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Why are some countries more innovative than others?

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I recently chaired a dinner in Turkey.

Turkey is one of the hotbeds for retail bank innovation, alongside Poland, in Europe (assuming you count Turkey as European).

It was in Turkey that I first saw a strong and concerted push into contactless payments.

Remember this ad for Garanti Bank:

It was in Turkey that I first saw an effective rollout of Facebook banking by both Akbank and Deniz Bank.

It is in Turkey that I am seeing the first example of a clearing system creating a mobile digital wallet (BKM Express, which I will l discuss in more depth in the near future).

Meanwhile, Poland is the first country to have an effective rollout of contactless payments, hailed as the best in Europe by Visa.

Poland is where mBank are making waves in response to competitive challenges from Alior Bank's Sync.

Why are Turkey and Poland so high on the innovation radar?

I thought it was the lack of legacy, and yes, that has something to do with it.

Most of Turkey's and Poland's infrastructure was built in the 1990s and so, unlike British and American banks that were first movers in technology in the 1960s/1970s, these banks don't have the cemented foundations of old IBM mainframes that reduces their ability to adapt.

This does not mean they don't have legacy however - would you still use Windows 95? - and so they do point out that this is not the sole factor.

Another important factor is cost.

In Turkey and Poland, resources to reinvent systems are far less costly when compared to those of hiring some talent in New York or London.

That's a factor too, but not the only one.

Most US and UK banks built large development shops in India, the Philippines and further afield in the 1990s/2000s, so cost is not the gating factor.

Maybe it is more to do with passion and need.

In Turkey there are some large banks - Akbank, Deniz Bank, Garanti, Yapi Kredit - but the fight for dominance is still evolving and competition is high.

Unlike the UK where one banks' move can be ignored - as little changes fast and the big five banks can all keep up with innovations -  Turkish, Polish and Spanish banks have far more challenges to outwit each other than big banks in big markets that are well established.

Maybe ...

I don't particularly endorse that statement, but it's a possibility.

No, the reality is that it's timing and demographics.

Turkey and Poland in particular have the beneficial factors of lack of legacy, low cost resources and competitive markets but, more importantly, they have a young and dynamic population.

Turkey’s total population is around 75 million and the median age is around 29. In contrast, the median age in the UK is 40 and in the US it’s 37.

What’s more, almost 25% of Turkey’s population is under 14 years old.

So when looking for change in the form of banking, look at those markets where the population brackets are favourably young, and you'll probably see something different too.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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