As a result of one of the most comprehensive and objective assessments of financial institutions' digital maturity, Turkey has been named one of the five champions in digital banking in Europe, the Middle East and Africa (EMEA), according to Deloitte, one of the largest global tax and consultancy firms.
In its EMEA Digital Banking Maturity 2018 report, Deloitte conducted a comprehensive benchmarking of functionalities and customer preferences in 248 financial institutions and 10 financial technology operators (fintechs) across 38 countries to separate digital champions from the smart followers, adopters and digital latecomers.
Accordingly, the report suggested banks in the EMEA markets could be broadly divided into four groups, namely digital champions, smart followers, digital adopters and digital latecomers.
Deloitte defined digital champions as financial institutions that offer a wide range of functionalities relevant for customers and a compelling User Experience (UX).
According to the report, Turkey, along with Poland, Russia, Spain and Switzerland, was named in the digital champion group.
"Environmental pressure from customer preferences [expectations regarding services] and competitive pressure [digital 'arms races' ignited by banks that decide to leverage digital channels as key competitive advantages] are responsible for creating EMEA's digital champions," the Deloitte report said.
It also said internet banking penetration is highly correlated with internet access, but it does not explain digital maturity.
In terms of customer preferences, according to the research, the majority of customers receiving banking services in Turkey, some 65 percent, are using mobile banking. While 21 percent of the customers prefer to use internet banking, the remaining 14 percent still prefers to use banks' branches.
In terms of digitalization of traditional banking services, Turkey, with 50 percent, performs over the EMEA average of 40 percent.
The report also stated that a mixture of changing consumer preferences, competition from fintech startups and regulations like the European Union's revised Payment Services Directive (PSD2) have been forcing banks in the EMEA region to develop their digital capabilities, but not all of them have taken it onboard to the same degree.
Indicating that market pressure from customers and competitors created digital champions, the report suggested that "in the nearest future, PSD2 and fintechs will increase market pressure which will create new opportunities for digital champions."
Deloitte also noted that "Open and Beyond" banking will decide who will be a future digital champion. "The vast majority of identified functionalities are around digitalization of traditional banking products, yet digital champions already achieved a strong position in 'Open and Beyond' banking," it noted.
Commenting on the report, Deloitte Turkey Senior Partner and Financial Services Industry Leader Hasan Kılıç said digital banking leaders are directly affected by environmental factors.
"Customer preferences and market pressure can cause banks in these countries to turn to develop digital capabilities faster than customers expect. The maturation of digital banking in Turkey stems from both the customer pressure and the competition between the banks to offer better services. Tomorrow's digital champions - it is no longer possible to just call them 'banks' - will be banks that can transform themselves into various platforms and prepare themselves in the best way for Open and Beyond banking in the future," Kılıç noted.
Meanwhile, countries such as Israel, Ireland, Iceland, Slovenia, Latvia, Kuwait, Lebanon, Jordan, Saudi Arabia and the United Arab Emirates (UAE) were named in the "Digital Latecomers" group.
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