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Banks are still big business

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Serial entrepreneur Elgar has a couple of online businesses under his belt. He founded his second, Serverside, in 2003 with brother Adam. They spotted a niche for personalised credit cards. Goodbye standard gold or blue laminate. Hello family snap or Porsche 911.

"We came up with the software architecture and bought our first patent for £7,500," explains Elgar. "Within six months we were selling it into the large banks. Today we have some of the largest banks in the world on our books: RBS, Capital One, Fortis, Citibank. Up to 50 per cent of their entire portfolios take up the service."

Serverside produces the back end technology for imprinting the image of your choice onto your credit or debit card. It’s not a printing firm or a design studio, per se. Although, the firm does have relationships with a number of photo libraries to ensure that bank customers can get hold of any image they like.

The firm turned over £4.3m last year, with profits of nearly £0.5m. But how does Elgar ensure the business keeps streaming in, especially in these tough economic times?

"Here’s the real pitch for banks," explains Elgar. "The average American has five credit cards in his wallet. They will only use one. Our personalising service makes sure that this become the one. The value is enormous: banks spend $100 to get the card into a customer’s wallet. If it doesn’t get activated, that’s money down the drain."

Elgar has built a presence in Europe, the US and beyond with patents pending for his technology in seven territories. Going for the biggest players in each market has ensured that business has scaled dramatically from the outset: "You can sign six banks and crack 50 per cent of the market," he says.

And Serverside hasn’t felt the recession’s pinch either. "The banks did go quiet for a bit," admits Elgar. "There was stasis in the whole industry. But the pipelines are very strong now. We have a great business case because of these hard ROI statistics. We’re definitely in the sweet spot now."

Interestingly, Serverside is the only business of its kind in this niche. "We’re sort of the lone ranger," he says. "There are some companies that work with incentive cards. Some printing presses have a small market share but we have 85 per cent of the business."

There are a few barriers to market putting off the copycats: "We have lots of expertise in security and service level uptimes and contracts," says Elgar. "Banks require that. And this business also requires a significant ongoing spend in R&D."

And if you think you have problems with red tape and bureaucrasy, imagine working with giant fiscal institutions. "The banks can take up to 18 months to sign off on a deal," Elgar continues. The bill might last a year afterwards too. And you can’t scrimp on overheads. If you need to fly someone from A to B, you do it. Banks expect a premium service. You can’t just outsource the whole thing to Madagascar."

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