Banking historically has been a sector based on individual or institutional client service. In today’s browser-based competitive finance world, banks need to flourish this client service viewpoint with web-empowered features for keeping clients and attracting prospective ones. Internet has emerged as a key competitive field for the future of financial services. In a sense, it is almost synonymous with change. Banks, especially commercial ones, are swiftly becoming more aware of the importance of internet banking in this era. This topic was selected to dilate the current developments and implications of internet banking in Turkey, which has been repeatedly cited as an emerging market with its growing sectors, over the period 2005 and 2008. Keywords: banking; financial innovations; internet banking; Turkey JEL Classification: G21, G29, O31, O33
© Bora Aktan, Edip Teker and Pervin Ersoy, 2009
The finance world has undergone major changes over the last three decades. Globalization of finance, integration, advances in information technologies and financial innovations in the last couple of decades have deeply changed banking business not only in Turkey but in also other markets and forced the state authorities to deregulate national financial systems. Deregulation allowed banks to flourish their businesses and enter into new markets with new technologies involving both individual and institutional costumer interaction (DeYoung, Hunter and Udell, 2004). In addition, developments of modern computer technology have also enabled banks to lessen the cost of bank transactions by having the client interact with an e-banking facility rather than with a human being. E-banking applications, which include automated teller machine (ATM), telephone banking, mobile banking, digital television, debit and credit cards, internet JIBC - 3 -
banking, etc., became one of the main battlefields of the banking industry. For instance, Hanson and Kalyanam (2007) points out that e-banking grew rapidly, ATMs made costumer visits to a branch less necessary, and then in the late 1990s the rapid growth in banking web sites made a wide range of services available from almost everywhere. The global online population is also increasing substantially that according to the internet world stats, in 2008, there was 1.6 billion internet users worldwide (Internet World Stats, 2008). Hence, internet is increasingly becoming a diverse global marketplace with global business opportunities for financial services delivery as well as challenges. The purpose of this paper is to examine the usage of internet in Turkey to make a basic due-diligence investigation for the financial institutions, including banking, stock trading, insurance and provision of financial information. This paper is organized as follows: Section II provides a brief review of the previous studies. The Turkish banking system is summarized in Section III while internet usage in financial services is reported over the period 2005 and 2008 in Section IV. Finally, Section V addresses the conclusion and implications. PREVIOUS STUDIES
Following the boom of new technologies such as the internet and mobile phones in practice, e-banking has also been the focus of numerous academic papers. Berger (2007) argues that a sound understanding of client is required for improvement of e-banking. Thus, all relevant information about the clients should be taken into account and a client-centric strategy should be developed. Confirming Berger (2007), electronic banking research has attracted much attention from marketing researchers about client perception (e.g. Maenpa et.al. (2008)), client attitudes (e.g. Liao and Cheung (2002), Mols (1998)), client satisfaction (e.g. Gonzales 2004)) service quality (e.g. Bauer et. al., (2005)) but it attracts relatively less attention from the finance and banking researchers about the economic consequences of e-banking. One of the papers that examine the...