In Turkey, finance and technology close ranks

By Andrew Jay Rosenbaum

ANKARA

 A new breed of Turkish financial technology company (fintech) is bringing cutting-edge high-tech solutions for customers at banks and financial services companies, experts told Anadolu Agency.

Most experts will tell you that London and Berlin are the hotbeds of fintech innovation, but Turkey is increasingly finding its level in competition with them.

"Turkey seems to have a deeper-rooted and more organic approach to innovation," Lu Zurawski, the head of Consumer Payments EMEA at ACI Worldwide, an international banking and payments specialist. "Banks in Turkey are recognised as fast adopters of technology. The relationship between Turkish banks and fintech seems to be more collaborative and symbiotic."

Banks in Turkey now offer branches with no tellers, as consumers access their accounts and even make loans at computer terminals. Walk into some Turkish banks, and you’ll be given a number for service automatically by a scanner device. Approach some Turkish ATMs, and they will ask you for your mobile phone’s id to access them.

"Today, the rapid advance of technology and the clients’ swift adaptation have brought technology and finance sectors closer, marking the emergence of the fintech sector in Turkey," noted Ayse Nil Sarigollu -- the CEO of the Istanbul-based chip and payment technologies specialist Cardtek, in an interview with Anadolu Agency on Friday.

"Our country is very much open to innovations in payment systems. She learns fast and has bigger demands. We at Cardtek have ongoing projects on mobile payment, wearable technologies, cloud-based systems and smart city solutions," Sarigollu said.

Transaction value in the Turkish fintech market is growing at the rate of 19 percent per year, according to researcher Statista, who forecasts that, in 2016, the market will be worth $19.6 billion. Granted, that number is $118 billion for Germany, but it’s only growing at about 10 percent per year

"Turkish fintech is growing at an extremely rapid rate, thanks to the robust financial infrastructure in Turkey that provides the opportunity for young fintech companies," commented Sean Yu, the founder of Parasut, which offers online financial management for small and medium-sized companies, in an interview with Anadolu Agency on Friday.

Because a majority of Turkish consumers are online, most seek to bank online, and Turkish banks have, for the past five years, competed to satisfy client expectations in this respect. The result, as a September 2015 report from the international retail bank BBVA noted, is that Turkish consumers are offered a wide variety of online and electronic services, many of which are not available even in developed countries.

These include access to deposit and credit card accounts through Facebook, biometric authentication at ATMs and in branches, credit cards with built-in authentication technology, mobile branch banking, among many others, according to the report.

Some examples: Turkish Akbank uses data mining and algorithmic data analysis solutions to streamline communications with customers. Bank TEB last year launched CEPTETEB, and online-only bank which provides a range of services, including peer-to-peer transfers and withdrawals without an ATM. Istanbul-based payments company ininal has launched a point-of-sale for merchants accessible on mobile phones.

"But Turkish banks continue to innovate," Yu continued. "A number of banks have established a kind of open laboratory for fintech startups, enabling them to interact directly with the banks’ software platforms, and work to offer new products."

Venture capital firms have seen the promise, and have increased investment in fintech startups, making them the third-largest type of investment in Turkey last year, according to researcher Startups.watch.

The main challenge for Turkish fintech is the need for updated legislation, Yu complained. "Legislation governing customer data -- where it is held, how it can be accessed -- remains unclear." This makes it difficult for fintech companies to determine how data can be used in cutting-edge solutions, utilizing new platforms like the Cloud.

Despite these challenges, Turkish fintech is "punching above its weight in terms of investments and transaction values," ACI Worldwide’s Zurawski said.

"This grass-roots, practical approach to innovation has not been unnoticed by big international banks like BNP Paribas, BBVA and ING, each of which have or are considering stakes in Turkish banks. Turkey’s reputation for entrepreneurship will inevitably see more inward investment over the coming years, and I would not be surprised to see Turkish fintech becoming a significant global force," he added.