Turkey’s dig­i­tal bank­ing among ‘cham­pi­ons’ in EMEA re­gion

Daily Sabah (Turkey) - - Front Page -

AS A re­sult of one of the most com­pre­hen­sive and ob­jec­tive as­sess­ments of fi­nan­cial in­sti­tu­tions’ dig­i­tal ma­tu­rity, Turkey has been named one of the five cham­pi­ons in dig­i­tal bank­ing in Europe, the Mid­dle East and Africa (EMEA), ac­cord­ing to Deloitte, one of the largest global tax and con­sul­tancy firms.

In its EMEA Dig­i­tal Bank­ing Ma­tu­rity 2018 re­port, Deloitte con­ducted a com­pre­hen­sive bench­mark­ing of func­tion­al­i­ties and cus­tomer pref­er­ences in 248 fi­nan­cial in­sti­tu­tions and 10 fi­nan­cial tech­nol­ogy op­er­a­tors (fin­techs) across 38 coun­tries to sep­a­rate dig­i­tal cham­pi­ons from the smart fol­low­ers, adopters and dig­i­tal late­com­ers.

Ac­cord­ingly, the re­port sug­gested banks in the EMEA mar­kets could be broadly di­vided into four groups, namely dig­i­tal cham­pi­ons, smart fol­low­ers, dig­i­tal adopters and dig­i­tal late­com­ers.

Deloitte de­fined dig­i­tal cham­pi­ons as fi­nan­cial in­sti­tu­tions that of­fer a wide range of func­tion­al­i­ties rel­e­vant for cus­tomers and a com­pelling User Ex­pe­ri­ence (UX).

Ac­cord­ing to the re­port, Turkey, along with Poland, Rus­sia, Spain and Switzer­land, was named in the dig­i­tal cham­pion group.

“En­vi­ron­men­tal pres­sure from cus­tomer pref­er­ences [ex­pec­ta­tions re­gard­ing ser­vices] and com­pet­i­tive pres­sure [dig­i­tal ‘ arms races’ ig­nited by banks that de­cide to lever­age dig­i­tal chan­nels as key com­pet­i­tive ad­van­tages] are re­spon­si­ble for cre­at­ing EMEA’s dig­i­tal cham­pi­ons,” the Deloitte re­port said.

It also said in­ter­net bank­ing pen­e­tra­tion is highly cor­re­lated with in­ter­net ac­cess, but it does not ex­plain dig­i­tal ma­tu­rity.

In terms of cus­tomer pref­er­ences, ac­cord­ing to the re­search, the ma­jor­ity of cus­tomers re­ceiv­ing bank­ing ser­vices in Turkey, some 65 per­cent, are us­ing mo­bile bank­ing. While 21 per­cent of the cus­tomers prefer to use in­ter­net bank­ing, the re­main­ing 14 per­cent still prefers to use banks’ branches.

In terms of dig­i­tal­iza­tion of tra­di­tional bank­ing ser­vices, Turkey, with 50 per­cent, per­forms over the EMEA av­er­age of 40 per­cent.

The re­port also stated that a mix­ture of chang­ing con­sumer pref­er­ences, com­pe­ti­tion from fin­tech star­tups and reg­u­la­tions like the Euro­pean Union’s re­vised Pay­ment Ser­vices Di­rec­tive (PSD2) have been forc­ing banks in the EMEA re­gion to de­velop their dig­i­tal ca­pa­bil­i­ties, but not all of them have taken it on­board to the same de­gree.

In­di­cat­ing that mar­ket pres­sure from cus­tomers and com­peti­tors cre­ated dig­i­tal cham­pi­ons, the re­port sug­gested that “in the near­est fu­ture, PSD2 and fin­techs will in­crease mar­ket pres­sure which will cre­ate new op­por­tu­ni­ties for dig­i­tal cham­pi­ons.”

Deloitte also noted that “Open and Be­yond” bank­ing will de­cide who will be a fu­ture dig­i­tal cham­pion. “The vast ma­jor­ity of iden­ti­fied func­tion­al­i­ties are around dig­i­tal­iza­tion of tra­di­tional bank­ing prod­ucts, yet dig­i­tal cham­pi­ons al­ready achieved a strong po­si­tion in ‘Open and Be­yond’ bank­ing,” it noted.

Com­ment­ing on the re­port, Deloitte Turkey Se­nior Partner and Fi­nan­cial Ser­vices In­dus­try Leader Hasan Kılıç said dig­i­tal bank­ing lead­ers are di­rectly af­fected by en­vi­ron­men­tal fac­tors.

“Cus­tomer pref­er­ences and mar­ket pres­sure can cause banks in these coun­tries to turn to de­velop dig­i­tal ca­pa­bil­i­ties faster than cus­tomers ex­pect. The mat­u­ra­tion of dig­i­tal bank­ing in Turkey stems from both the cus­tomer pres­sure and the com­pe­ti­tion be­tween the banks to of­fer bet­ter ser­vices. To­mor­row’s dig­i­tal cham­pi­ons - it is no longer pos­si­ble to just call them ‘banks’ - will be banks that can trans­form them­selves into var­i­ous plat­forms and pre­pare them­selves in the best way for Open and Be­yond bank­ing in the fu­ture,” Kılıç noted.

Mean­while, coun­tries such as Is­rael, Ire­land, Ice­land, Slove­nia, Latvia, Kuwait, Le­banon, Jor­dan, Saudi Ara­bia and the United Arab Emi­rates (UAE) were named in the “Dig­i­tal Late­com­ers” group.

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