Innovation Opportunities Emerging With The Service Banking Model

The number of innovative financial products, the speed of taking on the field and the way they are produced will change drastically.

Banks have been providing very successful services in digital channels such as internet banking and mobile banking for a significant period of time. In this way, they not only reach their customers more efficiently and at a lower cost but also provide excellent ease of use for their customers. However, with the diversification of services in the digital world and the increase in applications on the axis of e-commerce, consumers who are accustomed to digitalisation, demand more innovation in terms of financial products.

However, there are great difficulties in bringing inno- vative products and services developed by the banking sector, whose application area is the real sector, to the field. This is because for these products to meet with customers, cooperation with real sector companies is required. Moreover, since many mutual commercial ne- gotiations and agreements have to be made, the product loses its innovative aspect and ability to meet customer needs until it reaches the field. For example, even if a bank develops a credit card that allows you to collect points from your airline travels, it may take years to convince the airline companies to include it in this pro- gram. Similarly, although it develops a credit product that can be offered at the time of shopping for the sale of electronic products due to the instalment limitation on the credit card, it is not straightforward for customers to use the product unless special agreements are made with the electronic market chains or e-commerce sites. Recently, there has been a significant development that can eliminate such problems. The Banking Regulation and Supervision Agency (BRSA) published its regulation on "Service Model Banking," which began on January 1, 2022. Thus, the concept of "Service Model Banking" en- tered our world of finance. In summary, we can say that this new model is a model that allows companies that do not have banking activities to provide banking services.

In this model, the definition of "service bank" is given to the institution that provides the infrastructure for the provision of banking services, while the meaning of interface provider is made to the digital website or applications that make use of these services and deliver them to the customers. While an interface provider can sometimes offer all banking services and position itself as a digital bank, it can also position itself in a strategy that aims to bundle other services it provides with finan- cial products. The way to become a partial digital bank, albeit indirectly, by taking advantage of the opportunities provided by this regulation seems clear. A suitable exam- ple case was the practice carried out by Albaraka Türk in Germany before. Albaraka Türk established its digital bank named Insha by using the banking license of Solaris Bank in Germany and integrating its banking application with the banking technology infrastructure. Thus, they 

succeeded in establishing a digital bank with a much lower-budget investment than establishing a bank. With the new regulation, many similar examples may emerge from Turkey. However, the most prominent innovative solutions are likely to come from real sector companies with an extensive customer portfolio. Especially online marketplace initiatives (Trendyol, Getir, Hepsiburada etc.), which have gained significant momentum in recent years, meal card organisations that have started to go beyond the payment world (Edenred, Multinet, etc.) and physical market chain stores that have commenced to take significant steps towards digitalisation (Bim, A101, Şok, Migros etc.) may start to offer banking services to their customers very soon by taking advantage of service banking opportunities.

With the Service Banking Model, the number of innova- tive financial products, the speed of taking on the field, and how they are produced will change significantly. Financial innovation, which used to be dependent on the real sector for its production, survival and promotion within banks, will now evolve into a structure that can arise and develop within the real industry itself. Thus, both the speed of taking innovative financial products on the field will accelerate, and customers' lives will be easier with more innovative products.

Technopark Istanbul Incubation Center Senior Specialist - Şerafettin Özsoy