Dubai Islamic Bank Enters Turkish Digital Banking and Financial Technology Sector

Dubai Islamic Bank (DIB), the largest participation bank by asset size in the UAE, on Friday said that it has acquired minority stake of 20% in T.O.M. Group of Companies, which was established by Aydın Group shareholders.

The transaction has been approved by the Banking Regulation and Supervision Agency (BDDK), the Central Bank of the Republic of Turkiye (CBRT) and the regulatory authorities in the UAE and will be formalised after the clearance of the Turkish Competition Authority (Competition Authority).

The T.O.M. Katılım Bankası (Turkiye’s First Licensed Digital Retail Bank) includes T.O.M. Pay Elektronik Para ve Odeme Hizmetleri, (a licensed e-money company with a fast-growing customer base in Türkiye), and T.O.M. Finansman (Licensed financing company specialised in developing innovative digital products) and their subsidiaries.

DIB’s strategy revolves around the acquisition of a minority stake into the T.O.M. Group, which is an integrated, comprehensive financial services group established in the digital space. DIB has an option to increase shareholding to 25% within 12 months.

Aydın Group, T.O.M. Group’s founding shareholder with its new partner DIB, aims to make T.O.M. Group a national leader with an aspiration to grow regionally in the digital banking and financial technology sector. The shareholders core mandate is to promote financial inclusion by facilitating, easing, and enhancing access to digital financial services in Türkiye.

This agreement is a clear demonstration of DIB’s increased commitment and trust into Turkiye’s financial system and represents a compelling opportunity to tap into fast scaling digital banking and financial technology sector in Turkiye.

Turkiye an Attractive Destination

DIB has long held the view that Turkiye was an attractive investment destination for a financial services institution, particularly for an Islamic bank over the medium to long term. This belief was largely premised on the attractive and robust long-term macroeconomic fundamentals of the market which fuelled the country’s continued ability to attract FDI, despite short term market fluctuations.

However, the key challenge for DIB had always remained the selection of the most appropriate entry strategy that would permit generation and aggregation of maximum value for the bank and its shareholders. In addition to the strong macro-economic fundamentals of Turkiye, the banking sector has also generated impressive growth post COVID, another factor in motivating DIB to positively consider this investment at this time.

DIB Group CEO Dr Adnan Chilwan said that central to their growth ambitions has been the bank’s ability to effectively formulate winning strategies amidst shifting industry dynamics.  The DIB’s entry into the Turkish banking sector through the investment in a digital financial group represents this dynamic approach to an ever-evolving market environment.

“We are of the view that digital banking propositions in Turkiye and other markets will enhance our efforts to provide financial services to mass population segments, including the underbanked and non-banked segments. We believe this deal in Türkiye will lay the groundwork for further initiatives in other key strategic markets for DIB,” he added.

“Turkiye holds a pivotal position in our growth strategy, considering the sizable market dynamics and the opportunities we foresee in digital banking and financial technology sector. We are confident that this partnership with T.O.M. Group will not just be mutually beneficial for our combined institutions but will also help unlock new opportunities, whilst deepening the economic ties between both UAE and Turkiye,” he added.

T.O.M. Group CEO Onur Ozkan said that the partnership they have established with DIB in the early stages of T.O.M. Group’s journey is highly encouraging and shows that T.O.M. Group is on track with its mission to provide affordable financial services to its customers.

“We hope to make T.O.M. Group, which has been established under the Aydın Group’s umbrella, a regional and a global leader in digital participation banking, aiming to provide access to financial services and promote inclusivity by encompassing segments beyond the traditional banking system,” he added.