Smartera
The Financial Sector's Journey Toward Digital Transformation
The number of industries that digital technology has thrown into disarray—breaking them down and paving the way for their reinvention—continues to grow. The music, entertainment, and film industries faced challenges as soon as the Internet became widespread; subsequently, the media and journalism sectors were significantly impacted by the Internet… With the 2010s came the “sharing economy,” where we began renting out our homes, belongings, and cars to strangers or allowing them to use them at the same time as us. Revenues for existing players in sectors like hospitality and taxi/transportation declined.
On the other hand, it was thought that the financial world—including banking and insurance—would be relatively unaffected by these disruptive changes. However, the rise of the “sharing economy” has not only made processes like peer-to-peer money transfers much easier but has also significantly accelerated lending processes. In developed economies where deposit interest rates have approached zero but credit card interest rates and borrowing costs remain high, numerous companies that bypass banks to connect borrowers and lenders at the midpoint garnered significant attention and formed the first strong wave of “Fintech” companies—financial technology firms.
Google and Samsung’s launch of mobile wallets and their investments in this sector, along with Apple’s Apple Pay project and similar initiatives, have pushed traditional financial institutions in a new direction.
It was only natural for projects offering such significant value to individuals to become the center of attention, but the FinTech world has also begun rapidly introducing new services, as well as previously unconsidered and unexplored features and capabilities, across various sectors of finance and banking and not just for individuals and consumers, but also for businesses, borrowers, leasing and factoring companies, and, of course, insurance companies and banks.
While the new generation which is far less interested in financial institutions compared to previous generations remains indifferent to opening bank accounts or even using credit cards, they have begun to show interest in the services offered by new financial players. Consequently, some traditional banks have come to view FinTech projects as competitors or threats. But it wasn’t just startups; Google and Samsung launching mobile wallets and investing in these areas, along with Apple’s Apple Pay project and similar initiatives, pushed traditional financial institutions in a different direction. This accelerating digitalization in the financial world was not limited to the innovative and perhaps disruptive or transformative possibilities that FinTech firms were striving to bring to the market. The leaders of the digital world were now also stepping into the financial arena.
Seeing these developments, some traditional financial institutions including banks and insurance companies have begun to view firms offering next-generation financial software and other financial players not as competitors or threats, but have instead chosen to develop such capabilities themselves while also collaborating with and even investing in these players.
The situation in our country is also multifaceted and involves various dynamics. According to an analysis from 1991, at a time when the use of IT devices among consumers was not yet widespread, nearly half of the software and hardware investments in Turkey’s then-minuscule IT market were made by financial institutions. Subsequently, as technology became a necessity for other sectors and consumer electronics experienced a boom in the 2000s, the distribution of these investments became much more democratic.
The Turkish financial sector, which took significant steps to demonstrate this early adaptation, continued its successful R&D efforts and innovation in commercial applications. There were substantial foreign investments in the banking sector in our country; many of our major banks welcomed foreign partners, and following acquisitions, technology transfers from Turkish banks to the rest of the world also took place.
On the other hand, the FinTech sector in our country has attracted less interest from investors and entrepreneurs compared to sectors such as e-commerce, gaming, and mobility. However, in recent years, we have seen successful startups emerge in this field as well. In particular, new startups offering financial and accounting solutions tailored to SMEs have developed effective solutions.
At the same time, FinTech activities as software and solution partners are on the rise. These activities aim to help banks improve their services and provide support so they are not left vulnerable in the face of the dizzying pace and trends in the digital finance world. They enable banks to offer the right solutions to meet the needs of sellers, producers, and platforms alike on multi-layered B2B, B2C, and even B2B2C platforms. Companies working in areas such as financial data analysis and reporting, consumer finance, and ensuring integration between financial software and various ERP and logistics programs are poised to take center stage.
At Smartera, we have set as our vision the development of software solutions tailored to the needs of the financial world, leveraging next-generation technologies.
In today’s world, where technology is changing so rapidly, legal regulations may sometimes lag behind this progress; however, many regulatory innovations governing the impact of technology on our professional and personal lives have recently been introduced. These legal regulations primarily consist of rules that institutions must follow to protect individuals’ privacy and personal data.
One of the sectors with the strictest regulatory requirements is undoubtedly Finance. Banks and other financial institutions are striving to comply with numerous regulations both regarding the confidentiality of personal data and the fulfillment of various financial criteria.
It is a fact that keeping up with today’s competitive environment and the increasingly stringent regulations is extremely challenging for organizations using legacy applications developed with the technological capabilities of the past and designed to comply with the legal frameworks of the analog world. To compete with FinTech and the growing number of other startups, both agility and the ability of systems to adapt to the new world are of critical importance.
At Smartera, we are building tomorrow’s financial solutions using the latest software technologies. The architecture we employ offers a database-independent structure while fully meeting information security standards. Cloud technologies provide a scalable solution tailored to performance needs while also minimizing initial investment costs.