BANKING ACTIVITIES IN TÜRKİYE: DIGITALIZATION AND SUSTAINABILITY

“We are now in an era where sustainable development-oriented banking takes precedence”

The global impacts of global warming and the depletion of Earth’s resources are being felt worldwide. Awareness activities on this issue are underway, bringing sustainability to the forefront. Sustainability encompasses various dimensions including the economy, society, and environment, and involves elements such as reducing carbon footprint, energy conservation, social development, green investments, and sustainable financing.

Studies on this subject are crucial not only globally but also in our country. All financial institutions adopting a sustainability approach in the banking sector must monitor environmental and social risks. They are required to establish a comprehensive framework and prepare an effective risk management plan to minimize these risks. At Halkbank, when investing in the future, we prioritize not only our financial future but also our environmental and social responsibilities. That is why we have placed the principle of sustainability at the core of our business model. Companies applying for loans from our bank are evaluated based on Sustainability and Environmental Assessment criteria.

They are asked about practices such as employment development, carbon footprint reduction efforts, employment of disabled individuals, and waste management. This sustainability scoring affects the company’s credit rating. Through these assessments, the bank identifies potential risks that may have adverse effects on the environment and society, and works to mitigate these risks.

GREEN ECONOMY TRANSFORMATION MOBILIZATION

At Halkbank, we pride ourselves on being one of the pioneering institutions in mobilizing financial resources for green economy transformation. We took proactive steps, foreseeing that the growth of environmental awareness and the rising energy needs would keep green financing on the global agenda for the foreseeable future. We are among the institutions that introduced Green Financing products to our country in alignment with the Paris Climate Agreement, to which Türkiye is a signatory and the accompanying European Green Deal. Under the framework of Green Financing, our bank supports investments aimed at promoting renewable energy resources and the production of renewable energy technologies in our country.

This includes enhancing energy efficiency, reducing fossil fuel consumption, and lowering carbon emissions. In this context, we provide financing solutions for both operational and investment aspects of renewable energy projects. These projects are environmentally friendly, aimed at reducing carbon emissions, and helping to decrease our country’s reliance on foreign energy sources. Through the Renewable Energy Investment Loan, we offer financing for investments in Solar Power Plants (SPPs), Wind Power Plants (WPPs), Biomass Power Plants (BESs), and Geothermal Power Plants (GPPs). These loans help companies meet their energy needs through renewable energy systems. Our total portfolio size for energy efficiency and renewable energy projects reached TRY 31.62 billion for 639 companies.

The Central Bank of the Republic of Türkiye – Investment Committed Advance Loan (YTAK) of TRY 21 billion has been extended by the Bank since the beginning of 2022. With the latest amendment, a sustainability criterion has been incorporated into the Technology and Strategy score used to qualify for YTAK credit benefits. As a result, sustainability has become crucial for companies seeking to access investment credit under favourable conditions. We also support efforts towards electric vehicle transformation and enhancing energy efficiency.

Together with other public banks, we provided financing support for the establishment of our country’s automobile brand TOGG factory. At Halkbank, we provide special interest rates and flexible maturity options on TOGG loans for customers interested in purchasing Türkiye’s domestic and national automobile brand, TOGG. We are proud to be the first Turkish bank committed to achieving net zero emissions by 2050, aligned with SBTi (Science Based Targets) standards. Additionally, we lead with initiatives like our Women Entrepreneur Department Directorate and Value Driven Financing model.

Due to our environmental commitment, we maintained our “A-” score in the CDP Climate Change program at the leadership level during the 2023 assessment. In the CDP Water Security program, we achieved inclusion in the Global A List for the second consecutive time, earning the highest A score. Since 2017, we have been listed on the Borsa Istanbul Sustainability Index (BIST). Additionally, in the second quarter assessment of 2024, we secured our place in the BIST Sustainability 25 index. We are proud to be among the first Turkish banks to join the Net-Zero Banking Association, established by the United Nations and comprising 111 banks from 41 countries as members.

We aim to expand green transformation not only within our operations and collaborations with credit customers but also across our supply chain. In this context, we assessed 70 percent of our procurement activities within the framework of sustainability using the Sustainable Procurement Question Set established under our Sustainable Procurement Policy, which was published in 2023.

NEW HORIZONS IN FINANCE: THE DIGITAL TRANSFORMATION JOURNEY

The Turkish banking sector has emerged as a global model due to its emphasis on digital innovation and customer experience. At Halkbank, we remain committed to advancing new-generation banking, actively participating in the ongoing global digital transformation. We continuously strive to advance digital banking through personalized services tailored to customers of all ages and backgrounds. At our bank, we have established a Digital Transformation Department dedicated to overseeing and driving digital innovation. Under the guidance of our dedicated department, we have transformed our branches into a new concept that prioritizes robust technology and sustainability. This transformation aligns with our service model, enhancing our interactions with customers. As part of our new service model, through the “Document Management Screen”, we secure digital approvals for all legally permissible documents from our customers.

Through Digital Customer Opening, we enable our customers to take their initial steps into our bank digitally. Nevertheless, we strongly believe that financial literacy is crucial for the success of our developmental efforts. In this regard, we place special emphasis on children’s banking. For those under 18 years old, we have launched an educational and entertaining application designed to introduce them to banking, impart financial literacy, and cultivate a sense of savings awareness from an early age.

Furthermore, through our new initiative, we aim to promote environmental protection and recycling awareness among children with the Zero Waste game, fostering a sense of sustainability from a young age. We were pioneers in the banking sector by introducing Augmented Reality technology to finance through the establishment of a branch and event centre in the Metaverse universe. We are pioneering the integration of the Internet of Things (IoT) and Augmented Reality technologies through strategic investments. We take pride in being the bank at the forefront of pioneering initiatives such as FinTech 4.0, which redefines banking services.

Building on our innovative strides in digital banking, we have introduced a significant innovation in wearable contactless payments within our country. Paraf RingPay, built on the TROY infrastructure, our domestic payment system incorporating cutting-edge technology, has established itself as Türkiye’s first wearable contactless payment instrument, adding substantial value to the banking ecosystem.

In 2022, we will expand our product range by introducing digital wallets, electronic money services, new-generation cash registers, and POS systems to our customers through Platform A.Ş., our subsidiary. Aligned with these innovative strategies, our digital channels now handle 7.7 million daily transactions, reflecting a shift where approximately 98 percent of our banking transactions occur through non-branch channels. Through our digital transformation projects, we aim to save 250 million sheets of paper by the end of the year.

Considering labour productivity in these projects, we anticipate our financial gains to amount to TRY 1.9 billion. Ultimately, sustainability and digitalization are ongoing areas that demand continuous effort and seamless integration. We believe that all financial institutions should take consistent and decisive steps in these areas. In line with the Medium Term Program and the 12th Development Plan, we will focus on renewable energy investments, energy efficiency practices, digital technologies, circular economy and green transformation.