Banking digitalization: accelerated import substitution and the transition to innovation. TAdviser 2023 Review and Ranking

In general, banks recovered quite quickly from the shock after the events of February-March 2022. After a few months, many financial organizations began to implement plans for the introduction of import-independent technologies. In turn, the IT community accepted the challenge of last year. The banking industry was one of the first to launch projects to migrate and transform its IT loop. By assessing the scale of the replacement of foreign solutions and identifying the available Russian software, banks were able to determine the priorities of import substitution, not forgetting the development of digital services, adds Andrei Fomin, director of the Development for the Financial Sector department at IBS.

Stanislav Shilov, director of product development at the BSS Center for Digital Business Solutions, characterizes the digitalization of Russian banks in 2022 as "running in bags." The meaning of the competition remained the same (to come to the finish line first), but the process itself was significantly and in places unpredictably complicated. The "bag" was made up of import substitution tasks, personnel problems, and the need to solve urgent IT problems dictated by current current current challenges (from combating the consequences of imposed sanctions to countering cyber attacks). However, despite this, many banks successfully solved the tasks of digitalization in 2022, dictated by business requirements and development strategy.

By the end of the summer and beginning of the fall of 2022, the market returned to an orderly movement, emphasizes the general director of Cinimex, Andrei Sykulev. It became clear that despite the blow received, both industries - fintech and IT - are alive.

"Frozen" budgets and development projects began to recover. Moreover, it came to the realization that in the old way it would no longer be, that there was a large-scale and long-term work ahead to replace a huge amount of software and hardware. At the same time, the IT industry received unprecedented support from the state, which in many cases allowed business not only to resist, but also to form a good reserve for development. The twenty-second year is not only extraordinary decisions in an emergency, but also a time for realizing the challenges and new opportunities that are opening up in almost all areas of IT, "says Andrey Sykulev.

Huge efforts were made to carry out in a short period the transition from proprietary software to free and open source software, from Western solutions to Russian ones.

In this regard, it was necessary to finalize the existing intra-bank software. Here, banks faced an acute shortage of developers and other technical specialists due to their mass migration abroad, said Yuri Teryokhin, director of financial institutions at Ai-FORCE, FORS GROUP.

Over the past five years, banks have paid much attention to the development of client services. The main efforts in the field of digitalization were aimed at the convenience of obtaining banking products through various channels, increasing the speed and quality of service, forming personalized offers, providing instant transfers. We can say that in 2022 banks finally became digital assistants in planning life strategies for most customers, notes the Ekaterina Prokhorova head of the sales directorate Financial of the company's "institutes" department. IBS According to her, despite all the objective difficulties of 2022, banks continued almost all digital projects and did not abandon the development of IT.

The experience of our specialists confirms the stable growth of digitalization of the financial sector in Russia, - emphasizes Viktor Frolov, Director of Business Development at Yuztech Group of Companies (Usetech). - Existing systems and applications are being improved, both internal and external, the development of digital client-centric ecosystems continues, new solutions, technologies and practices are being introduced, security systems are being improved, new fintech products are being brought to market. We also see an increase in the monetization of non-financial services.

According to the results of 2022, most of the requests of the Yuztech Group of Companies received for the refinement of online banking, the development and improvement of digital ecosystems, as well as for the creation of integration solutions.

The state's policy of supporting the IT industry and promoting parallel imports stimulated increased spending by banks on software development and technical pre-equipment and re-equipment. Unfortunately, the replacement of the IT landscape of banks for the year was carried out only in a small part, but, most importantly, the beginning of an accelerated further decrease in dependence on Western brands was laid, and a strategy for localizing PAC and software was built, taking into account the first trial and error, emphasizes Yuri Teryokhin.

The main result of 2022 is that banks have finally adopted a guideline on technological sovereignty and have moved on to real action. Each has outlined his own path of gaining import independence: to become a pioneer of import substitution or wait for successful implementations of domestic solutions, to look for permitted analogues of foreign software or to develop internal development. This path largely prioritized digital transformations in banks in 2023, concludes Julia Amiridi, Deputy General Director of Intersoft Lab.

T1 became the leader in the rating of the largest IT suppliers in banks. Its revenue from the implementation of IT projects in banks in 2022 increased by 227% and exceeded 74 billion rubles.

The top five also included companies, Jet Infosystems, and Softline Rubytech the Group. IBS

The new rating brought together 65 IT companies. Their total revenue from banking projects amounted to 195 billion rubles.

The main difficulties of import substitution in the financial sector (as in any other) are associated with the level of maturity of platforms and software products for the transition. Over several decades, developing in line with the IT equipment of the global economy, Russian banks, as a rule, focused on the products of SAP, Microsoft, Oracle and other leaders in the IT market, and the main requirements for products were functionality, performance, the development of the vendor's ecosystem and the presence of a developed service network. At the same time, Russian solutions in the context of the active expansion of Western players usually could not develop at a sufficient pace, since domestic vendors were limited in resources, it was almost impossible to establish an extensive network of technical support and form their own ecosystem of products. But after the departure of foreign vendors, a large window of opportunity opened before Russian companies. To stake out profitable positions in the banking sector and in other industries, domestic IT players intensively invest in the development of their platforms, form various partnerships with other technology companies, build ecosystems, and scrupulously support competence centers in various areas. Significant support for IT companies is provided by the state, providing tax and other benefits, allocating grants and participating in projects to finance the development of IT products.

Speaking about the scale of work on the replacement of foreign products in banks, you need to understand that industrial solutions and ERP systems occupy a huge amount, - draws attention to Anna Protsko, business partner of LANIT BP Em (part of the LANIT Group). - In a short time, removing a large piece from the IT landscape is simply unrealistic, since this is not one cube, in the place of which you can simply put another, it is not a replacement for something equivalent. The whole process must be careful, and in some places even jewelry, so as not to break the simultaneously working systems, and thoughtfully, since the cost of an error due to strategically incorrect decisions can be colossal. Therefore, important points in the transition to domestic software in banks will be a rethinking of the approach to architecture, technologies and the basic principles of building an IT landscape.

To overcome the difficulties associated with the departure of Western vendors, large banks organized their IT subsidiaries, Viktor Frolov notes. Financial market leaders are developing their own IT expertise, defining development vectors and priorities in the implementation of import substitution programs. Some of the difficulties are overcome by Russian developments and Open Source solutions, if they meet security requirements.

I will assume that we are not too different in this matter from colleagues in the workshop. We have identified priorities, we are testing domestic alternatives where it is most critical. We will reorient something to development on our own, "said Alexander Chitalkin, Head of Architecture and Integration of Information Systems at Renaissance Bank.

The negative effect of the departure of Western vendors quickly passed and was replaced by positive trends. Financial institutions, like companies from other industries, in 2023 massively switched to expanded support for existing systems based on foreign software (Oracle, SAP, Microsoft, etc.), which is carried out by large IT integrators and consulting companies with extensive experience in working with such systems. Often, such support even surpasses vendor support in its level. In terms of equipment, the Western "iron" is gradually replaced with equipment from Chinese companies or assembled in Russia. Parallel imports have also earned quite confidently - in the absence of alternatives, banks can still receive the necessary equipment from unfriendly countries through various channels.

Yuri Teryokhin notes that Western proprietary software is gradually being replaced with Russian software. For example, Oracle DBMS is replaced by Postgres Pro, Arenadata, Greenplum. The financial sector changes office packages from Microsoft to "MyOffice" or R7. Astra Linux and other domestic operating systems have become worthy alternatives to Windows.

The most painful question is the departure of DBMS suppliers - Oracle and Microsoft, on which most applied banking systems rely, including ABS, which belong to significant objects of KII, recalls Julia Amiridi. According to her, the adaptation of banking systems to work with domestic DBMS is a long and costly task.

Decisions on migration are made, as a rule, in a balanced manner, with pilot projects and analysis of various import-independent products. And of course, in these conditions, the determining factor is the presence of these very products, their functional maturity, - notes Yuri Kolbasin, partner of the Digital Economy League, director of Big Data.

Difficulties in this direction are associated with the complexity of rapid import substitution of a very diverse IT landscape of banks; these processes require high financial costs, strong teams of specialists with extensive expertise in the software and hardware being implemented, full-fledged analogues of the replaced equipment and software in terms of functionality and performance, experienced and reliable solution providers for banks with developed logistics. In many cases, a deep overhaul of the system architecture that has developed over the years is required. At the same time, import substitution should not affect the stability of banks and the quality of services provided by them. This creates significant problems for banks in terms of their compliance with the criteria for complete import substitution by 2025.

Among the key barriers to import substitution, Stanislav Shilov highlights the lack of solutions that can completely and seamlessly replace existing foreign solutions (especially in terms of system software and equipment), and the need to allocate resources (from financial to labor) for all import substitution activities in difficult external conditions.

Andrei Sykulev identifies three groups of difficulties. First, these are "technological" difficulties. The departed Western vendors have been creating and debugging their products for decades. For several years, it is impossible to replace them. "It is clear that our solutions are still lagging behind in functionality, reliability, performance, fault tolerance. But I think that in 2-3 years the situation will begin to level out, "Sykulev said. Secondly, he calls the difficulties of a financial nature. The fact is that solutions that are created to replace imported ones often have higher infrastructure requirements and the qualifications of the escort team. That is, Russian solutions are often more expensive to operate than replaceable Western counterparts.

I think that here you also need to wait 2-3 years, and they [Russian IT solutions] will be "overgrown" with auxiliary tools that will reduce the cost of implementation and ownership

Also, in a number of areas of Russian software, there is not a sufficient number of qualified specialists, since before that, the products of Western vendors were mainly introduced. Yuri Kolbasin draws attention to the fact that domestic solutions have a number of restrictions, a lack of some functions, and in such cases customization is required as part of implementation and development.

Back in 2022, many banks prioritized the task of minimizing risks associated with the use of foreign software, equipment, as well as components and services from foreign companies. Events in 2023 related to, for example, the shutdown of Microsoft services confirmed the correctness of the selected course. But import substitution measures do not mean at all that Russian banks have abandoned the direction of digital transformation.

Banks have not turned off the path of further digital improvement, - confirms the expert of the IBS company Ekaterina Antonova. - Moreover, many projects are launched on replaced platforms, with constant tasks to revise and optimize business processes, using new trend technologies such as blockchain, quantum computing, AI. The topic of "bank as a service" (BaaS), API services for corporate business continues to develop, integration with the end client becomes deeper and more personalized. Projects are being launched to replace solutions in the field of internal business management of the bank and human capital management

Vladislav Ignatenko, head of financial sector at NORBIT (part of the LANIT group), notes that, adapting to new market realities, fintech in 2023 focused on the launch of the digital ruble, the development of digital financial assets (CFA), payment services and Fast Payment System (SBP). Banks were vigorously looking for alternatives to cross-border settlements, a move began to move towards a new model of open finance, the expert says.

Many banks are developing intensively. In particular, Renaissance Bank is modernizing the remote service platform. "As a result, we expect both a reduction in technological obstacles in the development of digital channels and further simplification of access to products and services by customers," said Alexander Chitalkin from Renaissance Bank. Earlier, the bank introduced an RPA platform to automate some of the routine tasks of the operational unit. The payment service was also redesigned - a component that has a significant impact on the experience of customers when interacting with the bank in digital channels.

In the face of a noticeable increase in the share of transactions carried out online, banks are paying increased attention to cybersecurity. The direction of digital twins is also developing, the process of personalization for customers becomes deeper.

The digitalization of banks in 2023 significantly returned from the emergency regime to the regular regime - of course, taking into account new trends and tasks dictated by the changed conditions, said BSS expert Stanislav Shilov. He believes that the key priorities of digitalization are business tasks (reducing costs, accelerating business processes, increasing sales, improving customer experience), a range of import substitution tasks has been added to them.

After increased spending on digitalization in the previous year, banks began to behave more restrained in 2023, they learned to keep the situation under control, said Yuri Teryokhin, a representative of Ai-FORCE. The understanding has come that systems will not collapse overnight, and the IT landscape can be gradually replaced without titanic efforts, stretching the corresponding costs for several years and maintaining stability. The general priority of digitalization remains to reduce dependence on foreign suppliers - at least from unfriendly countries. "Nevertheless, the order of implementation of IT projects has entered the usual course, as it was before the start of the special operation, and is determined by the internal needs of banks as financial institutions and the instructions of the Central Bank," says Yuri Teryokhin.

The Russian banking system in terms of digitalization has been among the leading in the world for several years. Experts remind that in 2020 Deloitte included our country in the Top 10 countries with the highest IT development index in the financial sector. We can say that 2023 is characterized by the continuation of digitalization, which began in 2022. "Among the priorities of banks are the continuation of import substitution of foreign products, preparation for the use of the digital ruble, compliance with the new requirements of the Central Bank (483-P, open APIs and others)," says Andrei Fomin.

Among the key areas of digitalization, Viktor Frolov calls the implementation of banking services and products in various online services, the introduction of advanced technologies, as well as the development of security systems. There are a huge number of directions for the development of digitalization of banks, confirms Andrey Sykulev. According to him, in addition to such large "blocks" as information security and replacement of specialized solutions of departed Western vendors, new topics appeared in 2023, such as the creation and implementation of solutions for the circulation of the digital ruble or the development of other settlement mechanisms.

Almost all large banks have completed the creation of their own IT "platforms." Some of them take their solutions to the market, beyond fintech, filling the vacuum formed after the departure of Western vendors. This is absolutely logical, because large banks have significant IT resources and expertise sufficient to develop and develop serious product and platform systems. And, of course, you cannot ignore everything related to artificial intelligence. AI confidently enters both our daily and financial lives. "We are on the verge of qualitative changes in business related to the search and implementation of new solutions based on generative neural networks," said Andrei Sykulev, head of Cinimex.

Representatives of a number of banks have already reported on the successful experience of using AI. The flagship of the introduction of innovations based on AI is Sberbank. In April 2023, the country's largest financial and credit organization introduced its own neural network GigaChat, and in September opened access to it for everyone. Sberbank also created the GigaCode tool based on artificial intelligence, which provides support to developers in writing and auto-completing code.

PSB was the first on the market to integrate the GPT neural network into a business chatbot. In mobile and Internet banking, as well as in instant messengers, business clients in pilot mode have access to a service for communicating with a neural network on topics that go beyond banking services.

Import substitution and deep transformation of products and services of credit institutions based on working with data and the use of artificial intelligence remain the key trends in the digitalization of the banking market. For example, neural networks can remember the details of the conversation and adjust the answers based on the information that the user informed them. And the neural network can be adapted to perform almost any task with the text: preparation of materials of technical and client support, surveys, research, consultations, which are both financial and general in nature, etc. The integration of such technologies with other services in the future will allow solving information security problems, optimizing marketing costs, creating sites, managing an investment portfolio, etc., - said Alexander Sakharov, Director of the Department of Digital Transformation and Information Technology Strategy of PSB.

In addition, banks successfully switch to robotization of processes, using robots to perform routine and insignificant tasks. This allows you to speed up customer service processes and reduce the likelihood of errors. By automating routine operations, employees are freed up resources for strategic tasks. The use of smart robots in communications with customers, for example, allows you to reduce the cost of maintaining contact centers by more than a third, according to the company RDTECH.

Import substitution tasks entailed significant changes in the structure of demand in the software market.

As a result of the departure from Western vendors, the demand for custom development platforms has grown, which can be built into the IT landscape without significantly changing integration flows and data format, "said Andrei Fomin.

At the same time, according to him, among banks, the study of the target architecture for the future of 5-7 years is in demand. Also, the IBS expert among the financial priorities in the field of digitalization calls the development of new digital services, measures to support the digital ruble and for compliance with new regulatory requirements, as well as the introduction of open APIs (part of open banking).

In the area of ​ ​ growing interest are low-code platforms that allow you to effectively cope with rapid development tasks. They are often used to test hypotheses and create MVP, as well as automate internal processes. In addition, it is low-code that helps banks solve priority tasks to maximize information security and switch to domestic software, "said Vadim Sorokin, director of business development at LANIT OMNI (part of the LANIT group).

Another key trend is the continued transition of a significant part of banking projects to open source software. The prerequisites for more active implementation of such products were a significant increase in the quality of open source software and an increase in the variety of tasks solved, as well as the emergence of companies that provide full support for open source software, which is not inferior in service level to the support of proprietary software.

Forced import substitution in IT helped overcome the remnants of the "fear" of IT managers and accelerated the process of replacing proprietary code with open ones. Today there is not a single bank, not a single large company that would not use open source software and would not plan to further expand its use, "notes Andrei Sykulev.

Russian banks have recently begun to actively introduce OpenAPI technology. Its use significantly reduces the time and costs of launching new financial products, simplifies their development and scaling, and also increases competition and the quality of financial services, Vladislav Ignatenko is sure.

Konstantin Yurganov, Director of Strategic Development at MONS (part of KORUS Consulting Group of Companies) said that the demand for ecosystems, self-service services, security and identification systems is growing. To develop these areas, voice and video recognition technologies, recommendation systems, AI services (chat bots, text analysis) will be required. In addition, solutions are needed that support the health, scalability and performance of high-load systems at both the hardware and software levels - load balancers, resident databases, etc. Much attention will also be paid to application development, integration and delivery tools: tools for collective development, low-code platform.

From a security point of view, it is crucial to create trusted repositories that will be quickly updated and verified. Moreover, it is necessary to build a system in which such repositories can be used in the development of critical infrastructure services, including banking applications, "says Konstantin Yurganov.

According to the regulator's requirement, companies related to critical infrastructure should switch to domestic software by 2025. In September, many large banks spoke about the need to postpone the transition to Russian system software (automated banking and database management systems) from 2025 to 2027. Despite the fact that most large banks have their own IT divisions, it is very difficult to create a full-fledged analogue of a high-load information system in a short time. At the same time, this gives opportunities for development - for example, not just "repeat" the systems when replaced, but create something new, notes Konstantin Yurganov.

Despite the fact that the largest banks asked to move the deadlines, the transition to the domestic ABS may become the most priority task at the moment, - says Galina Yashina, head of the QA department of the IT company SimbirSoft, - This will require combining the IT resources of large banking players, conducting thorough analytics and planning of all internal subsystems, trying to avoid critical failures of banks throughout the country. Such a global move to domestic software cannot but affect the digitalization strategy of the entire banking cluster.

Intersoft Lab expert Julia Amiridi says that other digitalization priorities are determined by business needs and the specifics of banks, the need to maintain continuity and profitability and comply with regulatory requirements. To reduce customer service costs and expand service availability, banks invest in CRM, customer analysis and remote service channels. To improve internal efficiency, document management systems, data platforms and data-based management approaches are implemented. To comply with regulatory regulations - develop RegTech solutions, etc. For example, in 2023, banks had the most demanded task, which was solved on the basis of data warehouses, was the automation of mandatory reporting. The share of such projects exceeded 40%, Yulia Amiridi emphasized.

The situation is more complicated with the replacement of hardware solutions. Russian manufacturers are not yet ready to replace imported solutions, for example, servers, data storage systems or network equipment with analogues with the required performance. Therefore, large technology companies, including banks, continue to use and increase productivity on Western equipment.

Banks are increasingly taking care not only of their clients and external systems (Internet bank, client applications), but also of employees, organizing a convenient digital workplace, says Anna Protsko. To provide the best service, bank specialists must quickly respond to requests, find the necessary information and quickly receive news about innovations or changes in products. They should be comfortable and easy to work with requests and changes in internal information.

Most market participants among the key trends in the Russian banking digitalization market in 2023 and for the near future include artificial intelligence and the development of Data Science.

A wide range of directions are connected with them, says Viktor Frolov. - For example, credit scoring, managing credit pipelines, transforming customer experience, electronic document management, detecting anomalies and fraudulent actions in the early stages of their commission, automation and hyperautomatization of various processes, including SLA and risk management, monetization of digital assets.

Banks will actively look for new options for the use of generative networks: from general-purpose applications, such as simultaneous translation or transcription of speech, to specialized autonomous applications or various assistants (co-pilots) for a variety of specialists: operationalists, underwriters, programmers, etc. But the deeper we dive into the use of artificial intelligence, the more "human" problems it solves, the more often "related" problems will arise, warns Andrei Sykulev. For example, according to him, with the development of AI, we will need tools that will allow us to distinguish artifacts created by humans from artifacts that were created by the machine.

It's not just about abstracts or articles compiled entirely by AI from the internet. Soon the ability to generate using AI photos or videos about events/people that have never existed in reality will become as publicly available as now shooting or editing video in a smartphone. It can be not only harmless cartoons or thrillers, but also malicious fakes. We will face the need to prove the authenticity of digital assets, linking CA to real entities and events - financial or non-financial, not so important. Of course, this task can be habitually solved through centralized systems, but I think that in this regard, in the near future, we will see a revival of interest in distributed register technologies, and first of all, from banks, "says Andrei Sykulev.

Banks need to take measures to increase confidence in digital technologies. "Often customers cannot understand the interface of the bank application and drop registration due to the abundance of options, so the user path does not end. In this, credit institutions can be helped by intellectual assistants who can answer any questions and help solve problems. Such solutions are being developed, "says Dmitrakova, director of the Center for Financial Solutions at RDTEKHA.

Renaissance Bank expects further commoditization of AI-based instruments, their expansion in banking automation beyond the usual scoring and a number of other (already traditional) areas.

Expert of the Digital Economy League Yuri Kolbasin says that banks are primarily interested in IT-Innovations can help them improve the quality of customer service, increase the efficiency of operations and ensure a higher level of security. In this regard, in the near future, banks will actively use artificial intelligence and machine learning algorithms to analyze customer data, predict their behavior, provide personalized services and detect fraud. At the same time, automation of routine banking operations and tasks using robots will increase efficiency and reduce personnel costs. The development of safer and more convenient methods of identifying customers, such as face scanning, fingerprints and voice recognition, will replace traditional passwords and pin codes.

Quite an interesting innovation is financial robot advisers. The development of automated systems that provide clients with investment advice based on data and algorithms will help create an optimal portfolio for each client, says Yuri Kolbasin.

Banks will also take care of new security tools in connection with the introduction of quantum technologies that increase the cybersecurity risks of financial institutions. As you know, the National Center for Digital Cryptography of the Russian Federation is already implementing research projects on quantum-stable channel protection in Russian banks, recalls Anna Dmitrakova.

Talking about digital technologies, market experts emphasize that call centers and mobile applications of banks will be improved on the basis of neural networks, AI assistants will help reduce the severity of the problem of the shortage of developers and system administrators, the digital ruble will firmly come into use as the third form of Russian currency and a convenient means of transfers within the country and between states to replace SWIFT.

Thus, having created import substitution "road maps" in 2022 and evaluating the solutions presented on the market, many banks in 2023 confidently follow the planned course of introducing domestic technologies instead of foreign ones. At the same time, financial organizations for the transition period, as a rule, found alternative support for Western systems, comparable in level with the vendor. Banks continue to improve customer experience and personalization by introducing services based on artificial intelligence and robotization technologies. At the same time, a lot of attention is paid to information security issues. One of the hot directions in the domestic banking sector in the near future will be to ensure the circulation of the digital ruble as the third form of the national currency.

According to the TAdviser project database, as of December 2023, among the various classes of IT solutions in the companies of the Russian financial sector, the most in demand are systems electronic document management EDMS(/),ECM business analytics (), BI customer relations () CRM and remote banking. These solutions account for the largest number of projects completed during the observation period since 2005. Data on other classes of systems are shown in the diagram below.

For each class of IT systems implemented in certain industries, the TAdviser database allows you to identify the most popular solutions and vendors of these products. See the chart below for which companies are developing the systems most commonly implemented in the financial sector.