COMMENT: Turkish banks must embrace ecosystems

COMMENT: Turkish banks must embrace ecosystems
Istanbul, Turkey's commercial and financial capital, is home to more than 16mn people, offering fintech banking products potentially huge market potential. / Ahmed ツ: @mutecevviil,
By Yerbol Orynbayev December 1, 2023

Turkey is in the midst of a once-in-a-generation economic crisis. The spotlight has been on how government policy has responded to soaring inflation, but Turkish banks also need to take drastic action if they are to survive.

President Recep Tayyip Erdogan’s “low rates, low inflation” strategy led the economy onto a dangerous precipice—and brought inflation up to a staggering 72.3% in 2022. To rectify this damage, the Central Bank of the Republic of Turkey most recently ramped up interest rates to 40%. To put it bluntly, Turkey’s ‘seesawing’ policies have put the economy in a dire state.

But this has not stopped consumer spending, as, despite the uber-high inflation in 2022, it still rose by 19.7%. And this is bolstered by the rise of digital banking in the country.








Number of active customers (thousand)







Volume of transactions (TL Billion)







Internet banking







Mobile banking







Volume of transactions (% of GDP)







Internet banking







Mobile banking







Internet banking and mobile banking in Turkey (Source: Banks Association of Turkey).

Turkey’s banks seem to be succeeding amid the economic turmoil: more and more customers are using online banking – and more and more transactions are taking place. This is a sure-fire sign that the retail banks need to expand their digital offerings.

Like their European counterparts, Turkey’s banks have already begun to digitise their services. They have already incorporated loans, deposits, insurance and investments into their integrated platforms – and have clearly anticipated the expectations of the young, digital-first generation.

But Turkish banks must go further. There is a distinctive lack of lenders employing a comprehensive ecosystem business model among Turkey’s retail banks – and this is potentially hampering the wider economy.

Why? Loans.

While Turkish banks have achieved high revenue in recent years, there has been a sharp decline in loans when compared to GDP from 67% in 2018 to 52% in 2022. This shrinking number of loans is problematic because the lending sector is critical to driving economic growth—and that’s even more important in the turbulent situation Turkey finds itself in.

Loans are the lifeblood of economic activity. They encourage the foundation of new companies, the expansion of existing ones and ensure competition across all sectors. This supercharges the money supply in an economy, maintains a healthy supply and demand dynamic and, in that way, fuels the economy’s growth.

Turkey’s retail banks should do all they can to turn around these numbers, and they can use their digital platforms to do this. They should put all their eggs into digitalisation and leverage their digital platforms to expand their lending activity.

Nevertheless, they cannot achieve this with their current business models. Only comprehensive banking ecosystems can create a holistic, user-forward service. By developing these ecosystem models and by enhancing their digital platforms further, Turkey’s banks can increase the efficiency of loan applications and financial inclusion—contributing to economic growth in the process.

Of course, by providing greater access to financial services through fully-fledged ecosystems, Turkey’s banks can rapidly begin to onboard more customers onto their digital platforms.

But they’ll need to incentivise customers to join these platforms. And there are multiple ways to do that.

First, banks could develop retail and consumer-focussed online loan products, making it much easier for people to secure the loans they want and need. This would kill two birds with one stone—and could simultaneously boost the number of customers on their digital platforms as well as bolster the number of loans made online.

Second, these banks could create marketplaces where customers can both buy products and services—and secure financing.

It’s an age-old myth that banks should only offer financial services. And now that the public—and especially the younger generation—value convenience above everything else, banks should be aiming to move away from their brick-and-mortar past. They must become one-stop shop institutions. They should aim to offer non-financial services—like retail, travel, entertainment and telecoms services—alongside their financial offerings to maximise the value of their platforms.

For example, Turkish banks could introduce popular schemes like ‘buy now pay later’, allowing customers to continue to spend even in a high-inflation environment. All in all, these initiatives mean banks can generate revenue from many different sources and diversify their streams of income for when the macroeconomic situation stabilises.

Overseas markets provide some valuable lessons on how to do it right. China sets the global benchmark when it comes to combining financial and non-financial products. AliPay is a shining example--they’ve created a one-stop shop for a variety of products, increasing convenience and providing benefits through discounts and incentives.

‘Erdoganomics’ has certainly taken its toll on the country. And, while banks seem to have fared rather well out of the chaos, it’s important that Turkey’s banking sector prepares for a world beyond high interest rates and high inflation.

I understand that banks might be reluctant to move towards ecosystems; after all, they require banks to transition beyond financial services—and they rely on the consumers’ desire to spend and utilise the various non-financial options available to them. But with consumer spending rising—mostly because consumers would prefer to spend rather than wait for prices to rise more—it should be a no-brainer. 

The ecosystem business model will ensure that Turkish banks have a healthy, flourishing future. And it’s not a far distance away either: as shown, Turkey’s retail banks have already invested enough resources to digitise most of their financial offerings. But they just need to go that step further to create a more holistic service.

If Turkey’s banks do so, and prioritise the customer above everything else, they could position themselves as leaders in digital finance—and prove that they can make a sustainable profit in a high-inflation landscape.

About the author

Yerbol Orynbayev is an independent financial services consultant and former deputy prime minister of Kazakhstan, and is now based in Washington DC. He advises leading financial services and technology companies and has held a number of senior positions in private financial, research and technology companies. Prior to his consultancy career, Orynbayev served as the deputy prime minister from 2007-2013 and aide to the president on economic policy from 2013-2015. He also worked as a governor of the World Bank on behalf of Kazakhstan, and helped to steer the nation out of the financial crisis in 2008. He was chairman of First Heartland Securities and held a number of board-level roles at the National Bank of Kazakhstan and the Agency for the Regulation of Financial Markets.