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Western EuropeMay 2 2017

Turkey’s TEB reaps online early-mover reward

As one of the first banks to venture into digital banking in Turkey, Turkiye Ekonomi Bank is enjoying the benefits of early investment, as Gökhan Mendi, senior assistant general manager, retail and private banking group, tells David O’Byrne.
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Gökhan Mendi

Only a few years ago, Turkish banks were rushing to open as many as 50 new branches a year on the back of a consumer-banking boom. But Turkey is also registering rapid growth in both internet usage and smartphone penetration – a trend often seen in countries with positive demographics – which is causing the country's banks to increasingly seek to develop more cutting-edge banking technology.

One of those having taken the step into technological advances at an early stage is Türk Ekonomi Bankası (TEB). A subsidiary of France’s largest bank, BNP Paribas, and the Turkey's 10th largest bank by assets as of year-end 2015 data, TEB is reaping the benefits of being an early mover into financial technology (fintech).

“In the early 2000s, TEB was one of the first banks in Turkey to venture into digital banking and to invest in it seriously,” says Gökhan Mendi, TEB’s senior assistant general manager for retail and private banking, who adds that two decades of investment in digital banking in Turkey have borne fruit in ways that few would have expected.

“In many cases [digital and online] products and services that were introduced for the first time in Turkey have served as models for banks in other countries – evidence of the level of development of the Turkish banking sector,” says Mr Mendi.

Turkey gets connected

According to the country’s Information and Communications Technology Authority (BTK), during 2016 alone the number of broadband subscriptions in Turkey – both fixed line and mobile – rose by 28.1% from 48.6 million to 62.2 million, meaning that some 78% of Turks have access to the internet.

By the end of 2016, the number with mobile phones was up 1.4% annually at 69.9 million and mobile internet subscriptions had risen 34.8% at 50.5 million. This means as many as 63% of the population have access to mobile internet, according to BTK data.

And customers are increasingly turning to online banking services to manage their finances, according to the Banks Association of Turkey.

Online banking boom

During 2016, the number of active internet banking customers in Turkey rose by 18.1% to 19.1 million, 24% of the population. And the number of online transactions is also rising. In the last quarter of 2016, online transactions rose by 5.7% on the same period in 2015 to 149 million, with the value of those transactions reaching Tl1080bn ($298bn), an increase of 27.6% on the year.

For TEB this means some 400,000 customers are using its digital services. The bank has brought its digital operations together under the single platform CepteTEB, meaning ‘TEB in the pocket’. One of the fastest growing digital banking platforms in the country, CepteTEB allows customers to directly access a customer representative wherever they are.

TEB also introduced a programme called Fintech Future Four in 2016, with which it aims to build bridges between digital developers and entrepreneurs and the financial services industry. The project aims to provide infrastructure, experience and financial support for successful applicants from the fintech space.

So far, TEB has selected some 43 applicants for their ideas to be developed into final products. Of those, the bank intends to choose four products to work with TEB’s shareholder BNP Paribas, in its fintech start-up ecosystem in France.

“This could be a significant step in Turkey’s journey to becoming a global finance centre,” says Mr Mendi, as the scheme could introduce Turkish developers to other markets.

Catering for all

Yet, while technological advances have seen several Turkish banks close branches – according to the BDK the number of bank branches across the country peaked at 11,223 in December 2014 and has been in decline ever since, to 10,781 at the end of 2016 – TEB does not envisage a need to reduce its 515 branches in the near term.

“Certain types of transactions are shifting to digital channels and there could be a move towards branches, which [might] physically be somewhat smaller, but our branch policy is focused on the business potential of each locality," says Mr Mendi. He stresses the bank’s multi-channel strategy, as not all of its customers are tech-savvy.

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Read more about:  Western Europe , Turkey