Just before Christmas, I was interviewed by a Turkish magazine about the future, Turkey and fintech. I thought it might interest folks to share it here …
When you wrote your first book about fintech – little was known about it. How much has that changed and have your predictions so far come true?
Things have changed a lot. I mean I met my first fintech firm way back in 2005. A company called Zopa. I wrote my first book in this space in 2007 and it wasn’t until around 2014 that everyone else caught up. My predictions about technology have all pretty much come true or are starting to. My predictions about financial markets were a little bit off, thanks to the Black Swan of the credit crisis followed by things like the Brexit vote.
You have been in Turkey before, what was your opinion on Turkish FinTech ecosystem before and being here has your opinion changed?
I’ve always thought Turkey was demonstrating leadership in financial technology since first seeing an advert for contactless payments from Garanti Bank about ten years ago. That was the one where a guy was being chased by a dog and ended up losing all his clothes. Very funny. My opinion is still the same which is, in the retail banking markets, Turkey is far ahead of most other European countries.
In Fintech, it is not the same, as that requires a strong start-up ecosystem which Turkey has, but not as well supported by government as the ones I see in other markets.
What is the greatest strength of Turkey FinTech ecosystem?
People. You have great people with great vision here. I think the Turkish talent pool is rich, and that makes it standout for me.
Could you compare the turkish banks with european banks? Are the Turkish banks more ready for the digital transformation?
Well, as I said, I think the Turkish retail banks are on the cutting edge here, and far ahead of their European counterparts. It was best illustrated to me when I talked to one of your leading local banks who had just toured American banks, to see what they were doing. He told me that all they could talk about was the sorry state of their core systems, and the challenge that created in dealing with digital. He then asked me why they have this problem, as Turkish banks don’t understand it.
The difference is that most American and European banks implemented massive programs of technology change and investment in the 1970s and 1980s, and they are now locked into those systems because they operate their core mission-critical services. The fact that those systems are now fifty years old is starting to show, as they cannot support real-time internet-based business.
Turkish banks don’t have this problem , as most of their core systems were developed after internet banking became the focus. That is why Turkish banks are far more ready for digital than their European or American counterparts.
How can traditional banks prepare to digital revolution
The main priority is to recognise that digital is not banking as usual with technology on top, but that digital is the core structure of the bank with people on top. It is a cultural change, and a leadership that fully understands and embraces digital will be able to communicate this cultural change to their people. A leadership that just talks digital, but does not fully embrace it, will fail.
On your personal blog, you said that the Turkey will be cashless at 2023. Do you still think the same way? If you do, what is your strongest argument about it?
It is the Turkish clearing system for retail payments, BKM, that has made this forecast. I think it is ambitious, and that Turkey will be largely cashless by 2023, but it won’t be fully cashless. The reason I say this is that Sweden has tried to get rid of cash for fifty years and the central bank there believes it will be another fifty before they succeed. If Turkey could beat Sweden then well, that would be something..
As you know, Turkey has the largest young population compared to other European countries. How it effect the Turkish banking technologies and FinTechs?
This goes back to my previous statement about talent being the strength here. When you have a young talent pool with vision, you can achieve anything. It is why the hotbeds of Fintech revolution and change are in many countries with youth on their side – the Philippines, Mexico, Brazil, Nigeria, Kenya and Turkey. Where you have an aging population, as we see in Germany and Japan, it is far more difficult to find a visionary talent pool that understands technology as most of the population were born before computers were used at home.
What will we talking about in FinTech sector at 2018?
I think the dialogue about artificial intelligence, machine learning and robotics will continue, which has been hot this year, along with a lot more discussion about IoT: the Internet of Things. I prefer to call it the Intelligence of Things though, as this is all about things having intel inside. When things are intelligent, they can work out how to do commerce, trade, investments and payments. You won’t need a banker to work it out for them.