The Alternative Financial Services Association of North Macedonia
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FinTech’s industry sets new rules for the financial system globally

Non-bank financial services based on financial technology, known as “FinTech” services, have seen dramatic growth in the world in recent years, and our country is no exception. The term “FinTech” is used to describe new services that, using advanced and innovative technologies, improve and automate the delivery and use of financial services and are a serious competitor to traditional financial methods in the delivery of financial services.

The exponential growth of the FinTech industry has been evident over the past years, and last year experienced its zenith in a number of parameters, which is also reflected in KPMG’s latest report – The Pulse of the FinTech 2018, which notes that global investment in financial technology has increased by more than 2,200% in seven years, from $ 930 million in 2008 of over $ 22 billion in 2015.

According to the same report, in 2018 global investments in “FinTech” companies reached $ 111.8 billion with 2,196 investment contracts, of which tens more than $ 10 billion, which is twice as high compared to 2017 when it was 50.8 billions of dollars. Only from November to the end of 2018, global investments amounted to 35.5 billion dollars, with a record 1.431 contracts.

Additionally, the projections show that growth will continue in this year, 2019.

Last year, only in Europe, investments in FinTech companies reached $ 34.2 billion with 536 investment contracts. London is the largest center of FinTech, where 40 percent of the workforce is employed in companies providing financial services. Immediately after him is Stockholm, and Lithuania begins to become a North European center for financial tech companies. In this country in 2016, 32 licenses were issued, and in 2017 there were 51 licenses for “FinTech”.

The “FinTech” industry is rapidly transforming and affecting the financial services industry as a whole, in terms of operations, regulation, customer experience, and more. If in the beginning customers only wanted more flexible payment methods and better financial services, with digitization and technology development, their needs expanded to alternative sources of funding. Numerous research shows that as many as 69% of customers around the world want to have all their financial services through digital channels, with just a few clicks, anytime, anywhere. That is why the needs for using technology in every sphere of social life will grow even more, and thus the industry itself. According to expert estimates, the next step in the development is the convergence between artificial intelligence (AI) and financial services, which began last year, and will continue even more in the future.

In North Macedonia, the main promoter of the “FinTech” industry are the financial companies whose formation was made possible in 2010 with the adoption of the Law on Financial Societies, with the idea of ​​becoming a complement to the existing financial system. The financial companies industry experienced real expansion in recent years, when there was a threefold increase in both the number of loans granted and the amount of funds placed, and the number of companies providing such services increased. This is certainly a reflection of the needs of the population and the economy for providing loans in simple procedures and usually at smaller amounts, which is different from what traditional financial institutions offer. Financial services use modern technology solutions that simply, from a computer or mobile phone, can complete all application procedures, quickly check the creditworthiness of the applicant and in the short terms receive the response and the requested funds account, if the application is approved.

The FinTech industry is on the rise in the world, and its rapid growth imposes continuous improvement of the conditions and modes of operation in the direction of providing quality services in accordance with unified standards and creation of a climate for mutual understanding with all stakeholders, regulatory authorities. That is why the financial companies in the country recently formed the Association of Financial Companies in order to work together to introduce quality service standards, as well as to design a medium-term strategy for the development of the industry together with the supervisory authorities and the legislator. This, on the other hand, will contribute to greater transparency of the financial industry, and to raise public awareness of the need and benefit of non-bank financial institutions both for the beneficiaries and for the society as a whole.