Who Will Launch an On­line-Only Bank?

The first branch­less bank could be set up in Be­larus in the next few years

Economy of Belarus - - FRONT PAGE -

Bank­ing in­dus­try is very re­spon­sive to all sorts of in­no­va­tions. In the fight for cus­tomers, fi­nan­cial in­sti­tu­tions make their ser­vices more user-friendly and more con­ve­nient, bring them closer to cus­tomers and ex­pand the range of on­line ser­vices. It is not sur­pris­ing that cor­po­rate clients and in­di­vid­u­als choose on­line ser­vices over tra­di­tional bank­ing. What does the Be­laru­sian on­line bank­ing mar­ket look like to­day? What will it look like to­mor­row tak­ing into con­sid­er­a­tion the re­cent reg­u­la­tions to pro­mote dig­i­tal bank­ing? Driv­ers of Growth in Non-Cash Pay­ments

Cash­less pay­ments have been gain­ing mo­men­tum in Be­larus thanks to the banks them­selves and to the gov­ern­ment and its pol­icy to­wards the dig­i­tal trans­for­ma­tion of the econ­omy. Over the past fif­teen years a num­ber of na­tional and re­gional pro­grams have been im­ple­mented in Be­larus to de­velop on­line bank­ing and cash­less pay­ment sys­tems. Since 2007 the share of cash­less money in re­tail rose 12 times to reach 25.4% of the to­tal turnover as of 1 Jan­uary 2016.

Pay­ment cards are the fastest grow­ing cash­less means of pay­ment in Be­larus. As of 1 April this year 23 banks is­sued cards in Be­larus. The num­ber of cards in cir­cu­la­tion was ap­prox­i­mately 12.4 mil­lion, in­clud­ing 5.1 mil­lion Belkart cards, 5.2 mil­lion VISAs, and 1.8 mil­lion cards of the MasterCard pay­ment sys­tem. About 200,000 were co-badged Belkart/Mae­stro cards.

As of 1 April 2016, 22 banks pro­vided on­line bank­ing ser­vices to in­di­vid­u­als and 25 banks to cor­po­rate clients.

The above-men­tioned banks pro­vided ser­vices to ap­prox­i­mately 13 mil­lion re­tail cus­tomers (one per­son can be a cus­tomer of sev­eral banks). About 3.7 mil­lion used on­line bank­ing ser­vices. The most pop­u­lar ser­vices among in­di­vid­u­als are In­ter­net bank­ing (about 3 mil­lion users), SMS bank­ing (more than 1.18 mil­lion) and mo­bile bank­ing (846,000) (one client can use sev­eral on­line bank­ing sys­tems). Some 412,000 re­tail clients were users of other dig­i­tal bank­ing ser­vices such as TV bank­ing, USSD bank­ing, and au­to­matic pay­ment for re­cur­ring bills.

To­day in­di­vid­u­als can use such on­line ser­vices as de­posit, clear­ing and set­tle­ment ser­vices, cur­rency ex­change, lend­ing and pay­ment card op­er­a­tions, elec­tronic money trans­fer, op­er­a­tions with pre­cious met­als and stones, com­mem­o­ra­tive ban­knotes and coins, and also in­for­ma­tion and con­sul­ta­tion ser­vices.

The ag­gre­gate cor­po­rate clien­tele of Be­laru­sian banks was more than 450,000 as of 1 April 2016 (one per­son can be a cus­tomer of sev­eral banks). Over 286,000 were users of on­line bank­ing ser­vices. The main on­line bank­ing ser­vice for le­gal en­ti­ties is the Client Bank sys­tem, with 213,200 users (one client can use sev­eral on­line bank­ing sys­tems). Fur­ther­more, 85,600 used In­ter­net bank­ing, and 9,600 took ad­van­tage of mo­bile bank­ing. With re­gard to other on­line bank­ing ser­vices (such as USSD, SMS bank­ing, e-com­merce), there were 13,800 users.

Cor­po­rate on­line ser­vices in­clude de­posit ser­vices, clear­ing and set­tle­ment, cur­rency ex­change, elec­tronic funds trans­fer, lend­ing and card ser­vices, trans­ac­tions with pre­cious met­als and stones, doc­u­men­tary and trade fi­nance ser­vices (bank guar­an­tees, let­ters of credit), fac­tor­ing, cash col­lec­tion, and other op­er­a­tions.

“How­ever, we can­not say that the Be­laru­sian mar­ket is ma­ture in part of elec­tronic pay­ment in­stru­ments, prod­ucts and ser­vices of­fered through In­ter­net for both

in­di­vid­u­als and le­gal en­ti­ties,” be­lieves Alexan­der Sot­nikov, the head of the direc­torate for dig­i­tal bank­ing tech­nolo­gies at the Na­tional Bank of Be­larus.

De­spite the fact that the list of on­line ser­vices seems pretty com­plete, in prac­tice ev­ery bank de­cides on its own what ser­vices to of­fer to its clients. When it comes, for ex­am­ple, to on­line bank­ing for in­di­vid­u­als, ac­cord­ing to the lat­est data (1 Oc­to­ber 2015) only six banks of­fered de­posit ser­vices and only three is­sued pay­ment cards. In­di­vid­u­als can ap­ply for a loan re­motely in six banks, but will still have to visit a bank of­fice to re­ceive it.

When Dis­tance Brings Us Closer

How­ever, banks have re­cently started us­ing on­line bank­ing more ac­tively. In fact, for small banks this is a way to at­tract new cus­tomers with­out ex­pand­ing the net­work of out­lets. For big busi­ness this is a way to op­ti­mize, re­duce costs of run­ning a net­work of of­fices and im­prove the cus­tomer ser­vice.

The banks ac­tively de­vel­op­ing their on­line net­work in­clude Pri­or­bank, Bel­gazprom­bank, MTBank, Alfa-Bank, Bank BelVEB, Belin­vest­bank, Be­larus­bank, Be­la­gro­prom­bank, BPS-Sber­bank, Tech­nobank, Be­larusky Nar­o­dny Bank, BSB Bank, Bank MoscowMinsk, and Frans­a­bank.

Belin­vest­bank of­fers such on­line ser­vices as In­ter­net bank­ing, mo­bile bank­ing (na­tive mo­bile ap­pli­ca­tions de­vel­oped for An­droid, iOS, Win­dows Phone), TV bank­ing and SMS bank­ing. Client Bank and In­ter­net Bank sys­tems are avail­able for cor­po­rate clients.

Clients may open a de­posit ac­count and or­der a plas­tic card on­line, fill in an on­line loan ap­pli­ca­tion, make var­i­ous pay­ments, trans­fer funds be­tween cards/ac­counts, limit op­er­a­tions for se­cu­rity pur­poses, ac­ti­vate bank­ing ser­vices and pay for them.

“The most pop­u­lar on­line bank­ing ser­vices are In­ter­net bank­ing and mo­bile bank­ing, with the lat­ter gain­ing mo­men­tum at a rapid pace,” Di­rec­tor of Belin­vest­bank’s Card Cen­ter Vadim Golov­chits said. “For in­stance, the num­ber of in­di­vid­ual users of the In­ter­net bank­ing sys­tem in­creased by more than 40% in 2015. The num­ber of mo­bile bank­ing users soared by 36% in Q1 2016 alone.”

Pri­or­bank’s on­line ser­vice com­prises the In­ter­net Bank Prior On­line sys­tem for in­di­vid­ual cus­tomers and the Client Bank sys­tem for cor­po­rate clients. The In­ter­net Bank Prior Mo­bile ver­sion is avail­able for users with An­droid, iOS and Win­dows Phone mo­bile de­vices.

On­line cus­tomers can take ad­van­tage of the ERIP sys­tem (the com­mon pay­ment and in­for­ma­tion space) and also re­pay loans, fill

To­day in­di­vid­u­als can use such on­line ser­vices as de­posit, clear­ing and set­tle­ment ser­vices, cur­rency ex­change, lend­ing and pay­ment card op­er­a­tions, elec­tronic money trans­fer, op­er­a­tions with pre­cious met­als and stones, com­mem­o­ra­tive ban­knotes and coins, and also in­for­ma­tion and con­sul­ta­tion ser­vices

up de­posit ac­counts, trans­fer funds be­tween cards of dif­fer­ent banks, re­ceive bank state­ments, block/un­block cards, and ap­ply for cards. Ser­vices such as au­to­matic pay­ments and push no­ti­fi­ca­tions are avail­able as well. The Prior On­line sys­tem also pro­vides in­for­ma­tion about the near­est ATMs and the cur­rent ex­change rates.

Mo­bile ap­pli­ca­tions al­low cor­po­rate cus­tomers to reg­is­ter in by us­ing their cor­po­rate In­ter­net bank­ing lo­gin and pass­word, view bal­ances and mon­i­tor ac­count trans­ac­tions.

“The bank has cho­sen a mul­ti­chan­nel prin­ci­ple in ser­vic­ing its clients. We aim to in­te­grate var­i­ous chan­nels: In­ter­net, mo­bile bank­ing, SMS bank­ing, ATMs, pay­ment ter­mi­nals, call cen­ters. We also en­cour­age our cus­tomers to go dig­i­tal,” Pri­or­bank Ex­ec­u­tive Di­rec­tor Dmitry Volchek said.

Prior On­line sys­tem has more than 155,000 users. In 2015 the num­ber of the In­ter­net Bank Prior On­line users rose by 45%. The num­ber of mo­bile bank­ing users shot up by 60% in com­par­i­son with 2014.

Alfa-Bank Be­larus on­line re­tail cus­tomers ac­cess its ser­vices via two chan­nels: In­ter­net Bank Alfa Click and Mo­bile Bank Alfa Mo­bile, with SMS Bank Alfa Check among the avail­able ser­vices. The bank places a spe­cial em­pha­sis on the de­vel­op­ment of its mo­bile bank­ing.

With the help of In­ter­net/ mo­bile bank­ing, users are able to pay for more than 55,000 ser­vices within the ERIP sys­tem. Alfa Click also al­lows mak­ing pay­ments out­side the ERIP sys­tem.

With its e-chan­nels Alfa Bank pro­vides trans­ac­tional ser­vices to its clients (reg­u­lar pay­ments, money trans­fers, for­eign ex­change op­er­a­tions, and so on), and also pro­motes other prod­ucts such as loans and de­posits. The fo­cus is on pro­vid­ing a full range of on­line ser­vices. For in­stance, if a de­posit is opened on­line, it may be closed dis­tantly as well.

“In Q1 2016, the to­tal num­ber of the bank’s on­line users rose by more than 17% from the start of the year. To­day al­most ev­ery sec­ond Alfa Bank client uses the bank’s on­line ser­vices on a reg­u­lar ba­sis,” Di­rec­tor of the Alfa Bank Elec­tronic Busi­ness De­part­ment Alexei Kornikov pro­vided the sta­tis­tics.

Alfa Bank’s ёCard has been re­cently gain­ing pop­u­lar­ity. This vir­tual card can be or­dered through the In­ter­net Bank­ing ser­vice. The card has no phys­i­cal car­rier, thus it can­not be lost. It is also al­most 100% fraud-safe. Ac­cord­ing to Alfa Bank ex­perts, in some four years’ time nearly 25% of on­line trans­ac­tions in Be­larus will be made with vir­tual cards.

Bank BelVEB also of­fers a wide range of on­line ser­vices. The bank’s re­tail cus­tomers are able to make pay­ments through the ERIP sys­tem, re­pay loans, fill up a de­posit ac­count and e-wal­lets.

On­line bank­ing ser­vices re­lated to the open­ing and man­age­ment of de­posit ac­counts are par­tic­u­larly pop­u­lar to­day. On­line bank­ing sys­tems also en­able clients to send re­mit­tances and trans­fer money from one card to an­other. Be­sides, cus­tomers can get ac­count bal­ance in­for­ma­tion, keep track of their trans­ac­tions, and ob­tain other kinds of data.

The num­ber of in­di­vid­u­als sub­scribed to on­line bank­ing ser­vices is in­creas­ing, so is the size of on­line trans­ac­tions and the num­ber of pay­ment cards. For ex­am­ple, in 2010 only 4,400 bank cards, or 3.1% of the to­tal num­ber of cards is­sued for in­di­vid­ual users, were con­nected to the ser­vice. In 2015 the fig­ure stood at 49,300, or 18.2% of the to­tal.

As for cor­po­rate en­ti­ties, Bank BelVEB of­fers Client Bank and In­ter­net Bank ser­vices. E-bank­ing is pop­u­lar with busi­nesses. As of 1 April 2016, on­line bank­ing was ac­tively used by 96.7% of the bank’s cor­po­rate clients.

“Like many ex­perts, we be­lieve that the num­ber and size of trans­ac­tions han­dled on­line will be grow­ing over time. This is why we at­tach so much im­por­tance to the de­vel­op­ment of on­line bank­ing sys­tems,” Bank BelVEB rep­re­sen­ta­tives ex­plained.

There is a grow­ing de­mand for e-bank­ing ser­vices in Be­larus, and banks are deter­mined to work hard to de­velop on­line bank­ing sys­tems. It is also worth men­tion­ing that the mo­bile bank­ing mar­ket is ex­pand­ing rapidly, al­though it has not yet out­per­formed dig­i­tal bank­ing in terms of user num­bers. The share of smart­phones and tablets in the to­tal num­ber of mo­bile de­vices used to­day is con­stantly ris­ing.

“We ex­pect that in the near term more Be­laru­sians will man­age

their fi­nances through the use of mo­bile bank­ing and fi­nan­cial apps de­vel­oped by banks and other par­tic­i­pants of the fi­nan­cial ser­vices mar­ket,” rep­re­sen­ta­tives of the Na­tional Bank said.

The mo­bile app Banka is con­sid­ered one of the most promis­ing soft­ware so­lu­tions in this sec­tor. It is the first uni­fied mo­bile bank­ing plat­form de­vel­oped by the Be­laru­sian com­pany Alseda Con­sult­ing. The app en­ables the user to si­mul­ta­ne­ously man­age all pay­ment cards, ac­counts, de­posits and loans from dif­fer­ent banks. To­day it can be used by clients of BPS-Sber­bank, Be­la­gro­prom­bank, Zepter Bank, BTA Bank, Trust­bank, and Tech­nobank.

Dig­i­tal Revo­lu­tion

De­cree No. 478 “Con­cern­ing the de­vel­op­ment of dig­i­tal bank­ing tech­nolo­gies” and the dig­i­tal bank­ing de­vel­op­ment strat­egy for 2016-2020 are aimed at ac­cel­er­at­ing the dig­i­tal trans­for­ma­tion of the fi­nan­cial and bank­ing ser­vices mar­ket in Be­larus. For ex­am­ple, they pro­vide for cre­at­ing an in­ter­bank client iden­ti­fi­ca­tion pro­gram, in­tro­duc­ing APIs (ap­pli­ca­tion pro­gram­ming in­ter­faces), and de­vel­op­ing pay­ment ag­gre­ga­tors, con­tact­less tech­nolo­gies, mo­bile pay­ment so­lu­tions, and the dig­i­tal money mar­ket.

The es­tab­lish­ment of the in­ter­bank client iden­ti­fi­ca­tion pro­gram in Be­larus is an im­por­tant in­no­va­tion that will en­able mu­tual ex­change of iden­ti­fi­ca­tion data. The sys­tem will be put into op­er­a­tion in Oc­to­ber 2016 and will be based on the Raschet sys­tem and the iden­ti­fi­ca­tion sys­tems used by banks.

It will pro­vide clients with on­line ac­cess to the ser­vices of­fered by dif­fer­ent banks at any time re­gard­less of their phys­i­cal lo­ca­tion. All they will have to do is make one in-per­son visit to a bank of­fice and un­dergo the iden­ti­fi­ca­tion pro­ce­dure. This sys­tem will be used by state gov­ern­ment bod­ies and in the long term by busi­ness en­ti­ties, the Na­tional Bank rep­re­sen­ta­tives said.

It is worth not­ing that such prac­tice is al­ready com­mon in some coun­tries. For in­stance, Aus­tria, Canada, Es­to­nia, and Swe­den use a sim­i­lar in­ter­bank iden­ti­fi­ca­tion sys­tem BankID. It was orig­i­nally de­vel­oped by a con­sor­tium of large banks and to­day is used by in­di­vid­u­als, gov­ern­ment author­i­ties, busi­nesses, and banks. BankID en­ables ac­cess to on­line bank­ing, on­line shop­ping and tax dec­la­ra­tion. In Swe­den, they have a sim­i­lar iden­ti­fi­ca­tion sys­tem and the Swish mo­bile pay­ment app to trans­fer money from one ac­count to an­other within ten sec­onds. All they need is to in­di­cate the amount of the trans­fer and the tele­phone num­ber of the re­ceiver.

Bio­met­ric iden­ti­fi­ca­tion tech­nolo­gies that re­duce the risk of fraud in on­line trans­ac­tions are pro­jected to ex­pe­ri­ence a ma­jor boom. Such tech­nolo­gies are used across the world to iden­tify in­di­vid­u­als as they with­draw cash from ATMs, make phone calls to banks, log on to mo­bile bank­ing apps, or use on­line bank­ing ser­vices.

For ex­am­ple, Slo­vakian Ta­tra Banka de­ploys a voice bio­met­rics tech­nol­ogy to au­then­ti­cate users of con­tact cen­ter ser­vices. Pri­or­bank in­tro­duced a sim­i­lar ser­vice in 2015. Cus­tomers of Rus­sian Stan­dard Bank can log on to the Mo­bile Bank ap­pli­ca­tion us­ing Touch ID-en­abled smart­phones. Bel­gazprom­bank and Belin­vest­bank en­abled such so­lu­tions in 2015.

Stan­dard­iza­tion and ap­pli­ca­tion of bank­ing API tech­nolo­gies will en­able banks to of­fer uni­form prod­ucts and ser­vices as well as to en­gage out­side or­ga­ni­za­tions in the process. Plans have been made to de­ploy open APIs (for ex­am­ple, ex­change rates, news, tar­iffs, the lo­ca­tions of the bank’s out­lets and ATMs, loan and de­posit cal­cu­la­tors), APIs for pro­vid­ing sta­tis­tics to pub­lic ad­min­is­tra­tion bod­ies, and se­cure pay­ment APIs in Be­larus.

By the way, the United King­dom has launched the Mi­data pro­gram which pro­vides cus­tomers with ac­cess to their trans­ac­tional data held by pub­lic and pri­vate com­pa­nies, in­clud­ing banks. For this pur­pose, out­side fi­nan­cial com­pa­nies can get open data of con­sumers and cre­ate use­ful ser­vices us­ing open APIs. Open API tech­nolo­gies are widely used by Ukrainian banks.

Be­larus is also go­ing to de­velop the net­work of pay­ment gate­ways which are very pop­u­lar world­wide. Plans have been made to pre­pare a bill on pay­ment

ser­vices in the com­ing years. In other coun­tries there are many pay­ment plat­forms en­abling ven­dors (web­shops, ser­vice providers) to process cus­tomers’ pay­ments us­ing var­i­ous elec­tronic pay­ment sys­tems (for ex­am­ple, We­bMoney, Pay­Pal, Yan­dex.Money, RBK Money), pay­ment ter­mi­nals (QIWI, Elec­snet), mo­bile com­merce ser­vices (Me­ga­fon, MTS, Bee­line).

Pay­ment gate­ways help ven­dors to save their time and money as it is enough to get ac­cess to one ser­vice of an or­ga­ni­za­tion in­stead of us­ing var­i­ous ser­vices. Be­sides, such plat­forms of­fer a wide range of pay­ment op­tions to con­sumers.

“The in­crease in the share of cash­less re­tail pay­ments in­volv­ing bank cards and their billing de­tails made by the pop­u­la­tion and the ap­pli­ca­tion of cut­ting-edge pay­ment tech­nolo­gies and meth­ods will be the key pri­or­i­ties in de­vel­op­ing the sys­tem of cash­less re­tail pay­ments,” the de­vel­op­ers of the strat­egy em­pha­sized.

As far as re­tail pay­ments are con­cerned, the in­dica­tive tar­get is to raise the share of cash­less pay­ments in trade to 40% by 2021. For this pur­pose, on­line trans­ac­tions in Be­larus in­volv­ing all kinds of plas­tic cards shall be au­then­ti­cated with a 3D Se­cure tech­nol­ogy start­ing from 2017. In­ter­bank card-to-card trans­fers are to be launched in Be­larus in 2018. There is a need to pro­duce more co-branded cards com­bin­ing bank­ing and dis­count func­tions, ex­pand the lineup of credit and debit cards, in­clud­ing cards meant for spe­cific cat­e­gories of clients such as school and univer­sity stu­dents, wel­fare re­cip­i­ents, etc.

It is also im­por­tant to de­velop con­tact­less tech­nolo­gies which will sig­nif­i­cantly ac­cel­er­ate cash­less pay­ments and make them more trans­par­ent. This not only per­tains to con­tact­less cards but also to pay­ments in­volv­ing mo­bile de­vices and ap­pli­ca­tions, in­clud­ing QR code gen­er­a­tors and HCE tech­nolo­gies. It is pro­jected that con­tact­less cards will ac­count for at least 30% of Be­larus’ card emis­sion by 2021. As of 1 April 2016, these cards ac­counted for 7.2% of the to­tal. The share of pay­ment ter­mi­nals, self-ser­vice ter­mi­nals and con­tact­less cash ma­chines will reach at least 90% in the bank equip­ment in­fra­struc­ture. The share of this equip­ment was 16.1% as of 1 April 2016.

Be­larus will keep up with the trend as ex­perts fore­cast an ex­plo­sive growth for the global mar­ket of con­tact­less and mo­bile pay­ments. It will be pos­si­ble thanks to the pro­gres­sive de­vel­op­ment of mo­bile wal­lets in­volv­ing con­tact­less NFC tech­nolo­gies. Amer­i­can Ex­press, Ap­ple Inc., MasterCard, VISA, AT&T, Sprint, First Data, Black­Berry, Sam­sung, and Google will be the most ac­tive play­ers on the mar­ket.

Dig­i­tal trans­for­ma­tion of the fi­nan­cial ser­vices mar­ket will be also spurred by the es­tab­lish­ment of or­ga­ni­za­tions pro­vid­ing al­ter­na­tive fi­nan­cial ser­vices, in­clud­ing or­ga­ni­za­tions pro­duc­ing in­no­va­tive soft­ware so­lu­tions. These in­clude pay­ment sys­tems for mo­bile mi­cro­pay­ments, P2P providers, crowd­sourc­ing or­ga­ni­za­tions, and in­no­va­tive fi­nan­cial soft­ware de­vel­op­ers.

“The co­op­er­a­tion be­tween banks and or­ga­ni­za­tions pro­vid­ing al­ter­na­tive fi­nan­cial ser­vices is a pil­lar of the bank­ing sec­tor as it helps ex­pand the lineup of bank prod­ucts and ser­vices, re­duce op­er­a­tional costs, de­vise al­ter­na­tive ap­proaches to the com­pre­hen­sive eval­u­a­tion of in­sol­vency risks in the bank­ing

The es­tab­lish­ment of the in­ter­bank client iden­ti­fi­ca­tion sys­tem in Be­larus is an im­por­tant in­no­va­tion that will en­able mu­tual ex­change of iden­ti­fi­ca­tion data. The sys­tem will be put into op­er­a­tion in Oc­to­ber 2016

sec­tor,” rep­re­sen­ta­tives of the Na­tional Bank said. “As a re­sult, new pack­ages of fi­nan­cial ser­vices can be cre­ated to sup­port small and medium-sized busi­nesses in Be­larus. An ad­e­quate level of trans­parency and se­cu­rity can be en­sured, losses of fi­nan­cial ser­vices providers can be min­i­mized.”

By the way, there are some good ex­am­ples of mu­tu­ally ben­e­fi­cial co­op­er­a­tion be­tween banks and crowd­sourc­ing com­pa­nies in Be­larus. For ex­am­ple, Bel­gazprom­bank is a part­ner of Ulej.by, a crowd­sourc­ing plat­form de­signed for fi­nanc­ing char­ity and com­mer­cial projects. Be­sides, the bank has re­cently launched the Wik­iBank crowd­fund­ing plat­form aimed at sup­port­ing SMEs. In­vestors can fi­nance projects listed on this plat­form by mak­ing an on­line de­posit on the web­site of the plat­form.

The strat­egy sets in­dica­tive tar­gets for banks re­gard­ing the share of their clien­tele that should be pro­vided with on­line bank­ing ser­vices by 2021: at least 60% of in­di­vid­u­als and 80% of cor­po­rate clients (28.7% and 63.6% re­spec­tively as of 1 April 2016). In other words, at least 80% of bank­ing ser­vices ren­dered to cor­po­rate clients should be avail­able through an on­line bank­ing fa­cil­ity (this fig­ure av­er­aged 64% as of 1 April). At least 75% of ser­vices pro­vided to in­di­vid­u­als should be of­fered through e-bank­ing (the av­er­age of 60% as of 1 April).

The es­tab­lish­ment of the Be­laru­sian Fi­nan­cial Tech­nolo­gies Cen­ter is on the agenda now. This cen­ter can be­come a ne­go­ti­at­ing ground for fi­nan­cial mar­ket play­ers.

The se­cu­rity of on­line ser­vices re­mains in fo­cus of the Na­tional Bank. Uni­fied se­cu­rity stan­dards in the field of elec­tronic in­ter­ac­tion, in­clud­ing the use of bio­met­ric data will be in­tro­duced; the sin­gle fi­nan­cial se­cu­rity in­ci­dent re­sponse cen­ter will be set up. This will en­hance peo­ple’s trust in the coun­try’s fi­nan­cial in­sti­tu­tions and its fi­nan­cial sys­tem in gen­eral, re­duce crime in the bank­ing sec­tor and cut down bank fraud ex­penses.

The strat­egy con­tains quite a num­ber of new ideas and prom­ises rev­o­lu­tion­ary changes in the field of fi­nan­cial ser­vices. It will help ex­pand co­op­er­a­tion be­tween banks, their cus­tomers, author­i­ties and com­mer­cial or­ga­ni­za­tions by means of elec­tronic com­mu­ni­ca­tion chan­nels, make this in­ter­ac­tion trans­par­ent and safe for all its par­tic­i­pants and even­tu­ally fos­ter dig­i­tal trans­for­ma­tion of the Be­laru­sian econ­omy and raise its com­pet­i­tive­ness.

Who is the First?

What about on­line banks? Al­though such banks are gain­ing ground abroad (Tinkoff Bank in Rus­sia or mBank in Poland are a case in point), Be­laru­sian banks are still re­luc­tant to fully go on­line.

The prob­lem is not one of tech­nol­ogy. Be­laru­sian banks have the ad­e­quate tech­no­log­i­cal ca­pac­ity and Be­laru­sian IT de­vel­op­ers are ready to pro­vide the nec­es­sary soft­ware. It is not about the ab­sence of po­ten­tial cus­tomers, ei­ther. Al­most 30% of in­di­vid­ual cus­tomers use var­i­ous on­line ser­vices, which is quite enough for at least one bank.

“It is likely that banks are not yet psy­cho­log­i­cally ready to be­come In­ter­net-only banks. There are also a num­ber of leg­isla­tive re­stric­tions, but they will be re­moved by the strat­egy,” Alexan­der Sot­nikov ex­plained.

To­tal dig­i­tal­iza­tion will be the dom­i­nant trend in the bank­ing sec­tor for years to come. A tes­ti­mony to that is the scale of dig­i­tal trans­for­ma­tion across all walks of life and the in­creas­ing de­mand for on­line ser­vices on the part of cus­tomers.

As far as In­ter­net tech­nolo­gies are con­cerned, a num­ber of mar­ket play­ers are hard on the heels of the bank­ing sec­tor. IT com­pa­nies, mo­bile ser­vices providers, a va­ri­ety of fi­nan­cial and en­gi­neer­ing star­tups and other com­peti­tors would be happy to steal the thun­der by of­fer­ing their cus­tomers on­line bank­ing ser­vices. For ex­am­ple, the mo­bile car­rier vel­com of­fers a num­ber of pay­ment ser­vices, like the mo­bile ap­pli­ca­tion v-bank­ing, the Mo­bile Bank ser­vices, the EasyPay text mes­sag­ing ser­vice, the iPay sys­tem.

There­fore, branch­less banks are likely to be­come re­al­ity in Be­larus within the next five years. In­deed, the ex­pert com­mu­nity sug­gests es­tab­lish­ing an on­line bank where IT com­pa­nies would

im­ple­ment and fine-tune new dig­i­tal fi­nan­cial tech­nolo­gies. Any­one could be­come a found­ing mem­ber of this bank on sub­scrip­tion through a crowd­fund­ing plat­form.

“This will not be a tra­di­tional brick-and-mor­tar bank. All trans­ac­tions will be con­ducted on­line with­out hu­man in­put; all the data will be ‘in the cloud’; tech­no­log­i­cal pro­cesses will be out­sourced,” Alexan­der Sot­nikov ex­plained.

Such an e-bank could cater for IT com­pa­nies and their per­son­nel first and fore­most. How­ever, ex­perts be­lieve that the bank’s ser­vices will be pop­u­lar with sev­eral mil­lions of smart­phone own­ers, too. This is the kind of op­por­tu­nity one should not miss.

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