Albaraka Turk (Albaraka Turk Participation Bank A.Ş.) is not the first non-European banking enterprise that set its sights on the European market; however, it is indeed one of the first to reach this goal. Albaraka Turk’s first FinTech venture, the interest-free digital-only banking service insha, offering its services in cooperation with solarisBank, is preparing to celebrate its first year in Germany and has it all figured out.

insha was listed among the top 10 challenger banks in Germany and recently became a member of the Berlin-Partner Network, bringing its transformation process for becoming a true Berliner to an end.

Typically, new ventures start dealing with challenges after the honeymoon phase; it was quite the contrary for insha. After several months full of regulatory quests and operational learnings, insha is now growing significantly and is planning to break the taboos on Islamic Banking. Let’s hear the story from Yakup Sezer, the Managing Director of insha and the Head of Business Excellence and Innovation at Albaraka Turk: 

  • Sezer, I am glad to catch you during one of your Berlin trips. Can you tell us a bit about yourself and Albaraka Turk? 

Thank you, it’s very nice meeting you too. I am the Founder and Managing Director of insha, Germany’s first Islamic Digital Banking Service. I also serve as Head of Business Excellence and Innovation at Albaraka Turk. insha was founded in Albaraka’s Startup Garaj, our own innovation unit, with full backing from Albaraka. I think it’s important to note that Albaraka was founded in 1985 as Turkey’s very first participation bank. Having already been the pioneers in this field back then, we think it’s only natural for us to now be the first player to offer digital, Islam-compliant banking to European audiences.

  • Let’s focus on insha for a moment. What triggered you to create this product? At this point, I would like to quote one of your recent tweets, “Traditional banking was made for a lifestyle that doesn’t exist anymore. insha is designed to meet the needs of modern life.” What makes insha more suited to the needs of modern life?

Well first of all, insha is a fully digital, mobile-first banking platform. We’re quick, we’re very convenient, and we offer all the benefits of digital banking, while at the same time respecting the moral principles of our users. We have several features in our app, that make managing finances and saving towards your goals super easy – inSight and inSave for example. Or inShare, with which you can easily donate money to a charity of your liking with only a few taps. That said, traditional banks had some benefits that digital banks have been lacking. Good customer service for example. We want to combine the best of both worlds and make a point to serve our customers with real customer service representatives in the language they speak. We are digital when it comes to features, but personal when it comes to service.

  • Do you see insha as more of a competition to neobanks or to Islamic finance institutions? What does your ideal customer look like?

Our customer base mainly consists of young, digital-savvy people. And it’s not only Muslims, far from it: About 50 % follow no religion at all, or a completely different one. This is important for us: We want to promote an ethical approach to banking, that takes into account clear values and moral principles – regardless of religious backgrounds and open for all. So, in short: We compete with both neobanks and Islamic Finance. We have a very strong product and our growth plans are ambitious. I am confident that we are well positioned to tackle neobank giants like N26. At the same time, we’re the first player in Germany to bring Islamic Banking to the digital age. So, all those young Muslims who so far could not bring their finances to harmonize with their faith – because banking with traditional Islamic banks is really inconvenient – can now do so.

  • It appears as the customers perceive the products with an “Islamic Banking” label in a different way as if they are entirely different. From a pure functionality point of view, would an average customer feel any difference between insha and some neobank?

Not at all. First and foremost, we are a a digital banking, and our features are as convenient as you would expect from a digital bank. The difference is that to us, it is very important how a bank handles the money that their customer trusts them with. At this point you can consider us as a neobank with a surplus. The surplus is that we are compliant to Islamic banking principles, which does not hinder anyone but is important for some. We don’t invest into immoral industries or participate in highly speculative trading for example. We want to do good in the world, and – based on the feedback we get – our customers appreciate this a lot.

  • Is there more to Islamic finance than interest-free banking? Do you think that Islamic banking comes close to achieving sustainability goals due to the ethical investment principle lying underneath?

Yes, I believe it comes a lot closer to sustainable banking. I already mentioned that we don’t participate in speculative trading – all our investments are backed by real assets. Let’s take the financial crisis of 2008 as an example. While the topic is certainly more complex, the complicated financial products, and the greed of a whole generation of speculative investors were the root of what caused this global crash. We believe that money can’t generate more money just from thin air. Had that thought prevailed back then, the world would probably be in a better place now. And of course, fostering wars through investments in arms manufacturers is one of the most unsustainable things you can do – so we just don’t.

  • London holds the Islamic FinTech flag for a long time now. Do you think Berlin has the potential to become another hub for Islamic FinTech? If so, why?

It’s true, the UK is a lot further in that regard than Germany. We see this as an advantage for us though, for two reasons. One – we are the first mover on the German market, which is a market with a huge Muslim population, and a huge Turkish population on top of that. And two, the regulatory environment, and Brexit, play an important role. Germany is so heavily regulated that once you have your product going here, you can make it work everywhere. And especially post-Brexit, Fintech Hubs within the EU will only gain importance compared to London.

  • insha was Albaraka Turk’s first non-MENA FinTech venture. What were your learnings in this process? What differences struck you in terms of the differences between the markets?

I can admit that, building a fintech spirit beyond the digital banking in a corporate culture is extremely difficult. We have been realized that we need to find a strong niche to grow fast. Dilemma of satisfying the niche’s needs and general community’s needs. Reputation about Islamic finance in the market was damaged by some other disreputable and irrelevant companies. We have discovered the people know more about ethical and moral banking than the Islamic banking. As you know Islamic banking is a part of the Ethical banking, so we began to call ourselves ethical/moral banking.

  • Coming from the traditional banking sector, were there any aspects of founding a FinTech venture that was unexpected/surprising for you?

There are many competitors across Germany and unexpectedly strong competition on retail banking is challenging for us. But we focus on the customer experience and creating a value and it seems we differentiated ourselves from the crowd. Moreover, Legal hardships and old school processes lead to negative effects on customer acquisition. To be able to open an account in Germany, customers have to make a video call with an agent. For example, there is no need to to make a video call in UK or France. We figure that out Germany is the most challenging European country for the user acquisition, and we believe that we will boost our growth insanely when we expand our services to other EU countries.

  • You are a part of both the traditional banking and FinTech verticals of Albaraka Turk. Did you experience an approximation in terms of management and culture after your FinTech acceleration center, Albaraka Garaj, started its activities, or are there still two different entities with different cultures?

In fact, it would be a little more accurate to say both here. As you know, Albaraka Garaj was founded in 2017. In the first year, employees came to visit like it is a museum. We welcomed everyone and organized event and meetups to facilitate interaction with startups and employees. We encouraged entrepreneurs to constantly talk to other employees, because we knew that to achieve collaboration, we should achieve communication first. We held meetings for cooperation with the most resilient teams. We have spent a great deal of effort to show them how functional it is to work with this culture. I should also thank my team here. They did not give up even when they met resistance. Our main strategy here was to create a successful example quickly. The chain broke when we combined an enterprise with an enterprise on a successful case. Cooperation with a startup became the demand of the units when we started the third term. They question themselves whether there is a suitable startup for solving a particular job, because they got used to the speed and flexibility of working with startup. Especially Albaraka Garaj has triggered a lot of interest in in-house entrepreneurship, since they saw more closely that the world was moving in another direction, they turned their routes in that direction. We always get phones and emails to have a new idea. In short, Albaraka Garaj has started an adventure that compels us to transform. It actually happened as Machiavelli said, “One change has made all other changes necessary.”

  • The same tweet we have mentioned above also mentioned some big surprises. What new features and products are on the horizon?

We’re currently planning our European expansion and will launch new markets in the coming months. I can’t tell you more at this stage – it wouldn’t be a surprise otherwise – but I’ll be happy to come back once I can!

Gazi University Faculty of Law graduate Ş. Elif Kocaoğlu Ulbrich has degrees in Private Law from Galatasaray University and MBA from WHU – Otto Beisheim School of Management, and is also a fellow of Jean Monnet, Joachim Herz Stiftung. After working as a lawyer in various international law firms in Istanbul and Ankara for more than six years, Denizbank A.Ş. He started his banking and finance career in 2013, specializing in business development, project management, FinTech regulation and lobbying activities at FinTech startups (FinLeap, Cringle, Lendico) in Hamburg and later in Berlin. Co-author of The PAYTECH Book, The AI ​​Book and The LegalTech Book, which are planned to be published in 2020 in cooperation with FINTECH Circle and Wiley, Kocaoğlu Ulbrich has been providing consultancy, training and publishing services since 2019 through Berlin-based Contextual Solutions, which she is the founder of.