The Alternative Financial Services Association of North Macedonia
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Interview with Jana Nikodinovska for The essence of financial companies is to meet the short-term financial needs of citizens in a fast, efficient and simple way

AFD Secretary General Jana Nikodinovska spoke with the editorial board of about the NBFI industry and the challenges of the Fintech industry.

The Association of Financial Companies of North Macedonia unites financial technology companies, also known as FinTech, and other organizations operating outside the banking sector, providing financial services to residents of North Macedonia.

The mission of the Association is to create a responsible practice, with the aim of long-term cooperation and positive evaluation by consumers and market regulation institutions, while explaining to the general public the different opportunities that financial companies that use FinTech can provide for the development of the individuals and society as a whole.

We spoke with Jana Nikodinovska, Secretary General of the AFD  – about the appointment of the association as the first operative of the Association, the cooperation with the financial companies that have accelerated growth, the role of the financial companies, the Code of Good Practice and the level of financial literacy of the population. of Northern Macedonia. At the end of last year, you were appointed Secretary General of the Association of Financial Institutions in North Macedonia (AFD). What is your commitment to the Association?

Jana Nikodinovska: The Association of Financial Companies in the Republic of North Macedonia was established in May last year and unites, so far, six non-banking financial companies that run their business in accordance with the AFD mission, ie, strive to create a safe and responsible industry and practice, while explaining to the general public the various opportunities that alternative financial services can offer for the development of individuals and society as a whole. One of the basic commitments of the Association is to provide reliable, socially responsible and sustainable lending practices, as well as standards for the quality of services in the industry, together with the establishment of long-term cooperation and positive evaluation by consumers, institutions and regulators.

Within the set mission and goals, my activities as Secretary General of AFD are aimed at strengthening the internal organization and structure, ensuring and promoting the principles of responsible lending and fair business practices, transparency in the work of the Association and the non-banking financial sector as a whole, as well as the development of the industry in cooperation with the regulator and other stakeholders.

Education of the citizens is also an important segment of the work , so in the coming period we will pay special attention to raising the level of financial literacy of the population through various activities, including the implementation of an extremely important project for which very quickly the public will receive more information. Since you do not work in the NBFI industry, what was the reason for the “external” member to be elected Secretary General of AFD?

Jana Nikodinovska: It is a great pleasure for me to be hired as Secretary General of the Association of Financial Companies of North Macedonia because it is a dynamic sector that is developing rapidly. I have been working for more than 10 years as a legal consultant in the field of corporate governance, finance and development and I hope that with my experience and knowledge I will contribute to achieving the goals of AFD, and especially to raise the Association to the level of partner institutions in development and regulation of the FinTech services industry and a partner in which customers will be free to seek advice if they need to use the services of non-banking financial companies.

We are starting the realization of the activities for the current year with full steam, and I am especially glad that the citizens and institutions are already noticing our efforts for the development of the industry and increasingly find the Association as an instance for contact, advice, support and opinion. Although the financial industry has been around for 10 years, the last two or three years have seen rapid growth. However, their share in the financial sector in the country is relatively modest. Is it due to insufficient public awareness of the opportunities offered by the industry?

Jana Nikodinovska: The non-banking financial sector that is developing on the basis of financial technology, in recent years has seen drastic growth worldwide, and our country is no exception.

The non-banking financial sector in our country is the “youngest” segment of the financial sector, which, although growing rapidly, still has a small share in both the total assets of the financial system and the total loan portfolio, as evidenced by the data of 0.44 % share in the total number of funds.

However, what is important to note is that non-banking financial companies do not have the ambition to replace or compete with the traditional financial sector, but to supplement the supply of financial services in the market.

The essence of non-banking financial companies is to meet the short-term financial needs of citizens for financial services in a fast, efficient and simple way, by applying advanced and innovative technology to all channels that consumers prefer, with an emphasis on digital channels. Financial companies use modern technology solutions in their services, which simply, from a computer or mobile phone, can complete all application procedures, quickly check the solvency of the applicant and in a short time to get the answer and the required funds to account, if the application is approved. That is why one of the main goals of the Association is to bring the services of financial companies closer to the citizens.

The association offers free assistance and consultations for non-banking financial services, as well as preparation of educational content, activities and events for all stakeholders. Of course, this year we continue to invest in educating the population and raising awareness about the financial institutions and services they offer, because the need for financial education is evident, as evidenced by the data from the Financial Literacy Survey conducted last year. year.

Public perception of the non-banking financial sector is improving significantly, according to a recent survey that 47% of respondents have a positive to neutral opinion about the industry, while 18% have no opinion at all. This tells us that we are moving in the right direction in bringing the industry closer, but still, we need to further improve our financial literacy.

At the end of last year, a meeting of the Association of Financial Societies was held with the representatives of the National Bank of the Republic of North Macedonia and the Ministry of Finance. The challenges posed by the development of financial technology and the areas in which its application should be expected in our country in the future were also addressed.

Communication with the institutions continues in order to continuously inform about the conditions, trends and news in the sector of financial companies. Collaboration is key to properly identifying and addressing further challenges in the industry. In that sense, AFD remains a partner of the institutions and an active stakeholder, offering its help, knowledge and experience from the sector, and due to its further development, formulating a strategy and regulation of the same.

As technology evolves, so will the non-banking sector, and our country is already catching up with new trends in the financial sector. The members of the Association have signed a Code of Good Practice with which they have undertaken a series of obligations regarding the protection of consumers. This is one of the obligations of the Association. Do you have any complaints from dissatisfied customers in the Association?

Jana Nikodinovska: The purpose of the Code of Good Practice is to provide additional protection of the interests of consumers who use the services of financial companies members of the Association. This Code sets out the principles of fair commercial practice and criteria for professional prudence, in accordance with the principles of goodwill and the principles of responsible lending in the conduct of financial companies with customers.

Each of the members of the Association is obliged to provide each client with the necessary information about the loan, the method of repayment, the amount of costs, and all other information related to the nature of the loan. Also, in order to ensure the adequacy of the approved loan with the financial conditions, the member has the obligation to make a realistic assessment of the client’s solvency in accordance with the regulations and principles of personal credit risk, to prevent the loan applicant from taking unnecessary financial obligations.

At the same time, the Code of Good Practice provides credit security to the members of the Association that will respect the business practices set out in this document, because otherwise, if they have objections and complaints about the operation of a financial company, credit users now have the opportunity to address the Association. There are mechanisms and procedures in the Association for dealing with complaints and grievances from credit users. This service of the Association is free. Complaints are processed quickly within 5 working days.

Our experience so far shows that citizens have increasingly addressed the institutions with complaints and this is a practice that we want to change and direct citizens to get all the necessary information and data, assistance, advice, and response to complaints and grievances in the Association. A recent public opinion survey conducted by the Association for the Financial Literacy found that although citizens need it, they are less informed that the services of financial companies are available for unexpected situations. How, in your opinion, can this situation change?

Jana Nikodinovska: The research conducted by the Association of Financial Companies of North Macedonia in the period 11-19 September 2019 is the first of its kind and the results of that research can be used more widely, and not only by financial companies. This research brought to the surface a lot of data on public opinion and the habits of our citizens when it comes to running their own finances, the level of financial literacy and knowledge of the various financial services available on the market.

The survey was conducted on a sample of 502 respondents over the age of 18, with equal representation in the country’s urban and rural areas. Thus, 51% of the respondents have not used any financial service from the offered financial instruments in the questionnaire in the last 3 years. 59% of respondents assess their financial literacy as weak or average, and 36% do not pay attention to their financial literacy and need additional information.
Although a large part of the population does not have the means, the research shows that a small part of them use the available financial services, but at the same time, do not have information about the opportunities offered – only 6% took a loan from a non-banking financial company in the past 12 months.

All this proves that there is a need for financial resources, and the Fintech industry needs a real reason – to provide the necessary funds, with the best customer care in a fast, simple and easy way, without additional security, precisely in the necessary, small amounts for situations that require quick solutions, such as home repairs, white goods purchases, tuition fees and the like. However, in order for citizens to understand and know which service to use when using it, additional efforts are needed to improve the financial literacy of society.

Steps, projects, and activities are needed to raise the financial literacy that the Association is ready to take, and that is one of the main goals set by the Association. The analysis shows that financial education is also necessary when it comes to using the services offered by non-banking financial companies, mainly due to the possibilities for financial inclusion of the population with limited access to the services of traditional financial institutions.

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