“Credit Activity Expected to Pick Up in the Last Quarter”

Hayat Finans General Manager Galip Karagöz stated that credit utilization in the real sector is at a minimum, saying, “Companies are trying to get through this period by selling real estate. We expect a more stable market after June. The fog will clear. If the program progresses as planned, we expect credit utilization to increase in the last quarter.”


The number of digital banking users worldwide has reached 1.11 billion. Let’s look at other figures: In the European Union, there are more than 5,000 traditional banks and over 100 digital banks. Globally, this number is close to 400. As of July 2023, the volume of digital banks globally has reached $300 billion.

We spoke with Galip Karagöz, who became the General Manager of Hayat Finans, one of Turkey’s pioneers in the sector, at the end of 2023, about both the sector and the first five months of the year.


Karagöz said that this area has been quickly accepted in Turkey as well. “The only issue is regulation,” he said, emphasizing that they are awaiting regulations in this area. He explained the advantage of being a branchless bank: “The establishment cost of a branch ranges from 6 to 10 million TL. Moreover, this is only the physical cost. Thus, we can talk about more cost-effective, accessible banking services. Digital banks prefer to invest this money in technology and artificial intelligence.”


According to Karagöz, the difficulty in accessing finance in the market also affects digital banks. “Hayat Finans prioritizes private and corporate individuals within the Hayat Holding ecosystem. Our current target is 10,000 dealers. Today, we have reached 4,000 dealers,” said Karagöz, noting that the first quarter of the year was a maturation period for them. Karagöz stated that by the end of May, Hayat Finans had reached 2.6 billion TL in deposits and had provided over 2 billion TL in loans. He emphasized that 40% of these loans were used within the Hayat Holding ecosystem, while the rest were used by SMEs.

What is the market’s appetite for credit usage? “There is a need, and therefore an appetite, but the real sector finds it challenging to use credit under these conditions. Everyone has minimized their needs. The market is trying to get through this period with methods like selling real estate,” Karagöz said, suggesting that the foggy picture will clear soon.

Karagöz explained this further: “If the economic program proceeds according to the expected schedule, we will enter a disinflation process. The market expects the schedule to proceed this way. Therefore, we foresee that in a month, the fog will clear, and credit usage will start to increase. We expect credit market activity to pick up in the last quarter.”


According to Galip Karagöz, the sector needs some regulatory changes. Karagöz said, “Currently, the regulation states that ‘a digital bank can only work with SMEs.’ If the SME I work with exceeds 500 million TL, it no longer remains an SME and must go to a traditional bank. This is a handicap for me. On the other hand, there is the issue of checks. Companies in Turkey work with checks. Since there is no electronic check law, I cannot do this as a digital bank. I can work with X bank. But the regulation also prohibits this. This restriction does not exist in the world.”


Karagöz noted that 24% of the world’s population still has not entered the banking ecosystem and believes that digital banks can capture this group. Karagöz said, “As a bank, we support sustainability-themed projects. Since we engage in participation banking, we also engage in profit-loss partnerships. In Turkey, 69% of SMEs do not have any digitalization strategy. In two years, it is targeted that digital banks will have a 10% share of total deposits,” he said.


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