The Alternative Financial Services Association of North Macedonia
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Financial companies offer innovative solutions and bring a fresh air to the financial market

Innovations penetrate into every sphere of our everyday life, even in the field of finance, an area that was formerly exclusive to the traditional financial system. However, times are changing and it is becoming more clear that the Fintech industry’s time and non-banking financial institutions is coming. The technology behind the Fintech continues to grow and develop, which makes companies using innovative technological processes slowly but surely conquer the global financial market.

Fintek companies use advanced software, advanced marketing strategies and various online technologies, created to safely and efficiently deliver and bring financial services to customers, thus making them more accessible than ever. These companies use the Internet and mobile innovative technologies for financial products such as lending, payments, trading and other, with a simple goal – to improve life and maximize the benefits for end users, citizens, and companies and industries.

With the increased accessibility of the Internet, consumer habits have changed. If before every purchase was made in person, now consumers are increasingly choosing to shop remotely. The same refers to the financial services market. Today, the financial services market is seeing a demand for a completely new approach as consumers expect simple and easy-to-use products rather than hours spent at bank branches filling out piles of paperwork. This inevitably is forcing the financial services market to transform.

Another aspect that has affected the evolvement of non-bank financial services is technological advances. The advantage of non-bank service providers lies in the fact that their technological solutions have been built recently which makes them efficient and up to date. Also, their company culture and attitude resemble that of start-up companies, whose focus is on providing efficient service and excellent customer experience contrary to global corporations which often revolve around heavy bureaucratic procedures.

Fintechs and traditional financial institutions are not quite competitors. While they do provide similar financial services – lending money – the needs of a traditional financial institutions clients and those of a non-bank lender`s clients are different. While traditional financial institutions will issue larger amounts for an extended period of time, the non-bank lenders help people resolve acute financial needs, where time has a decisive role. Non-bank lender`s main idea is based on short-term liabilities, which set out advantages for non-bank loans in situations where money is needed quickly, and the repayment period is not long. Given that the loan amount is much smaller than in traditional financial institutions, hence the bureaucratic requirements are significantly smaller. Fintech`s service is available on-line, which means that the client does not have to sit for hours in bank branches, waiting for their turn in long queues.

In our country, the main promoter of the finetech industry are the financial companies whose formation was made possible in 2010 with the adoption of the Law on Financial Companies, with the idea of becoming a complement to the existing financial system. The financial companies industry is experiencing a real boom in recent years when a triple increase has occurred, both on the number of loans granted and on the amount of the funds placed, and the number of companies providing such services has also increased.

Financial companies in their services use the modern technological solutions that simply, from a computer or mobile phone, all the procedures can be completed for applying for a loan, to quickly check the creditworthiness of the applicant and in the short period of time to get a response and the required funds on the account, if the application is approved.

As technology evolves, the non-banking sector will grow, and Northern Macedonia is already catching up with new trends in the financial sector. One of the challenges will be the legal harmonization with the Payment Systems Directive (PSD2), which entered into force in the EU on January 13, 2018, and Macedonia is drafting regulations that need to adjust the payment sphere with European practice.

The new directive foresees that traditional financial systems in the European Union will not be the only providers of payment services in the future, but can also be done by third parties, ie companies from the financial sector, technology companies, social networks like Facebook, Google, and all other players on the market.

Simply put, this concept will greatly contribute to the development of new products and services with maximum user orientation, and thus increasing competition and progress in the financial services market.

The need for using technology will grow even more, and thus the industry itself, and according to experts’ 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.

Fintek industry in our country will surely develop in the future as it represents the future of the financial system in the world. Therefore, the financial companies, as holders of finetech in the country, recently formed an Association of financial companies in order to work together to introduce quality service standards. But also in order to design a medium-term strategy for the development of the industry, for which the Association will partner with the legislator when adopting appropriate legal regulations that our country will have to catch up with the world movements in the financial sector.