The advanced technological developments and new business models laid the foundations for a new generation of family businesses that are different from their traditional retail and trade predecessors. Combining digital business models and modern work style elements, this new generation of family businesses do not necessarily struggle with typical management and institutionalization issues. Having founders with Turkey-origins, Berlin-based RegTech identifystands out among the new generation of family companies.

Founded by Taner Ortakasapbaşı ve Neslihan Özbuğutu-Ortakasapbaşı, who were also founding members of iyzico, Turkey’s well-established payment company, identify is the KYC-focused subsidiary of Business Service Solution GmbH (BSS). BSS is active in Germany since 2012, and thanks to its extensive product portfolio, BSS has partnerships with many different German financial institutions and is now in close contact with BaFin due to identify‘s licensing process. We addressed identify‘s experienced founders about the licensing process in Germany and the digital identity future, getting a chance to learn more about these topics.

  • FTI: Mr. and Ms. Ortakasapbasi, thank you for making time for this interview. We occasionally meet with founders with Turkish origins, but finding out about a family company specializing in RegTech makes the tory even more interesting. Could you please introduce yourself shortly and enlighten our readers about your founding journey?

Neslihan O.: Thank you for having us! Together with my husband, we have been providing services to payment providers, banks, and telcos since 2012. Since the payment market became our main domain, we started offering web service support in the meantime, and this is the direction we are moving towards. We can count digital onboarding and KYC services as an example of our services.

During a customer discussion we had in the past years about KYC challenges, we realized that the existing solutions would not be sufficient to fulfill the market’s needs. That was our starting point for our KYC and onboarding product “identify.” After that, we started offering video-based identification and other KYC services.

Our team consists of 65 people. We have the sheer advantage of offering our services in 16 different languages, which allows us to quickly and effectively serve the German and the European markets as a whole.

  • FTI: Sounds like an exciting and long journey indeed. Let’s start with some market insights. Can you tell us more about the digital KYC solutions available in Germany? The other member states were able to create rather innovative and experimental products, whereas, in Germany, the existing solutions are not as developed due to BaFin’s conservative approach. What awaits us in the next years to come? 

Taner O.: In Europe, BaFin has one of the strictest policies towards KYC solutions. In fact, the German KYC processes work differently; KYC and customer identification (Video-Ident) run as two separate procedures. At the moment, there is no existing company that manages an end-to-end process. That’s why financial service providers have to use two different providers for KYC and identification, which eventually slows down the whole digital onboarding process. We aim to solve this problem with identify. We can offer a full set of electronic signature, video-based customer authentication, KYC, and anti-money laundering initiatives in the scope pf GWG in a centralized manner, which makes our products attractive and unique.

As you well know, due to the recent claims around a well-known German DAX company, the market turmoil continues. We believe that this development will provoke BaFin to tighten its management and supervision policies. They will start examining the financial service providers’ activities more closely, requesting the customer data to be processes more delicately. We already foresaw the changes and designed identify‘s system in a way that the regulator would approve it.  In this scope, we believe that a new ecosystem will be created. As for FinTechs, although this turmoil led to a loss of trust from the market, there is a silver lining: this crisis triggered a more collaborative environment for FinTechs.

  • FTI: Who are your customers in Germany?

Neslihan O.: We work together with the most prominent payment system providers, banks, and telcos in Germany. Besides, we have several strategic partnerships in place with financial infrastructure providers.

  • FTI: Shall we talk about your licensing process? For how long has it been ongoing, and what were your experiences in this process?

Neslihan O: We needed a BaFin license to make the services we provide under the identify brand more practical for our customers. We used every available means to lay the groundwork for this application process. The preparations are going well. We formed a new team focusing on the licensing process last February, and everything works as planned; we are hoping to get the approval until the end of the year.

  • FTI: The discussions and the lobbying work for the digital identity topic continues in Germany. Do you believe that it’s possible to create an interoperable digital identity system, considering the data privacy concerns? At this point, we would like to remind a similar project, Ausweis App, which still doesn’t work on all phone models and has a very limited service scope.

Taner O: To be honest, it’s evident that Germany’s digital identity services are not very popular. That’s why we have a long way to go to create a product that can be embraced by the whole market. Products like Ausweis App will probably have a hard time keeping up with the tech developments and address the whole market, due to some security and regulatory standards. Nevertheless, we expect these services to be used wide spread in the future. As for our product, we can currently read digital IDs using the NFC technology, managing the process per the data standards stipulated in BaFin’s AML regulations.

  • FTI: We would also like to allocate some time for the Turkish market. As you well know, the new law published in the Official Gazette dated 26.06.2020 enabled the financial institutions in Turkey to use digital customer onboarding processes. No doubt, this development is quite a big step for the new FinTech business models. How do you see this development?

Taner O.: We were delighted to read about the developments. We believe that this new law will create new opportunities in Turkey, diversifying the product offers by making the execution of fully online contracts possible, improving the customer satisfaction and corporate governance aspects at the same time. 

  • FTI: The Turkish market will need digital customer onboarding systems, once the legal foundation is set. Are you planning to offer your services in the Turkish market?

Neslihan O.: This question hit the nail right on the head. We actually started the talks with a couple of banks and FinTechs, exchanging opinions and sharing our expertise. Once the legal implications are clear, we would like to offer our knowledge via a technical infrastructure and via training the other players in the market.

  • FTI: Last but not least, could you compare the Turkish and German FinTech ecosystems? We would be interested in hearing your opinions based on your experience in both ecosystems.

Taner O.: It is not so easy to make a direct comparison of these ecosystems, since they are quite different. Turkey is way ahead of Germany in terms of infrastructure and innovation, whereas Germany has a lasting, established system that is regulated thoroughly. The German ecosystem eventually started making expansions into other markets. All in all, neither ecosystem has exhausted its full potential yet.

Gazi University Faculty of Law graduate Ş. Elif Kocaoğlu Ulbrich has degrees in Private Law from Galatasaray University and MBA from WHU – Otto Beisheim School of Management, and is also a fellow of Jean Monnet, Joachim Herz Stiftung. After working as a lawyer in various international law firms in Istanbul and Ankara for more than six years, Denizbank A.Ş. He started his banking and finance career in 2013, specializing in business development, project management, FinTech regulation and lobbying activities at FinTech startups (FinLeap, Cringle, Lendico) in Hamburg and later in Berlin. Co-author of The PAYTECH Book, The AI ​​Book and The LegalTech Book, which are planned to be published in 2020 in cooperation with FINTECH Circle and Wiley, Kocaoğlu Ulbrich has been providing consultancy, training and publishing services since 2019 through Berlin-based Contextual Solutions, which she is the founder of.