20 April 2021
“This is our home now,” André Zein says casually. As he rearranges himself on the sofa, his camera tilts and I get glimpses of a modern living room in the large condominium in Limassol that he has rented for his entire team to live and work in. I feel my eyebrows raise and I catch myself wondering if it is possible to make things function properly when the workplace and private worlds of so many people collide. The CEO of TechnOrion and co-founder of Swittle has just relocated both companies’ headquarters from Lebanon to Cyprus and, from what I’m hearing, it’s has been a rollercoaster of a ride.
After some 25 years spent working on the digital side of banking in different parts of the world, from the Gulf all the way to New York, Zein decided to retire from being an employee. In 2011, he started TechnOrion, a company tasked to undertake long-term projects in the digitalization of banking systems. “I chose Lebanon to launch the business because it’s my home country and also because, at the time, there were signs that the banks were going to launch digital services,” he explains. “With over 60 banks available in Lebanon, there was a lot of work to be done.” Slowly but steadily, TechnOrion built a solid stack of technologies and, in 2019, spun off the electronic bill presentment and payment technology to give birth to Swittle.
Meanwhile, Lebanon was plagued by growing financial and political instability. Unemployment stood at 25% and nearly a third of the population were living below the poverty line. Frustration was growing as the Government failed to provide even the most basic of services and proposed new taxes on tobacco, petrol and even voice calls via messaging services such as WhatsApp in a desperate bid to drum up more revenue. People took to the streets and protested.
“I immediately decided to relocate our business before it was too late, before we went into survival mode,” he says, adding as an afterthought, “I had personally invested all I had in order to come up with the TechnOrion stack and Swittle.”
He had three destinations in mind – Cyprus, Malta and Armenia – the former in close proximity to Lebanon and all offering the necessary facilities and tax advantages to establish a tech company and, most importantly, EU-wide access in the case of Cyprus and Malta. He first set up a meeting with the commercial attaché at the Cyprus Embassy in Lebanon to discuss his plans. “The moment I landed in his office, he had all of the paperwork in front of him. He gave me brochures, leaflets, advice; he understood what we were doing. Then, he set up a call between me and Invest Cyprus,” Zein recalls. As soon as he arrived back in his office that afternoon, he received a call from Marios Tanousis, the Deputy Director General of Invest Cyprus. The agency was quick on the uptake and invited Zein to come to Cyprus the same week. “They hosted us for a full day in their offices in Nicosia and they invited us to come back the following Monday, after conducting some reconnaisance on real estate. So, our first visit to Cyprus was like a big welcoming symposium. We did not really have to think too much about our other options,” he says.
As soon as the decision was made to relocate to Cyprus, the coronavirus pandemic began its spread across Europe and Zein found himself out of the frying pan and into the fire. It took three months to register TechnOrion in Cyprus and then another three months to prepare the necessary paperwork for his team to join on a visit basis. Zein didn’t intend to register Swittle just yet. Despite the fintech being fully operational and successfully tested on multiple business models across the board, capital controls and haircuts in Lebanon had left him with virtually no credit. The funds to register, licence and hire operational and regulatory staff were simply not there. “I was ready to fund this from TechnOrion, but unfortunately I couldn’t. It’s like starting from scratch,” he sighs. The silver lining is that he is in possession of a solid intellectual property, which makes it much easier to knock on the doors of local investors and EU VCs. “Invest Cyprus has also helped us find the right EU grants and R&D budgets to tap into,” he says. Zein has nothing but praise for the Cyprus investment promotion agency. By his own account, the hands-on approach made it fairly easy to navigate most of the vexing problems that come with a morass of red tape.
Permanently moving his team to Cyprus after their visitor’s visa had expired proved to be one of the most challenging bureaucratic hurdles. The agents he hired worked every possible angle. “I think we landed on the perfect agents – they even bought us duvets for the winter,” he says. A new Immigration Framework for tech companies was launched in October 2020, most notably lifting any restrictions on the maximum duration stay of third-country nationals and providing direct access to reunification with their immediate family. However, it imposed a financial burden in terms of capital deposits which Zein couldn’t shoulder as his funds were still locked in Lebanon. The startup visa programme didn’t help either, since TechnOrion, being a 10-year-old company, didn’t qualify. So, on the recommendation of his agents, he reverted to the Immigration Department in Nicosia. “A lady there really looked into the matter. She found out that, since our company in Cyprus is more than 50% owned by the company in Lebanon, it meant that we could use the employee-transfer programme,” he says. Essentially, when a company has the same shareholding structure or is owned by a foreign company, the law allows for the transfer of specialized resources. Zein chose the core team that built Swittle and TechnOrion’s stack to relocate to Cyprus and intends to hire the rest locally.
The plan is to eventually shift the entire focus to Swittle – TechnOrion will continue with its long-term engagements – as Zein banks on the fintech to monetize all his intellectual property, allowing it to expand internationally and attract more investment. He sounds quite confident that the future of fintechs and banks is intrinsically linked, especially in Europe, where the PSD 2 Directive, in force since 2019, has opened the road for financial technologies in the traditional banking sector. Banks, he argues, while undeniably influential in the financial ecosystem, have become increasingly aware of their limits when it comes to customer service. Consequently, they were pushed to embrace the fintech concept, which has the potential to get into the most minute of customer needs. This relationship, in the end, becomes symbiotic, Zein explains. “The banks that have been the most successful with fintechs have gained wholesale business.” The links between the two don’t end there. Zein is adamant that those wishing to get into the fintech business must first earn their stripes in banks in order to really understand the security, controls and processes behind financial models. He is not wrong; the unicorns of the European fintech world (TransferWise, Revolut, Monzo) were founded by people who splintered off from banks. Even tech companies like Facebook and Uber, which have started to leverage their customer base in an attempt to introduce financial technologies and become a one-stop-shop, are poaching people from banks.
So, where does Swittle exist in the financial ecosystem? The startup targets billers, from the largest corporations to the dentist and the e-learning provider with six bills per day. “We are like an Uber service; you do it yourself,” Zein quips. “You just enroll on your own without any friction and with no investment made from us to onboard you. This is something banks and big providers can’t do; the cost to acquire a single professional is tremendous. So they can retract and do wholesale and interface with fintechs like us.”
With his team now permanently in Cyprus and able to work on multiple fronts, the
time to launch Swittle as a Cyprus-based fintech is fast approaching. He takes a deep breath before he talks about his people: “It’s not been easy for them,” he says. “At this point in time, I’m unable to give them what they deserve – the lines of credit are no longer there, the cards are useless. But they have said that they are with me till the end, that we have built this together.” That seems to dispel my initial reservations: a shared history and a single-minded focus allow work/life boundaries to collapse without any negative ramifications. Zein’s story also provides an insight into why someone chooses Cyprus and not Malta, for example, to relocate a tech company. Promoting Cyprus as an innovation hub in the Mediterranean tends to focus on tax benefits, a pro-business environment and direct access to the EU. Zein, though, was convinced by the little things, including the hospitality for which Cyprus is still famous. Perhaps, for someone still suffering from seeing their country in peril, finding a hospitable new home mattered most. Or, perhaps, bringing the smaller things out of the small print will ultimately be the deciding factor in our bid to attract more tech companies, or better yet, the people who run the tech companies.