Ben Aris in Kyiv -

It started as a love story in academia. Professor Tatiana Vysokova, who now heads the auditing and compliance committee of Center Invest, was then a student at the Rostov-on-Don Economic University studying banking and economics under Professor Vasily Vysokov. To cut a long story short, they fell in love, got married and opened a bank, which has turned into arguably the strongest bank in southern Russia seemingly by accident.

Center Invest's is a strange story when put into the context of Russian banking in the 1990s. That was a time of shell-suited Mafioso and guns, of abusing government connections and speculation against inflation. But Center Invest has always been run more like some financial Shangri-La based on high-minded academic principles that have been made to work in practice.

The whole bank has an academic bent. Many of the management team are drawn from same academic facility as the Vysokovs, who offers free business training for customers and there is even a free internet café on the premises of the headquarters for anyone who wants to use it.

Taken all together, there is something very unbank-like about the bank. While Center Invest's rivals talk about traditional goals of margins or market niches, Vysokova keeps returning to the themes of community and the need to invest for the future prosperity of the region. Centre Invest seems to be much more concerned with life, studies and learning than Ebitda, ROA or cost-to-income ratios. At first glance, Center Invest looks like it has become the most successful bank in the region by accident.

But that is to miss the point of what the Vysokovs are doing. There's a didactic streak running through much of what the bank does, but it turns out that this is exactly what its customers want and so makes solid business sense. The customers need money to make money, and Center Invest is there to help them do this as well as they can. It is exactly what a bank full of financial academics should excel at. "My team and I founded a sustainable business. We set up audit, leasing and bank services for private enterprises. We offer consulting, business advice and other support for small entrepreneurs for free. The idea is to provide the infrastructure for successful business for the entrepreneurs in the region," says Vysokova speaking to bne in the café of the newly opened Hyatt Hotel in Kyiv during the EBRD's annual general meeting in May.

The Vysokovs are not running a charity: they are investing heavily in not just their own bank, but somewhat more radically, they are also investing heavily in their customers. As the business people in the region have a lot of growing to do, there is lot more money to be made from helping these customers succeed over the long term than there is in adding a few percentage points to the margins in the short term. "All these people are our future clients. It is good for us and it is good for the region. We are teaching people how to think," says Vysokova ordering a rather good crème brule from the waiter. "We don't want just money. We are dreaming of creating a good infrastructural network that will build up the local economy."

The result: Center Invest enjoys a fierce loyalty amongst both the clientele and the staff. "Head hunters call all the time," says Vysokova. "We don't have low wages, but the foreign banks offer twice as much and they target our staff. It is rare that someone leaves," she says raising her head slightly obviously proud of the fact.

Doing well by doing good

What are a couple of professors doing running a dynamic bank in the large southern Russian region close to the Black Sea? Vysokova dismisses the decision to found a bank flippantly, saying: "My husband actually started as a physicist, but he needed to feed his mum so he went into banking." Indeed, the bank's story has a lot of similarities with Sibacadembank in Siberia (now called Ursa bank), which was also founded by a star academic Igor Kim and has gone on to be one of the strongest banks in its regions.

Dr Vysokov originally joined the team of SBS Agro owned by the Yeltsin-era oligarch Alexander Smolensky. Working in the Rostov branch of SBS Agro, Vysokov hived off part of the bank to form Center Invest at the start of the 1990s, which came into its own following the 1998 financial crisis. "It was very, very difficult, as at the time it was a very new idea. I was the best professor of banking and taught all our bankers in the region. What made life so difficult at the time was that Russia was so bureaucratic," says Vysokova.

The couple's extensive network of former students paid dividends almost immediately. They found that they had former students in all walks of like: in banks, local companies, the regional administration and even in the securities services or FSB. Calling on their alumni, the bank managed to avoid a lot of the problems that corrupted many of the early players in Russia's nascent financial sector.

It is tempting to say that Vysokova brought a woman's touch to the interface between the bank and customers. Modernising the interface between customers and tellers was an obvious start, but Vysokova's altruism comes through in the Center Invest approach where special attention is paid to making a trip to the bank pleasant even for low-income groups like pensioners. "Customer service is key for us especially services for old aged pensions - Sberbank doesn't know how to smile. We sponsor the veterans [of WWII]. There are also special programmes for other low incomes groups like students and academics. They don't make any profit, but it is good strategy as it is a very pleasant way to market the bank. At first it seems like charity, but in the end it is good for business and our competitive advantage," says Vysokova.

The bank has expanded steadily in its patch in the Volga delta. Today, it has 111 branches, one of the larger retail networks in Russia, in cities like Krasnoyarsk, Volgograd and Sochi, which will host the 2014 Olympic winter games.

Once you start getting down to the nitty gritty of Center Invest's business, apart form the all-but-free banking services for OAPs, students and academics, the rest doesn't differ that much from its competitors.

The bank has issued over 100,000 debit cards. It owns the biggest car leasing company in all southern Russia. And Center Invest is first in both person and corporate deposits, which Vysokova prefers to refer to as "wealth management," even though these customers are hardly wealthy, as the bank actively manages its depositors' money. "We are well known in the local business community and there is a lot of cross-selling of products to cover things like mortgages, investing for children's education and the like," she says finally talking shop.

What comes next remains to be seen. Vysokova is keeping her options open but is open to suggestions. The bank already has a varied shareholder base with the EBRD holding 27.5%, Renaissance Capital Financial fund 10%, the German investment agency DEG 22% and US investment fund Firebird Management 9.8%. "If it is good strategy, then maybe we will sell a stake then IPO? Why not?" says Vysokova, who looks slightly out of place in the swish surroundings of the Hyatt eating her desert, but the irony of it is that she probably understands the business of her business better than anyone else in the room. That's the thing about letting a bunch of academics run a bank - you can be sure they do their homework.

Send comments to The Editor