A View on the Agenda with Participation Finance

The news compiled in Katılım Finans for February are as follows:

SOME GROUNDBREAKING DEVELOPMENTS FROM THE ARTIFICIAL INTELLIGENCE UNIVERSE:

Google takes its game to the next level with Gemini 1.5 Pro, promising premium performance to rival its flagship model. Google has launched Gemini 1.5 Pro, an update to the existing Gemini Pro model that performs at the Gemini 1.0 Ultra level. Google also made the Gemini app available in more than 150 countries and expanded the range of Gemini LLMs available to developers on its Vertex AI platform. And Amazon is breaking records with the largest text-to-speech model ever trained, demonstrating exceptional natural speech capabilities.

Researchers at Amazon have trained the largest text-to-speech model ever, called Big Adaptive Streamable TTS, which they claim has emergency capabilities, exhibiting "emergent" qualities that improve its ability to speak naturally, even complex sentences. Meanwhile, NVIDIA is putting AI chatbots at your fingertips with Chat with RTX.

Nvidia has released Chat with RTX, a tool that allows owners of GeForce RTX 30 Series and 40 Series cards to run an AI-powered chatbot offline on a Windows PC. And let's not forget Slack, which recently announced game-changing AI features to boost productivity! Slack has rolled out its long-awaited AI update, introducing features like call responses, channel summaries, and topic summaries to boost productivity.

FEBRUARY 16, 2024, BAKU:

The 'Regulation on the Regulatory Sandbox Implementation' was approved by the Resolution No. 06/4 of the Board of Directors of the Central Bank of the Republic of Azerbaijan dated January 31, 2024 and entered into force.

On February 14, 2024, the Regulatory Sandbox is a set of rules regulating the testing of innovative services and products in financial markets within a limited framework (region, duration, number and size of transactions, number of participants or other restrictions). It is under the supervision of the Central Bank.

The Regulation includes the conditions set by the Central Bank for legal entities applying for participation, as well as the products to be tested in the Regulatory Sandbox, the circumstances that terminate the right to participate in the regime, and the conditions and procedures for the application of the applicable legislation governing financial markets. (The regime participants, the supervision of the activities of the regime participants and the maximum period that can be applied for the regime).

The Central Bank will announce the application period for the special regulatory regime on its official website one month in advance.

OZAN DENİZ BECOMES THE NEW GENERAL MANAGER OF THE INTERBANK CARD CENTER (BKM), MBA

As Deputy General Manager of the Central Bank of the Republic of Turkey, he coordinated the development of FAST from start to finish.

Founded in 1990 with the partnership of 13 public and private Turkish banks, Bankalararası Kart Merkezi A.Ş., which became the controlling shareholder of the Central Bank of the Republic of Turkey in 2019, has taken an important step to prepare for the new era as a system operator and one of the financial technology institutions with systemic importance for the payment systems of our country.

In 2005, Ozan Deniz graduated from Boğaziçi University, Department of Computer Engineering, received a Master's degree in Computer Engineering from Middle East Technical University and an MBA from the University of Texas. In 2018, he completed the Harvard Business Review Executive Leadership Program.

The statement reads as follows:

"Ozan Deniz started his career at the Central Bank of the Republic of Turkey in 2006 and held managerial positions in Information Technologies, Business Development, Payment Systems and Financial Technologies departments.

During his tenure as the Deputy General Manager of the Central Bank of the Republic of Turkey, he played an important role in guiding FAST, which is positioned as the foundation of our country's retail payment infrastructures, by providing all coordination from start to finish in the development of FAST.

He led the development of EFT, FAST, Easy Addressing, TR-Karekod, Request Payment and Security Layer Services with domestic and national resources in order to realize payment systems and financial technologies.

Ozan Deniz has been serving as the General Manager of Interbank Card Center A.Ş. as of February 2024."

The adopted Regulation will contribute to the introduction of innovative services and products to Turkey's financial markets through the Regulatory Sandbox, thereby increasing financial inclusion and further improving the security and accessibility of financial services for users.

INTERBANK CARD CENTER

"Interbank Card Center (BKM) (Card Payments) TR QR Code Technical Principles and Rules Guide 1.02" has been published. In the published guide, the change was shared as "ATM TR QR Code Deposit Flow and Payment Flows with Customer Verification with Push Notification Confirmation by Third Party Mobile Applications". You can access the Payment Service Providers with QR Code Generator Code from the Interbank Card Center (BKM).

New Assignment

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) elected Prof. Dr. Ertuğrul Boynukalın, Deputy Chairman of the Advisory Board of our Association, to the Sharia Advisory Board, Prof. Dr. Necmettin Kızılkaya, Lecturer at Istanbul University, to the Governance and Ethics Board, and Sezayi Toprak, Head of Risk and Data Analysis Department at the Public Oversight Accounting and Auditing Standards Authority (POA), to the Accounting Board for the period 2024-2028.

AS OF MARCH 1, 2024 MKK PUBLISHED MARKET DATA

The Central Bank of the Republic of Turkey (CBRT) Payment Systems were renewed with new technologies and architecture. The CBRT Payment Systems, consisting of the Turkish Lira Interbank Transfer System (EFT), the Turkish Lira Inter-Customer Transfer System (PÖS) and the Electronic Securities Transfer System (EMKT), were upgraded and renewed within the CBRT in order to transition to a more flexible and independent architecture.

Operating since 1992 and redeveloped and put into production within the CBRT in 2013, the CBRT Payment Systems have been operating effectively and efficiently as the main infrastructure of the Turkish payments ecosystem for more than 10 years. In 2023, approximately 780 million transactions were settled in the CBRT Payment Systems, with a daily average of 3.1 million transactions.

QATAR TO START INSTANT PAYMENTS IN MARCH

Qatar Central Bank (QCB) has called on local banks to adjust their status in preparation for the launch of its instant payment service (Fawran) in March 2024. The service is part of QCB's pioneering and innovative initiatives in payments and digital transformation in Qatar. This is in line with the 3rd Qatar Financial Sector Strategy (FSS) and complements QCB's efforts aimed at improving payment infrastructure systems and keeping abreast of the latest developments in the electronic payment and funds transfer system. On this occasion, Sheikh Ahmed bin Khalid Al-Thani, Vice President of Financial Instruments and Payment Systems at QCB, said that the launch of the 'Fawran' service underscores QCB's keenness to provide the best services to customers of banks and financial institutions in Qatar and to facilitate regulation.

"TURKEY FINANCIAL OUTLOOK STUDY - JANUARY 2024" PREPARED UNDER THE COORDINATION OF THE PRESIDENTIAL FINANCE OFFICE HAS BEEN PUBLISHED

The "Turkey Fintech Outlook Study", prepared under the coordination of the Presidential Finance Office, showing the current state of the sector and its development compared to previous years, was first published in December 2021. This study, which aims to create an up-to-date and categorized data set, provides domestic and international entrepreneurs and investors with up-to-date and accurate data on Turkey's fintech outlook.

As of January 2024, 1.3 million dollars was invested in 2 fintech companies. 691 active fintech startups operate in Turkey's fintech ecosystem, with Payments, Banking Technologies and Blockchain/Crypto Asset verticals coming to the forefront.

FAST PAYMENT ON LAYER SERVICE HAS BEEN ACTIVATED

The FAST Request Payment Overlay Service, which allows the creditor to request a FAST (Funds Instant and Continuous Transfer of Funds) payment from the debtor, has been launched. The overlay service, which was initially launched for person-to-person payments, enables the initiation of a money transfer between two people by providing a communication and approval mechanism for the creditor to initiate the payment.

In addition to person-to-person payments, the Request Payment Overlay Service is designed to be interoperable with various business models. It is expected that the Request Payment Layer Service will create added value in many areas of the payments ecosystem with various areas of use such as e-commerce payments, e-instruction payments and corporate invoice payments in the future.

The number of participants in the FAST System, which offers 24/7 instant and secure money transfer, increased to 36 with the participation of 10 Payment and Electronic Money Institutions in 2023. The FAST System, which is used as an alternative payment method to cash and cards to meet the needs of the payments ecosystem, has increased its transaction volume since the first day it was put into production, with an average of 11 million transactions per day in January.

It is aimed that the FAST system will pave the way for new business models by encouraging competition and innovation in the field of payments with the innovative technologies it offers together with its layer services, and serve as a transparent, secure and fast payment method by easily managing the financial status of users and facilitating their daily lives.

OUR SUSTAINABLE INVESTMENTS CONTINUE

Ufuk Uyan, General Manager of Kuveyt Türk, said, "Being respectful to society and nature is among the fundamental principles of participation finance. At Kuveyt Türk, we plan and execute our activities in a way to maximize environmental and social benefits. Within this framework, we measured our greenhouse gas emissions by fulfilling our environmental obligations and participated in the 2023 CDP Climate Change survey for the first time and received a B score, one of the best grades in the banking sector. At Kuveyt Türk, we prioritize projects that will protect our nature with our actions towards energy efficiency. We act with the sensitivity of fulfilling our responsibilities towards future generations. In this regard, we fulfilled all the necessary criteria for the Zero Waste Certificate and became the first participation finance institution to receive this certificate. In addition, our Kuveyt Türk Banking Base building has BREEAM certificate, which shows that we attach importance to energy efficiency. In addition, by adopting a paperless banking approach, we reduce paper consumption, prevent high water consumption during paper production and reduce our direct emissions. Again, in order to support sustainable economic development, we continue our sustainable investments, especially renewable energy and rooftop SPP financing, at full speed. We will continue to engage in environmental activities with our goal of becoming the leading participation finance institution in digital and sustainable finance."

MEHMET ALİ AKBEN, GENERAL MANAGER OF VAKIF KATILIM, TALKED ABOUT THEIR ACTIVITIES IN THE FIELD OF DIGITAL BANKING

Having built its growth strategy on strengthening digital channels, Vakıf Participation's number of customers gained through digital channels increased 5 times in 2023 compared to the previous year. Commenting on the issue, Vakıf Participation General Manager Mehmet Ali Akben said, "Our goal is to ensure that all of our transactions other than digital channels, especially financing products, can be realized on digital channels. At the point we have reached today, approximately 94 percent of transactions are made through digital channels."

Continuing its digital transformation investments in line with its vision of providing fast and accessible banking services to its customers, Vakıf Participation aims to increase the use of artificial intelligence and robotics by the end of the year.

Vakıf Participation General Manager Mehmet Ali Akben said, "With the competition moving to digital, customer experience has gained a much more critical importance. As a result of the improvements we realized in 2023, especially in remote customer acquisition, we reduced the time to become a customer to 4 minutes.  We also became the first financial institution to launch the remote customer acquisition process for legal entities during the year. The number of customers acquired through digital channels increased 5 times compared to the previous year." Akben underlined the importance they attach to digital banking by saying that they address every process they design and every service they offer in digital channels, especially mobile banking, in line with their customers' desire and preferences to have the best experience.

"WE WILL INCREASE THE USE OF ARTIFICIAL INTELLIGENCE AND ROBOTICS"

Stating that 2023 was a year in which they strengthened their digital channels and increased the digitalization rate of their customers, Mehmet Ali Akben said, "This year, we want to expand the scope of our services and bring a wider audience to our bank through digital means. At the same time, we will continue our data-centered business culture and increase the use of artificial intelligence and robotics in this direction. In 2024, we will further increase our 'Digital Maturity' level, which we have set in order to carry our digitalization targets to higher levels, and we will continue to respond to the expectations of our customers in the most effective and fastest way in accordance with the developing technology."