Awards for Excellence 2019
|
|
| View full 2019 results |
There is rarely any difficulty in persuading senior bankers to give details of their investments in digitalization. With most, indeed, the challenge is getting them to stop reciting an endless list of technology buzzwords.
What is often much harder is pinning these digital evangelists down on the impact all this spending and innovation is having on their bank’s bottom line.
Akbank chief executive Hakan Binbasgil is a rare and refreshing exception to the rule. While keen to talk about the Turkish lender’s mobile-first strategy, collaboration with fintechs and embrace of ‘phygital’ branches, he is equally happy to discuss the financial impact of digitalization.
“At the end of the day, that’s what matters,” he says.
He has some impressive numbers to cite. More than 60% of Akbank’s active customers use its mobile banking platform, accessing it on average 30 times a month.
|
|
|
Hakan Binbasgil |
“Every visit gives us an opportunity to cross-sell products and talk to our customers,” says Binbasgil.
Akbank is making the most of the opportunity. Around two thirds of general purpose loan sales go through digital and out-of-branch channels, as well as 50% of new credit card sales.
Direct banking channels contribute around half of non-credit fee and commission income, which accounted for a substantial chunk of the 47% year-on-year increase in overall fee and commission income in the first quarter of 2019.
The rapid take-up of multichannel banking has also allowed Akbank to cut its physical network by 22% over the last four years, as well as changing the role of branches. Launched last year, the bank’s new branch format is designed to be cashless and as close to paperless as is possible in Turkey’s current regulatory environment, with tellers replaced by mobile staff with tablets.
All of this has contributed to Akbank’s standout number, namely its cost-to-income ratio. As recently as 2015, this stood at 39.3%. Last year it came in a full seven percentage points lower, at 32.3%.
“Reaching this level with a universal banking model is not easy,” says Binbasgil. “It’s something we are very proud of, and it’s largely thanks to our effective digital strategy.”
It is all the more impressive given that Akbank’s technological achievements have not come cheap. Despite upheavals in the Turkish markets and a dramatic slowdown in the economy, the lender invested $200 million in innovation and technology last year and expects to spend nearly the same again in 2019.
Part of this has gone on a new $250 million data and living centre that will host Akbank’s entire technology infrastructure, which became operational this year.
The bank has also invested heavily in improving customer service and risk management through the effective use of data. A unique system called Financial Intelligence (FIZ) uses artificial intelligence and machine-learning to help customers and relationship managers navigate the bank’s physical and digital channels.
“It is like a central brain within the bank that links our digital platforms with our branches, ATMs and the contact centre,” says Binbasgil. “Wherever a customer hits one of these boundaries, it feeds through to the system and helps us to communicate with them.”
You are trying to migrate your bank into a very small screen, so simplicity and practicality are essential – Hakan Binbasgil
This is complemented by a data management platform that combines Akbank’s internal data with information from multiple external sources.
“It allows us to give answers to credit applications via our mobile platform in seconds,” says Binbasgil. “That is the key to our high digital sales numbers.”
Akbank has also led the Turkish market in establishing links with the global fintech community. It was the first bank in the country to launch an application interface (API)-enabled open banking platform and one of the first to create a facility at its Istanbul headquarters – Akbank Lab – dedicated to collaboration with external partners.
At the same time, Akbank has worked hard to nurture an internal culture of innovation. Binbasgil cites the example of design, where the bank has laid out institution-wide principles that inform the creation of all internal and external interfaces.
“Design is crucial for success in the digital sphere,” he says. “At the end of the day, you are trying to migrate your bank into a very small screen, so simplicity and practicality are essential.”
A focus on hiring highly qualified, younger staff has been key to changing Akbank’s internal culture, he adds. Of the bank’s approximately 13,000 employees, 95% are graduates and 10% post-graduates. Women account for 53% of the total.
“We don’t really have to push for innovation anymore, because ideas are coming from all over the place,” says Binbasgil. “This is something I’m very happy about.”
Akbank’s most recent digital initiative, launched in June, is a peer-to-peer payment platform targeted at Turkey’s huge youth demographic. Called Tosla, it incorporates elements of gaming design as well as social media functions and can be used by non-bank customers.
“Turkey is a young country,” says Binbasgil. “Half of our citizens are under 30, so that’s our target market. Tosla is very practical and will appeal to a wide audience, and we are confident that a lot of those customers will migrate to the bank.”
