The Russian banking sector has demonstrated its ability to adapt to sanctions and its readiness for transformations under the influence of external shocks. In many respects, this has been facilitated by the path to digitalization and technological dominance, the trend that the industry’s biggest representatives were considering even before the sanctions funnel of 2022. Besides the systematic work of the Central Bank, which responds quickly to difficulties and takes preventive measures to stabilize the market.
This was discussed by the participants of the plenary session “Structural transformation of the economy and financial markets”, held within the framework of the Financial Congress. This event is traditionally organized by the Central Bank of Russia. Among the speakers were representatives of the largest banks and the regulator, who made it possible to hear the views of the parties committed to the dialogue on the stability and future of the banking system.
Technology is not the problem
Technology has allowed Russian banks to resist sanctions and rely on their own development. Even in the pre-pandemic period, financial institutions allocated significant budgets for the development and implementation of digital tools. Experts TMT-Consulting calculatedthat the total cost of IT for Russian banks has increased steadily by 12-14% over the past few years. So in 2021, this figure amounted to 514 billion rubles, which is 58 billion more than in the previous period.
The fact that in Russia everything is up to technology was noted by many who took part in the discussion. In addition, according to his estimates, banking in the Russian Federation is ahead of classical banking in the West.
“A year ago I said that there are seven banks left in Russia, these are really trend-setting players, improving competition, redistributing the market, now there are five such banks. Each head and shoulders from any European and American bank. This type of competition is good for customers and business. “I believe that half of the success of the current macroeconomic stability lies precisely in the advanced solutions of the five major banks and, of course, in the initiatives of the Central Bank of Russia,” said Vladimir Verkhoshinsky, Chief Executive Officer of Alfa-Bank.
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German Gref, Chairman of the Board of Sberbank, reminded that not a single bank went bankrupt in 2022 and that investors and depositors were not harmed. This was ensured, among other things, by technology and the advanced Russian banking sector, where according to Gref, Europe was at the “cave” level.
digital orbit
Earlier, experts from the analytical company Deloitte spoke about the success in digitizing the local banking system. According to them researchRussian banks outperform the global average on five out of six key indicators. This allowed the Russian Federation to become one of the top 10 countries in the world in terms of digitalization of banks.
Experts believe that there is nothing surprising in the high level of digitization. Major developing countries, primarily Russia, India, and China, are the flagships in the implementation and implementation of financial technologies (although the technologies themselves often appear in the West). BCS stock market expert Valery Emelyanov says that the share of non-cash turnover is high in these countries, payment services are popular, use of crypto technologies is one of the most convenient and advanced mobile applications. Investment World.
In addition, FG Finam analyst Leonid Delitsyn notes that historically, the Russian banking sector has jumped right out of the old technological eras into new ones. For example, in Russia, the Apple Pay payment system has spread faster than in the United States, because American stores want to recoup the costs of devices that accept plastic cards, India quickly introduces the 5G mobile standard, etc.
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Of course, technology offers new opportunities and will continue to do so. A simple example: Alfa-Bank revised its view of the usual bank branches and replaced them with open offices in the form of Phygital – spaces without the usual windows and partitions. This format will allow the bank to double the number of branches in the country by the end of the year.
“Alfa-Bank’s hygienic offices are a combination of modern technologies with a physical service: Face ID recognizes the customer at the entrance and employees receive the necessary information about him. In addition, documents are signed and stored on the smartphone. That’s why each Phygital branch saves 10,000 tons of paper every year. Phygital branches have open spaces and have no “windows”, shelves or partitions – a bank office is perceived as a co-working space or cafe. In addition, visitors can bring their pets with them – bank branches thus contribute to the sustainable development of the urban environment,” said Vladimir Verkhoshinsky. According to him, Alfa-Bank already has more than 300 such offices and their number is growing rapidly.
What worry?
Despite the stability of the banking system and a more predictable course of development in the near future, the regulator sees the need for further structural transformation in the economy. Central Bank Governor Elvira Nabiullina spoke on the subject. “You can be proud of what you have, but what will you do next? “We have not gone through a complete structural transformation, we cannot say that we have reached a stage and then we can relax,” Nabiullina said at the Financial Congress of the Central Bank of Russia.
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Among the duties of the organizer included the creation of conditions for long-term planning, which made the business more competitive. “We are concerned that due to various circumstances a business may narrow the planning horizon, which is dangerous for long-term trends, and it is important to get yourself out of this situation. “We are doing everything we can to broaden the planning horizons of the business community,” said the head of the Central Bank.
Alfa-Bank noted that they did not change their planning horizon and continued to actively invest in IT for 3-5 years. “We have been working for a long time,” said Vladimir Verkhoshinsky.
VTB Chairman of the Board Andrei Kostin expressed the opinion that the problems of the banking sector go beyond the limits of the local market. According to him, the goals should be more global at the level of building a new system of international payments and infrastructure of the world capital market. Relying on a reliable level of digitization, the development of remote services and modern technological branches, the Russian banking sector can initiate a global transformation with the participation of the regulator and create an alternative to SWIFT through fundamental reforms. Establish horizontal links between local banks, bypass existing infrastructure and new tools for raising capital and launch an international custody HUB.
Experts agree that the traditional path of development of the banking sector in Russia has largely been overcome. Leonid Delitsyn believes that development banks will need to break into other sectors. For example, according to the expert, such a restructuring of the industry is possible, in which one or two large banks will simultaneously become developers of IT platforms, other banks and IT companies will play the role of solution developers. on these platforms.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.