Jan. 8, 2020

Mithat Arıkan


Mithat Arıkan

General Manager, TurkishBank

“We are a small-sized bank in the market, so our agility enabled us to react swiftly.”


Mithat Arıkan is currently general manager and a board member of TurkishBank. He is also a board member of Turkish Investment and Securities, a subsidiary of TurkishBank. Arıkan joined TurkishBank in 2011 as the executive vice president in charge of credit management. He began his banking career in 1992 as an inspector and later served in various executive positions in the credit management departments of several banks. Arıkan graduated from Ankara University's faculty of political science and public administration.

Can you tell us about TurkishBank's investments in innovation and your strategy for technology and digital banking?Turkey has two main advantages in digital banking: its young population and smartphone penetration ratio. Daily banking transactions, like new account opening and money transfers, have already become digital. Now, asset management and investment planning tools are also becoming digital, which will result in lower costs for banks and less commissions to be paid for customers. AI, chatbots, and blockchain technologies are also new areas of improvement for the financial sector. Individual customers can also choose robo-advice tools to manage their portfolios. TurkishBank is aware of this development and is in close contact with fintech companies, which are also becoming important players in the market. Such collaborations with fintechs will enable us to reach more customers without a huge branch network or heavy infrastructure investments. These advancements in technology will also provide banks the ability to reduce costs and allow customers to reduce their fees for banking transactions.

The Central Bank of Turkey has reduced interest rates twice in recent months. How will this impact TurkishBank's corporate lending strategy?
After the last two interest rates meetings, held by the central bank, interest rates have been cut by almost 750 basis points. We expect the central bank to continue with these actions, in line with their monetary policy. Even though these are technical figures in the finance market, they also have an important psychological influence. If customer perception is negative, then they choose not to apply for any loans from banks. A drop in the rates can quickly change this perception to positive for customers and the banks. With borrowing costs expected to fall further in the coming period, credit interest rates should also fall. TurkishBank has always tried to pass along any advantages or discounts from the central bank or funding markets to the benefit of our customers, and this is how we will continue in the future.

What are the updated figures on TurkishBank's non-performing loan (NPL) ratio, and how are you working through this instability?
The NPL ratio of the local banking sector has increased, though it became more of an important issue for the local financial sector to manage this bad loan portfolio. This forced all banks to be more aware of the risks. We are a small-sized bank in the market, so our agility enabled us to react swiftly. We analyzed the market circumstances and sought to be proactive on how we could further help our customers. We are not an active player in the individual loan market and did not see such a negative impact on our individual portfolios. On the corporate side, we had some bad debt to manage. In terms of ratios, we are currently on the sector average, though in comparison to our previous level, our NPL ratio is now higher. Instead of selling any bad debt—which is a common practice in Turkey—we sought to restructure it internally, which is the reason why our ratio is slightly higher.

What are your objectives and plans for the next 12 months?
Firstly, we are working hard on more digitalization in banking services for a better customer journey. Secondly, in Europe especially, the open banking concept is becoming a big trend, though this is not the current situation in Turkey. TurkishBank wants to be part of the open banking trend and has already entered that zone with TurkishBank UK. Another important issue is the strong synergy between TurkishBank and our subsidiary company, Turkish Investment. This improves our financial service and product offers to affluent segment customers in the market. Developing partnerships with fintech companies to fulfill customer needs in a cheaper and easier way compared to traditional banking services and products is another goal for TurkishBank Group.