AzFina official: Banks, fintechs and platforms need clearer role distribution

The distribution of roles in Azerbaijan's financial sector should change, Rasim Mammadov, board member of the Azerbaijan Fintech Association Public Union, AzFina, said at the 10th International Banking and Finance Summit in Baku, Report informs.

According to him, almost every organization - banks, insurance companies and fintechs - is now trying to develop products in line with customer behavior.

"But there is a flaw in this approach. The problem is that when a bank, fintech or insurance company develops a product, it tries to conduct monitoring, carry out research, create the product, do marketing and manage the sales process all at the same time. As a result, many things are not taken into account. Costs rise, efficiency declines, customer experience weakens and the pace of innovation slows. The IT team is overloaded in parallel, and in the end the product either fails or remains incomplete," he said.

Mammadov noted that the biggest problem is the fear of failure, which prevents new initiatives.

"However, this should be openly acknowledged and the right model should be built. In my opinion, functions should be divided more clearly. Banks and insurance companies should mainly deal with product development and risk management. Fintechs should focus on innovation and the development of technological solutions. Payment systems should ensure speed and resilience. Digital platforms should mainly perform comparison, lead generation and customer acquisition functions - in other words, they should take over part of sales. In this case, the workload is shared and the system works more effectively," he said.

He also noted that Azerbaijani banks should focus on their core activities.

"A considerable amount of work is currently being done in the financial sector. Open banking has been formed and is being applied, instant payment systems are expanding further, and artificial intelligence is entering all areas of our lives day by day. In this context, it is important to create platform-based ecosystems that involve everyone and promote competition in order for the economy to function more efficiently," he said.

The AzFina official recommended that banks focus on their core area of activity, namely banking products.

"Fintechs should develop in their own fields. In general, platforms should play a greater role in ensuring transparency and fair competition. Each organization should focus on its core activity. It is not possible to do everything at once. Trying to do so reduces competitiveness and ultimately weakens development. If you want to be a strong partner in the ecosystem and gain a competitive advantage, preference should be given to cooperation with organizations that provide sales platforms. There is no need to take the entire burden upon yourself. This approach will make you a more effective and more sustainably developing organization in the future," he said.