The Finopolis 2016 Forum of Innovative Financial Technologies opened in Kazan. Banks leaders and the regulator attended the key plenary session to discuss a 10-year future of the financial and banking sector.
"In Tatarstan, people always do their best."
Elvira Nabiullina, Governor of the Central Bank of Russian, presented her welcome speech and noted that not only did Finopolis provide a platform for discussion and analysis of new trends, but it also boosted a continuous work of all market participants. Besides, Ms Nabiullina read out the greeting of Prime Minister of the Russian Federation Dmitry Medvedev:
"Finopolis 2.0 possesses recognized competence among specialists as an advanced platform for discussion of relevant professional issues, exchange of best practices and conclusion of mutually beneficial contracts. This year representatives of major domestic and foreign banks, financial IT companies focused on the range of important subjects. They discussed application of advanced digital technology in the financial sector, prospects of its technological development, creation of new products and services, and constructive interaction with the state authorities. I expect that your work will be fruitful and you will generate specific demanded offers. My best wishes and nice time in the capital of Tatarstan for all participants of the Forum."
The moderator of the plenary session was Herman Gref, Chairman of the Executive Board of Sberbank of Russia, who noted that "in Tatarstan, people always do their best. [...] Only a year ago we were not going to do anything in Innopolis, and this year we are already signing an agreement," and Tatarstan becomes the point of attraction for technologies.
The agreement mentioned by Mr Gref provides for opening an office of SberTech, Sberbank's subsidiary, in Innopolis. Up to 600 IT specialists will work in this new office by the end of 2017.
Financial sector will lose 40% of its staff
In fact, technologies in financial sphere were one of the key subjects of the session. Answering the question about the main challenges of the banking sector, forum participants voted for "financial technologies which require adaptation." This answer got more votes than "problems with macroeconomic environment", and just few people chose for "low rates".
Sergey Solonin, Qiwi CEO, was the first to answer how the banks would change. According to him, blockchain can change the sphere significantly, and the banks will unite into communities.
"Blockchain is a game changer for many markets."
For clients, changes will be reflected in invisibility of payments. They will be able to switch to virtual reality, and those banks, which create good platforms will benefit.
"Artificial intelligence will for sure increase productivity. On the other hand, many people can lose their job. It is very important for the country that as many people as possible work in the sphere of knowledge, creating new products and possibilities for people. New intellectual environment requires other people and requires reconstruction," said Mr Solonin.
According to Herman Gref, one million people are currently engaged in finance in Russia. Mr Solonin forecasts that this number will decrease by 40% in the next 10 years. If you want your business to stay in the other 60% you should pro-actively participate in the knowledge-driven economy, transform into an IT-driven company, be more mobile, and stop waiting for the market, but approach financial technologies.
"I don't understand why people still go to the banks physically"
Oleg Tinkov, major shareholder of TCS Group Holding, gave an eloquent speech. He reminded that today Tinkoff Bank is the biggest Internet bank in the world, but ten years ago, when he came up with the idea of creating a bank without departments and offices, people mocked him. According to him, a bank in 10 years (in a retail segment) will look like a telephone or other gadget (and Mr Gref later developed this idea by adding that he was not sure that telephones would still exist in 10 years).
"I am strongly convinced that in 10 years there will be a complete convergence between a mobile operator and a bank, but at the same time some departments will definitely remain. I don't understand why people still go to the banks physically. It is really strange. Probably they just like to do it," said Mr Tinkov.
He noted that the regulator managed to stop a non-banking business recently, and that human resources would be the next challenge for the CB.
Oleg Tinkov: "People will choose banks by the brand name and good quality of service."
Anyway, not only the Central Bank but the whole financial sphere faces personnel problems. Banks are forced to compete not with each other, for example with Sberbank Technologies, but with Yandex, Google and Facebook (at the same time Mr Tinkov called Sberbank the most advanced IT Bank in the world).
"It is very difficult to hire the right personnel, because they have a lot of alternative options. We need professionals who will change everything and the less we disturb the faster we will change the sphere," said Mr Tinkov.
Mr Tinkov noted that for clients bank's credibility is not as important as it used to be. Now clients are attracted by brand name and convenience, whereas Deposit Insurance Agency ensures safety and reliability.
"The customer is always right, it is not a mantra, it triggers certain actions," claimed Mr Tinkov. "Children have no authorities, presentability is insignificant for them, they need a nice and usable application. Same values will attract customers in 10 years."
"Regulation ideology has to be changed"
"It is obvious that the financial technology changes the industry's landscape, and makes it faster than 10 years ago," said Ms Nabiullina. According to her, only two years ago FinTech replaced tight regulations and capital scarcity as the main challenge for banks.
"It is a huge challenge for the banking industry. Banks may fall into a trap since they are now complaining about low interest rates, and severe and unfair regulations. But the financial technology has already sneaked up behind. We still have some time; different generations perceive the financial technology differently, so the demand for traditional methods will remain," noted Ms Nabiullina.
At the same time, she stated that whether the banks would remain as institutions depends only on the banks themselves. Moreover, the CB also sees the financial technology as a challenge. According to Ms Nabiullina, a conventional regulator got used to protect interests of the customers and banks and to limit risks by regulating institutions in connection with the current characteristics. And now institutions are changing dynamically, new services appear, conventional regulators are unable to keep up, and the number of regulating documents increases exponentially.
"Regulation ideology has to be changed. It is very important to ensure the regulation that is squared with the risks. We must not unleash our regulation force against institutions that have no system risks yet. We must give a chance for new technologies to develop. It is difficult for us to understand what risks these technologies bring, we are unable to do it by ourselves, that's why we cooperate with banks, create a consortium," Governor of the CB stated and added that it is necessary to switch from the regulation of certain risks to creation of a financial ecosystem.
President of Tatarstan Rustam Minnikhanov also contributed to the discussion. He noted that guests of the Forum focus only on the financial sector, while nobody knows what new industries and professions will appear in the next 10 years.
"On which ground the whole banking system will operate, will we be able to create proper conditions, what professionals we have to train? Development of higher educational institutions, Innopolis, the structure of pre-school and school education shall be considered in the context of the nearest challenges, and this plenary session helps us to determine them," said Mr Minnilhanov.
Later guests of the Forum answered questions from the audience. Mr Tinkov said that everything should be available online, and that the speed of all financial services should increase (Mr Solonin also added user-friendliness to the list). Mr Gref noted that the absence of uniform identifier was slowing operations and were inconvenient. When the discussion touched the subject of cash dispensers, Mr Tinkov stated that the bank was working on creation its own cash dispensers the next year, and Mr Gref said that Cashless City project was launched in Zelenodolsk.
The source: TatCenter.ru