A year ago, at the end of October 2017, the operations of the Polish FinTech Aforti Exchange were being set up in Romania. Romania was the first foreign country where Aforti had decided to expand its business, primarily because of the size of the market, the growing economy as well as the robust business environment. Today, richer with 12 months of hands-on experience, we are confident that entering the Romanian market was the right decision as the FinTech phenomenon is growing very fast here, with local entrepreneurs at the forefront of adaption to the newest technologies.
This begs the question – who is an average user of FinTech platforms in Romania? While it is difficult to create a unique profile of an average customer, in order to mark one year of operations in Romania, we decided to perform some market research on the subject of FinTech and how Romanian SMEs are adapting to the use of new technologies in their day-to-day operations.
Our study involved analysing the behaviour and preferences of over 500 local businesses and helped us come up with the following conclusions:
- The average age of decision-makers behind the significant decisions related to financial services is 35 years-old in the case of entrepreneurs running their own, young businesses and up to 55 years-old taking into account the owners of very well-established companies, as well as financial or accounting managers working for large businesses;
- Key industries interested in FinTech services are import-export, production, international transportation, agriculture and IT. These are generally the types of businesses that perform many types of financial transactions, including currency exchange, in their daily operations and, given the fact that the services provided by banks are either not sufficient or simply too expensive, the companies are actively searching for methods that will allow them to save money or facilitate the daily operations;
- There is wide diversity in terms of size, starting from companies that have a yearly turnover below 100,000 euros to those generating sales of tens of millions of euros. As such, the size of a business is not a deciding factor behind moving away from traditional banking products and using FinTechs;
- While the main barriers of entry for FinTechs are the already well-developed relationships with the banks, as well as little understanding of how FinTechs work, we have noticed that very often it is sufficient for a major player from a specific industry decides to embrace new technology for the other players follow almost instantly.
For FinTechs in countries where the adoption of new technologies is still at an incipient stage, pro-actively approaching potential clients is a key. Based on our research, in Romania we estimate that 70 per cent of companies become FinTech clients as a result of the efforts of the sales team or FinTech representatives proactively approaching companies. Around 30 per cent found out about FinTech solutions on their own, by performing research on specific services. We believe that this split will change in the future as clients will become more aware of the existence of FinTechs, as well as the specific issues that FinTech platforms can address. Also, we foresee that the PSD2 directive will contribute to increasing the number of clients using FinTech since it makes the process of benefitting from services rendered by third-party platforms so much easier.
In terms of client behaviour in Romania, we have observed that there is a uniform manner in which clients use FinTech platforms – they usually begin so-called ‘test transfers’ or ‘test transactions’ when they perform an actual operation, which is rather insignificant in terms of size, in order to learn how the specific platform works, which factual benefits it brings and if it can make any kind of difference to the daily operations of the company. After the test transaction, the clients either give up on the FinTech solution, finding it not sufficiently attractive or beneficial, or steadily but significantly increase the volume of transactions until they completely give up on using the service provided by the bank.
Transparency is key
The careful adaptation to new technologies proves that safety, as well as transparency, are the key differentiating factors for FinTech users in Romania. According to our estimates, approximately 60-70 per cent of FinTech customers in Romania focus on transaction security and how the specific financial process works. For the remaining customers, cost is the key defining factor, as their basic question when considering collaboration with a FinTech is ‘How much could I save if I use the services offered by your platform?’.
When Aforti Exchange entered Romania 12 months ago, our plan for the beginning was to replicate the business model so successfully implemented in Poland. While on the one hand, Romania has in a way outperformed Poland since it managed to reach an average monthly turnover of several hundred thousand euros, on the other hand, we have seen that Romanian entrepreneurs are more risk-averse than their Polish colleagues, and as such it takes them longer to become convinced to use FinTech platforms and build their trust. This was further proven by our recent findings. At the same time, in our very specific case, on the Polish market, there are over a dozen platforms offering currency exchange online while in Romania, the competition is very limited, which helps us increase our market share at a much faster rate than was possible in Poland.
All in all, we are confident about the future of Aforti Exchange in Romania and the fact that the Romanian entrepreneurial ecosystem is very dynamic and eager to adapt to global market trends. In terms of what the future holds, as the expectations of clients grow, so do the services provided by the FinTechs. Therefore, we foresee particular attention being paid in the nearest future by all FinTech players (including the banks) to developing state-of-the-art technologies, to providing significant cost-saving to the clients as well as to contributing to the total elimination of bureaucracy.
The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.