Asya Bank makes mark in cards

Following the restructuring of the Turkish Banking Act in 2007, which brought the licensing and regulation of Turkey's so-called interest-free (Islamic banks) under the comprehensive new banking law, on a par with their conventional counterparts, there have been signs that these banks are now becoming more ambitious especially in their activities abroad.

The interest-free banks are now legally under the act called participation banks. There is no doubt that Kuwait Turk Participation Bank, the Turkish subsidiary of Kuwait Finance House, started the forays abroad. It opened a representative office in Germany when other Turkish banks, including conventional ones, were conspicuous with their absence. It set up a wholly-owned bank in Bahrain and more recently in the Dubai International Financial Centre. Similarly it has applied for a license to establish a subsidiary in Germany.

However, perhaps the more interesting example is that of Asya Participation Bank, which late last year set up a holding company, Tamweel Africa SA, in a joint venture with the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IDB) Group, whose main aim is to support Islamic financial institutions in sub-Saharan Africa, especially to extend financing to small-and-medium-sized enterprises (SMEs).

Tamweel Africa, which has a capital of $50 million and is based in Dakar in Senegal, and which bought the shares of the three former banks in West Africa owned by Dar Al-Maal Al-Islamic (DMI), headed by Prince Muhammed Al-Faisal, started operations in January 2010. ICD holds 60 percent of the equity and Asya Participation Bank owns 40 percent of the equity, for which it paid $15 million.

According to Unal Kabaca, president and CEO of Asya Bank, Tamweel Africa owns 66 percent of Islamic Bank of Niger; 77.5 percent of Islamic Bank of Senegal; 100 percent of Islamic Bank of Guinea; and 100 percent of Islamic Bank of Mauritania which is a new bank and is due to start operations in first half of 2010. Asya Bank is providing the technical expertise, the management system, the knowledge base, for Tamweel Africa.

Asya Bank is also now directly accessing the international financial markets for financing. In the past Turkish banks, save Kuwait Turk and Albaraka Turk Participation banks, were coy about accessing the international markets and relied heavily on their domestic deposit bases to fund their lending activities, largely short-term in nature.

Last week, ABC Islamic Bank arranged a $75 million dual currency Murabaha facility for Bank Asya.

At home, Asya Bank is innovating new products including a new card family, under the "DIT Pratik" brand. "The pre-paid card named DIT Pratik existed in the Turkish market for almost a year in several cities where Bank Asya Transportation program has been launched. DIT Pratik can be obtained across Turkey through bank branches and authorized merchants," stressed Asya Bank. Since its launch in 2006, Asya Bank has become one of the leaders in EMV contactless payment world in Europe. To date, Asya Bank has issued 500,000 DIT cards to customers.

According to Kabaca, the bank aims at becoming "the leading bank" in contactless payment systems and would continue to invest in high technology. DIT Pratik, according to Asya Bank, is the first pre-authorized card in the world with its unique features, and is an important milestone in Bank Asya's city card vision. Bank Asya had started the project in 2006 in order to create a complete city card solution by using EMV contactless technologies. The main objective was for customers' carrying only one card for different uses such as shopping, transportation, tollway payments, etc. The latest innovation under the DIT Pratik brand include the Harclik (allowance card for teenagers), Kampus (school card), and Hediye (gift card).

The bank stresses that the main advantages of DIT Pratik family of cards are that they are more secure than carrying cash; there is no need for coins and no need for a bank account, the card can be linked to a bank account at any time, and the card may be used as a debit card on top of contactless prepaid card features.

This is not the first time that Turkish Islamic banks have produced Islamic card products in Turkey. Two years ago, Albaraka Turk introduced a unique Barakat Card aimed at small farmers which includes a chip with all the information about the farmers and payment details from the state silos which purchase the produce of the farmers. The bank has also pioneered payment cards for franchises and for business customers.