Fintech and Participation Finance System

Looking at the recent years, today, we see that the investment made and the value given to the participation finance system in our country is increasing day by day, and it can be observed that fintech collaborations, incubation models, and investment incentives, especially in the digital field, are rapidly emerging.

Fintech and Participation Finance System

Potential of Fintech and Competition 

We can call fintech companies and technology enterprises operating as startups indispensable partners for these institutions that invest in technological developments in competition with conventional banks. Even though these startups mostly have a small number of employees, by means of concentrating on digital solutions, they contribute to producing significant cooperation outputs and taking the gilt off the market in cases where banks cannot move quickly or respond to opportunities in project priority decisions. Organizations that see this potential and act with the idea of competition have started to get useful outputs. 

Digital Banking Expansion and Its Effects

With the effect of the wind from the draft regulation on Digital Banking, seeing such developments in Turkey in the near future will bring similar startups in the participation finance system.
The rapid development in the Mobile Banking channel and the desire to take the user experience to the next level are actually the result of a correct strategy. That is because humans have come a long way humans in terms of mobility in the last 2 years with the effect of the pandemic. Thanks to the mobile banking service, even Internet Banking is no longer the primary choice of individuals. Mobile Banking not only allows money transfer, payments, or card transactions but also collections by means of NFC, secure payments and FAST, QR transactions, foreign exchange transactions in many types of currencies, and precious metals and will keep allowing these.

Collaboration for Innovation  

Fintech and startup organizations sometimes appear as partners, sometimes as solution partners, and other times as infrastructure providers in these developments and innovations. Of course, banks can implement this service themselves, but dealing with the changes and regulations in the main field of activity of banks and spending effort are sometimes the hidden enemy in front of innovation, and this can negatively affect the speed of innovations by the institutions in the sector. Although companies want to implement these developments themselves, it is not possible in terms of legislation to offer financial solutions and payment infrastructure in a non-licensed model. Even companies that have obtained licenses within the scope of Law No .6493 may have difficulty in reaching the dominance and infrastructural comfort of intermediating all payment transactions with scarce resources. Solutions to be produced in company with banks will be able to produce more solid and beneficial results. However, with the latest regulation published on December 1, 2021, compliance with the regulations in the licensing process regarding this law and communiqué on information systems has been made more comprehensive and conditions such as capital adequacy have become more strict. 

Solution Partnerships and Digital Expansion 

Sometimes, no matter how big the chain is, the power it produces is directly proportional to the resistance of its weakest link. Participation finance system players strengthen their weak parts in this direction through the solution partnership models developed and become able to cover the sufficient distance before missing the train. 
2022 seems to bring along valuable developments in the digital field, and structures that adapt to this acceleration will be able to keep progressing rapidly.               

 Salih Erbaş

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