Financial services increasingly available remotely in Russia
In 2018, more than half of Russia’s adult population (55.2%) used remote access to their bank accounts as compared to 45.1% in 2017. The Bank of Russia has completed its regular measurement of financial inclusion indicators, and notes a steady growth in the use of remote access to financial services and cashless payments.
The regulator launched such measurements in 2015 and annually highlights that the development of remote access channels and an increasing speed of access to them are essential for enhancing financial inclusion in Russia.
Consistent with the measurements of the previous year, the readiness to start using remote access to financial services on a regular basis (subject to availability) was reported by 42.8% of adult consumers who are currently not regular remote service users. There was a rise from 35.9% to 54.7% in the proportion of individuals having the opportunity to instantly (within 15 minutes) make a money transfer using a mobile telephone or satellite communication. The share of cashless payments for goods (work, services), which includes via payment cards, increased by 8.2 pp to total 55.6% of the overall volume of retail sales, public catering and commercial services. In 2018, the number of operating banks which can open a second and further accounts without a customer visit to the office grew from 78 to 105.
At the same time, 2018 saw a reduction in the number of operating banks’ branches — from 35,494 to 31,752. While this reduction had been decelerating in the previous years (11.9% in 2015, 8.7% in 2016 and 3.4% in 2017), it gained speed in 2018 to 10.5%. The downward trend in the number of physical branches is in line with global practice and is primarily driven by the evolution of modern remote service channels. This practice has proved to be successful in cities and large localities. Yet, such an approach cannot deliver proper access to financial services in rural, remote, sparsely populated and hard-to-reach areas lacking a well-developed information and communication infrastructure. This is the reason why some large credit institutions did not close their offices in rural localities in 2018, while reducing their physical footprint in Russian cities.
Banks also used a new format differing from conventional branches and internal structural units. The Bank of Russia carried out its first dedicated comprehensive survey of credit institutions. The findings are as follows: as of 31 December 2018, there were over 27 thousand remote points of service with bank employees and more than 196 thousand remote points of service with credit institutions’ agents (excluding bank payment agents’ cash offices). As of the end of 2018, money transfers, cash withdrawal and lodgement services were available at over 30 thousand post offices (annual growth — 103.9%), which is nearly 75% of all operating post offices. In addition, 15 thousand post offices accept the documents required to open an account (annual growth — 47.6%).
The survey comprised the analysis of financial institutions’ service quality. It revealed a 8.2 pp increase (from 65.0% to 73.2%) in the share of adults believing that over the last 12 months banks had provided them reliable, easy-to-understand and sufficient information when they applied for loans. In 2018, the proportion of adult consumers having active loans from banks and non-bank financial institutions (NFIs) increased by 1.3 pp (from 26.8% to 28.1%), and the growth rate of principal debt at such organisations reached 22.5% (from 12,342 billion to 15,114 billion rubles). Individuals’ overdue debt to credit institutions decreased by 10.5% (from 849 billion to 760 billion rubles).
As compared to 2017, the year 2018 recorded a 7 pp rise (from 18.4% to 25.4%) in the proportion of SMEs with active loans from banks and non-bank financial institutions; total loans grew by 11.4% (from 6,151 billion to 6,855 billion rubles; and principal debt was up by 1.1% (from 4,209 billion to 4,257 billion rubles).
As of the end of 2018, SMEs’ debt on bank loans increased for the first time since 2014, and the amount of loans disbursed in 2018 reached its maximum since 2015. A considerable cut in loan interest rates for SMEs was a substantial support for the market in 2018: weighted average interest rates on loans granted to SMEs for up to one year decreased by 1.32 pp (from 12.46% in January 2018 to 11.14% in January 2019), and interest rates on loans with a maturity of over one year — by 0.49 pp (from 11.28% to 10.79% respectively). SMEs’ overdue debt to banks reduced by 16.2% (from 622.7 billion to 521.8 billion rubles).