In 2012, FinTech has settled as a sector in Türkiye with adequate regulation of the sector in 2013. Hence, FinTech is not a new concept for Türkiye; rather modern financial solutions are very popular among the Turkish population. For example, Buy Now Pay Later is widespread in Türkiye for several decades. A substantial part of the insights shared in this article has been acquired by interviewing the leading Turkish FinTech experts Prof. Dr. Selim Yazici, Professor at Istanbul University and Co-Founder FinTech Istanbul, and Dr. Soner Canko, FinTech Advisor.
The Turkish FinTech Ecosystem
Since the establishment of this sector in Türkiye, more than 400 FinTech startups have been founded which cover different areas. This includes payments, banking, finance, corporate finance, insurance, crowdfunding, investment, personal finance management, asset management, big data, hubs, blockchain, and crypto coins. The majority of startups with 60-65% in Türkiye are in the area of payment systems. With most of the startups aiming the same area of FinTech, experts expect consolidations and fusion of startups due to similar business models. In the past three years, many startups in the area of crypto have emerged. However, in the area of InsurTech and PropTech Turkish companies are relatively slow and with few initiatives.
In contrary to the global perception of startups as initial pushers of innovation in financial services, the big financial institutions including banks and credit organizations have been the driver of FinTech in Türkiye. With big financial institutions being extremely good and aggressive in terms of innovation, not too many FinTech startups could rise in the market. Therefore, most of the FinTech entrepreneurs are former bankers with strong experience in the Turkish financial sector. Also, the banks and credit institutions as big players in this sector invest in corporate entrepreneurship and in FinTech startups to further push innovation in the financial market.
The Demand and Customers
With early innovations in the finance sector in Türkiye, financial and technological literacy is extremely widespread in the Turkish population compared on a global scale. Nevertheless, FinTech advisor Soner Canko underlines that this literacy is not established yet especially in the minor age group of the population as well as among farmers. Hence, these groups require more attention in the near future to improve their access to FinTech solutions. In general, the Turkish population has a high consumption compared to other countries
Furthermore, besides the literacy sphere, an important portion of the population is still “unbanked or under-banked” and require a facilitate access to financial instruments and solution according to Prof. Dr. Selim Yazici from the Istanbul University. Hence, the demand for financial services that make participation in the financial sector easier is substantial.
The demand in the Turkish FinTech ecosystem does not only consist of customers and business but also governmental institutions appear as demand players besides their regulative character.
Why Enter the Turkish FinTech Market?
Turkish FinTech players and FinTech Istanbul are striving to accelerate Türkiye to a regional Fintech center. The Turkish FinTech sector inherits the pivotal characteristics to become a successful market for FinTech companies. This does not only include the market size with a population of 80 million but also the innovation capacity in the Turkish ecosystem is striking. In addition, the technology domination in the population with the widespread use of smartphones and fast adaptation to technology is a supportive factor.
Considering the human resources factor, Türkiye offers a strong human resources pool for the FinTech sector. With many highly qualified potential employees at a relatively lower cost, Türkiye should be favored for a market entry for FinTech companies.
Regulative Framework
Institutions obliged with the regulation of the FinTech market include the Banking Regulation and Supervision Agency (BRSA), The Central Bank of Türkiye (CBRT), the Capital Markets Board (CMB), the Ministry of Treasury and Finance, the Revenue Administration (GIB) and the Financial Crimes Investigation Board (MASAK). Law No. 6493 and its sub-regulations regulate the relevant factors Financial Trust and Information Security, especially in terms of payments services, e-money services and, systems operations. Hence, companies operating in these areas are obliged to hold operating licenses in Türkiye.
How to be Successful in the Turkish FinTech market
The Turkish FinTech market provides and presents many attractive factors to enter. However, every geographical location has its uniqueness and differences. Also taking into account that the existing players in the Turkish FinTech market are already very strong and aggressive, it requires expertise to enter the market. Hence, Prof. Dr. Selim Yazici underlines and emphasizes the need for cooperation. Having an expert of the Turkish FinTech market on one’s side is the key to a successful market entry.
Swiss firms, in particular, are well known in Türkiye for their strength in niche markets such as FinTech and for providing strong added-value services. Therefore, cooperation between Turkish experts and Swiss firms promises a strong market entry. To further accelerate the Turkish FinTech sector, experts have founded the hub FinTech Istanbul and some Thematic Technoparks are initiated through universities.
The following overview presents favorable factors of the Turkish FinTech market and specific market opportunities.
