Global financial inclusion goals are gaining momentum with the widespread adoption of mobile technology, but this digitalization process necessitates secure authentication mechanisms. Biometric digital identity solutions make financial services accessible to everyone while automating critical processes such as Know Your Customer (KYC) and Anti-Money Laundering (AML). This not only boosts operational efficiency but also provides users with a faster experience.
Turkey’s national instant payment system, FAST, has become a significant part of this transformation with its domestic success. As shown by global examples like India’s UPI, FAST’s potential for integration with international payment networks offers a roadmap for the future. As a complement to this integration, blockchain technology, with its decentralized structure, can eliminate intermediaries, reducing international transfers to seconds and lowering costs. Corporate solutions like J.P. Morgan’s Kinexys demonstrate that this technology is not limited to decentralized cryptocurrencies but is becoming a strategic part of traditional finance.
The Digital Turkish Lira project by the Central Bank of the Republic of Turkey (TCMB) is one of the most crucial components of a holistic vision that encourages financial inclusion and innovation. Ultimately, the future of cross-border payments does not depend on a single technology but rather on a harmonious and hybrid digital ecosystem where different components complement each other by leveraging their respective strengths.
Dynamics of Global Financial Inclusion and the Impact of Digitalization
Financial inclusion, which refers to the ability of individuals and businesses to access affordable, convenient, and secure financial services, is a key item on the global agenda. The World Bank’s Global Findex 2025 report shows that access to financial services has increased worldwide, with 79% of global adults now holding a financial account. This increase is directly related to the spread of mobile technology, especially in developing economies. According to the report, 84% of adults in these economies own a mobile phone, and 3 billion people use smartphones.
This data clearly indicates that access to financial services is now built on digital infrastructures rather than physical bank branches. The accessibility and convenience offered by mobile technology are bringing millions of unbanked or underbanked people into the financial system. This transformation creates new market potential for traditional financial institutions while also forcing them to adapt their business models to the digital environment. Parallel to this global trend, Turkey is in a better position regarding financial inclusion compared to countries in its income bracket. Services like Param’s Findeks risk report also support this digitalization process by enabling you to easily access your financial history and score.
Secure Authentication: Why is Digital Identity So Important?
The digitalization of financial services also brings security risks. This makes secure and reliable authentication processes not just a convenience, but an indispensable necessity for the digital financial ecosystem. Biometric digital identities, which are replacing traditional passwords, both improve the user experience and enhance security. These solutions are more effective at preventing identity theft and fraud than conventional methods. Digital identity technologies are redefining compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering), two of the most critical processes in the financial sector.
According to a report by the McKinsey Global Institute, the widespread adoption of digital identity systems could add 3% to 13% of economic value to some countries’ Gross Domestic Product (GDP) by 2030. This value includes tangible benefits such as the prevention of fraud and the potential to reduce the cost of KYC processes by up to 90%. These developments are concrete evidence of how digitalization directly contributes to financial inclusion.
Redefining KYC and AML Processes
Digital identity technologies are redefining compliance with KYC and AML. Traditional KYC processes, which rely on manual document checks, can be both time-consuming and prone to human error. This slows down the customer onboarding process and increases operational costs.
Biometric KYC solutions offer a response to these challenges by automating identity verification. Unique physiological features like facial recognition, fingerprints, and iris scans provide a strong defense against fraudulent tactics like fake identity creation and document forgery. Through a combination of AI-powered automation and human oversight, fintech companies can verify user identities in seconds and minimize fraud risk.
The Contribution of Digital Identities to Financial Services
| Parameter | Traditional Methods | Digital and Biometric Identity | Economic Value and Gains |
| Identity Verification | Manual, document-based, prone to human error | Automated, biometric, resistant to fraud | Prevents identity theft and fraud, strengthens security |
| Customer Onboarding | Time-consuming, can take days | Instant, completed in seconds | Improves user experience, increases conversion rates |
| Operational Costs | High, labor-intensive | Low, optimized through automation | Can reduce KYC costs by up to 90% |
| Regulatory Compliance (AML/KYC) | Challenging and complex | Provides a secure and reliable data flow | Facilitates compliance with global AML regulations, reduces penalties |
| Economic Contribution | Global economy loses over $1 trillion annually due to fraud | Can add 3-13% value to some countries’ GDP by 2030 | Drives economic growth and efficiency |
Turkey’s Instant Payment Infrastructure: The FAST System and Its Cross-Border Vision
One of the most significant developments in Turkey’s financial infrastructure is the Instant and Continuous Funds Transfer (FAST) system, developed by the Central Bank of the Republic of Turkey (TCMB). Launched on January 8, 2021, this next-generation instant payment system has become a national success story by enabling 24/7, real-time money transfers between different banks. A standout feature of the system is the ability to transfer money without an IBAN, using “Alias ID” definitions such as a mobile phone number, Turkish ID Number (TCKN), or email address.
The intense interest and rapid spread of FAST show that instant payments are not just about speed, but also about how critical it is to simplify the user experience. As of April 4, 2024, the system has increased its money transfer limits to 100,000 TL and to 250,000 TL for business payments made using the FAST-TR QR code.
FAST’s International Integration Potential
While FAST currently focuses on domestic payments, its future lies in its potential for integration with cross-border payments. This vision runs parallel to the global success of India’s Unified Payments Interface (UPI) platform. The International Monetary Fund (IMF) highlights the potential of instant payment infrastructures like UPI to boost financial inclusion.
UPI has gone beyond being a local success story. The system has facilitated cross-border payments by integrating with international networks. For example, the global payment technology provider EBANX has integrated UPI’s recurring payment feature, UPI Autopay, into its platform.
However, this integration process is not easy and comes with significant challenges. To scale local success globally, there is a need for universal standards and global initiatives that support transparent data flow. Overcoming these challenges will define the strategic steps required for FAST to become an international payment corridor.
The Bridge Between Blockchain and Traditional Systems
Blockchain technology, with its decentralized ledger structure, offers the potential to make international transfers faster, more secure, and less costly by eliminating intermediaries. While traditional SWIFT transactions can take one to five business days depending on the number of intermediary banks, blockchain-based transfers can often be completed in seconds or minutes.
Blockchain’s greatest value is not just speed and cost savings. The recording of every transaction on an immutable ledger provides increased transparency and traceability. This feature reduces the risk of fraud and allows payments to be tracked in real-time.
Innovative Blockchain Solutions
The financial sector is adopting blockchain technology through different models. The first is open and decentralized networks like Stellar. Stellar stands out because the cost of each transaction is only a nominal fee ($0.00001 XLM). This nominal fee and high speed offer an ideal solution, especially for micro-payments like low-value remittances from migrant workers.
Another model is “permissioned” blockchain solutions managed by traditional financial institutions, such as J.P. Morgan’s Kinexys Digital Payments platform. Kinexys enables programmable, real-time, and multi-currency payments for corporate clients. This platform integrates with existing systems (SWIFT, APIs) to process 24/7 cross-border transactions in minutes.
| Parameter | Traditional (SWIFT) | Next-Generation (Blockchain) |
| Speed | 1-5 business days | Seconds-Minutes |
| Cost | High (intermediary bank fees) | Very low (network validation fees) |
| Access | 11,000+ financial institutions | Decentralized, open to everyone |
| Security | Centralized, more vulnerable to cyber attacks | Distributed, cryptographic encryption |
| Transparency | Limited, real-time tracking is difficult | High, every transaction is traceable |
| Scalability | High, manages millions of transactions | Under development, can face congestion |
Central Bank Digital Currencies (CBDC) and the Digital Turkish Lira Project
Development of the Digital Turkish Lira Project
Central banks aim to strike a balance between financial innovation and stability. In this context, they have begun exploring their own digital currencies (CBDC). The Central Bank of the Republic of Turkey (TCMB) is running the “Digital Turkish Lira” project in parallel with this trend. The first phase of the project, which began in 2022, was completed in the first half of 2023 with pilot tests that successfully processed the first payment transactions.
The TCMB is implementing the Digital Turkish Lira project with a “permissioned distributed ledger” (DLT) technology. The digital currency is designed to be a complement to existing banknotes. The main goal of the project is to increase financial inclusion and create a uniform infrastructure for digital payments. In this way, even those without a bank account will be able to easily access financial services.
| Work Area | Scope | Timeline | Key Takeaways |
| Pilot Tests | First payment transactions on the Digital Turkish Lira System | Late 2022 – First half of 2023 | Tests successfully completed |
| Technological Infrastructure | DLT platform setup, smart contract, and application development | 2022 | A modular architecture was adopted |
| Digital Identity Integration | Integration of the prototype digital identity system | Within Phase 1 work | Identity verification was identified as a critical component of financial transactions |
| Business Model | “Two-tiered” banking system model, access via financial intermediaries | Design phase | Aims for compatibility with the existing financial system |
| Focus Area | Retail payments (low-value, high-volume transactions) | Main goal of the first phase | Aims to increase financial inclusion |
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The Future of Finance: How Identity, Payments, and Technology Converge
The future of cross-border payments is not dependent on the dominance of a single technology. Rather, it relies on the strategic and harmonious convergence of different digital ecosystems. In this holistic model, each technology takes on a specific role, complementing the others.
Digital identity securely authenticates the identities of individuals and businesses, creating a secure entry point for the global financial ecosystem. On top of this secure authentication layer, national instant payment systems like FAST can be placed. FAST provides a reliable and scalable foundation by enabling instant money flow within the country. The role of a global bridge, enabling these local infrastructures to communicate with each other in a trustless and transparent manner, can be undertaken by blockchain technology.
This holistic vision would make it possible for a user verified with a digital identity to send money to a local bank via FAST, have those funds automatically transferred across borders via a blockchain network, and have them deposited into the recipient’s account via the recipient country’s local instant payment system. This creates a synergy where each technology performs its role, strengthening the entire ecosystem, and ultimately maximizing financial inclusion.
Strategic Roadmap and Opportunities for Turkey
Turkey is in a ready position for this transformation. According to a report by the Ministry of Commerce, Turkey’s e-commerce volume exceeded 3 trillion TL in 2024. The share of e-commerce in GDP has reached 6.5%. These figures show a great potential for the integration of the digital payment infrastructure into international trade. Pilot projects can be tested for blockchain and FAST integrations in areas such as migrant worker remittances and e-commerce payments. These steps are strengthening Turkey’s position in the digital economy.
Key Challenges and Risks
The biggest obstacle to integration is the unique structure of national payment systems and a lack of global interoperability. Regulatory frameworks, data privacy laws, and cybersecurity standards in different countries complicate cross-border integration.
Overall Assessment
The transformation of cross-border payments is a process aimed at increasing financial inclusion, lowering costs, and facilitating global trade. This process will be possible not by the supremacy of a single technology, but through the harmonious integration of digital identity, instant payment infrastructures, and blockchain. With local successes like FAST and strategic projects like the Digital Turkish Lira, Turkey is a strong candidate to become a vital part of this ecosystem.
The convergence of these three technologies creates a synergistic force in overcoming existing challenges. Turkey’s ability to fully realize this potential depends on strategic steps such as aligning with international standards, clarifying regulatory frameworks, and strengthening public-private sector collaborations. The future of financial inclusion lies in a digital ecosystem built on trust, transparency, and inclusivity. Progress in this direction has the power to transform not just the financial sector but the entire global economy.