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WorldOctober 1 2013

Turkey stays ahead of the mobile game

Turkey's banks are acquiring a global reputation for innovative products, particularly those that connect them with the country's youthful population through social media. As Duygu Tavan discovers, this is increasingly being done through smartphones.
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Turkey stays ahead of the mobile game

Turkey’s banks are blazing a trail when it comes to the innovative use of technology in financial services. Online and internet banking are starting to be considered run-of-the-mill in the country as its banks look to the next era of banking – and the race to capture customers – which is increasingly being played out on social networks and mobile phones.

“The most in vogue trend among banks is integrating social media into banking. Another is to simplify the user experience and log-in process on mobile applications,” says Soner Canko, CEO of the Turkish inter-bank card centre BKM. He is not concerned about overwhelming consumers with new products. “There’s abnormally high interest in new technologies,” he says.

This is the typical portrayal of Turkish consumers: young, keen on new technologies, social. These characteristics seem to come in contrast to the speed of technological adoption in the country, however. “The internet penetration rate in Turkey is lower than [most of] Europe – but the users are younger and spend more time online than their peers in other European countries,” says Orkun Oguz, Akbank’s executive vice-president of direct banking.

As Mr Oguz highlights, Turkish consumers spend an average of about 34 hours a week online, and the country boasts more than 11 million internet banking, and more than 2 million mobile banking users. It is in these areas that Turkish banks aim to be more than just banks – and really believe in mobile, he says.

DenizBank's big ambition

Although all banks in Turkey have a social media presence in one way or another, DenizBank and Garanti stand out.

It may not be one of the country's largest lenders, but DenizBank’s appetite and record for innovation is a match for anyone. Its products include a Facebook branch, a Twitter loan service, a person-to-person payment service and a mobile cheque payments channel for small and medium-sized enterprises (SMEs). In the words of Gurhan Cam, the digital generation banking senior vice-president at DenizBank, the lender develops products according to its customers’ lifestyle and their location within the country.

For SMEs, DenizBank has assigned an extra credit line to those that fulfil certain criteria. This line opens automatically when the DenizBank Mobile Cheque app is downloaded and activated. DenizBank guarantees the total amount and anyone can receive and forward a payment, whether they are a customer of the bank or not. The only limitation is on the person or company drawing out the money, who has to be a DenizBank customer as they need a specific credit line.

“To increase the usability of the app we also integrated an SMS gateway; receivers who don’t have smartphones can receive payments via SMS. Once the cheque is due, if the payee is a customer, the amount is transferred directly to their account. If the payee is not a customer, they receive a notification that points them to a DenizBank branch to cash the cheque,” says Mr Cam.

DenizBank has connected its Twitter account to its existing SMS loan infrastructure in July 2012. Consumers can apply for a loan by following the designated Twitter account and sending a direct message with their citizenship and mobile phone number. The loan volume approved via Twitter to date is equal to about $1.3m, the result of 1298 transactions. The bank has more than 10,000 Twitter followers and is now planning to integrate other loan types, such as mortgages or vehicle loans, to its Twitter service, according to Mr Cam. Through its Facebook branch, DenizBank offers money transfers and card monitoring, and this service has reached almost 10% of its online banking users.

Garanti's social climbing

DenizBank's focus on social media is matched by Garanti, which has been striving to reach ‘connected’ customers – those who use mobile internet in their daily lives. Following a study conducted along with management consulting firm McKinsey, in May 2013 Garanti launched iGaranti, a mobile-only app that enables myriad processes, from onboarding to transactions, via smartphones. Users can connect to Facebook, Twitter and Foursquare to transfer money through the app, which also serves as a wallet and enables cardless cash withdrawals.

In its first month, iGaranti was downloaded about 100,000 times and it now has close to 70,000 active users, more than 5000 of whom were not existing Garanti customers. “The strongest characteristic of iGaranti is that, although it incorporates many value-added services under one app and exploits the mobile technology to its limits, it aims to convert all the technology used into a living, friendly service that naturally fits into the daily lives of its users as a financial coach or a smart friend in his or her pocket,” says Didem Dincer Baser, the executive vice-president of delivery channels, social platforms management and customer satisfaction at Garanti.

For instance, based on scheduled payments, combined with the user’s past spending and income data, iGaranti estimates the remaining funds in the user's accounts for the rest of the month. It also provides savings suggestions and exclusive campaigns from their favourite brands. The app recognises the user’s location and informs them if there are any campaigns from their favourite brands nearby by sending a push notification.

iGaranti has several sub-apps to communicate with users to support the management of instant or long-term financial activities, and provide personalised services. Users can quickly and easily add or remove these sub-apps from their iGaranti dashboard.

Akbank's different route

Not every bank’s approach to social media involves creating new channels, however. When it comes to social media, Akbank’s main strategy is customer relationship management and service management, as well as one-to-one marketing in real-time. “We’re currently not focusing on pushing sales, services or products via social media,” says Mr Oguz. 

Instead, Akbank focuses on its mobile channel, Akbank Direkt, which was launched in late 2012 and has already been downloaded almost 1 million times. It is now turning into a revenue-driving business stream. Most importantly for Mr Oguz, the channel has not cannibalised Akbank's internet banking service. “Customers use both channels – and effectively use the bank’s services more,” he says.  

With Akbank Direkt, customers access services through their mobile phones using a single password, though users of Akbank’s Axess, Wings or Fish credit cards can just use their card details.

Finansbank's net benefits

Another bank that has embraced direct banking is Finansbank, which recently launched a direct bank, Enpara.com. As the website removes a need for a branch network, it saves costs that Finansbank passes on to customers through, for instance, higher interest rates on deposits and no fees for certain transactions, according to Elsa Pekmez Atan, director of Enpara.com.

Enpara.com was launched about a year ago and already has more than 100,000 customers. “Finansbank customers who migrated to Enpara.com were few. The majority are new customers who weren’t Finansbank customers previously,” says Ms Atan.

Although Enpara.com still belongs to the Finansbank brand, Ms Atan makes a clear distinction. “Finansbank is a universal bank. It serves all segments. Enpara.com, on the other hand, is part of Finansbank, but serves a specific segment. Our target customers are young professionals, 25 to 45 years old, who are in employment, don’t have much time or the inclination to visit a branch, and tend to do their banking online. We do have other customers, such as students, housewives or retirees. But mostly it is young professionals that Enpara.com appeals to,” she says.

Current products offered by Enpara.com include current, dollar/euro, savings and investment accounts; money transfer and payment services. The bank has also recently added an overdraft facility, with credit products also in line to be launched.

Turkey's common platform

In addition to the offerings of individual banks, Turkey also has in its armoury the industry-wide initiative, BKM. Its wallet app enables users to pay for purchases online in a similar manner to PayPal. With BKM, the buyer clicks a button that says 'pay with BKM Express' and enters their e-mail address and password. They are then presented with the cards they have registered on BKM Express, as well as a payment option (in instalments or advance). A verification code is sent by the respective bank to the buyer’s mobile to authorise the payment. 

On the one hand, innovations such as BKM seem to be the type of solution many banks, both in Turkey and abroad, hail as the driver for widespread e-payment adoption. On the other hand, however, it bears the question: at what point are banks cannibalising their own products? As things stand, for the majority of Turkish bankers at least, the answer is simple: there is no cannibalisation.

“BKM really makes a difference in Turkey – it gives a common platform,” says Mr Oguz. “It doesn’t cannibalise banks’ proprietary systems. Just as banks use Visa and MasterCard, they can adopt BKM into their own platforms.” Mr Canko at BKM says it is a national brand, as well as an ecosystem. “We have more than 165,000 users and 160 retailers with a market share of 40%,” he says. The 12 banks using BKM Express have a domestic market share of 98% in both debit and credit cards. “[Mobile strategies are] no longer an R&D question – it’s happening,” says Mr Canko.

But there is some way to go, some think. “Consumers do consider mobile as a good channel, but social media is still mostly social. It will probably take a year or two until a mentality change kicks in among consumers to use, for instance, Facebook for more than sharing pictures,” says Mr Oguz.

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