- Let's start with the most pressing issue. How is fintech doing today, and how have the months of the pandemic affected it?
- So far, no dramatic changes have been seen. I think that the pandemic will have a delayed effect and it is too early to say that a radically new picture has emerged.
The main tendency is obvious - it is stopping and slowing down many projects and activities. It is also clear that no special investment in fintech should be expected in the near future - while everyone is trying to cut costs and recover. Therefore, alas, those startups that were in an unstable financial condition and in a vulnerable phase of their development are unlikely to survive this period. Or they will be forced to quickly and at a fairly low cost "attach" to a large company.
- Have you decided at VTB to make any changes during the period of self-isolation?
- We had a number of “underdigitalized” and “semi-automated” projects and processes. For example, in a number of operations, we store both paper and electronic dossiers, so in this case, in fact, we pay twice - both for space and for the archive.
Basically, this happened due to the fact that we were afraid that our clients, contractors and government officials would not want to “digitalize” and switch to digital workflow.
During the period of self-isolation, we transferred 98% of our employees to a remote location, and with them, of course, we “deleted” the processes. And ... they met almost no resistance from the other side. When needed, everyone quietly switched to e-mail.
Now the epidemic in Russia is on the decline, but, of course, in most cases one does not want to return to the previous "analog" form. Moreover, we are currently implementing a program for a smooth transition to a completely paperless document flow.
- Sounds progressive. In general, it is interesting that in general the banking industry in Russia is very advanced. I remember that I once tried to pay with my smartphone in the center of Berlin - they looked at me like I was crazy. And in Russia, in whatever region I find myself, any entrepreneur, if not Apple Pay, will definitely accept the transfer to the card. Why do you think it happened?
- Financial networks in Russia developed later than in Europe and the United States. The formation of the banking industry coincided with a period of rapid technological development.
At the same time, during that period (90s), a lot of people with good technical education and high IQ appeared in Russia, who were left without work. The banking industry in our country was formed by former techies with a steep fundamental education and experience in developing innovations.I'm a former techie myself.
Also, in a certain period, the key advantage of banks, for example, in the field of the same car loans, was the speed and high percentage of approved applications. Roughly speaking, the faster and more approved, the more good clients will come. At the same time, we could not rely on statistics when assessing risks, since the segment was new, there was simply no previous experience as such. So it was necessary to form and test hypotheses, build mathematical models, engage in integrations, invent systems for searching and processing data.
And, oddly enough, numerous crises helped the development of the industry. The client's profile changed abruptly, spasmodically, in waves - due to this, the direction of risk management began to develop. We built models, with the help of which we tried to predict future changes, worked out models of churn, etc. There were three such waves, and by the end of the third, only those banks remained intact, which understood that it was important to develop the risky part and retain potentially good clients.
Further more. Front monitoring appeared, then front payment, then biometrics, computer reading ...
Then fraudsters became more active, throwing two or three new schemes per quarter, which gave rise to a new stage of the "imagination race". We broke old schemes, came up with new ways of checking and automating. Then small and medium-sized businesses joined, which improved banking models and adapted them to their needs ... But it all started precisely because the industry was initially formed by strong techies.
- Hmm ... Well, the West, why hasn't this scenario been repeated, say, in Eastern Europe?
- I had the experience of introducing credit factories in Europe with the construction of models - then I realized that they were hindering their development. It's a lack of scale. The fact that the country itself is small makes the development and implementation of such systems unprofitable. And they cannot use other people's systems, since each country has its own legislation, its own local data sources, a specific storage structure, its own system of authorities ...
- Back to technological development - what should we expect in the future?
I think that soon the majority of banks will start testing the native interaction system, that is, managing their account through voice and voice assistant.I think that in 2021 many will enter the market with trial versions of such assistants.
The second trend that can be expected to boom is the development of predictive systems that will save customers from intrusive irrelevant ads.
Still, the bank does not provide essential services - it provides funds to cover needs, therefore, in the final analysis, the winner will be the one who learns to offer his services and resources in a timely, accurate and non-invasive manner. The choice of the client, the moment, the channel for transmitting the proposal, the tools of influence - all this is calculated and predicted mathematically.
We hope that soon all banks will get away from bombarding customers with annoying irrelevant offers, but for now this is a way for the bank to stand out, to show that "I am not like that, I respect your time, I will provide only what you need and when you need it." ... Customer understanding and tact in communication is now a strong competitive advantage.
Well, the third, gradually growing trend is robotization and minimization of manual labor in the banking sector.
It sounds futuristic, but we are actually working on digital employees, moreover, we are building models whose task is to build models.That is, machine logic producing machine logic. We have already had very successful test launches - although they have not yet gone into mass practice, from the point of view of building models, the experience was useful and positive. We are slowly returning to this topic - we do not invest large resources yet, now is not the right time for this. But still, taking into account the emerging new technologies and new mathematics, we consider this to be not the primary, but promising direction.
- I hope that this bright future with a native bank without annoying ads will come as soon as possible. In the meantime, I see that many companies are developing ecosystems, partnerships. Not so long ago, VTB and Rostelecom announced the creation of a joint venture to work with data. What do you expect from this cooperation?
- We want to try each other's algorithms in order to develop the most effective personalization system. That is, we do not combine our data (after all, the patterns and data classes are very different), but we exchange experience on working with them and try to combine our best practices. We will try the developed methods first of all on ourselves, and if we get a solution that the market needs, then we will make it replicable.
- I think that data monetization can be called a well-established market, growing exponentially. I believe that data-driven businesses are a prospect, if not a year or two, but definitely five years. At the same time, it is interesting that the demand for many services (including one of ours) is not only from business, but also from the state.
- I think that the demand for such services will come from all organizations that have territorial distribution, transport and logistics tasks and a million different applications.
The state is more than suitable for these criteria, although I was pleasantly surprised at how dramatically the volume of requests from various government agencies from different cities increased. Now the state is "trying on" tools and platforms, for example, we have already implemented a platform that allows you to see an online consumption profile with a step of 500 meters during the day.
It is certainly very interesting to build government services, and it is nice to realize that they can make life easier for many Russians and, along the way, free up the time and resources of government officials.
- Speaking about the market movement, one cannot help but talk about technology startups - do you have any system at VTB for working with them?
- Yes, of course, we have our own startup accelerator. Over the past year, we have collaborated with a total of more than 500 teams, and 10 of them have come to implementation. This year we have even more ambitious plans in terms of the number of completed projects. We work with different projects - here we have modeling, machine learning, and other areas. The main thing is that the startup has a good strong team, with the rest we are ready to help everywhere and in everything. At the same time, investing is not the main thing we do; incorporation in the early stages is more important for us.
- I would say that the issue here is not even about investments. It is clear that large corporations create a huge number of services and products on their own. But it is obvious that hands and heads cannot reach everything - or not as fast as startups can. Therefore, for example, we at Beeline provide some startups with access to data that they would never have received on their own. By combining our powerful data set with the ease and flexibility of startups, we are able to do something big and cool fast enough.
- Exactly. But, again, the main thing is the team.
- Well, and, perhaps, the last question for today: will the product component of banking change? Will there be something new or nothing better than “saved up, saved up, took out a loan” until it is invented or in demand?
- I forgot to "translate". I think that the basic needs for which, in fact, banking was created, are unlikely to radically change in the foreseeable future. Basically, the industry develops around the "how" question.
For each of these needs, “families” of products have been formed, which are now undergoing a noticeable transformation. So, even 5 years ago, it seemed that a bank card is the eternal "basis of the basics", but now more and more operations are carried out without it, and, perhaps, at some point it will disappear altogether.
That is, the basic payment is still a payment. But the way it is processed, how much cheaper the transaction is for both the seller and the buyer, is changing radically. So the basic products remain the same, but from a procedural point of view, they can be rethought and changed beyond recognition.