Maxim Yevdokimov, Tinkoff Bank’s head of mobile and digital strategy, tells Efma’s Boris Plantier how it is going beyond providing traditional banking services to become a one-stop-shop for all its customers’ lifestyle spending needs.
What is the current adoption of mobile banking in the Russian Federation?
Russia has fewer legacy issues than many of its developed country peers, so it has been able to leapfrog some older solutions in favor of the newest technologies. In general, Russians are quick to embrace mobile solutions, such as Apple Pay, Samsung Pay and others. However, smartphone penetration is still below 100%, so there is still a lot of room for mobile banking to grow and develop.
Russia’s serial entrepreneur Oleg Tinkov established Tinkoff Bank as a branchless credit card issuer in 2006. It was the first branchless lender to operate in Russia and the company was listed on the London Stock Exchange in 2013. Just over a decade after its inception, Tinkoff Bank is now completely cloud-based and offers products ranging from current accounts and online securities trading for individuals, to accounting and tax support services for small and mid-sized businesses. Tinkoff Bank serves more than seven million customers and was named Russia’s Bank of the Year and most profitable bank in Central and Eastern Europe in 2016 by The Banker.
Although Russia’s 30 largest retail banks have followed our lead and developed mobile banking apps of their own, Tinkoff Banks remains the leader in the sector. The bank’s mobile application was recognized as the best in Russia by Markswebb Rank & Report in 2014, 2015 and 2016, and by Deloitte for four consecutive years between 2013 and 2016, when Deloitte stopped carrying out this research.
What is Tinkoff Bank's strategy in terms of digital banking?
Tinkoff Bank began operating as a branchless distant lender in 2006 and organically moved into the digital and mobile banking space with the proliferation of the internet and later, smartphones.
By being customer-centric and focusing on a great user experience, we have achieved our goal of becoming a financial supermarket (both through our online portal and our mobile app). Now, we are broadening our objectives to become a one-stop-shop for all our customers’ lifestyle spending needs. Not only can our customers get a loan and manage their ongoing spending on utility bills, parking tickets, mortgage payments and other inevitable expenses, but they can also book airline tickets, reserve tables at their favorite restaurants, find information, buy concert tickets and make other exciting purchases without leaving the Tinkoff app. The goal is to make customers’ day-to-day and leisure-related spending easier and more enjoyable.
To achieve this goal, Tinkoff Bank has partnered with many product and service providers from outside of the banking industry. They include travel sites such as Booking.com, concert and theatre ticket portal Kassir.ru, and many others. The bank has also launched Tinkoff Stories, which is lifestyle content that is gradually becoming more customized to the needs of each user. Making this targeted move towards providing wider lifestyle services that are customized to individual has helped Tinkoff to offer a wider array of products and services and market them more efficiently. It also helps to increase customer retention and engagement.
Could you tell us more about your recent project to test a payment solution with the National Payment Card System?
Tinkoff Bank is part of Russia’s FinTech association, which includes several financial and banking industry players, as well as the central bank. The purpose of this group is to study and test the applications of the newest technology with the end goal of making banking and payment transactions faster, more efficient, more secure and more customer friendly. As part of this, Tinkoff Bank is testing a unique solution in cooperation with the National Payment Card System (NSPK) that will enable our customers to view card receipts in their accounts at Tinkoff.ru (available since April 2018) and in the mobile app (starting in autumn 2018).
Using the software developed by NSPK, the cash register equipment will automatically link to payment terminals, ensuring that the day-to-day exchanges with fiscal data operators and Tinkoff are in full compliance with Russia’s data protection requirements. Card holders will no longer need to give merchants their phone number, e-mail address or a photo of their receipts, this will all be taken from the receipt in the user’s account and processed automatically. This new technology will make it easier for card holders to view their spending details in their usual mobile banking app. It will also provide banks with a convenient tool for offering more cashback bonuses from various providers of goods and services.
What are other digital banking projects has Tinkoff Bank recently launched by Tinkoff Bank?
Tinkoff Bank is part of London-listed TCS Group Holding, which also includes virtual mobile operator Tinkoff Mobile, direct insurer Tinkoff Insurance, and Tinkoff Software DC, a network of development hubs across Russia. This March, the Bank of Russia issued Tinkoff Bank with a professional securities market participant license so it can provide brokerage and depositary services. While 25% of all retail investment accounts on the Moscow Exchange are already opened via the Tinkoff app, this license will help further develop Tinkoff Investments, which has been operating in cooperation with BCS Broker.
Tinkoff Bank has also recently rolled out a pilot version of Tinkoff Travel, aimed at helping customers book airline tickets within the Tinkoff ecosystem. In future, rail tickets and car rental services will also be accessible via Tinkoff Travel, which has partnered with Booking.com and Rentalcars.com for this initiative. While not a traditional banking product, Tinkoff Travel is in line with Tinkoff’s strategy to provide a wider array of lifestyle spending products and services within its ecosystem.
More and more banks are launching multi-service application programming interfaces (API) platforms that include FinTech solutions. What do you think about this?
Open API protocols have gained global prominence through region-specific initiatives that focus on the benefits for end customers. The European Union’s Revised Payment Services Directive regulation and initiatives by the Singapore Monetary Authority, UK Financial Conduct Authority and Australia Economic Committee are ongoing efforts to make open banking and open APIs the standard. While there are no regulatory requirements for Tinkoff Bank to launch an open API, we are considering doing this so we can partner with start-ups.
The use of open APIs enables third-party developers to build applications and services around the financial institution. It helps banks that provide mass-market services to cooperate with FinTechs, which are more focused on creating niche solutions to specific problems. Tinkoff is essentially a technology company, employing many programmers and other IT professionals across Russia and we believe an open API would benefit Russia’s wider FinTech community by furthering its development.
How do you think retail banking will evolve in the next five years?
Around 10 years ago, banks had to transform into IT companies to continue to compete. Now that they have the technology aspect up to speed, banks should prepare to start functioning more like media companies, but still continue to provide traditional banking services. Banks will need to create ecosystems that function more like social networks, fulfilling their customers’ lifestyle needs by offering services that go beyond traditional current accounts, credit cards and loans.
By 2020, young millennials will come of financial age and start consuming banking services as adults. This will create a totally different paradigm in terms of what consumers want, how they interact with banks and the interfaces they expect. Therefore, the future is about large players that have the scale, the brand, the distribution, the interface and the data to build big ecosystems. While our seven million customers make us the biggest independent digital-only bank in the world, it’s not enough to have an ecosystem. We’re getting there pretty quickly though.