Marketplace will operate on the basis of remote authentication online. By removing the geographical framework of the Central Bank plans to increase the availability of financial products and the competition between their suppliers.
All 2018 market participants discussed the marketplace and its structure: some joined the project at the start, someone expressed a willingness to cooperate, and someone has decided to stay away. But the idea of the financial supermarket left no one indifferent.
When the project is fully operational, the landscape of the banking market will change a lot. Consumers will certainly be convenient, but banks, insurance companies, investment companies will have to compete for their customers and to significantly restructure the business processes.
Biometrics, or “service in the face”
To buy anything on the marketplace, the Russians will need to submit biometric parameters in one of the authorized banks. Biometric data (face image and voice casts) will fall into a Single banking system (EBS), which started on 1 July 2018.
Biometrics can be used to identify the customer when placing an online services, and to the collectors of overdue debts. According to estimates of the Central Bank, by the beginning of next year to submit their biometric parameters will be about 4,000 Bank branches.
Thus while the Russians are not very keen to hand over their data — as at October of 2018 is made of approximately 3,000 people. The main reason is that people don’t understand practical benefits of biometrics. We can assume that it is only a matter of time, as biometrics is a very convenient way of interacting with financial institutions.
The procedure of initial identification in the authorized Bank as follows: Bank in the presence of a natural person will check his passport and SNILS, will register the applicant in the Unified system of identification and authentication (ESIA), as well as remove the necessary biometric data — facial image and voice recording.
Further, for remote opening of account (Deposit), a loan or transfer money in any Bank the client is authorized ESIA and confirms his identity using a smartphone (camera and microphone). Apparently, in 2019, banks will have large-scale work to raise public awareness about the advantages of biometrics.
Sberbank has already started it by running an advertising campaign with the slogan “Soon there will be a service in the face”. According to J’son & Partners Consulting, banking biometrics in the years 2018-2022 will demonstrate the highest growth (54%) compared to other industry segments.
The division of banks licenses
2018 was a transitional period in the division of Russian banks on the basic and universal. Initially, this innovation was perceived as disturbing, particularly when there were clear “rules of the game” critics talked about the possibility of regional division of banks. But these fears were not confirmed.
The division of banks ‘ basic and universal is intended to encourage the banking sector to more active lending to consumers and small businesses. For the base of the banks provided a simplified regulation, a reduced number of standards (5 instead of 9) and, most importantly, a minimum capital amount of 300 million rubles and more loyal requirements for reserves.
Such banks will be able to work with the population and small enterprises, abandoning risky lines of business, while universal banks will continue to operate as before. At the same time, the universal banks will have to “pull” the bar capital of 1 billion rubles. No concessions on reserves is provided.
Already 74 of the Bank basic licence (more than 45% of the number of credit institutions with capital less than 1 billion rubles). According to the head of the Central Bank Elvira Nabiullina, at a basic license can claim 192 Bank. Probably in 2019 we will be able to see a large-scale transition of banks into the category of the base.
The revival of lending
Statistics on the banking sector in 2018 has been quite positive. According to the Bank, the growth of lending to the economy in January-October 2018 (+9.6 percent) more than twice exceeded the figure of January-November 2017 (up 4.7%).
Loans to non-financial organizations increased by 5.9%. The positive dynamics of lending to key sectors of the economy: transport (+34%), construction (+11.2 percent), trade (+10.5%) and agriculture (+9,4%) and others.
Rapidly growing retail lending — plus of 18.7% vs 9.8% in January-October 2017 while improving the quality of the portfolio. Overdue corporate loans is 6.7%, retail — by 5.6%. For 10 months of 2018, the banking sector profit amounted to 1183 billion rubles, exceeding the result of the same period last year by 1.7 times.
However, if not for the performance of banks for the cure, the profit of the sector amounted to 1.5 trillion rubles. And if you consider financial results through the prism of economic changes in the country — they do not seem so positive. Thus, banks focused on retail in the face of declining margins and stagnating corporate lending.
However, due to the weakening of the ruble, rising fuel prices, declining purchasing power and other negative economic factors, the retail lending may dry up as the driver of the banking market before 2020.
The appearance standards of the sales
One of the ways to make money for banks in recent years has been its cross-selling policies investment life insurance (coli). Due to the active and sometimes aggressive work with clients — some banks sold the insurance policies as contributions — there is a problem of misselling.
Misselling is incorrect and selling the product, not the customers who need it, or with incomplete or incorrect explanation of the terms. The Central Bank noted that a growing number of complaints coli, including those associated with failure to receive a consumers expected income at the end of the term of the contract.
How to solve the problem, said the whole 2017. As a result, in 2018, the Central Bank has developed standards for life insurance, having published a draft order “On the minimum (standard) requirements to conditions and procedure for implementation of life insurance on condition of periodic insurance payments (rents, annuities) and (or) participation of insured in the investment income of the insurer (coli)”.
The document provides uniform procedures for the sale of insurance policies, and this should improve market transparency and product for customers. For example, the standards stated that the information to consumers is provided in the handout, namely: name, location, website address and phone of the insurer, stating that the contract is not an agreement with a credit institution (90% of the coli contracts sold through banks), is not a contract of Deposit.
In addition, sellers will be required to indicate that coli is invested in funds are not insured by the DIA, and the return on investment is not guaranteed.
Consolidation of banks
In 2018, it continued with the revocation of banking licenses. However, it was primarily a small-size banks.
The consolidation of the banking sector continued primarily through mergers and acquisitions. Among them, for example, the deal between Sovcombank and RosEvroBank; Communication-Bank and “GLOBEKS”; Bank “ZENIT” and kreditimi organizations “ZENIT Sochi”, JSB “Devon-Credit”, Spiritbank, Lipetskkombank.
According to estimates of Expert RA, as a result, the concentration of assets in banks from the top 20 by the beginning of 2020 will rise to 82-83% from 80% on 1 July 2018.
The introduction of artificial intelligence and Big Data
An alarming trend in 2018, stimulated the banks not only to search for alternative sources of income, but also to improve efficiency — for example, through technology.
In the Russian banking sector formed a group of technology banks are actively using the possibilities of artificial intelligence and machine learning: Tinkoff-Bank, Sberbank, MKB, “Renaissance Credit”.
The scope of application of these technologies — assessment of credit risk, anti-fraud, the formation of personalized products, organization of call centers and algorithmic trading.
In the further penetration of technology in banking sector will only increase, because of the ability to apply Analytics to big data depends ultimately the Bank’s success.