The finance sector has a business model that requires being connected to all sectors; therefore, its potentiality and speed to be affected by changes are higher than other sectors. We care about analyzing global, regional, and local trends with the awareness of this situation specific to our industry. Thus, we aim to take precautions in advance upon potential risks created by changes and seize opportunities on time. With the idea that natural resources, technology, and labor are at the core of the value creation process, we closely monitor local and global developments and acknowledge them when determining our priorities.

We expect the pandemic, the impact of which has been felt throughout the world, to continue to be effective in the coming period. For this reason, we consider the Covid-19 pandemic among the main trends affecting our industry, along with “Combatting Climate Change,” “Technology and Digitalization,” and “Changes in Working Culture.”

Combatting Climate Change

Climate change, which has become visible in many parts of the world today, is seriously threatening the future of humanity. Countries, therefore, need policies that prioritize renewable energy and compliance with climate change to protect them from the destructive effects of climate change. Therefore, the low carbon economy, which causes all the operations of all the stakeholders of the economy to generate minimum or zero carbon emissions, becomes more a necessity than a preference.

In this context, the Paris Climate Agreement entered into force on 4 November 2016, being the first of its kind to be ratified by at least 55 parties, which together account for 55% of global greenhouse gas emissions, as of 5 October 2016. The main goal of the agreement was determined to limit global warming to well below 2 degrees Celsius, with emission reductions in the states parties’ national contribution statements, preferably to 1.5 degrees Celsius, and to achieve a carbon-neutral target on the entire planet by 2050.

In 2021, the 26th United Nations Climate Change Conference was held in Glasgow. The conference, also known as COP26, resulted in an agreement reached by 197 countries to reduce global warming and greenhouse gas emissions. The agreement includes important decisions such as the commitment to phase out coal gradually, the regular review of emission reduction plans, and more financial support to developing countries, especially to limit the global warming targeted in the Paris Climate Agreement to 1.5°C. Additionally, the Paris Agreement Work Program (Rules Book) that outlines how to implement the Paris Climate Agreement was completed at this conference. Thus, a significant momentum toward the second stage of the Paris Climate Agreement has been achieved.

In 2019, the European Union (EU) published the European Green Deal for the implementation of the global goals and approaches set out by the Paris Climate Agreement. Through this Deal, the EU aims to reduce its greenhouse gas emissions by 55 % by 2030 and become the first continent to be climate-neutral by 2050. After this development, countries with intensive international trade, such as South Korea, Japan, and China, also began to announce their goals for the green transformation. Moreover, many organizations such as the World Bank, International Monetary Fund (IMF), Financial Stability Committee (FSB), Bank for International Settlements (BIS), and the Organization for Economic Cooperation and Development (OECD), are among the umbrella organizations of global finance, continue to work to reveal the financial risks that the transition to a carbon-neutral economy may pose and to create environment-friendly financial instruments integrated into the financial system of the future.

In addition, the financial authorities of many developed countries (Europe, the USA, and Japan) are taking concrete steps both regarding their monetary policy instruments and administrative structuring. The European Central Bank (ECB) said it has drafted an action plan that will include the assessments on climate change in its monetary policy strategy. The Bank of England (BoE) announced it is switching to green bond purchases in 2050, with the target of reducing carbon emissions to zero levels. The Bank of Japan (BoJ) and the Federal Reserve (Fed) have both formed independent committees to explore the effects of combatting climate change on the global economic system.

Turkey declared at the United Nations General Assembly in September 2021 that it would become a party to the Paris Climate Agreement. In the agreement, it committed to reducing emissions growth by 21% by 2030 and complying with the “Net Zero Emissions” target by 2053. On October 6, 2021, this agreement was unanimously accepted in Parliament. In addition, during this period, the Ministry of Trade published the Green Deal Action Plan, which explains the general strategy and steps for green transformation in our country. The action plan includes a total of 32 targets and 81 actions under 9 main headings.

On the other hand, the financial sector is one of the most important sectors for managing climate-related risks. In this context, the Turkish Banking Sector is taking important steps. In 2014, the Banks Association of Turkey (TBB) published the “Sustainability Guide for the Banking Sector.” Borsa Istanbul (BIST) subsequently created the “BIST Sustainability Index.” In 2021, the Banking Regulation and Supervision Agency (BRSA) announced the 2022-2025 Sustainable Banking Strategic Plan regarding the action of “3.2.5. Determining a roadmap for the development of sustainable banking” of the “Green Deal Action Plan” at the end of 2021. Consequently, our country and the Turkish banking sector continue to make significant efforts to manage environmental and social risks as part of the combat against climate change.

Turkey signed the Paris Climate Agreement.

Technology and Digitalization

In recent years, countries have made significant advances in the field of digitalization and innovation. Especially with the pandemic, it has become clear how necessary digital technologies are for society. So much so that digitalization improves welfare and contributes to the development of societies. Digitalization not only ensures sustainable development but also monitors the environmental and social impacts. It is one of the highlighted facts in recent years that digitalized companies grow faster and are more resilient to crises.

New capabilities, skills, and services are increasingly needed to take advantage of digital technologies and create more value. Businesses need to make their business models and organizational structures more flexible and agile to keep up with the accelerating change. At the same time, the corporate culture needs to encourage change and innovation. Inevitably, businesses that do not have a corporate culture promoting change or whose business models are not flexible and agile will have adaptation problems in the face of disruptive technological developments.

Developments in the mobile, internet, artificial intelligence, internet of things (IoT), machine learning, autonomous and robotic technologies, systems that recognize and process audio and video, blockchain infrastructure fields, whose importance has increased even more in this period, are expected to be among the technological developments that create radical changes in the financial sector in the coming period.

Cybersecurity challenges, in addition to these developments, come forth as an issue that poses significant risks. Efficient management of cyber risks requires the systems to be designed for prevention, preparation, and protection. It is thought that many cyber-attacks will be carried out based on artificial intelligence in the upcoming period. It will be impossible to defend against them only with human power, so artificial intelligence should also support defense methods.

Changes in Working Culture

Employee loyalty and satisfaction are essential indicators for organizations to maintain qualified employees and attract newly qualified candidates. Thus, organizations try to create a corporate culture by developing practices to sustain employee satisfaction and activities related to this in their work areas. However, the Covid-19 era, during which many white-collar workers experienced the “work from home” process, caused a change in work culture. Although the studies predict a future where working culture can occur outside the office after a certain period, the pandemic has accelerated this process considerably.

This necessary change in the work environment will reflect more deeply on the work culture over time. This process, which will increase the use of technology in human resources applications and business processes, will bring family-friendly practices, employee loyalty, and satisfaction to institutions’ agendas in terms of work-family balance.

Covid-19

The Covid-19 pandemic that emerged in Wuhan, China, has affected the entire world in economic, sociological, and cultural terms. The banking industry played a crucial role in the sound operation of the financial system and was one of the industries most affected by the pandemic. However, thanks to its strong capital, solid technical infrastructure, and qualified human resources, this process was managed quite successfully.

On the other hand, changing consumer habits following the pandemic has increased the interest in alternative distribution channels and digital. This has accelerated digital transformation in the industry. During this period, flexible, remote, and hybrid working models became widespread and permanent, and online purchases increased significantly. Financial access for many segments of society has been facilitated by the increasing digitalization in the banking sector. Increases have been observed in the number of customers who were introduced to the Internet and mobile banking practices. Since the banking sector in our country is one of the sectors that invest the most in technology and human resources, the demands of the customers were met without any problems.

The changing consumer habits following the pandemic have increased the interest in alternative distribution channels and digital.