Ironing the Medal

Every fifth dollar invested in VC funds this year has entered the fintech sector, accounting for 20% in percentage terms. The current global value of the fintech industry is estimated at around a trillion dollars. This industry has been experiencing continuous growth in investments for years. In just the first half of this year, fintech companies raised nearly $100 billion; in the previous year, they raised $120 billion. Due to the COVID-19 pandemic, it might be more appropriate to compare it to 2019, when companies raised around $200 billion. Based on these figures, it's easy to conclude that the industry's recovery is very rapid. What are the main reasons for the attractiveness of this sector that have subsequently led to its quick recovery? Fintech is an area that combines technology and finance, making everyday activities much more efficient. Efficiency is, therefore, the core value of this industry because it saves its users two essential resources: time and money. Some of the most well-known fintech solutions include digital payments, contactless payments, e-commerce platforms, "buy now, pay later" financial solutions, and the emergence of the concept of "challenger banks," which means that banking activities such as account management, savings, payments, fund transfers, etc., are conducted digitally, without the physical presence of banks.

Fintech is Europe's number one investment destination, and European fintech companies are more robust than any other technology sector in Europe by more than 100%. Following the fintech sector in terms of value are companies that develop software solutions for businesses and the gaming sector. The facts, therefore, show that fintech is currently the most active area in Europe. Instinctively, the question arises: why isn't the situation the same in our country, considering that we are part of Europe? However, it takes work to answer this question. The topic has two interconnected sides, each with its unique shine or rust, depending on the perspective. In the first phase of the emergence and development of fintech, banking or banking services have a dominant role. Connected to this is the first side of the coin in our country. The Banking Law in Serbia does not allow banking services outside traditional banks. There is no point in discussing this issue, given the current situation. However, the other side of the coin needs to be more shiny for us to focus solely on the rust of the first side. The fintech sector creates solutions primarily categorized as SaaS (Software as a Service) solutions. This means that a higher level of digital literacy is needed for the proper and mass use of these solutions. In Serbia, about 2 million people use current mobile banking solutions. Simple math tells us that it's not even 30% of the population. Analyzing the population structure, the picture of digital literacy becomes even more apparent. Serbia has about 1.5 million citizens aged 0-20 and about 2.7 million citizens aged 51 and above. However, we cannot say all citizens aged 51-60 are digitally illiterate. Supporting this is the latest EUROSTAT survey, which states that about 46% of the population in Serbia is digitally literate. Ultimately, we still have about 3.3 million citizens who need help using fintech solutions effectively.

Let's give a few suggestions to increase the shine of both sides of the coin. Firstly, if Serbia aims to increase investments and the number of startups and companies in the fintech field, which means higher efficiency, lower costs, and GDP growth, it is necessary to amend the existing Banking Law. Furthermore, the widespread introduction of technologies such as blockchain and artificial intelligence is needed, along with working on strengthening cybersecurity, which requires cooperation between the government and companies at the PPP (private-public partnership) level. Working on cybersecurity is essential for at least two reasons: improving supply quality and increasing trust in demand, especially regarding asset security. On the other hand, how can we increase demand for such services? Statistics can help us here, too. YouTube is the second most visited website in Serbia. It is used by people over 51 years old, primarily through shared links on Viber. However, they still use it (they are used to its environment, search methods, etc.). Since people over 51 cannot attend school, YouTube is the ideal channel for educating citizens on using SaaS solutions. Since we've only recently started implementing fintech, let's not overdo the polishing of the coin.