Turkey’s geographical position make the country a three-way bridge between Europe, the Middle East and Asia, something unique for many centuries that made the country influential and important. Today, fintech’s growth is also one that the country, and in particular the largest city and financial hub of Istanbul, has potential to bolster. The population of Turkey is large, which according to the United Nations (UN) is at over 84 million people; Istanbul within that is over 15 million people.
According to a previous ‘FinTech Ecosystem in Turkey’ report, which was prepared in collaboration with Deloitte, BKM and FinTech İstanbul, the fintech market saw growth – where investments jumped by 175% from 2012, reaching $29 million in 2016. It was projected to continue growing and, with the rise in digital transformation across the world (especially now with Co-VID 19), the role of fintech not just in Turkey but globally will most likely not only stay but continue to grow.
Ozan Eryavuz shares his insights as the Group CEO of the Alternative Finance / Fintech division of Global Kapital Group, a position which he has held since 2015. Established in 2010, Global Kapital Group was initially driven to lead the financial technologies industry through innovation. Over the years, the group has grown into a global fintech company, with 28 offices across 18 countries.
Eryavuz says, “Turkey has a big potential to grow in the fintech world, mainly due to its already innovative banking and payments sector, and strong Information Technology talent pool. Over the past decade, several Fintech companies have emerged in verticals of payments/cards, e-money & wallets focusing on consumers, and point-of-sale (POS) payments, invoice/budget management targeting small businesses. However, the growth of fintech in Turkey can be fueled with further support from regulators. As an example, lending is a key component of the fintech industry that is currently not supported through consumer credit or peer-to-peer (P2P) lending licenses.”
From a report from Deloitte last year, it stated that three out of ten Turkish people do not have bank accounts but nearly everyone has a mobile phone, which even back in 2018 smart phone usage was at 77%. Across fintech the same report highlighted growth across fintech – from digital access to the banking system to digital payments to name a few. Finally, amongst the 1,000 startups that are active in the country, nearly one-fifths of them are fintech companies.
Despite that, the potential for fintech in Turkey is huge, especially with its large young and tech-savvy population. Nevertheless, gaps are being filled and the interest in the sector is clearly visible.
For example, Mobilexpress, which it says is one of the largest online payment platforms in Turkey processing nearly 10 million transactions per month with over 15 million cards tokenised on their systems, has raised $2 million in a Series round led by Istanbul-based Collective Spark. The investment also included the participation of angel investors including Ali Kolaghassi, Tunç Mehmet Berkman, Deniz Doany, Careem’s former VP of Growth Emre Tok.
It was also recently announced that Tencent launched WeChat Pay, its payment platform for transactions with third-party merchants, in Istanbul Airport to make payments easier for Chinese tourists visiting Turkey. According to Istanbul Grand Airport (IGA), the company which built and now operates the brand new airport, Chinese travelers are the second biggest spenders at the airport after Turkish travelers. Thereby with a fintech payment solution it can help boost shopping volume.
Istanbul also has Istanbul Fintech Week (IFW), which according to its website is the largest fintech gathering in Turkey and the broader Europe Middle East and Africa (EMEA) region. In its first edition, the event hosted over 1,100 participants through 7 industry streams, 25 thematic stages, country presentations and dozens of startup pitches. It appears that the event will go ahead as it is scheduled for 13 October – 15 October 2020 in Istanbul.
Finally, Financial technology leader FIS® and The Venture Center have announced the ten companies selected to participate in the 2020 FIS Fintech Accelerator program, which is its fifth edition. One of the companies is San Francisco and Istanbul based Mall IQ. According to their website, they offer the most scalable Location Intelligence & AI Platform for mobile apps that is store-level accurate indoors & outdoors without any hardware deployments.
Fintech’s growth across the world generally has also been felt in Turkey. Even before the novel coronavirus there has been noticeable growth and even today. Much of course still can be done but it should be applauded with what Turkey in fintech both has accomplished so far and its future aspirations.