TKBB Has a Very Important Mission

İkram Göktaş, President of the Participation Banks Association of Turkey (TKBB), gave an interview to the Katılım Finans / Participation Finance magazine about the 20th anniversary of the TKBB and the development of participation banking in Turkey and conveyed the vision of the institution and his projections about the participation finance sector.

WHAT IS YOUR PERSPECTIVE ON THE 20TH ANNIVERSARY OF THE TKBB?

We have determined our 20th-year perspective as  strengthening our communication with our target customers, conveying the operational processes and functioning of the participation finance system to our customers in detail, developing cooperation mechanisms with our stakeholders, ensuring product diversity, and increasing awareness of sector employees. All of our institutions are working on these on an individual basis.

As participation banks, we need a significant amount of human resources. In this context, there are programs at the master and doctorate levels in universities. Lately, departments have been opened primarily in private universities. These are positive developments for our industry. Previously, we had to give very significant trainings on specific issues related to our field for human resources coming from universities, which was reflected in the industry as both a cost and a waste of time. Now, with the employment of new graduates, progress will be made in terms of education.

Within the scope of improving operational processes, technology comes to the forefront. We currently see that all of our members use technology very well and that customer turnover increases rapidly. As of the end of June 2021, our sector grew 16.6% in the funds provided compared to the end of 2020 and supported the markets with TL 280,003 million. Asset size increased by 15.4, reaching TL 504,309 million. This shows that the banking sector has reached a share of 7.5% in total assets. We can say that we have started to see the results of the awareness that we have created. We use technology in many different ways. Especially in the field of digital banking, all institutions have serious investments. Venture capital investment funds on technology have also been implemented. At this point, we take Islamic fintech reports as a basis. When we look at the reports, we see that alternative financing methods such as digital wallet, artificial intelligence, Roboadvising, blockchain, crowdfunding, open banking, wealth management, fundraising are significantly included. We can confidently say that these have been developing in our country. Our efforts to change the perspective continue. Supporting the murabaha method, which constitutes an integral part of the sector, with other methods and products

By increasing the understanding of partnership and incorporating technology, we need to put into practice our perspective rapidly

will be a factor that will bring growth. We can say that there is a serious dynamism in the sector when other partnership methods are employed through venture capital investment funds, but this is not enough. By increasing the understanding of partnership and incorporating technology, we need to put into practice our perspective rapidly.

WHEN YOU LOOK AT THE INSTITUTION'S PAST AND FUTURE, HOW DO YOU PERCEIVE THE JOURNEY AS THE PRESIDENT OF TKBB?

Our industry has a 37-year history in Turkey. We are celebrating the 20th Anniversary of the Participation Banks Association of Turkey (TKBB), which was founded in 2001 as the Association of Special Finance Institutions and changed its name in 2005 with the transformation of special finance institutions into participation banks. We can say that with the establishment of the Association as an umbrella organization, there is further awareness in this area. The TKBB and the participation banks had the chance to collaborate. Our association collects the sector figures I have just mentioned from member organizations and presents them to the public. As such, TKBB has a vital mission in terms of managing the current statistics and following the sector both in the country and in the world.

We attach great importance to the consideration of collective wisdom while guiding the sector. Here, TKBB appears as a cohesive and unifying component. 

TKBB has a vital mission in terms of managing the current statistics and following the sector both in the country and in the world

We anticipate that this role will increasingly continue in the coming period. While our institution has been carrying out its duties and activities in harmony with all its stakeholders, it continues to work intensively to achieve sustainable growth and make the sector offer world-class financial products and services.

HOW DO YOU EVALUATE THE 15% MARKET SHARE TARGET BY 2025 THAT TAKES PLACE IN THE TKBB STRATEGY DOCUMENT, WHICH INTERNATIONAL RATING AGENCIES ALSO FOLLOW?

15% market share is a very ambitious target. All of our institutions are making great efforts to achieve this goal. The progress achieved in 2021 has given us hope. Industry players currently serve their customers with a total of 1,280 branches and employ more than 17 thousand people. In line with the coordination of the TKBB, the meetings with the member participation banks and sector stakeholders, we have set six main goals for participation banking to become stronger in our country and accomplish the point it deserves. These goals are communication, ecosystem, product diversity, standards/governance, digital and competency building. It will not be difficult to reach a market share of 15% in 2025 with the harmonious work of all our sector stakeholders and taking the determined strategic steps. The recent statements of the international credit rating agency Moody's, that in Turkey it expects the share of participation banking in total banking assets to increase at least twice in the next five years, also supports this. There are different instruments used around theworld. We believe that the industry will go a long way if we can overlap and align these with the facts of our country. The most crucial factor here is the capital markets. We need to support growth by putting into practice capital markets and capital market products. When we look at the examples around the world, we can easily say that rapid growth periods occur together with the capital markets.

TODAY, SIX PARTICIPATION BANKS OPERATE IN TURKEY. IN THE FUTURE, DO YOU EXPECT PARTICIPATION FINANCE INITIATIVES IN THE PUBLIC OR PRIVATE SECTOR?

Public institutions are opened with government decisions. As such, time will tell if there will be more than three new initiatives. As for the private sector, the performance of six participation banks will determine the situation. If we achieve the performance, we deserve in the upcoming period, a market share of 15% will make these platforms attractive. Investors will be attracted to the sector, especially from the country and abroad. In our country, I see it as inevitable that new players will join our sector, which has entered a rapid growth trend in recent years, especially with the support given by our government. I find it highly beneficial to increase the number of players in participation finance for our industry to carry its market presence and assertiveness to the future. It is especially valuable for the private sector and foreign investors tocome. Our part is to achieve the numbers, to make this place attractive and to increase their appetite.

TKBB Chairman of the Board of Directors İkram Göktaş