Albaraka Turk expanding fintech footprint with own accelerator, launching digital-only Islamic bank in Germany

KUALA LUMPUR - Turkey’s Albaraka Turk Participation Bank’s own accelerator kicks off its second programme next month as it lays down plans to open offices abroad to find and fund innovation with its new VC.

The Shariah-compliant bank will also officially launch its digital-only service in Germany on Sep 27, Nurettin Coskun, business development and innovation assistant manager at Albaraka Turk, told Salaam Gateway.

Albaraka Turk Participation Bank opened its own accelerator and incubator, Albaraka Garaj, last year to support entrepreneurs and start-ups with innovative projects and to find technologies to boost its own work.

“Banks cannot innovate products and services quickly, so we need to work with fintech start-ups, hence Albaraka Garaj,” Coskun, who is also co-founder of the accelerator, told Salaam Gateway on the sidelines of the Global Islamic Fintech Summit 2018 yesterday in Kuala Lumpur.

Garaj has selected 11 Turkish start-ups for its second accelerator programme this year, of which five are in the fintech space.

This is an increase from the nine selected in the inaugural thrust last year, of which only three were involved in fintech, said Coskun.

“We only selected [the start-ups] two weeks ago, and will kickstart the process of mentorship and grant support next month.

“Each start-up will receive 50,000 Turkish lira ($7,829) in grants, and we will open their services up to our customer base,” said Coskun.

From the inaugural intake, Albaraka Turk adopted and integrated three technologies into its own systems.

The first was Techsign, which developed a technology for biometric signatures.

“On Monday, we launched their biometric signature technology across tablets at our branches, the first bank to do so in Turkey,” said Coskun.

The second was Inooster, a performance management platform using gamification to increase performance and loyalty, which Albaraka Turk now uses within its sales and marketing departments.

The third was a chatbot. “We also use chatbot technologies from Rubicio within our internal employee engagement, for our human resource department,” Coskun added.

The nascent Turkish fintech start-up ecosystem still lacks technologies that Albaraka Turk needs to grow, such as robo-advisory, wealth management and blockchain.

“We did see some start-ups apply to the second round this year, but they were largely in the idea stage. We prefer to fund start-ups with at least an MVP (minimum viable product),” said Coskun.

EXPANDING GEOGRAPHIC FOOTPRINT, VC

The search for fintechs with technologies required by Albaraka Turk Participation Bank is sending Garaj on an expansion spree, with plans to open an office in Bahrain by year-end, and branches in Berlin, Silicon Valley and Singapore within the next three years.

“We plan to fund and support fintech start-ups across the new offices and eventually adopt and market their technologies across the 16 countries that the Al Baraka Banking Group operates in,” Coskun said.

The participation bank is a unit of Bahrain-based Shariah-compliant Albaraka Banking Group.

Albaraka Turk is also taking investments one step further this year and has set up its own venture capital (VC) arm.

The VC will invest funding ranging from $100,000 to $500,000 in three standout start-ups from the first Garaj accelerator: Techsign, Inooster, and Kartoon 3D, an augmented-reality based children’s education and development platform.

DIGITAL ISLAMIC BANK

Albaraka Turk last month launched the beta version of its digital-only banking service, Insha, targeted at Europe’s Muslim community. It is scheduled for a full launch on September 27, said Coskun.

Insha is a partnership between Albaraka Turk and solarisBank, a Berlin-based fintech company that offers banking-as-a-platform services with its German banking license.

KT Bank AG, a subsidiary of Istanbul-based Kuveyt Turk, is currently the only Islamic bank licensed to operate in Germany.

Albaraka Turk may push Insha to six other European markets, based on its reception in Germany.

“We have seven countries planned for our first phase which lasts a year from the launch. Insha will be in Germany for six months, and then expand to six more countries with high concentration of Muslim communities including France, Holland, Spain, and Poland over the following six months,” Coskun said.

Mobile and digital-only banks have found success in various parts of Europe and Albaraka Turk hopes to follow in their footsteps.

“If (UK’s) Monzo and Atom can reach half a million customers in two to three years, why can’t we hit one million in a few years?”

(Reporting by Stephanie Augustin; Editing by Emmy Abdul Alim emmy.alim@thomsonreuters.com)

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