Turkey: Outsourcing Of Banking Activities

The competitive working environment and the need to focus on core activities force today’s financial institutions to outsource some services, critical to their business, for which they have limited expertise and/or limited funds. Outsourcing offers a cost-efficient business by preventing time loss. The Banking Law and the recently-relevant legislation comprise provisions with respect to outsourcing in light of global trends. The Banking Law provides the definition of outsourcing companies (supporting service providers) in Article 3; however it leaves the details of application to the secondary legislation. Regulation regarding the Procurement of Outsourcing Services by Banks and Authorization of the Service Providers (the "Outsourcing Regulation") enacted on 1 November 2006 regulates outsourcing companies and the specifications of outsourced services.

As per the Banking Law and the Outsourcing Regulation, outsourcing companies provide any services supplementary to or complementary of the activities of the banks. However, companies providing clearing, custody and central registration services are excluded from the scope of the definition. The Outsourcing Regulation does not expressly set forth services which may be outsourced upon authorization of the Banking Regulatory and Supervision Agency (the "BRSA") as explained below; but does list the services which may not be outsourced. In this respect, services other than the following may be outsourced to different companies:

  • clearing, custody and central registration services;
  • services mostly procured from external providers such as consultancy, marketing, security, catering, transportation, promotion of banking services, maintenance and repair of any hardware including ATMs and POS devices, scanning and transfer of banking and credit card application documents to electronic form, delivery of abstracts by hand, and cleaning; which are not supplementary to or complementary of the activities of the banks;

  • any activities to be executed exclusively by the Board of Directors (the "Board") or the internal system units.

As per a recent amendment made to the Outsourcing Regulation and published in the Official Gazette dated 24 July 2007, the Outsourcing Regulation provides a non-restrictive list of services such as call centers, maintenance of software services provided for information technologies, ATMs (Automated Teller Machine) and POS (Point of Sale) device operations, imprinting of banking and credit cards, delivery of abstracts in electronic form, archiving and security services comprising counting, distribution, delivery, protection of cash, negotiable instruments and precious metals which can be defined as outsourcing services; however, the providers of such services are not obliged to be authorized by the BRSA. The Outsourcing Regulation does not apply, in whole, to such services; their providers are only subject to limited supervision of the BRSA, are bound by professional secrecy and must purchase professional liability insurance in order to indemnify any losses arising from their activities.

Outsourcing in the banking sector is a highly regulated field. Banks wishing to procure such services are obliged to develop a risk management program defining the services they require, expected benefits therefrom, allocation of audit, evaluation, reporting and security duties regarding such service and a contingency plan in the event such service is interrupted. Prior to the execution of any agreement with outsourcing companies, banks must conduct an evaluation study within such companies as to whether they have the required technical equipment, financial structure, expertise, know-how and personnel for provision of the service. The technical adequacy report to be drawn upon the evaluation study is submitted to the audit committee and to the Board. Upon assessment of the said report and opinion of the audit committee, the Board resolves to execute an agreement with the outsourcing company which it deems adequate.

Article 6 of the Outsourcing Regulation sets forth the required conditions for outsourcing companies, e.g., a transparent corporate structure, sufficient technical expertise and hardware, permits and authorizations necessary for business and professional liability insurance. The said Article also states that the shareholders, members of the Board, auditors and managers must fulfill the requirements sought for the founding shareholders of the banks under Article 8 of the Banking Law.

Companies willing to outsource activities to banks must obtain permission from the BRSA. In an application to be filed with the BRSA, banks submit (i) the risk management program; (ii) technical adequacy report; (iii) the relevant Board resolution; (iv) detailed information regarding the outsourcing companies, corporate structure and backgrounds of Board members, shareholders, auditors and managers; and (v) a notarized copy of the agreement executed with the outsourcing company (a draft agreement may be submitted if the agreement has not yet been executed). In any case, a notarized copy of the executed agreement is to be submitted immediately after execution. The Outsourcing Regulation sets out, in detail, the mandatory content of the agreements to be executed.

The authorization to be granted upon the BRSA’s evaluation of the submitted information and documentation is only valid for the applicant bank. The agreement enters into force upon the delivery of the BRSA’s decision to the relevant parties.

The BRSA assumes a very active role in every phase of the process. If the parties amend the agreement, except for the mandatory content enumerated under the Outsourcing Regulation, they must inform the BRSA of the relevant amendments within seven days. The BRSA itself is entitled to request any amendments if the provisions are not in compliance with the relevant legislation. Where the BRSA detects any activities of the authorized company which are not in compliance with the Banking Law or the Outsourcing Regulation, or if it does not fulfill the necessary conditions enumerated under the Outsourcing Regulation, or if the company fails to purchase professional liability insurance, the BRSA is entitled to request termination of the agreements. Following such request, cancellation of the authorization granted ensues.

Audit of the Outsourced Services

Regulation on the Information Systems Audit to be Carried out by Independent Audit Firms within Banks (the "Information Systems Audit Regulation") enacted on 16 May 2006 and amended by a Regulation published in the Official Gazette dated 17 August 2006, governs the audit of the banks’ information systems and financial data production. As per the Information Systems Audit Regulation, the information system audit is conducted under three categories:

  1. Audit of application controls (every year);
  2. Audit of general control areas (every two years);
  3. A large-scale audit of the above-mentioned areas.

The audit of the information systems of a bank is conducted by its independent audit firm, which is separately authorized by the BRSA to conduct the audit of the information systems (the "Authorized Company"). The BRSA is also entitled to cancel the authorization, on a permanent or temporary basis, if the Authorized Company fails to comply with the provisions of the Information Systems Audit Regulation.

The Authorized Company also audits the outsourced services of banks, taking into account the effect of such services on the information systems and financial data production process. The Authorized Company is entitled to review and evaluate the information systems audit report drawn with respect to the outsourcing company. Where the relevant bank has outsourced some of its services, the Authorized Company provides that the agreement executed with the bank comprises provisions ensuring meetings with the outsourcing companies regarding audit issues.

Despite the fact that the Outsourcing Regulation comprises provisions, even detailed, with respect to the outsourcing, the practice remains ambiguous, as the BRSA has not clarified its approach on the scope of outsourcing. We will see in the near future how the BRSA distinguishes between the core services of banks and those that are complementary and supplementary to such core services.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions