Turkish Broker Takes Shot At Financial Titans: 'In The Long Run, Product Always Wins'

Benzinga, a leading news and data provider, will be holding its annual Benzinga Global Fintech Awards, a day of dealmaking, networking, and recognition in the financial technology space, on Nov.11, 2021.

The event will award Benzinga Listmakers, those top companies part of Benzinga’s Global Fintech Index, for their accomplishments innovating, as well as merging the best of finance and technology.

In recognition of those disruptive innovators creating positive and diverse change within the financial services space, Benzinga sat down with Egem Eraslan, a founder at Midas.

About Midas: Since the pandemic began, Turkey’s stock market has been volatile, attracting participation from the country’s youngest investors.

That’s according to Eraslan, who is looking to capitalize on this new wave of investing with Midas, Turkey’s first neobroker that provides zero-commission access to local and U.S.-listed stocks.

Founded early last year, the company had its fair share of difficulties in getting up and running, he said. 

“New licenses aren’t given, you have to buy someone off,” the founder said, chuckling while recollecting early hardships. “You have to convince someone that’s crazy enough to give you their license.”

After nearly a year of work, the Midas prototype was ready for showing; Eraslan said he managed to secure a license and convince a private bank to make a direct investment.

“DenizBank Ventures invested in us,” he said. Eraslan was able to convince DenizBank to form a corporate VC arm just so Midas could raise $1 million in capital, he said.

“We convinced them that they should invest in us and also start a VC.”

At the beginning of 2021, Midas’ vision — to foster democratic, transparent, fair and innovative market access for a new generation of investors — came to fruition with a beta launch.

“We opened the waitlist that hit 55,000 people fully organic and we launched in April.”

The Core Product: Midas, at its core, is a zero-commission fractional trading app.

“You pay nothing on Turkish trading and we have a $1.50 fixed fee for U.S. stocks,” Eraslan said in a discussion on local market structure.

“We will bring it down soon and, by the end of this year and the fourth quarter, we’re rolling out our FX product as well.”

Soon, app users will have the ability to change between currencies. That means investors can buy Turkish stocks, sell and then immediately buy U.S. stocks, the founder explained.

In regards to how the company will raise money, FX fees and subscriptions are on the table. Also, users will have access to live, Level II market data, as well as instant transfers.

More On Midas' Hurdles: Onboarding customers is a pain.

Turkish regulations make it so that account openings must be done on paper via wet signatures, he said. 

“Every time they sign up, through the app, we send a motor courier with a signed agreement by ourselves,” the founder said. 

"They sign it as well, bring it to us, and that is how we can open an account.”

That process usually takes a week and is very costly. In cutting the barriers to entry, with the passage of digital KYC laws, Midas will enable e-registrations.

“In July or August, there’s going to be live video with a call-center agent.”

Users will tap their state-issued ID cards on the back of their phones, according to Eraslan. Midas will then retrieve and pre-fill registrations based on information in shared government databases. Thereafter, signups are confirmed with live, 2-minute video calls that confirm identities.

“It’s going to be ridiculously easy.”

Innovation Outlook: Midas’ biggest problem? Figuring out how to innovate, capture, and engage users from the five large banks that manage over 90% of retail banking in Turkey.

“Their products are outdated and expensive,” Eraslan said in closing.

“In the long run, product always wins. We’re the first new neobroker in Turkey and we’re the only broker, including these banks, who is able to open accounts in the U.S., without a minimum balance requirement.”