The Analysis of FinTech Ecosystem in Turkey — Review
- Introduction: FinTech and Ecosystem
Digitalization and technological developments are pushing almost every business to change and their business environment to develop. FinTech builds a bridge between the financial service industry and technology sectors.
Financial Technologies focus on developing innovative products and services with unique user experience for the B2C, B2B and if possible to B2G ( for governments) through the use of technology. In other words FinTech is the digitalization of the financial institutions.
The financial institutions are huge machines that they try to answer the customers’ needs within their created policy or frameworks. On the other hand technology enables every individual to exist, take decisions and make transactions without time or location constraints.
Additionally, the financial regulations are getting more and more. Old school financial institutions are trying to comply with the new and important regulations. I may say the financial services industry is the most regulated sector in the world. The reason is simple, money lending involves trust between transaction parties.
The financial services industry has its own ecosystem already with defined limitations, customers and game rules. Beside that FinTech ecosystem tries to exist and create its own sub ecosystem within the old ecosystem.
2. FinTech Ecosystem
FinTech ecosystem tries to define and identify the stakeholders, their roles and interdependencies between each other. New technology developments and socio technological adaptations are also changing the ecosystem structure and i may say both evolvements seems the catalysors for the ecosystem.
2.1.) New Technologies and Tools
Softwares, hardwares, wearable and mobile technologies, artificial intelligence, machine learning, etc. shapes the ecosystem capabilities. Also customers/peoples new behaviors tune the ecosystem players.
2.2.) Telecom and Technology Companies, Social Media and Internet Platforms
We may call these the infrastructure builders and platform developers. FinTech’s heart is the internet. Internet provides them a constant availability/ link to the internet. FinTech companies main risk may evolve in the future but nowadays being connected is the main issue.
Beside infrastructure builders, there are platform developers, these offers customers different user experience as well as linkage to FinTech companies.
2.3.) Startups
Startups are the soul of the FinTech industry. Entrepreneurship is the main driver of the innovation and this feeling feeds the FinTech. Amateur entrepreneurship is the key and must be combined with the sector knowledge.
FinTech startups are agile. Their agility comes from the “LASIC Principles” (Low Margin, Asset Light, Scalable, Innovative, Compliance Easy).
The key point of views for the FinTech Startups are
- Entrepreneurs knowledge of the sector.
- Understanding the needs and pains correctly
- Providing a good business idea appropriate to the needs
- Having qualified human resources
- Thinking globally
- Financial Information
- Good understanding of regulations
2.4.) Government and Regulators
I totally agree with the article, Government is the most important actor in the all financial service industry as well as for FinTech’s.
FinTech ecosystem is not yet called “The Industry” but most of the financially developed countries, UK, USA, Singapore tried to raise like a child this FinTech ecosystem with care and improve their game pitch.
The government’s are trying to be called RegTech. This umbrella word also takes the FinTech under it. We may also call all the policymakers, regulators, supervisors Financial Infrastructure Providers as well.
2.5.) Financial Institutions:
All other financial stakeholders/players in the financial service industry.
2.6.) Customer and Users
FinTech customers can be B2B, B2G but mostly B2C. Sociological perspective and understanding is important.
2.7.) Investors, Incubation Centers and Accelerators
FinTech investors can have knowledge of the pains and gains in the financial services but require funds to operate at the growing phase. Angel, Private, Venture Capital Investors, Incubation centers (both public and private), technoparks can be the fund source and growth environment provider.
3. FinTech Ecosystem in Turkey
We can say that the entrepreneurship attitude and technology adaptation is high in Turkey. Turkish FinTech ecosystem is growing rapidly and already expanded its operations in 13 different verticals. There is one issue that FinTech startups are concentrating on payment services in Turkey.
Turkey Fintech Ecosystem stakeholders still requires take few steps further to be active player in the world
- Ecosystems have to attract international investors to fund themselves with cheap capital, this is also good for Turkish economy as we consider investments as FDI.
- Financial services sector’s strength comes from the banking and insurance sector know-how but still needs to find connections with technology.
- Human capital needs to be evolved or raised for FinTech specialisation. Tech-Fin oriented human resources should be raised to be competitive against other FinTech Ecosystem
- Still needs to find innovative solutions/products and differentiate with tech innovation (AI, AR, VR).
- Most of the banking sector players still approach Turkish FinTech cautiously, some of them support their incubation centers or funding the startups. But bigger the player, internal FinTech developments getting more. In my humble opinion, Isbank show compassion to FinTech startups but mostly they want to acquire them.
- FinTech startups offer more customer oriented solutions and regular banks.
- Event FinTech developments has found a place in the 11th National Growth Plans, there is still needs policymaker, government support to reach more unbanked or underbanked citizens
- Telecommunications firms may still consider entering the game but they are in the game with their own payment integrations.
- The recent economic developments may suppress the new purchase order of the newest mobile devices. But this is just a seasonality effect. In my humble opinion, I say that Turkish customers will but newest and much more AI integrated mobile devices with economical recovery.
- The information security system requires to be considered as a game changer development and also affects the existence of the FinTech company. Turkish FinTech players should comply with the local and international InfoSec developments as well as malicious attacks.
Source: S. Yazıcı, The Analysis of Fintech Ecosystem in Turkey, Journal of Business, Economics and Finance
