Exclusive: ‘Citizens of Fintech’ – Cenap Doğru, Papara in “The Paytech Magazine”

With its internationalist outlook, in-app crypto tools and dizzying number of financial life hacks, Turkish challenger Papara is connecting users to a wider community, says Chief Operating Officer and Managing Partner, Cenap Doğru

In 2016, Papara, now one of Turkey’s leading startups, was launched with a vision of giving consumers access to financial services that were more relevant to their everyday needs, and connected them to a wider world.

It was a vision that sought to bypass boundaries imposed by the traditional banking system and embodied an exhilarating sense of not just financial, but social freedom.

That was two years before Turkey’s currency and debt crisis hit the headlines. Now there is little faith left in the Turkish Lira (TRY). Inflation is running at around 12 per cent and there has been a 33 per cent drop in value against the dollar in one year. Turks have been snapping up hard and, more recently crypto, currencies at record levels – all this against a background of 14 per cent unemployment, depleted central bank reserves and Western sanctions. And that’s without the hit to the economy from a pandemic that has badly impacted tourism and trade.

So, maybe it’s not surprising that consumers are increasingly turning to new methods of finance – more so because, while many people may not have access to traditional banks, a high proportion do have access to smartphones.

Papara, an electronic payment institution currently applying for a banking licence in Lithuania, began by offering online money transfers, foreign exchange (FX) transactions and bill payment services, with deposits enabled into accounts via wire transfer or cash at ATMs, bank branches, postal outlets and even convenience stores. Among the many benefits of Papara’s services were that they were (and remain) mostly free, and available 24/7, online.

Extremely generous cashback programmes, in partnership with monster brands, followed, along with a card account for teenagers. Other life hacks, including split the bill, are coming soon, demonstrating how apps like this can easily bypass the traditional banking system by addressing real-world problems that real people face. The fact that a secure, easy and fast way to transfer fiat money to and from cryptocurrency exchanges has been embedded in the app since 2017, illustrates just how ‘normal’ Papara saw crypto becoming. And, as it turned out, that was a shrewd call.

“There are lots of rules in the financial system which prevent people from reaching out for financial products easily,” says chief operating officer and managing partner of Papara, Cenap Doğru of the motivation behind the concept. “So, we said ‘OK, why don’t we give people the freedom to send and receive funds instantly?’ It was the idea of freedom; freedom to access financial services.”

The startup’s target audience included more than 30 million people in Turkey who did not previously have access to the banking system – not necessarily because they couldn’t open an account with a traditional bank, but because they did consider having one was necessary.

Now the digitisation of Turkish life – particularly over the last few months – has created a compelling reason to move from a culture where cash is king to online platforms that allow people to engage with the world on a daily, even hourly, basis. And nothing represents that global community better than cryptocurrency.

Turkey now has one of the highest adoption rates for investing and trading in the cryptocurrency markets, and is the highest-ranking country in the region  on blockchain analytics firm Chainalysis’ Global Crypto Adoption Index, coming in at 29th overall. Given the volatility of the Turkish Lira, it is understandable that one in five people are now investing and trading in crypto, which isn’t, as yet, a state-regulated activity. The recent surge in its use has prompted the country’s Capital Markets Board to develop a framework to oversee the markets, however, and legislation is to be anticipated.

Papara first partnered with cryptocurrency company Binance in 2017, to integrate cryptocurrency services into its app, and, in 2020, it extended its offering with Bitpanda.

“We know the situation with the Turkish lira – people want to invest in a variety of products. Crypto is one that makes them feel engaged with the world,” says Doğru.

He acknowledges the risks of the brand being associated with buying and trading in unregulated cryptocurrency, but growth, he says, does not come without risk.

Four years on from its launch, and Papara has expanded to include a multitude of other features which are now being used by millions of customers: features such as tracking monthly spending using a chart overview; notifications that alert users to upcoming, overdue and paid bills; automatic bill payments; instant charity donations, and even purchasing credits for their  favourite games. Cashback with the Papara Card saves users up to 50 per cent on major brands such as Netflix, Spotify and YouTube Premium, which is instant and hassle-free. It also offers request-to-pay to contacts via message – once the request is accepted, Papara automatically completes the transactions for free.

Planned future features include additional payment options, further investment opportunities, additional cashback programmes and collaborations with other startups and multinational companies.

As it stands, Turkish legislation prohibits neobanks from offering interest and credit, which makes the fact that Papara turned a profit in year two – pretty unusual in the fintech startup universe, but even more noteworthy because it’s based on a model that monetises transactions rather than persuades people to trade up to endless premium tiers. Having proved its money-making potential, no wonder it is looking to expand internationally.

The large Turkish diaspora in Europe is an obvious way into other markets, especially because, as Doğru says, sending remittances is a hassle – one it is planning to solve. Turkey is among the world’s top 10 countries for emigration, with more than six million Turks living abroad, the vast majority in Western European countries. Germany, the Netherlands and Austria host the largest Turkish expatriate populations in the world.

“Our next plan is to expand to Europe and then neighbouring countries like CIS [Commonwealth of Independent States] and maybe North Africa,” says Doğru.

You can see how borderless fintechs like Papara (of which there are a growing number in the fintech hub of Istanbul) provide not just financial literacy and freedom, but wider liberation, too. That’s especially for Turkey’s  metropolitan class of well-educated, digitally-savvy young people: all citizens of fintech who are therefore citizens of the world.

This article was published in The Paytech Magazine #07, Page 45-46