“Trap banks”: as financial technology has become a new challenge

“Trap banks”: as financial technology has become a new challenge


Chairman Of The Central Bank Of Russia Elvira Nabiullina

Photo: Alexander Miridonov/Kommersant

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The future of the banking market is impossible without the development of financial technologies. However, technology can be a trap for the banks, participants of the forum Finopolis 2016

The main challenge for the banking sector in the next decade should become the financial technology, assured the participants of the forum of innovative financial technologies Finopolis 2016, which began on Thursday, October 13, in Kazan.

For three years, investments in financial technology in the world has quadrupled to $22 billion, said the head of the Bank of Russia Elvira Nabiullina. If these rates continue, financial technologies will be a major factor affecting the financial market. “For banks, it is, of course, a huge challenge. Here, I think, the banks can fall into the trap, because basically now they complain about low interest rates, strict regulation, unfair regulation compared to the parallel banking sector. At this time, crept back financial technology, and this is the main challenge that banks have to pay attention,” — said Nabiullina.

According to the global leader of financial services division of PwC Nigel Haunch, under the influence of financial technology, banks will undergo substantial change. “Brands will likely remain, but banks in current form will go. Needs to be more contemporary service, customer-oriented,” said Woot. According to him, by 2026, the banks will only a tool that provides services.

The only function, which may persist for ten years for the banks to store money, agrees co-owner and CEO of Qiwi Sergey Solonin. “With the development of technology, the function of banks may be limited to depositing money. Perhaps some innovative banks will still provide front-end service, for example, to look at the client through telephone and other services,” says Solonin.

The main shareholder TCS Group Holding (the parent company of Tinkoff Bank and the company “Tinkoff Insurance”), Oleg Tinkoff is confident that in the near future the Bank will be a phone or any other gadget. “I am convinced that there will be full convergence between the mobile operator and the Bank. This will remain a retail office, but they will be isolated,” — he said.

Bet on blockсhain and big data

As suggested by Tinkov, the main challenge for the banking market is not only technology, but also frames. “Banks need to compete for those who understand how the Internet business,” he says. Therefore, according to Tinkov, more than 60% of the state of his Bank now account IT-specialists. “The team of mobile development is now more than a team of web development that says about our priorities” — said the banker.

Technology in which the shareholder and the founder of Tinkoff Bank sees huge potential associated with the introduction of blockchain technology (the technology for storing and processing data in the block chain represent a record of all the transactions), biometric technologies, rebouding (computer consulting), using the services of personal assistants.

VTB24 consider financial technology as a way to reduce their business costs, but also as a way to increase customer loyalty. “So for us relevant is to increase the volume and versatility of mobile banking services, increasing the share of electronic document circulation”, — said the Deputy Director of the Department of banking and information technologies of VTB24 Alexey Klepikov.

Director of innovation of the Bank “Opening” Alexey Blagirev said that a year ago on the forum Finopolis 2015 banks drew attention to the high interest rates, liquidity shortages and other problems. “Now the most popular answer to the question “what will affect the development of the banking sector in ten years?” is financial technologies,” he said.

He recalled that this year, banks and IT companies have formed a consortium, with the priorities for study and implementation of the blockchain technology, cloud computing and big data. In early July, this was announced by the Chairman of the Central Bank Olga Skorobogatova. His priorities — studying and implementation of technology distributed ledgers (blockchain), cloud computing, big data management (big data) and development of simplified identification. It includes Sberbank, Bank “Otkrytie”, Alfa-Bank, “Tinkoff” and Qiwi.

The challenge for the regulator

However, financial technologies will be a challenge not only for banks but also for the regulator, market participants believe. “For the regulator is no less a challenge, especially for the Central Bank, because we are not only a regulator of the banking system and the financial system,” — said Nabiullina at the forum Finopolis 2016.

According to the head of the Central Bank, will need to change the very ideology of regulation. “Regulation should be proportionate to the risks. That is, while financial technologies is not so big, we should not interfere with its regulation that still does not bear systemic risks. We should give the opportunity to develop new technologies,” she said.

Bankers believe that the need to create appropriate infrastructure to enable them to use technology to clearly understand all the risks. Now the regulation is largely based on the requirements of the regulations, but this approach does not solve the question of risks”, — said Bahirev. As an example, he cites a situation where because of an error in the algorithm or errors in the data can be affected by all of the participants using the array of data into their scoring models. “The accountability mechanism and risk allocation in this case is not spelled out,” he said.

Market participants noted that remote authentication is one of the most problematic issues for banks, introducing new financial services. “You need to change authentication, so you don’t have to be carried out constantly due diligеnce customers. Or, for example, needs to be modernized document management system”, — said the banker.

The first steps in this direction, however, is already done. In particular, in early October the Bank of Russia has announced the launch of the platform “Mastercam”, which will allow market participants to exchange information. As the newspaper “Kommersant”using the platform “Mastercam” banks will be able to conduct operations through the interbank market and in the same store information about transactions using it infrastructure to solve their own problems.

Blagirev believes that the development of the market of financial technologies, the participants should divide infrastructure projects and projects related to new products and services that allow banks to compete with each other.

Future threats

As possible threats of development of technologies in the near future Nigel HLA PwC has called the growing problem with cybercrime. “In addition, we should solve the problems with cybercrime. To do this, regulators need to communicate with each other,” he said.

According to the statistics of the Central Bank, announced at the forum Finopolis, from the beginning, prevented the amount of attempted theft of funds in banks in the result amounted to 5 billion rubles. the losses for this period amounted to 2 billion rubles. According to the Deputy chief of the main Directorate of information security and information protection, Bank of Russia Artem Sychev, the Central Bank is waiting for a surge of attacks on banks by year-end.

Among the trends of the last time the bankers and secrete the increasing activity of non-Bank FINTECH organizations. “They act more promptly, because clearly know what they want to offer to the client and instantly receive the result,” says Blagirev. “Banks to develop, now we need to clearly understand the client, to offer new and unusual products. But they are more inert,” says the banker.

VTB24 say that considering FINTECH companies not as competitors but rather as potential partners. “No real banking sector, their capabilities are very limited”, — says Alexey Klepikov.