Low interest rates, regulatory
pressure and intense competition are forecast to compromise returns
in the Turkish cards segment. But Bülent Ersöz, card payment
systems director at TEB who led the launch of the world’s first
digital card, tells Duygu Tavan that TEB will prosper from further
cards innovation.
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Banks
in Turkey have been pushing retail banking innovation in two key
areas in the past two years: cards and direct channels. Turk
Ekonomi Bankasi (TEB), a bank with a commercial banking background
and the country’s 11th biggest lender by assets, has been no
exception.
Since French-lender BNP Paribas
acquired a 50% stake in the bank in 2005, TEB has begun to focus
more on retail banking products. TEB currently has a market share
of credit cards issued of just under 1.8% – but last year, it
became an unexpected high flier of global cards innovation with the
launch of the world’s first digital debit card.
In the process, TEB attracted
international acclaim for innovation normally reserved for local
banking giants such as Garanti and Akbank.
TEB card payment systems director
Bülent Ersöz told RBI that the bank aims make all its
credit cards available as digital cards by the end of 2012. The
first of such digital credit cards will be introduced sometime
between May and June and will support the Bonus loyalty scheme,
developed by Garanti, he said. TEB, as well as other banks, have
signed agreements with Garanti to deploy the rewards scheme on
their own cards.
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By GlobalData“Customers will be able to see
their accumulated bonus points and remaining credit on the digital
screen. One can easily lose sight and control of their remaining
credit. Being told at the counter that you have reached your limit
is embarrassing. Thus, this feature will make sure customers can
stay on top of their spending and feel more in control,” he said.
“This is a very big project.”
Digital innovation is not all,
however. The other two big projects in cards products will be
prepaid and contactless cards, Ersöz said.
TEB already has a highly successful
contactless card, the TEB Total card, which deploys MasterCard’s
PayPass technology and Garanti’s bonus scheme.
Among other
campaigns, the bank promoted the card as one that helps reduce fuel
costs by giving a 5% cashback on all petrol purchases made at Total
stations.
“Petrol prices in Turkey can be as
high as double the costs as in other parts of Europe. We therefore
marketed the card as the one that helps keeps costs down.”
And the campaign has paid off:
between its launch in July 2010 and the end of the year, the bank
acquired 100,000 TEB Total card customers, boosting total number of
cards to 820,000.
“Neither we nor Total expected such
a strong adoption rate in this space of time. It has been a very
successful product for us and has enabled us to compete with other
credit cards on the market.”
The next step in the bank’s push
into contactless cards will be the launch of a TEB Total Visa card,
which will deploy Visa’s payWave technology, at the end of
January.
In addition to contactless, Ersöz
added that the TEB Total card will be available in prepaid format
and thus ideally suited to pay congestion charges in Istanbul,
where an automatic payment service has taken the place of cash
payments.
But, according to Ersöz, obtaining
chip-and-pin based cards is still difficult for some people in
Turkey, so the bank aims to tap into the unbanked market by selling
prepaid cards at Total stations 24 hours a day from July.
“In the
prepaid cards segment, our target group is the unbanked and young
sector of the market. This will be our pilot project for any future
prepaid cards.”
In terms of marketing, Ersöz said
that campaigns will depend on specific projects and products.
The bank will use all channels
available, including TV, print media and in-store advertisements.
But it will also launch campaigns through internal channels, such
as SMS and email and use Total’s petrol stations and billboards to
advertise new products.
Although the bank has shifted its
focus from predominantly commercial banking to retail banking,
Ersöz emphasised that TEB targets growth in all business areas and
will launch appropriate campaigns.
One major growth area besides
retail banking will be private banking, Ersöz said. TEB generated
TRY22.7m from private banking in the third quarter of fiscal 2010 –
a meagre figure compared to TRY2.38bn it generated from retail
banking and TRY4.23bn from commercial banking.
Private banking also lagged behind
commercial and retail banking in terms of deposits, where the bank
generated TRY1.46bn versus TRY3.46bn in retail banking and a
slightly higher deposit of TRY1.66 in commercial banking.
Looking ahead and beyond 2011,
Ersöz is confident that the bank will be able to snatch market
share from its bigger domestic competitors.
“There is no particular competitor
[for us]. We have entered into the retail banking market almost two
decades later than anybody else.
“Our goal is for everybody who becomes a TEB customer to sign up
for a credit card. We are gaining more and more market share, but
we have a long way to go still.”
See also: Turk Ekonomi Bankasi
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