What is a digital bank?
Under BDDK’s Regulation on the Operating Principles of Digital Banks and Service Model Banking (Official Gazette 29 December 2021, No. 31704; in force 1 January 2022), a digital bank (dijital banka) is a credit institution that offers banking services through electronic banking distribution channels instead of physical branches. It is a bank licensed under Banking Law No. 5411, not a payment or e-money institution.
Key rules
- Capital: the minimum paid-in capital for an operating licence is TRY 1 billion, paid in cash; the BDDK Board may increase it.
- Customers: a digital bank’s credit customers may only be financial consumers and SMEs.
- No branches: it may not open physical branches or organise through agencies or representative offices.
- Exit from the restrictions: if paid-in capital is raised to TRY 2.5 billion, the Board may lift the activity restrictions fully or under a transition plan.
Service model banking
The same Regulation creates service model banking: interface providers let customers connect directly to a service bank’s systems through open banking services and carry out banking transactions through that bank. This is the Turkish legal home of banking-as-a-service; the bank remains the licensed party.
Is a digital bank the same as an e-money institution?
No. A digital bank is a credit institution licensed and supervised by BDDK under the Banking Law. Payment and e-money institutions are licensed by TCMB under Law No. 6493 and follow a different capital and activity regime.
Can a fintech offer banking products without its own banking licence?
Through service model banking, a fintech acting as interface provider can connect its users to a service bank via open banking services, while the bank provides the banking service as the licensed party.
Related: Electronic Money Institution, Remote Identity Verification.
Sources. Banking Law No. 5411. Statute links open the official consolidated Turkish texts on mevzuat.gov.tr.