Beyond banking
Turkey is not among leading countries when it comes to the size of its banking industry. However, it is among the top when it comes to financial technologies and innovations. This fact has been underlined once more in a Deloitte report, titled “Digital Banking Maturity.” According to the report, Turkey is among the five digital champions, along with Switzerland, Spain, Russia and Poland. France, Finland, Norway, Zambia and Czech Republic are among digital smart followers, which is the second best category in the report. Germany, the U.K., the Netherlands, Belgium, Denmark, Sweden and Italy are all listed as digital adaptors.
The report states that internet banking usage is highly correlated to internet access, but it doesn’t explain digital maturity; instead that market pressure from customers and competitors created digital champions.
An analysis of the results revealed that market pressure is a key driver of digital banking maturity in two different subsets:
• Customer pressure: Expectations regarding the level of service which should be available in digital channels.
• Competitor pressure: Digital “arms race” ignited by a number of banks which decided to leverage their digital channels as key competitive advantage.
The report also found that there are three stages to becoming a digital champion.
A vast majority of functionalities are around the digitalization of traditional banking products. But in order to be a digital champion, you must be working beyond banking.
Digitalization means the transformation of traditional banking products and services from brick-and-mortar to internet and mobile. The services in most cases come from banks with limited presence of strategic partnerships with external companies. Banks focusing on this step try to maintain the status quo: Old banking world in new channels.
Open banking means platform-based business approach where data, processes, and business functionalities are made available within an ecosystem of customers, third-party developers, fintech startups, or partners. The services provided are financial, and may come from banks as well as from third parties.
Beyond banking means a platform-based business approach where multiple services are provided to customers in an integrated and coherent suite through an ecosystem of different service providers. The services provided can be from any type (e.g. mobility, security, delivery, home security), and banks can participate by providing niche and tailored financial services that consistently integrate the suite of services.
Kudos to the Turkish banking industry for achieving a champion status even though the internet connection speed and the number of people who use digital banking are much lower than those of most countries.
The fintech investments and startups of Turkey give me a lot of hope for the future. Let’s look at them in detail next week.
