So, the future will certainly be about hot desking in combination with permanent jobs.

Are you responding to the developments in specific ways in your branches in Prague, Brno and Ostrava?  

We monitor their occupancy. We offer people the option of working from anywhere they find comfortable. A lot of colleagues actually come to the offices, so we currently do not plan to limit office space.

I assume, then, that you don’t plan to open any offices either?

That will likely not happen, also thanks to our experience with our Pilsen team that will come to see us in our offices in Prague now and then – to chat with colleagues and have some beer in the evening. We really do not need more physical space.

Looking at your operation globally, you have 22 data centres all over the world. Do you control them all from the Czech Republic?

We operate data centres directly in local markets because legislation and regulation require data storage in the country of origin. We have ‘remote hands’ in all countries – if we need to push a button, a worker does it on site. It happens less and less often. Other than that, we control the network and monitoring from the Czech Republic, in particular from Brno. The teams in Prague and Ostrava are focused more on development.

You also control security, more or less, from Brno. How does it work in this area?

It is true that cyber security has been a big topic in the Czech Republic this year – for example, think about a certain hospital I won’t name. This aspect is often underrated. We have our IT security boss here in Prague and there is a person who reports to him in every country. We really try to embed security into development and operation, because when you put something on the market, you don’t want to find out later that there is a problem with it.

Have you set up a special strategy to approach security?

Our strategy is protecting the perimeter, not the individual server rooms: you don’t stand a chance with tens of thousands of employees. You cannot police so many people. You need policies and protection methods where – to put it figuratively – you can cut off a laptop before it infects the entire network. It’s a combination of investments, tools and processes.  

IT companies speak about a great increase in the number of cyberattacks this year; have you noted them too?

If we compare this year with the last or the one before the last, the number of attacks and attempts at intruding into our systems has definitely increased markedly. That’s just a sign of the times; more and more companies operate online, and this attracts various entities to try it. We prefer investing in prevention in order to avoid investing much more into protection at a later stage. If there is a hole in your system, the loss that occurs could be incalculable, and that in turn causes a tendency towards investing thoughtlessly, at all costs, just to protect yourself. That’s something we want to avoid.

Does such a global reach of Home Credit and its systems, which you develop in the Czech Republic to a great extent, help in recruitment as well?

It certainly does; we’re the only Czech company with such a reach. DHL could be the closest that anyone gets to a similarly global reach in this country, but they only have a part of the team in the Czech Republic, with the rest in America and in Malaysia, and the teams are managed from Germany. Our global dimension certainly helps us in recruitment: you will often hear complaints that employees don’t have actual influence on matters in the branch offices of international companies in the Czech Republic. Someone makes a decision somewhere, and then it is implemented in the Czech Republic. That’s not us. With us, people are part of the process of inventing how things will work abroad.

How does this help in developing products for clients?  

We use the Czech and Slovak Republics as a market for testing new technologies, which we then deploy on a larger scale in Asia. For example, we piloted video salespersons; some merchants use video terminals where customoers can serve themselves without an intermediary. Then, we moved functionalities from video terminals to mobile handsets. If a user has issues in a credit self-service shop, they can directly contact a live person via video. In addition, we have technology that we distributed across a network of thousands of agents, so that we are capable of operating distributed call centres today – and this proved to be an enormous benefit during the pandemic.

Home Credit uses call centres for the majority of customer contact; are you trying to replace them with automated systems?

With the ongoing shift of our primary business to mobile phones, we have introduced chatbots and voicebots to the application. Generally, customers take this positively; most of our customers in Asia are young people who find talking to a predictable machine pleasant. We are already capable of making our voicebots recognise emotion in the local languages. We have achieved great technological progress in this respect.

Do you deploy chatbots in each of your Asian countries?

We do, basically, though the chatbots are deployed to a different extent in each country. For example, we can serve most of China’s territory with Mandarin Chinese; in India, English doesn’t really work that well regionally, so we have to develop more than thirty languages. This is why we still have many people in call centres there; we are still unable to replace people’s language skills with machines.

How about chatbots in the Czech Republic?

We test them here too. You have to realise the difference in sizes – there are a total of ten million people in our country, and five million in Slovakia. There are a hundred times more in China, India and other countries. Savings achieved thanks to chatbots in Asia are much higher for us than they are here in the Czech Republic or in Slovakia.

How does Home Credit’s digital transformation with the emphasis on mobile handsets show in your internal operation?

We all can work from anywhere. We started the transformation of backend operations in January 2019, and when COVID came this year, we were able to work normally. We implemented the Microsoft Office 365 platform last year and we collaborate globally from the cloud.

You have tens of thousands of employees; what was the most difficult part of the transition?

What surprised me most was that the technology part went smoothly while the adoption by the people was more difficult; I expected this to be the opposite. I had this naïve idea that an average person with a smart phone would not be severely affected by such a change. The opposite is true – three or four months after the project launch, we started this ‘university’ where we started teaching people how the system works, that they can access documents anywhere, that it is secure, and that they can work off their mobile handset or tablet from anywhere in the world.

They say that man is the weakest link in the technological world…

But the change was not huge. Many people work with MS Office, Excel, PowerPoint and Outlook on a daily basis. When we moved everything to the cloud, most people kept stuff on their laptops and were afraid of putting it somewhere else. It was a mental switch; today, people are used to it and work normally, but we still have room for improvement.

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A version of this interview appeared in the Czech IT magazine “CzechCrunch”, available in Czech at https://www.czechcrunch.cz/2020/12/embedit-z-ceska-vyviji-it-systemy-pro-130-milionu-klientu-v-asii-uz-musime-ajtakum-platit-stejne-jako-v-evrope-rika-jeho-sef/