With the banking regulations coming into force, 2021 will be the digital banking year in Turkey. With the amendment to Banking Law No. 5411 on June 26, 2020, remote identification in Turkey was made completely digital. The amendment enables the relations between banks and their customers to be carried out at a distance by using remote communication tools and to be regulated by contracts to be established through methods that allow verification of the customer's identity.

There are 54 applications to the Central Bank of the Republic of Turkey (CBRT) for payment and cryptocurrency. Even telecom operators such as Türk Telekom are among the institutions that apply. All these developments show that it will be a tough year for banks to compete. So, the time has passed for banks to sweep their problems under the rug. Banks will now grapple with competitors with agile customer-oriented financial technology. It is high time for a race with digital services, not with huge buildings.

Stating that they have been preparing for this important transformation for four years, Albaraka Türk General Manager Melikşah Utku drew attention to the fact that the pandemic has introduced many developments. "Branches remained closed, many consumers shopped online for the first time and small- and medium-sized enterprises (SMEs) sold online for the first time," Utku said.

"Banks had to adapt quickly to this period. We have been preparing for the transformation for four years. We made our human resources planning accordingly. We implemented the in-house entrepreneurship program to get results, not just as a figure of speech. Moreover, we encouraged entrepreneurs to sell the solutions not only to us but to other financial institutions," he said.

Number of bank employees to decrease

Utku stated that many talented employees working for them have switched to financial technology startups. "The number of employees in banks will decrease. Banks, which boast of branches and large buildings, will now continue to earn trust and satisfaction by making their digital services uninterrupted and easily accessible," he continued.

"Banks will be more agile and flexible. They will compete to provide uninterrupted service 24/7. We had 4,000 employees three years ago. Now we have 3,500 employees. Some of our friends switched to different financial technology startups. This change will occur not only in our bank but in all other lenders. After a while, employees who transfer their work to robots started to enter data. Some of them turned into software developers. We paved the way for our employees for this transformation. The banks that have not started this transformation no longer stand a chance," he said.

Venture investments continue

Stating that they want to introduce more startups to the fintech ecosystem, especially insha Ventures, which started its activities in August 2020 and was launched by Albaraka Türk, Utku said: "We do not want emerging startups to only serve us. Let them sell as many institutions solutions as possible. We invested not only in games but also in startups that specialize in gamification. We have started to focus on open banking and open innovation."

Experience in Europe to be transferred to Turkey

Fintech organizations in Turkey are largely focused on payment systems. In Europe, the PSD2 regulation has paved the way for application programming interface (API) banking. Financial infrastructure and service providers will have to open the infrastructure of the service they offer to third party companies through APIs. Hoping to offset disruptions in potential innovation in many areas, such as payments, mobile banking, online money transfers, asset management, InsurTech (insurance), capital markets (financial modeling and analysis software), crowdfunding and blockchain, insha Ventures will share its knowledge and experience with businesses in Turkey. It has been serving as insha Digital Bank in Europe for the past three years.