Demand for digital banking is increasing day by day

Over the years, banking services provided through a widespread branch network and face-to-face services have shifted to the internet and later to mobile banking. As banks' appetite for opening new branches has gradually diminished, the trend towards digital has increased, and finally, banks with no branches at all have entered our lives.

Demand for digital banking is increasing

The names given to electronic banking services also clearly reveal this transformation. These services, which were called "alternative" in the 90s, have taken names such as branchless banking and unlimited banking over the years, and today the use of digital banking has become widespread.

According to data from the Banks Association of Turkey, there were 56 million active digital users in Turkey in March 2020. This figure increased to 111 millionby the end of December 2023. As of the same date, the number of active usersof participation banks has reached 5.3 million. Such an increase in demand for digital banking services creates a driving force for the transfer of traditional banking models to digital platforms.

The elimination of time and space limits in banking creates a great opportunity to deliver participation banking services to more customers. The sector is working hard to increase the services offered with mobile banking applications, advanced analytics and artificial intelligence support, and to provide a frictionless, fast and easy banking experience.

Digitalization has reduced business processes within banks

Digitalization is not only limited to internet and mobile banking channels but also covers business processes within banks, which reduces costs and increases efficiency. Thus, it is possible to provide more qualified service to customers both in branches and digital channels.

The increasing diversity of digital banking services and the resulting cost advantage increase customer satisfaction and thus the use of these services.

According to data from the Participation Banks Association of Turkey, the most common transaction made by participation banking customers through digital channels is money transfers , followed by bill and corporate payments. Investment transactions rank third, followed by credit card transactions.

Legal regulations encourage innovative services

Important legal regulations such as becoming a remote customer and digital contract approval minimize the need for wet signatures and encourage innovative services that can be provided digitally. This has paved the way for a wider geographical spread and reaching more people.

As a result of all these developments, new players have entered the sector, and competition has increased significantly with fintechs and other organizationsoperating in this field in addition to banks. In this emerging picture, it is obvious that institutions that can put people at the center of their services and differentiate themselves in this respect will make a difference. This is possible by offering a good customer experience.

Ensuring security along with customer experience is one of the main issues of digital banking. For this reason, banks are increasingly using data analyticsand artificial intelligence and making significant investments in this area.

Open banking transforms digital banking

One of the concepts that comes to mind when we think of digital banking is open banking. In a nutshell, open banking can be defined as a system that allows customers to access and transact with their information in different banks from a single interface. We see that this system, combined with open finance applications, has given digital banking a brand new form, in other words, it has transformed digital banking. We can say that we have entered a period in which we will feel this transformation in our daily lives in a colorful, creative and integrated way.

Demand for qualified human resources is increasing

All these developments require investment in advanced technologies. There is a constant need for investment in many areas such as new software, infrastructure, data, security, automation, API, analytics, artificial intelligence. This need is not only limited to technology but also requires new skills and competencies. This increases the demand for qualified human resources.

It is possible to bring participation banking to a much wider audience with digital banking

To summarize, digitalization and accompanying technological developments provide a great opportunity to bring participation banking to a much wider audience. Diversification of digital services, the development of new digital payment solutions, and the ability to offer personalized services with a frictionless experience will increase the orientation towards this area. Supporting all these efforts with training and awareness activities such as financial literacy, participation banking principles and sustainability activities will contribute to increasing financial inclusion.