Russia emerges as a top three fintech market

Russia emerges as a top three fintech market
Eight out ten Russians use some sort of fintech service making it a top three developed makret / wiki
By Vladimir Kozlov in Moscow December 12, 2019

Eight out of ten (82%) Russians use some sort of fintech service making it the third most developed market in the world, according to a study by Ernst & Young.

Russia is only behind China and India when it comes to fintech services' penetration, which both have an 87% penetration, but ahead of South Africa and Columbia.

Money transfers and payments are the most popular financial service among Russians, the study revealed. About 90% of the country's residents have at used a fintech service at least once.

When it comes to other fintech services, the awareness level is pretty high, at between 81% and 86%, but there are services that Russians hardly use at all, such as investment in securities.

Authors of the study note that the discrepancies in penetration between different types of fintech services reflect those in the financial sector in general, as fintech development patterns normally follow those of the traditional finance market.

The study also points to high potential in such areas as budgeting and financial planning, as well as savings and investment.

Russia's financial system is relatively young, which makes it less conservative and easier for customers to embrace innovations.

"Russia's financial system began to develop relatively recently, and, as a result, it is not that conservative as in Europe," Roman Prokhorov, head of the association Financial Innovations, was quoted as saying by Russian business daily RBC.

"Basically, we went from [Soviet era-style] savings books to payments over mobile phone almost overnight," he went on to say. "Therefore, our consumers are more receptive to fintech innovations, and this explains the popularity of these services."

Among all users of fintech services in Russia, 27% pointed to better rates and tariffs as the main advantage. Another 26% mentioned the easiness of registration and creating a profile and 24% said access to a wide variety of innovative products and services was the decisive factor.

Other advantages mentioned by customers include user experience and improved quality of the product and services. Back in 2017, when the study of this kind was conducted, users mostly pointed out the easiness of creating an account and around-the-clock access to the services as the main attractions.

Still, when it comes to services offered by companies outside the finance sector, customers are wary and prefer traditional banks or insurance companies' offerings. When a company from outside the finance sector has a partnership with a traditional financial institution, 45% of Russians are ready to trust it, but in case there is no partnership, this figure drops to just 13%, the study revealed.

Overall, Russia's financial system is concentrated around banks, Prokhorov said. "This is the main reason why banks are the main investors in fintech projects," he said. "As a result, it is easier for a fintech start-up to develop within the ecosystem as part of a large financial institution's ecosystem."

In addition to users' distrust for independent providers of fintech services, the development of the segment is hampered by Russians' unwillingness to share their bank details. According to the study, only 18% of Russian users of fintech services are willing to do so, while that average global proportion is 46%.

Meanwhile, experts predict that the law "On attracting funding with the use of investment platforms," which comes into effect as of January 1, 2020, is likely to become a driver for the fintech segment, spurring the arrival of new services offered by non-financial companies.

One of the areas for potential growth is crowdfunding, which so far has been a grey area. The law introduces the definition of an "investment platform" and provides stipulations for investment on such platforms.


This article is part of bne IntelliNews’s coverage of technology, blockchain, fintech, cryptocurrencies and the new economy. Sign up for the free monthly newsletter bneTech here, or read more tech stories on the website here.


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