An Evaluation For Participation Banking On Recognition Level And Product-Service Diversity

An Evaluation For Participation Banking On Recognition Level And Product-Service Diversity

This article aims on briefing about the topics of "low level of recognition/awareness" and "limited product-service diversity" within the scope of the participation banking model within the framework of "the participation banking's target of reaching 15% of market share by 2025 in the Turkish banking sector" shared with the public through the Participation Banking Strategy Update Report (2021-2025) in March of 2021, with reference to the idea of discussing the obstacles on the way of achievement of the mentioned target, by benefiting from the findings of the "Participation Banking Digital Research Report 2021".

The Fact That Participation Banks Fail in Displaying the Desired Performance in Terms of Recognition/Awareness Level and Proving To Be Adequate in Terms of Product-Service Diversity Is a Concrete Finding

Looking at the results of the "Digital Banking On-site Survey", conducted with the participation of 2246 individuals with different demographic and socioeconomic backgrounds in July-August, 2021, in order to gain insight on the approach and perspective of the conventional and participation bank customers in the digital finance ecosystem, it is noteworthy that 37% of the participants "do not have any information about the Participation Banking" and that this issue is even more evident especially in the young generation, in terms of age groups, and people with low socioeconomic status. In the same study, it was also recorded as a significant finding that Participation Banking customers stated that they do not use Participation Banking frequently, referring to the lack of widespread ATM network and the inadequacy of basic banking products and services. At this point, we should emphasize that similar results are included both in the "Presidential Finance Office Türkiye National Household Financial Perception and Attitudes Survey 2019" Report and in the "Türkiye Interest-Free Financial Literacy Survey Report", which was conducted in cooperation with Istanbul Sabahattin Zaim University and the Participation Banks Association of Türkiye.

These findings/results reveal that the institutions which started to operate in the Turkish finance sector in 1984 under the name of Private Finance Institutions and have been operating under the name of Participation Bank since 2005 have not displayed the desired performance in terms of recognition/awareness levell, and that participation banks are in a disadvantageous position in terms of competitiveness against conventional banks in terms of product-service diversity.

Based on the findings of "low level of recognition/awareness" and "limited product-service diversity", which are among the most significant obstacles preventing people who pay attention to staying away from interest-based financial transactions due to their religious sensitivities and those who are customers of conventional banks for different reasons, from choosing the Participation Banking model, the sector from sustainable growth and increasing its market share, and again the sector from realizing its high growth, it is thought that Participation Banks' focusing on these topics and implementing various strategies may obtain beneficial/positive results.

Instructor Ramazan Baş

Instructor at Kütahya Dumlupınar University (DPÜ)

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