This article presents a data driven approach to the discussions around Istanbul’s being a Regional Fintech Hub Candid. Key metrics that are affecting the Fintech ecosystems are selected carefully for a country comparison analysis and the results of this analysis are used to discover the fundamental aspects of Israeli Science and Technology Policy, which resulted a booming Israeli Fintech industry. National Fintech Ecosystems which are fragile to be easily hit by constricted local and global funding, have to innovate more in cross border trade and marketing, cooperative business models with abroad and multinational product-market fit to prevail in global area. This scale of leap could be achieved with institutional support backed by the State as Israel has been investing since early 2000s.

What should Turkey do to achieve its dream of being a Fintech Hub City for the region ? Getting excited with such an ambitious target, I began to seek for learnings from other Fintech Hub Cities and tried to understand their policies behind their global achievements: Israel, sharing the same geopolitical challenges with Turkey has showed a remarkable success in Fintech area in the last decade and now Tel Aviv ranks in the first 5  Fintech cities of the world. How did it happen ? One can easily say that it is Israel’s enthusiastic diaspora who invests back in the country and supplies the funding of startup companies. Is the answer of this question so easy ?

It is true that foreign investors fund 75% of investments. However, it does not explain why companies like Barclays, Citi, Visa Europe, PayPal, Santander or MasterCard have invested in the accelerators and R&D centers in Israel despite limited national demand of  a population of nearing 8,5 million by 2018. Hence, I find great value in focusing on some metrics other than funding source and following up a data driven approach to figure out some learnings  from Israel’s journey of building up a highly sophisticated Fintech ecosystem :

1- Time required to start a business (days) :

First, I tried to understand how the bureacracy is effecting an entrepreneur’s life in Israel. According to the World Bank Data, the time required to start a business in Israel, that is 12 days by 2016, is still highly above the average of OECD members; 8.13 days, and Turkey; 6.5 days. Apparently, the bureacracy in Israel is still one of the challenges for early-stage entrepreneurs as it is in the rest of the world.  Despite the negativity of this metric, Israel accomplished to be the world’s biggest fintech centers with the largest contribution as % of GDP, ahead of UK and US.

Graph 1 :

2- The cost of business start-up procedures (% of GNI per capita) :

On the other hand, Israel has achieved to keep the cost of business start-up procedures (% of GNI per capita ) well below EU average and closer to other distinguished Fintech Countries like Singapore, Estonia and UK.

Graph 2 :

Still, I find it hard to claim that this second metric was one of the major drivers of  Tel Aviv’s success in global market. On the other hand, this metric makes it undeniable that Israel has a stronger position in this aspect among the global league players than the other regional players like Turkey.

3- European Patent Office Metrics :

To examine how global the Israel’s know-how production is, I accessed European Patent Office (EPO) statistics supplied by OECD #OpenData sources and compared patent statistics of Israel and Turkey. Turkey’s total applications have soared in last 15 years, reaching up to a record level of 506 in 2010 as you can observe in Graph3. In Graph4, the percentage of cooperation patents with abroad over total patents are steadily high for Israel over years, whereas it is declining for Turkey. Could Turkey manage an innovation path as extrovertly as Israel in partnering with global actors ? A big question which requires attention from government and other public authorities, lies under the figures in Graph3 & 4. Please keep in mind that the small sample size of Turkey’s patent applications lightly shadows the reliability of my insight.

Graph 3 :

Graph 4:

4- The percentage of government funding in R&D activities:

All the metrics I presented above in this article are effecting a country’s position in Fintech area indirectly, if not directly. Another metric which is unquestionably directly effecting the Fintech ecosystem is funding in R&D activities and Israel leads the way in this metric following South Korea. In most countries, the bulk of R&D spend is by the State; but in Israel, the spend is mostly by the private sector, the state only supplies around 13% (2013) of finance in R&D activities according to OECD #OpenData Sources. This is another key metric disclosing the fundamental aspects of Israeli science and technology policy. While gradually reducing its role in funding, the Israeli government takes the lead in other strategical areas and supply an extensive institutional support for making the marketing knowledge, networking opportunities with partners, regulatory consultancy and the required infrastructure accessible for all investors and entrepreneurs. @UKIsraelHub (, famously known government backed institution have brought hundreds of companies together and offers bespoke schemes of networking and end-to-end consultancy to Fintechs seeking for new challenges for their products in cross-border markets. Ministry of Economy in Israel leads the Fintech Ecosystem by entering partnerships to develop products and technologies and providing technological and regulatory consultation and marketing directions to promote high-tech export capacity of national actors.  To promote cooperation with abroad in Fintech, the Israelian governments have invested in long term business agreements with many countries like USA, UK, Japan and recently with India. The institutional approach Israeli Government have put in place since years resulted in skyrocket effect in Chinese investments, “…with volume leaping from $50 million in 1992 to almost $11 billion in 2013…” as noted by Israeli Ministry of Foreign Trade Administration.

It is obvious that without these kinds of policy schemes and institutions similar to the ones Israel highly invested in since early 2000s, it is hard to prevail regionally and globally for national Fintech ecosystems. Turkey’s Fintech Investment journey that began in 2012, succesfully grew and reached up to US$18,658m in Transaction Value by 2018. This growth makes no suprise regarding the global Fintech industry, where valuations of Fintech companies that were founded couple of years ago, reach up to billion dollars. Since 2012, the global Fintech industry mostly enjoyed the easy money which had highly positive effects on investment decisions despite the volatility of the markets in the short term. But, 2016 & 2017 underscored the fact that entrepreneurship is about more than just valuation while some companies which were listed top once are gone bust like Powa Technologies in UK. Under such conditions, I strongly believe that Istanbul’s ambition of being a regional Fintech Hub City deserve better strategies than relying on the investors’ appetite. Despite the increasing support of independent institutions like FinTech Istanbul and BKM (The Interbank Card Center), there is still  need for long term commitments at national science and technology policy level to leverage the ecosytem to a global standard in multiple focus areas of blockchain, regtech, insurtech, payment, lending, personal finance and anti-fraud. This kind of framework policy should seek for ways to promote cross-border marketing activities and cooperation with abroad and should be backed by governmental level agreements with leading Fintech ecosystems.

This article was written by Dizem Ozalp Sari. She is an Independent CRM Consultancy. You may contact her via her personal website or Linkedin account.

Further Reading :

Data Sources  and References:

  1. The data on time and cost of a business start-up were collected through WorldBank #OpenData sources, which are accessible via
  2. The data on European Patent Applications were collected through OECD #OpenData sources, which are accessible via
  3. The data on R&D spending were collected through OECD #OpenData sources, which are accessible via