Deloitte about Bulgaria’s potential on the FinTech market
Deloitte announced the results of its research into the potential of software technologies applied in the financial sector (FinTech) in the countries of Central and Eastern Europe. The report was commissioned by the UK Department of International Trade and includes Austria, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Slovakia and Slovenia.
According to the report, the FinTech sector in Bulgaria has the lowest market value among the other surveyed countries – only 39 million euros, while the market valuation of Poland, the leader in this indicator, is 856 million euros. However, Bulgaria is rated as a country with great potential, and payments are given as an example of a market segment with many opportunities, where innovative technologies are expected to penetrate more and more dynamically. Thus, Bulgaria is in sync with the other CEE countries where people are increasingly embracing new methods to operate with money, such as the wider use of contactless payment methods, including innovations like host card emulation (HCE), which allows for contactless payment by phone.
Among Bulgaria’s strengths, the report lists the low government debt, the steady growth in the IT sector, the country’s increasing competitiveness and low labour costs. The small domestic market and the relatively low percentage of people using the Internet are mentioned as weaknesses. The forecast for Bulgaria entails the development of the banking sector with a focus on mobile technologies, CRM systems, digitization of services and models for data processing and analysis. In terms of percentage of the population which uses banking services, Bulgaria, with 63%, is placed second to last ahead of Romania. The highest share of people use banking services is in Slovenia and Austria – 97% in both countries.
The Bulgarian payments market will grow a lot in the future, Deloitte predicted. A potential obstacle could be the low level of smartphones penetration which could delay a widespread use of mobile technologies in the sector. Still, also in our country the FinTech industry is taking advantage of the general trend for people to give up paying cash and to turn to alternative methods of payment. The report gave an example of an innovative product in digitalisation, particularly in the insurance sector, and it belongs to a Bulgarian company – INSIS of Fadata – a software product used in more than 30 countries. In 2015, Fadata was valued at 20 million euros and acquired by British insurance company Charles Taylor and private equity fund The Riverside Co.
It is valid for the CEE region that technology changes are concentrated mainly in the banking sector. The reason for this is the widespread use of mobile phones and the customers’ desire to make easy, secure and fast money transfers.
In addition to contactless payment methods, the next emerging technology is expected to be near field communication (NFC) as well as contactless phone payments. Another pronounced trend is that small and medium enterprises (SMEs) are increasingly interested in the introduction of automated work processes and cloud technologies to facilitate the management of their finances.
Credit services that are particularly interesting for consumers are peer-to-peer loan platforms as well as online and mobile non-bank credit companies. But with higher digitization, the interest in cyber security also increases, especially in terms of data confidentiality, fraud protection, and customer verification.
The complete report for all eight countries, including Bulgaria, can be found in this document.
