The Russian banking sector has shown it can adapt to sanctions and endure shocks by leaning into digitalization and technical leadership. This trend has been shaping the industry well before the 2022 sanctions wave, aided by proactive oversight from the Central Bank and swift market stabilization measures.
These themes arose during the plenary session “Structural transformation of the economy and financial markets” at the Financial Congress, a gathering traditionally organized by the Central Bank of Russia. Delegates included leaders from major banks and the regulator, creating a clear forum for discussing stability and the future of the banking system from multiple perspectives.
Technology is not the problem
Technology has empowered Russian banks to withstand sanctions and accelerate internal development. Even before the pandemic, banks committed substantial budgets to building and deploying digital tools. Analysts at TMT-Consulting noted that IT expenditure by Russian banks rose steadily by about 12–14% annually, reaching 514 billion rubles in 2021, up 58 billion from the previous year.
Many participants in the debate highlighted that Russia emphasizes technology as a core driver. By some measures, the domestic banking sector is ahead of traditional Western banking in several respects.
“A year ago I noted seven trend-setting banks; today five remain. Each stands head and shoulders above European and American peers. This level of competition benefits customers and businesses. Half of the macroeconomic stability rests on advanced solutions from these five banks and the initiatives of the Central Bank”, stated Vladimir Verkhoshinsky, CEO of Alfa-Bank.
German Gref, chairman of the board at Sberbank, reminded audiences that no banks failed in 2022 and that investors and depositors were protected. He attributed this resilience to technology and the strength of the Russian banking sector, arguing that Europe lagged behind.
digital orbit
Earlier, Deloitte analysts highlighted the success of digitizing the local banking system. Their research suggested that Russian banks outperform the global average on most key indicators, helping Russia rank among the top 10 countries for bank digitalization.
Experts point to a broader pattern: Russia, India, and China are leading in the adoption and implementation of financial technologies, with Western markets often adopting these innovations later. Valery Emelyanov of Investing World notes the high share of cashless transactions, widespread payment services, and the rapid use of crypto-enabled solutions and mobile apps.
FG Finam analyst Leonid Delitsyn notes that Russia has frequently leapfrogged old technology cycles. For example, Apple Pay spread faster in Russia than in the United States as merchants sought to offset the costs of card-accepting devices, while India accelerates toward 5G.
Technology also opens new possibilities. Alfa-Bank has reimagined its branch network into Phygital spaces—open offices that blend digital tools with in-person service. By year’s end, the bank plans to double its branch count.
“Alfa-Bank’s Hygienic Offices merge modern tech with physical service: Face ID greets customers, and staff access relevant data instantly. Documents can be signed and stored on a smartphone. These branches save about 10,000 tons of paper yearly and function as open spaces without windows or partitions. Visitors can even bring pets, reflecting a push toward sustainable urban services”, said Verkhoshinsky. Alfa-Bank already operates over 300 Phygital offices, with rapid growth ahead.
What worry?
Even with the system’s stability and a clearer near-term trajectory, the regulator stresses the need for ongoing structural reform across the economy. Central Bank Governor Elvira Nabiullina underscored the question of what comes next: the country has not completed a full structural transformation and cannot afford to relax.
As part of its mandate, the conference emphasized creating conditions for long-term planning to boost competitiveness. officials warned that shifting circumstances could squeeze planning horizons, and stressed efforts to broaden the business community’s forward-looking strategies.
Alfa-Bank confirmed a steady planning horizon, continuing IT investments for three to five years. “The work has been ongoing for a long time”, Verkhoshinsky noted.
VTB’s leadership echoed a global outlook, arguing that domestic banking issues extend beyond national borders. The goal, they said, is to build a new international payments framework and a robust global capital market infrastructure. With reliable digitization, remote services, and modern digital branches, the sector could help create an alternative to traditional channels and spur international custody capabilities.
Experts suggest that the traditional path for Russia’s banking sector is evolving. Delitsyn points to a future where development banks play a dual role as IT platform builders and as solution providers across the industry, integrating banks and tech firms into shared platforms.