The digital banking regulation has been published

Banking Regulation and Supervision Agency (Agency) issued the Digital Banking Operational Principles and Banking Service Models Regulation (Regulation). The regulation, which was published as a draft on August 19 and attracted attention in the fintech and digital banking fields, entered into force on January 1, 2022.

The object of the regulation is indicated as follows “To determine the procedures and principles regarding the activities of branchless banks which serve only through electronic banking service distribution channels and to provide banking services as a model of service to financial technology companies and others companies “ and focuses on two main topics: digital banking and banking as a service.

Digital bank

Important regulations regarding digital banks, which are defined in the regulation as “Credit institutions which provide banking services through electronic banking service distribution channels instead of physical branches”, are set out below: – Requirements for the authorization of establishment and operation of digital banks: The establishment of digital banks is subject to compliance with the following additional conditions in addition to the standard conditions of a banking establishment:

  • Have a minimum paid-up capital of 1 billion Turkish liras,
  • In the event that the controlling partners of the applicant are legal entities providing technology, electronic commerce or telecommunications services; residing in Turkey and sharing risk data regarding debt status and financial soundness, at the request of the Banking Regulatory and Supervisory Board (advice),
  • The staff designated as senior manager responsible for information systems must be appointed at least at the level of deputy managing director and at least one of the members of the board of directors of the digital bank must have at least ten years of professional experience in the field of information systems management. ,
  • In the activity report and the work program to be submitted to the Agency, information such as the target audience, digital data on the target audience’s market, the 5-year pricing policy, plans and estimates, information system and associated processes and technology used in processes such as remote identification should be added,
  • On-site audit of information systems and its approval.

– General principles: As a general rule, digital banks can carry out all the activities that credit institutions can carry out, depending on whether they are deposit or participation banks. Consequently, in addition to complying with all the legislation that credit institutions are required to comply with, they must also comply with the provisions of this Regulation.

– Client restriction: It is regulated that the credit customers of digital banks can only consist of financial consumers and SMSE. The exceptions to this rule are (i) the execution of lending transactions between banks or on the money and capital markets, (ii) the granting of loans to other banks and (iii) the granting of loans in foreign currency to companies that exceed the size of SMSEs.

– Organizational restriction: Digital banks are not allowed to organize and open physical branches other than head office and associated service units. On the other hand, it is mandatory to establish at least one physical office to handle customer complaints. While it is allowed to establish ATM networks, vaults and escrow transactions can only be offered digitally.

– Credit restriction: It is regulated that the total amount of unsecured consumer cash loans offered by digital banks cannot exceed 4 times the customer’s average monthly net income, and if it cannot be determined, it cannot exceed 10,000 Turkish lira.

– Abolition of restrictions: In the event that the amount of paid-in capital of digital banks is or is increased to 2.5 billion Turkish liras, it is possible to abolish the above activity restrictions for the bank with the approval of the board of ‘administration.

– Continuity of service: The percentage of continuity to be engaged for the electronic banking services of digital banks must be at least 99.8% and it is necessary to announce the value of the percentage of continuity promised.

Bank as a service

In the regulations, interface providers are defined as “Companies incorporated as limited companies that allow their customers to carry out banking transactions by accessing the banking services offered by the service bank through the open banking services of the bank through a mobile application or an interface based on an Internet browser”, and the bank as a service is defined as “A service model in which customers can perform banking transactions through the service bank by connecting directly to the systems of the service banks through open banking services, through the interface offered by interface providers. “ Important regulations regarding banking as a service are as follows:

– Restrictions on interface providers: Banking as a service can only be provided to interface providers established in Turkey. In addition, banks are prohibited from being interface providers.

– Restrictions on advertising and promotion: Interface providers are prohibited from misleading expressions that could be interpreted as payment service providers such as banks, payment institutions, electronic money institutions or as operating in this way in their trade names, all kinds of documents, advertisements and statements or statements.

– Relations between the parties: The service bank can only provide services to the customer of the interface provider if an agreement has been made between the customer and the service bank. The mediation of the interface provider in the establishment of this contractual relationship or the provision of banking services on the interface designates the interface provider as an assistance service establishment and requires obtaining authorization from the Council. .

– Mandatory elements in the agreements: The elements that must appear in the agreement between the interface provider and the service bank have been specified. We include some of the required items below:

  • The fact that the interface provider is not a payment service provider or other approved financial institution should be included in the agreement between the interface provider and the customer.
  • Details of the services offered by the service bank, the terms of the contract between the customer and the service bank and other information ensuring transparency regarding the service bank must be included in the agreement between the interface provider and the customer.
  • The sample of agreements between the customer interface provider and the customer service bank, as well as the logo and name of the service bank, must be visible on the home page of the interface provider’s website.
  • The logo and name of the bank must be visible on all existing card payment methods.
  • System in which confidential data is processed and data backups must be kept at national level.
  • Confidential information transferred to the interface provider at the customer’s request will not be processed by the interface provider or third parties with the following exceptions reserved:
    • Processing is necessary, provided that it is directly linked to the establishment or performance of the contract between the interface provider and the customer,
    • Processing is mandatory for the interface provider to fulfill its legal obligation,
    • Processing is mandatory for the interface provider to establish, exercise or protect a right.

– Operating license : Since the banks’ operating license already covers the services they will provide to interface providers, there is no need to request an additional extension on the operation.

Responsibilities of the Service Bank: The service bank is required to advertise the scope of services on its website, which includes a list of all the interface providers it serves and the banking services it provides. In addition, there is an obligation to send a copy of each service contract signed with interface providers and of each addendum to the contract which provides for a change in the scope of services, to the Agency within one week from the date of signing.

Situation of current banks

Banks that obtain a business license and provide services through physical branches can offer electronic banking services under their existing license and do not need to apply separately. In addition, the provisions of the Regulation are not applied to these banks, which means that no additional obligations are imposed. However, an on-site audit of their information systems is necessary for these banks to completely shut down their branches and only provide electronic banking services.


The regulations regulate the digital banking system currently offered to consumers and pave the way for fintechs to provide banking services. This has an accelerating and supporting effect on the innovations that will emerge in the field of finance.

You can find the full text of the regulations here. (Only available in Turkish)

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