Participation Banking Strategy Document of Turkey updated for 2021–25

The original Participation Banking Strategy Document of Turkey prepared in 2015 has been updated for the period of 2021–25. New strategic pillars have been included in the new report to set a sophisticated guideline as a roadmap for the Turkish participation banking industry to reach its 2025 targets. Rapid changes in the banking industry and shift in customer behavior due to the accelerated transfer to digitilization driven by the conditions of the coronavirus pandemic period stimulated the updating of the original report.

The Participation Banking Strategy Update Report (2021–25) of the Participation Banks Association of Turkey (TKBB) will be in line with the mission to move the participation banking sector forward locally and globally in a solid and sustainable manner. The report was prepared by the TKBB with mutual coordination from EY Turkey’s consulting team and announced on the official website of the TKBB on the 25th March 2021. The updated strategy report has three sections: a review of the global and local framework of participation banking, identifying the current status of the strategic actions mentioned in 2015, and setting new strategies for the 2021–25 period.

Asset size growth projections are projected in the 2021–25 report to reach the goal of a 15% market share with a projected growth plan as emphasized in the earlier version. The three-phase methodology applied in the project management process of the report consists of participation banking sectoral research — Turkish participation banking market size analysis, projected estimations and strategy update studies. The ecosystem of the Turkish participation banking industry was studied comprehensively and meetings held with more than 20 institutions in both the public and private sectors. The vision, mission and the new strategic actions were discussed with the ecosystem stakeholders, and the current status of the actions was reviewed carefully. The responsibility matrix was determined for each strategic action of the new report. The updated strategic report covers 10 strategies and 23 actions under six key strategic goals: communication, competency-building, digital, ecosystem, product range, standards and governance.

The main focus of the updated report can be communicated as strengthening the relations between participation banks and their customers, increasing the transparency of the operational processes, enriching the interest-free finance system, developing the communication and cooperation channels with the stakeholders of the ecosystem, increasing digital competency, providing product diversity to satisfy the needs of customers and increasing financial literacy for participation banking products and services.

A project management office has been set up in the TKBB for the execution of the updated strategy report and the strategy leaders of each strategic goal have designed detailed action plans accordingly.The total asset size of the participation banking sector grew by 24% between 2015 and 2019 while the conventional banking sector grew by 16%. Participation banks generated TRY3.7 billion (US$444.05 million)-worth of profit in 2020. The total asset size of the sector increased by 54% despite the pandemic challenges. In addition to that, with a stable growth performance, funds collected increased by 49% and funds allocated by 61% in 2020.

Fatma Cinar is the head of international relations at the Participation Banks Association of Turkey. 

Participation Banking Strategy Update Report 2021 - 2025

Source: IFN