Data on Demand: Visualizing Turkey’s Financial Inclusion Efforts
Although not a signer of the Maya Declaration, over the past few years Turkey has shown a strong commitment to "include outsiders of the financial system and increase the quality and use of existing products and services”. Yet, the country still lags behind its upper middle-income peers when it comes to the percentage of adults with accounts at formal financial institutions by nearly 14 percent.
With generous support from the MetLife Foundation, our team at MIX has launched the Interactive Dashboard for Turkey. With data collected from various sources, we are able to provide a dynamic data visualization that explores financial access at the district level. Since Turkey’s financial inclusion action plan has a focus on “strengthening the demand side”, our dashboard presents access point distribution in the context of demand-side indicators including population density and literacy rates. Our findings show promise for Turkey's efforts to increase financial inclusion.
In 2010, the median number of access points per 10,000 people was 1, but that number inched up to 1.2 in 2015 (see figure below). Yet what is more indicative of the country's progress is the rapid increase in mobile banking adoption. In 2011, mobile banking customers registered at just 445,000 individuals. However, over the next five years that changed as cell phone penetration reached 95 percent. As of 2016, around 19 million individuals – nearly 30 percent of the adult population – were mobile banking customers. This shift occurred as more people gained access to the internet and, more specifically, gained access to the internet through smartphones. And if the number of online purchases completed using a mobile device is any indication – Turkey ranks third globally – mobile banking is poised to continue growing.
But opportunity for expanding financial inclusion also exists outside of mobile banking. Our analysis found that five financial service providers (FSPs) account for 50 percent of all access points in the country and 60 percent of all deposits. On the other end of the spectrum, 40 percent of banks have only one branch. The concentration of access points tends to match the population distribution, with 50 percent located in the largest cities. Microfinance institutions (MFIs) are more active outside of cities, with 91 percent of MFI access points located in non-urban areas. Similarly, the Post Office network plays a significant role in the largely rural East, with 82 percent of its access points located outside of cities.
Even with this distribution, there are a handful of districts with no access points at all. And 43 percent of the adult population is located in provinces with a supply-demand ratio that is below the median (see figure). Additionally, there are disparities in financial access between men and women that should be addressed. In 2014, there was a 25 percentage point gap in account ownership across gender lines. That’s not to say that Turkey has not made strides in improving access to women; the country was praised by the Alliance for Financial Inclusion for its focus on women, especially related to efforts to improve financial literacy. Through our analysis, we’ve identified provinces with high female literacy rates and a high number of access points as potential starting points for financial literacy enhancement efforts. Based on observations of trends, it seems that higher literacy rates drive increased use of financial services, supporting a key tenet of the government’s strategic plan.
Although Turkey is slightly ahead of its regional neighbors when considering account ownership, the middle-income country still has many challenges ahead. But the national financial inclusion strategy has laid a solid foundation for continued efforts related to financial inclusion. To aid in these efforts, we’ve also made available Market Insights for Turkey, a series of visualizations and high-level findings that can support key stakeholders – government regulators, FSPs and funders – in their decision making. As the country continues to implement its strategy, now is a good time to get a granular view into the changing landscape of financial access in Turkey.