Ukraine has the potential to harness new financial technologies (FinTech) in ways that few markets can replicate. The four factors that led me to this conclusion include:
- Good infrastructure – especially mobile penetration
- Large and well-educated population
- Strong Technology sector
- Gap in adequate financial services
The Right Infrastructure Mix
Ukraine has the appropriate infrastructure to take advantage of new financial technologies. While there is a gap in physical infrastructure (bank branches, ATMS and Point-of-Sale machines), there is an impressive mobile penetration, especially the growing adoption of smartphones. With over 130 mobile phones for every 100 Ukrainians and more than 20 million smartphones, the country can harness this technology to leap frog over physical infrastructure constraints. In several markets, mobile financial service solutions such as mobile banking and the use of mobile e-money, eliminates the need for bank branches or ATMs. The move toward mobile payments, especially the new developments around international standards for QR code payments, as demonstrated by China and India, also reduce the cost of deploying expensive point-of-sale machines. With the right support from policy makers and regulators, all of these potential opportunities are right for adoption in Ukraine.
Population Ready for FinTech
With one of the best educational systems in the region and a technologically savvy population, Ukraine is ripe to harness FinTech to address financial literacy and service gaps. Fintech can not only improve access to financial services but also support new use cases. In addition, FinTech can help to empower Ukrainians through increased financial literacy levels (see the example of Mr. Finance in Myanmar) and overall “financial health” through new mobile-enabled tools. With the rise of the sharing society and high usage of social messaging, Ukrainians have the potential to easily share and rate financial service providers and even to work with the industry to demand higher standards and improvement in customer service.
Leading IT Sector
Ukraine is one of the top information and technology outsourcing countries in the world. Companies all over the world regularly contract with local developers to build or maintain different technology platforms and applications including new FinTech applications. New developments in alternative credit scoring, big data analytics and financial comparison tools are regularly outsourced and developed in Ukraine. In a conversation with a colleague at Facebook’s headquarters, I learned that not only was the developer of WhatsApp Ukrainian but also a significant number of chatbot developers are Ukrainian. Chatbots, in particular, offer tremendous opportunities to enable better access, usage and even the quality of financial services.
Financial Services Gap
In countries where financial services are limited, mobile penetration is high, the population is technology savvy, and the right amount of expertise exists, the stage is set for the entry of FinTech to create a leap-frog affect in a market. We have witnessed this in other underserved markets where new technologies in countries as diverse as Kenya, China and India have dramatically increased financial service access and usage. I believe that this perfect mix also exists in Ukraine.
New Risks, New Solutions
As new digital financial services become available in emerging markets, so too do new risks. When people with limited financial literacy levels begin to access financial services via digital means, new challenges rise, especially consumer protection risks. These new risks, however, also provide opportunities for FinTech tools to play a role. In today’s sharing economy, consumers and service providers are empowered to better share opportunities, compare prices, rate providers and even file complaints. In connected social messaging societies, such as Ukraine, the ability to build these tools into apps that already exist in millions of people’s smartphones without the need to build a new application is a tremendous opportunity to also address these new risks.
With Ukraine being one of the leading countries to develop chatbot technologies, I see the potential to develop useful tools that not only support FinTech advancement in this market but also a solution that the rest of the world can also build on.