Many banks around the world have been successful by focusing their services around micro, small and medium enterprise (MSME) banking. However, there is a tendency for such banks to focus on the higher end of the MSME market, avoiding the risks and administrative costs that come with serving smaller businesses. Şekerbank in Turkey is an interesting case because it has targeted the lower end of the spectrum in its MSME banking line of business. Şekerbank classifies such businesses as craftsmen and “micro” businesses — referring to a business size in between the craftsmen and small business. The bank has been successful in reaching these sectors by tailoring its policies and credit procedures to these markets, as well as by developing products that address the needs of these very small enterprises.
Şekerbank provides an exciting example of a full service commercial bank that has chosen to specialize in serving smaller businesses in Turkey, specifically micro enterprises and craftsmen. These are collectively referred to as very small enterprises, or VSEs, in this publication. This case study is not an assessment of the full operations of Şekerbank. Rather, it is intended to identify the key choices that Şekerbank has made to serve these clients and keep the focus of the bank’s operations on them— instead of defaulting to the easier option of serving larger clients.
This brief summarizes the current state of financial inclusion in Turkey in terms of financial service usage and the level of access to financial services for individuals and small and medium-sized enterprises (SMEs).
Turkey is the 16th largest economy in the world in terms of GDP, a member of G20, OECD and a candidate for European Union membership. Its population is technologically well-connected, with mobile and smartphone penetration close to that of major EU nations, yet fewer than 60% of adults have a bank account at a formal financial institution — less than across the EU and much less than the Turkish financial infrastructure could potentially accommodate. The Microfinance Centre (MFC), with support from the MetLife Foundation, carried out a short-term research project to explore financial inclusion issues in Turkey, specifically to:
- map information sources on usage and access to financial services and the availability of data
- assess the level and quality of financial inclusion of individuals and SMEs.