George Jedlicka, managing director and chairman of Expandia Finance finds it hard to call Tomas Pardubicky, his colleague, Mr Pardubicky, as formality demands. It's understandable: Pardubicky is a fresh-faced 23-year-old who has been at Expandia just a year and confesses that he is still finishing a university degree. With a laugh, Jedlicka gives up, and reverts to the more familiar Tomas.
Pardubicky says that at 47 Jedlicka is the grandfather of Expandia Bank, undoubtedly the most youthful bank in the Czech Republic. Operational since May 1, it is the republic's first, and to date only, bank offering services solely via the internet and phone.
It's a radical step in a market dogged by outdated IT systems and poor customer service, and there is little to connect the modern glass-and-steel office building housing Expandia with the imposing facades of Zivnostenska Banka and CSOB, visible out of Jedlicka's office window. As he observes: "We don't have these beautiful stone buildings all over the republic. But we can do transactions cheaper and faster. We're looking to find a niche and utilize it."
The hi-tech bank is a departure for the Expandia Group, which had focused on investment banking and fund management. After two months it had around 2,000 accounts and deposits of Kr100 million ($3.2 million). By 2000 it aims to control 3% of deposits, the equivalent of $320 million. A more immediate goal is a breakeven target of 29,000 accounts ($100 million in deposits).
Virtually every banker in Prague has a view on Expandia's prospects. They range from the dismissive - "It's really for the student who plays with the internet" - to the cautiously optimistic: "They have a lot of new, young people who are enthusiastic and highly educated from a technological point of view," says Jan Carny, head of markets at ING Barings in Prague, "But as a new bank they have enthusiasm without experience. The success more or less depends on the team's ability."
Expandia is investing in the potential of youth. "Walk around and you'll think you're in older kindergarten," says Jedlicka. As a 17-year veteran of Morgan Stanley in New York, he claims "there is method in our madness", and other bankers suggest that if anyone can harness the talents of a young team, he can. "Jedlicka is flamboyant, a good chap, and his young team will need a strong hand," says Jiri Kunert, chairman of Zivnostenska Banka.
Although Expandia has capitalized the new bank to the tune of Kr500 million, it is looking for a strategic partner. Some doubt that it will find one. "It will be pretty hard to find a strategic investor for them," suggests Michal Susak, director at Credit Suisse First Boston in Prague. "People are used to old-fashioned banking. Komercni is on every corner, and it's not such a hard life to go and make your payment on the desk there."
That is exactly the view that Jedlicka says Expandia is set to challenge. Using the telephone, he says, a Czech yuppie could buy insurance, do a trade on the stock exchange and check his bank balance by the time he arrived at work in the morning. "Try doing all that in a state bank. I'll go with you just for fun," he laughs.
The state-of-the-art technology being used by Expandia includes an electronic key by which customers gain access to accounts. If tampered with, the key self-destructs. Let's hope Expandia isn't going to do the same. James Rutter