For a digital bank, time to market is one of the most important innovation mandates. For Lasha Gurgenidze at Tbilisi, Georgia-based TBC Bank, this mandate combined with low operational costs were the two fundamentals he and his team followed in launching TBC’s digital-first Space Neobank.

“We started only eights month ago,” Gurgenidze, who is currently project owner at Space Neobank, told Bank Innovation. “And today we are live, that’s a short timespan to go to market.”

Space Neobank, which launched in June, already has 65K users, Gurgenidze said. Space will use TBC Bank’s license but will operate as a standalone entity. Gurgenidze will head the Space team and will report to a TBC Deputy CEO Nika Kurdiani.

“This was TBC Bank’s biggest innovation project, and we achieved that in only eight months,” he said. “It was important for us to keep the costs low. So, for that, we have kept the team small, a cloud-based platform and agile technology. A lot of neobanks fail because they have very high operational costs.”

It is only fair for Gurgenidze to think this way. Just two weeks ago, reports emerged that challenger bank Monzo’s losses had quadrupled last year to £33.1 million ($43.6 million), up from £7.9 million ($10.4 million) in 2016. In a previous report, Bank Innovation mentioned high operational costs as one of the main reasons for this loss.

At Space Neobank, to curb operational costs, Gurgenidze said the standalone bank will maintain a small team. Right now that team consists of 20 people. Gurgenidze said that the team could expand as demand increases, but he “intends to keep it small. It’s never going to be 100 plus people team.”

To further the bank’s innovation, marketing, and customer services efforts, Space will take to collaboration.

“We are leveraging APIs and the software as a service model,” he said. “With our current technology stack, we have two options: we can develop things in-house with our limited capacity or we use a cloud-based service to provide us that ecosystem.”

To ensure this cloud-based infrastructure, Space has tapped into SaaS banking engine, Mambu. Over the eight-month process, Gurgenidze and his team worked on a number of POCs (proof of concept), alongside with Mambu to “edify the process.”

As a part of setting up, Space had to integrate with payment connectors. Space is working with Salesforce for CRM and Ukrainian API solutions provider Corezoid, which serves as the integration gateway.

“While creating a product like Space Neobank, we set up a sandbox environment to run scenarios during the process, and work with different products to test technology and functionality,” Eugene Danilkis, CEO of Mambu, told Bank Innovation. “As a SaaS provider, it’s our job to walk them [Space] through that solutions selection journey, and the right commercial and then project execution mode.”

Once all these pieces are in place, the challenger bank goes live in project mode, Danilkis explained. And then once it is tested and approved end to end, only then does the bank go live to the public.

Challenger banks, also known as digital-only banks, are especially popular in Europe, where regulation like PSD2 has only made it easier for such entities to connect to traditional banks, and therefore provide users a plethora of products and services — thanks to those banks’ data.

The trend will only continue, according to Gurgenidze. More recently, established banks such as TBC Bank have been creating their own standalone versions of these neobanks.

Space will be based in Tbilisi, Georgia, where TBC Bank is headquartered. Space will provide its customers with current accounts, savings accounts, loans, investment products and a debit card powered by Visa. 

Before working on Space, Gurgenidze served as the head innovation officer of product management at TBC.