Fintech Summit 2020: How Far the Bulgarian FinTech Ecosystem Will Go
Follow the discussion about the Bulgarian FinTech industry development attending the forthcoming event FinTech & InsureTech Summit 2020. Tsvetomir Doskov, CEO of Sirma Business Consulting, part of Sirma Group, in an interview for Capital weekly, sharing insights, the strategic directions for new products and services development, and his thoughts about market drivers and impeding factors before FinTech industry and the local players.
Sofia, the capital of Bulgaria, is considered as the next FinTech hub in Central and Eastern Europe. The city is one of the top 3 FinTech destinations in CEE with the largest number of FinTech startups in the region. There’s a critical mass of financial, technological and startup players, who are actively engaged in a positive competition.
Read the interview of Tsvetomir Doskov, the CEO of Sirma BC, about the challenges and drivers in the sector (translation on EN):
What is the driving force behind financial innovations today - the need of the customer or the companies which discover and create them?
In most cases, innovations in the field of finance are made and offered by companies that know and constantly monitor and research the changing needs of clients. They invest enormous amounts in the research of customer behavior, satisfaction, and needs, and on this basis create innovations that are for the mass market or for the end customers.
In some sectors of the economy, such as engineering or pharmacy, corporate clients are the engine of innovation, given the specificity or complexity of the business in which they operate. This may lead to the offering of hybrid financial products or services, but it is rather an exception.
Where can we expect a new wave of fintech services - first were payments, then some areas of banking? Which financial sectors and services have this potential?
The years following the great financial crisis of 2008-2009 for the financial sector have been marked by numerous regulations and restrictions, the idea of which, on the one hand, is to provide protection against reckless risk and, on the other, to act as a brake to rapid financing. The money market and all users of financial services require speed. Whoever manages to adapt and be fast, correct and close to the client will succeed in this competitive environment.
In this regard, the potential for digital or technology services is open to all financial players, including many others involved in health, culture, education, transport, construction and, last but not least, public administration.
Obviously, payments have been a big hit in recent years, but this trend and focus will soon be replaced by other much more analytical services and products. Price competition and ease of payment availability will be replaced by bundled services that have a clear focus on other major financial services such as loans, savings management, insurance, investment. All new trends provide for the “traditional” financial services to be presented and offered quickly, affordably, securely and personalized to the client through:
- Artificial intelligence (to make each proposal much more precise and individual),
- RPA (Robotics Process Automation), which will significantly reduce the processing time for a single transaction,
- Digital products and tools, tokenization and transaction and operation protection, through the use of various types of electronic signatures and stamps (certification services), blockchain tools, mobile wallets, and virtual assistants,
- Enhanced means of protecting sensitive customer information, as well as monitoring and prevention of fraud and abuse.
Is there anything that stops the development of the fintech industry in Bulgaria, or rather, what can stimulate it? What will be its drivers (which will require these services) - small consumers or businesses?
There are two things that I think are stopping us. One is the narrow-mindedness and timidity of the Bulgarian entrepreneur. The lack of scale of the intentions of the people to do business on a global level and the desire of many to compete only on Bulgarian soil. On the other hand, most of the people starting a business today are good experts but very few are visionary managers. Business development is hampered by the desire to survive and, rather, to create something in order to earn some revenue, without providing and allocating resources for the development, marketing, advertising and imposing of the name of the product or service. Somehow in Bulgaria, we are very keen on modern technological gadgets and at the same time underestimate the paperwork, the customer experience and the care for the partners.
The second thing that stops the development is the populism of politicians and various writers seeking fame or just surviving with their willingness to act hastily and subject to suggestion. Many people envy and misinterpret the successes of the IT industry, diminishing the potential of the technology industry. Even the media and the administration sometimes push through confused and premature ideas for imposing restrictions, different taxes and specific attitudes to the employees of the industry, in order to ensure “social balance”. The latter is absurd in an environment of mobility and globalization, in which capital and money are proven to move faster than gas and water, even in the face of greater ambition, even though the latter are furbished with investments and hubs of Balkan importance.
In this sense, can Bulgaria still become a fintech hub on the Balkans?
Bulgaria has the potential and real prerequisites to become a technological hub of Europe (the Balkans are the easier challenge) not only for financial products, services, and digital instruments. In this case, what we are missing is a global mindset, self-confidence and focused support from the government of the country. Much of the government, politicians and even some managers from the private sector, haunted by the ghost of the “planned economy” of the last century, have forgotten that every business needs to clearly define its goals and make financial planning.
The big obstacles and hindrances to business in Bulgaria and for making our country a center of technology today are very slow to change of the state apparatus, which should set prerequisites for the development and imposition of business; administrative burdens and a lack of understanding of what the entrepreneur needs in the digital world; lack of scale and trained personnel able to respond to the rapidly changing environment; the unwillingness, fear, and distrust of the few who succeeded in business to associate, support and work on common projects.
Rather, all this is a call to professional and industry organizations to unite and help the processes of dialogue with the state to make Bulgaria a technological hub of Europe. A tremendous effort that can only be realized through the broad support of all companies and experts in the sector, but also after recognizing this opportunity by the state apparatus and its support.