Baku, Azerbaijan, April 18
By Azad Hasanli – Trend:
Fintech companies are actively strengthening their positions in the financial markets. However, the application of innovative solutions requires a separate regulatory base, and sometimes even space for experiments.
The so-called "regulatory sandboxes" exist in different countries, starting from Bahrain to the UK, and within framework of them companies can experiment with new financial services in a limited environment.
Unfortunately, Azerbaijan yet lacks such "sandbox", which significantly limits possibility of appearance of fintech companies in the market.
Innovative and prospective start-ups are forced to leave Azerbaijan due to the lack of legislation.
For example, Maliyya start-up allowing p2p-lending without participation of financial institutions was forced to move to the UAE, where it was granted Innovative Technology License (ITL), a special license for fintech companies.
Nevertheless, the situation can change for the better in Azerbaijan soon.
Azerbaijan’s Financial Markets Supervisory Authority (FIMSA) told Trend that favorable conditions will be created in the country for fintech companies.
This will be possible after the adoption of a law "On payment services and systems," which is being developed by FIMSA. The law is expected to expand introduction of innovative payment methods in the country.
The importance of creating satisfactory regulatory framework for fintech companies can not be overestimated. Their role in the financial sector grows yearly. In Europe, the use of fintech services allows residents to save about 7 billion euros annually, according to Azimo company.
The fintech industry will help economies of developing countries to increase GDP volume by six percent, or about $ 3.7 trillion by 2025, according to McKinsey.
Last year, investments over $27 billion were made in the fintech industry, while since 2010 the figure reached $ 100 billion.
Despite the rising investments, fintech companies can not be assessed as competitors to banks. The latter already have established sales channels, while fintech companies, instead of creating competition, can offer innovations to optimize this work and expand access to financial services.
Fintech companies and banks can be competitors in case fintech companies could find out markets for their services. However, banks themselves also develop.
The digitalization of financial services is planned to be expanded in Azerbaijan starting 2018 within the framework of the Strategic Road Maps. The International Finance Corporation (IFC) assists local banks in this through its program entitled "Electronic and Digital Financial Services". Certain progress has already been achieved in this direction. For example, in some banks, the level of customer use of mobile applications and Internet banking reaches 60-70 percent.
However, the question is whether the current banking system will be preserved in 5-10 years or it will inevitably be transformed under the impact of financial innovations?
In Europe and the United States, some bank branches perform a role of show-room, where customers can get acquainted with their services, but then customers use their services through mobile applications.
Founder and CEO of Ukraine's IDNT Company Mykola Chumak believes that in the future banks in Baku will have three or five branches. Chumak told Trend that more and more banking operations will be self-service one and performed online.
Then, bank branches will act as a bridge between the physical world and the virtual, assisting clients in understanding the new service, as well as in performing more complex operations that can not yet be carried out online.
Today, Azerbaijan lags behind other countries in the sphere of financial technologies. However, development of relevant legislation and the "Strategic Road Map on the development of financial services" allow to hope that this segment will be able to get a boost for development.
Azad Hasanli, head of Trend's Russian Service