Blockchain in Russian banks

Main article: Blockchain in Russia

MasterChain

Main article: Masterchain Russian national blockchain network

Blockchain in the Central Bank of Russia

Main article: Blockchain in the Central Bank of Russia

Blockchain in Sberbank

Main article: Blockchain in Sberbank

Blockchain Technology Market

Main article: Blockchain technologies (Russian market)

2024

The Ministry of Finance of the Russian Federation told how blockchain will help the financial sector

Blockchain technology can have a significant impact on the business model of the financial sector of Russia, allowing to exclude financial intermediaries in the market. This was announced in September 2024 by Deputy Minister of Finance Ivan Chebeskov.

Blockchain and decentralized finance (DeFi) offer a new way to build trust in financial infrastructure, according to Russia's finance ministry. Chebeskov explained that this trust is formed due to the fact that everyone and no one simultaneously owns the financial system.

source = Ministry of Finance of the Russian Federation

The deputy minister stressed that the traditional model of the financial market, based on working with intermediaries, may undergo changes. He noted that earlier, the banking sector and the financial market worked exclusively with financial intermediaries, as this was the only way to achieve confidence in the financial sector.

Chebeskov expressed the hope that the Russian financial market and its participants will be able to adapt to blockchain technology and integrate it into financial infrastructure. However, he also noted that the development of the DeFi system raises certain concerns among the ministry.

Another deputy finance minister, Alexei Moiseev, pointed to the risks associated with the development of decentralized finance. Among the main problems, he highlighted possible violations in the field of combating money laundering and the financing of terrorism, as well as difficulties in protecting the rights of consumers of financial services.

Moiseev also drew attention to the fact that the spread of DeFi could deprive the Central Bank of the ability to control the emergence of financial "bubbles" through macroprudential measures. He explained that at present the regulator can introduce macroprudential requirements to limit banks in issuing loans or increase capital requirements when signs of a "bubble" are detected in the market, but such measures are not applicable in the DeFi system.

Despite the identified risks, the Ministry of Finance does not yet have a clear understanding of what regulatory measures can be applied to the system of decentralized finance. The agency continues to study the possibilities and consequences of integrating blockchain technologies into the financial sector of Russia.^[1]

What restrains the development of blockchain in Russian banks

In 2017-2018. the topic of blockchain in the banking sector was very discussed and it seemed that several more years would pass, and the technology would become truly mass among financial organizations. However, by mid-2024, there are few blockchain projects in Russian banks, and there are several reasons.

According to the majority of market participants surveyed by TAdviser, the main barrier to the widespread distribution of blockchain in financial institutions is associated with a lack of legislative regulation. According to the Russian Association of Crypto Industry and Blockchain (RAKIB), about 45% of banks say that the lack of a clear legal framework is the main deterrent to the introduction of blockchain technologies.

Uncertainty in matters of legal responsibility, taxation and transaction control prevents banks from rolling out this technology to all their clients, said Evgeny Kaminsky, an expert in the field of cryptocurrencies and blockchain.

According to him, if there is a favorable legal environment, blockchain can become a powerful tool for:

• improving the efficiency of banking operations;
• reducing costs by optimizing processes;
• improving transparency and security of transactions;
• development of new financial products and services;
• supporting CBDC standards and implementing the digital ruble.

Another problem is the shortage of highly qualified specialists in blokechin. Director of the Blockchain Laboratory Sberbank Alexander Nam, in a conversation with TAdviser, noted that such developers are not enough not only in Russia, but throughout the world. According to a study HeadHunter cited by Sevil Baer, project director at Arthur Consulting, at the end of 2023, only about 10% of specialists claiming knowledge of blockchain technologies meet the requirements of employers.

In addition, according to Alexander Namm, the possibilities of blockchain as the basis for accounting financial systems are not yet obvious to everyone. To unlock the potential of the technology of smart contracts operating with payment tokens, more advanced legislation in the field of payment token regulation is required, allowing more options for using such tokens, the director of the Sberbank Blockchain Laboratory emphasized.

Cryptocurrencies are the main driver of the development of blockchain development around the world, which attracts investment. In Russia, due to the peculiarities of regulation, this driver does not work, - added Alexander Nam.

The founder of the A&M Crypto and Amresearch.me projects, Nikolai Mozhenkov, believes that the future with the blockchain will open for banks only when the Central Bank prescribes clear algorithms for the financial sector to work with cryptocurrency, and a digital ruble will be released.

Alfa-Bank associates the main difficulties of introducing blockchain in the industry with the constant evolution of technology, the complexity of managing decentralized platform components and the need to integrate with existing corporate applications. 

Alexander Peresichan, general director of the corporate software company Tehnobit, also drew attention to the complexity of the implementation of blockchain projects in banks. According to him, banks are complex multi-level systems, and all processes within them are interconnected, and not work in isolation. To introduce blockchain into banking, you will need to completely rebuild the entire system. It takes time, expenses, confidence that the security of such a system will remain at a high level, he stressed.

Alfa-Bank has previously implemented several blockchain projects. Thus, a digital letter of credit and a B2B solution for airline agents selling tickets have been launched together with S7. A similar case is with the participation of Gazprom-Aero for refueling aircraft using Hyperledger Fabric technology.

Sberbank has created a designer of smart contracts (it allows you to create and configure the logic of smart contracts used in financial transactions without programming) and a blockchain platform for the release of digital financial assets.

Дом.РФ Bank also took part in several pilot projects to test blockchain technology, for example, electronic mortgages or registration of equity agreements, Oleg Komlik, director of the Digital Business Products division of the bank, told TAdviser.

We see for ourselves the advantages of this tool and are technologically ready to use it, "he said.

Speaking about the advantages of blockchain in the banking sector, experts interviewed by TAdviser agreed that this tool significantly speeds up the process of conducting transactions, the cost of them becomes cheaper. In addition, blockchain increases the security of banking operations. Banks using blockchain have been able to reduce fraudulent transactions by 50%, according to IBM.

Sberbank noted that blockchain makes it possible to create a digital analogue of almost any traditional banking product or service. The beneficial effects of implementing blockchain can also be more flexible accounting of finances and greater transparency (traceability) of payments, as well as the ability to control and ensure the targeted use of funds.

Despite all the barriers that hinder the development of blockchain in the financial sector, the process of introducing the technology is still underway. An example is digital financial assets, which are just based on blockchain. According to experts interviewed by TAdviser, many financial companies in Russia are in no hurry to use blockchain, because in previous years they have invested significantly in traditional IT infrastructure. Banks are in no hurry to actively act in order to avoid uncertainty, risks and costs of creating something new, said financial expert Ilya Makar.

2019: Russia launches decentralized depository system on Masterchain platform

On December 18, 2019, the FinTech Association (AFL) informed TAdviser of the commissioning of a decentralized depository system (DDS) on the Masterchain platform for accounting for electronic mortgages. The first participants in the launch were Sberbank and the Market Special Depository; by the end of 2019, five more large Russian banks and depositories will begin to use the system. Read more here.

2017

VEB implements 6 projects based on blockchain

Vnesheconombank implements 6 projects based on technology, blockchain VEB chairman said in November 2017 in an interview with TK "Russia 24." Sergey Gorkov Projects are being implemented in a wide variety of industries, which is expected to help identify those where blockchain technology can be applied most effectively. To this end, VEB also announced the opening of a competence center.^[2]. here

Factoring Platform

On October 13, 2017, it became known about the creation of a blockchain consortium by M.Video, Alfa-Bank and Sberbank Factoring. They launched an open financial platform designed to save hundreds of millions of rubles by reducing the human factor. Read more here.

MegaFon was the first in Russia to place bonds on the blockchain

On October 2, 2017, MegaFon announced that it was the first in Russia to place bonds, settlements for which will be carried out using blockchain technology. The buyer of the bonds was Raiffeisen Bank, and the developer of the decentralized platform is the National Settlement Depository (NSD).

The volume of issuance of bonds using blockchain technology amounted to 500 million rubles. The maturity of bonds is December 22, 2017. 

Megafon used blockchain to issue bonds and placed bonds worth 500 million rubles as part of the pilot

We were the first in the country and one of the first in the world to place commercial bonds, taking into account the rights to blockchain, "says Gevork Vermishyan, financial director of MegaFon. - The deal highlights MegaFon's commitment to affirm leadership in the development of the digital economy in Russia. We see great potential in the blockchain architecture, which gradually and confidently becomes the new standard for the exchange of transactional data and replaces traditional systems.

According to the operator, work on a prototype platform for conducting bond transactions began in the first quarter of 2017. This solution ensures confidentiality when working with data on securities balances, and also takes into account the peculiarities of Russian legislation, the company said.

Raiffeisen Bank called this deal to place ruble bonds on the blockchain the first and important step in testing a wide range of possibilities for using the technology in the Russian securities market.

Despite the active development of blockchain, the legislative framework in Russia is only developing in this direction. The successful completion of this transaction will allow us to form a new legal field, within which all such projects on the securities market in Russia will be carried out in the future, "said Andrei Popov, member of the board, head of the Raiffeisenbank information technology directorate.

VEB will create the first competence center in Russia with a focus on blockchain

Since September 2017, on the basis of NUST MISIS, the Competence Center for New Materials and Breakthrough Technologies with the main focus on blockchain technology, convergent and quantum technologies should open. This was announced at the end of June 2017 by Vnesheconombank (VEB), which initiates the creation of the center. Read more here.

German Gref's opinion on the development of blockchain in Russia

On May 30, 2017, the Chairman of the Board of Sberbank, ex-Minister of Economic Development German Gref said that it would take up to two years for the mass introduction of blockchain technologies in Russia.

In order to recommend it for mass implementation, you need to have the technology itself. This technology is still at the stage of very early maturation. What is called maturity, the maturity of the technology, which allows it to be massively introduced, is not yet about blockchain. And today we can only say that the beginning of such a massive use of technology is possible not earlier than in a year and a half or two, - said German Gref in an interview with the Russia 24 TV channel.

Hermann Gref

According to him, by May 2017, a large number of blockchain projects were developing in Russia, including five "quite successful with very interesting results" at Sberbank.

I think my horizon - understanding this technology - is 10 years, and you need to work a lot with it, experiment, use it to perform completely different tasks, "Gref said.

He also added that before using blockchain solutions, it is necessary to change the federal law "On Personal Data."

Obviously, this is one of the breakthrough technologies, and it will very much change all industries starting with ours, but so far this is the technology of the future. It is necessary to adjust the legislation for it, because there are a large number of features. The current law on personal data has restrictions on the use of this technology, - concluded the head of Sberbank.

Russian Prime Minister Dmitry Medvedev, speaking on May 17, 2017 at the St. Petersburg International Legal Forum, said that with the development of blockchain technologies, bank mediation on many operations may be superfluous.^[3]

Prospects for blockchain in the Russian banking sector

Blockchain is a distributed database that stores information about all transactions of system participants in the form of a "chain of blocks." The main advantage of this technology over traditional banking transactions is the lack of intermediaries, since the blockchain does not have a central body, and operations are checked by the participants themselves.

TAdviser decided to find out the opinion of experts from domestic IT companies on the prospects for blockchain technology in the banking sector of Russia. It is they who have to implement the entire pool of requests from financiers for the implementation of this system.

The general opinion on which the majority of respondents agree is this: blockchain certainly has a great future, but it is too early to use this technology. First of all, all issues with the law should be settled in Russia. In addition, a deep rethink of the technological principles of banking services will be required.

Blockchain is a fantastically secure and unusually complex system for distributed storage and transaction processing. It does not require the creation of any centralized information processing and storage points, data centers, decision-making centers, information processing - all this goes into the network. On the basis of this technology, you can build not only banking systems, but also any other systems. It has completely undeniable advantages over traditional centralized information systems. However, in Russia, any actions related to cryptocurrency operations are prosecuted, and this greatly slows down the development of blockchain. Until the law changes, there is no need to wait for some more or less serious organizations in our country, and first of all, in the banking sector, these technologies will appear, "said Ivan Rubtsov, Deputy General Director for Work with Key Customers" CROC. "

Alexey Zabrodin, Deputy General Director for Technical Activities of INLINE Technologies, calling blockchain a very fashionable topic, adds that this issue is very difficult, primarily from the point of view of international and Russian legislation. In his opinion, it should be deeply worked out, because this is a paradigm shift and here everything depends exclusively on the regulator, and the Central Bank of the Russian Federation, as we understand it, is integrated into the world financial and legal space.

In my opinion, the technology has no prospects for the near future, simply because no one is ready for its use. This is on the one hand. On the other hand, there are technological limitations. It requires tremendous computing power, for many large ones that the banking sector now uses. This is a completely different technology in terms of data processing - very heavy and resource-intensive. Of course, algorithms are being modernized, there are many innovations in this technology that make it easier to use. But only when the legal basis changes, when the technology itself "matures," and we, as a state or, maybe even as humanity, will be ready to accept completely different principles of mutual settlements, can we talk about the prospects for using blockchain. It's too early, "the expert concludes.

Ruben Hovhannisyan, Sales Director of the Center for Financial Solutions of the RDTECH, believes that given the fact of creating a blockchain consortium, which will include such financial institutions as the Central Bank, Binbank, KHMB Otkritie and others, we can safely assume that this technology has a great future in Russia.

According to many banking specialists, Hovhannisyan adds, blockchain technology will allow financial institutions to make transactions as transparent, fast and efficient as possible, and most importantly, safe. In addition, the use of blockchain technology provides significant savings in operating costs, regulatory reports, real-time interbank settlements, customer identification and other advantages.

I dare to conclude that based on the capabilities that blockchain provides to the banking sector, this technology will become an integral part of the banking infrastructure and the landscape of the financial sector as a whole as soon as possible, "says the representative of the RDTECH.

Maxim Bolyshev, Deputy Director of the RS-Bank Banking Software Department at R-Style Softlab, believes that the technology has good prospects after it is found to be used and developed appropriate solutions.

Currently, about 90% of large banks in the United States and Europe are exploring the possibilities of blockchain technology for making payments, he recalls. At the same time, according to a study by consulting company Accenture, 30% of banks are in the advanced stage of adopting blockchain for payments. The heads of financial organizations said that they are either "at the forefront of the revolution" (17%) or "engaged in the sale of products" (13%). 70% of banks are still in the early stages of taking the technology into operation. Of this number, about 30% of credit institutions "participate in the processes of confirming the operability of the concept together with other companies," 27% of respondents are still "developing a strategy" and 13% only "consider the technology."

As for our country, I think that we, as is usually the case, will observe what is happening on world markets, and then choose the best solutions and implement them at home, the expert believes.

At the same time, he adds that already now the leading players in the Russian financial market are experimenting with the use of this technology:

For example, Sberbank, together with the Federal Antimonopoly Service, prepared a pilot project on document control on the block chain. Its innovation lies in the fact that various organizations will have the opportunity to refuse the services of telecom operators when exchanging documents, which will reduce the costs of companies.

Yuri Terekhin, director of financial institutions at FORCE-Center for Development, says that the prospects for blockchain technology in the Russian banking sector are as excellent as abroad. However, even with the support of the Central Bank of the Russian Federation, he believes, the introduction of blockchain technology will not be fast, because this will require a deep rethinking of the technological principles of the provision of banking services and comprehensive testing.

An important role in this will be played by standards developed by international consortia - type R3 with the participation of Russian companies (Sberbank, Qiwi) and the Russian blockchain consortium under the auspices of the Central Bank. In the future, it is possible to issue a state cryptocurrency by the Central Bank to partially transfer money circulation online, "Terekhin notes.

Konstantin Usakovsky, Deputy Commercial Director of AiTi Group of Companies, is confident that due to a number of features, our country will not be among the leaders in the use of this technology. In addition, on the part of the state, the attitude towards the blockchain is rather wary.

There are opportunities for using technology not only in the banking sector, so all market participants will keep their finger on the pulse, as well as think about the possible use of technology in various areas of our life, "says Usakovsky.

Dmitry Demidov, head of the CRM department at Norbit (part of the LANIT group of companies), believes that blockchain is still an area for experiments, since there are too many questions about this technology from a legal point of view.

Time must pass for the technology to prove its viability, reliability and a community of specialists formed, tools and successful commercial cases appeared. Of course, the technology looks very promising and will begin to benefit in the medium term, Demidov believes.

According to Svetlana Vronskaya, Marketing Director of Korus Consulting Group of Companies, blockchain is certainly the most promising technology, however, its use will depend on whether it will be possible to organize its regulation.

Dmitry Sergeyev, Business Development Director of the Center for Software Solutions of Jet Infosystems, the excitement around blockchain technology resembles a similar situation with Big Data in 2010-2012 - another buzzword that. except marketing, so far it has nothing.

Of course, you can solve many interesting problems by using blockchain to ensure guaranteed reliability and non-transparency of data (for example, the Know Your Customer task). The question is, are we ready to open the necessary personal and commercial information? And what to do with the relevant laws on the protection of certain data? I think the real application of blockchain in solving pressing problems is still quite far away. Perhaps even this is a question of the next decade, "he reflects.

RosEuroBank has created a customer identification system based on the Microsoft blockchain

January 12, 2017 JSCB RosEuroBank announced the creation of a remote customer identification system based on blockchain technology from. Microsoft The new solution will allow you to use the services of other banks without physically visiting their branches. More. here

2016

VEB transfers investment process to blockchain

Following many financial institutions, Vnesheconombank also took up the development of its blockchain. On December 22, 2016, VEB announced the search for a contractor to create a prototype of the Digital Contract system for 3.5 million rubles, which will be based on blockchain technology. Read more in a separate article.

VTB combines shareholder data with a single blockchain system

In mid-October 2016, Deputy Chairman of the Board of VTBOLG Dergunova spoke about the bank's plans to develop a blockchain project that unifies the work of the entire market with shareholder registers.

According to Dergunova, a decision based on distributed register technology will allow registrar companies to store each other's shareholder registers, and in case of loss or damage to data, the Bank of Russia or the copyright holder of information may receive a key to open in order to restore the data or verify a specific shareholder.

There is no single technical standard for accounting in the register. In what format the data should be, where to transfer them, if the registrar is closed, who is responsible for control, this is not defined in any way or defined in a vague way, "she explained.

The deputy chairman of the VTB board also noted that the system will meet the main criterion of blockchain: what got into these bases can never be replaced, replaced, distorted.

VTB Group begins to develop a blockchain project designed to unify the work of the entire market with shareholder registers

Olga Dergunova found it difficult to name the timing of the project and only promised that in 2017 VTB would talk about the successes in this initiative.

Market representatives say that the system linking all shareholder data with a single blockchain will need additional control, and the Central Bank believes that the work of registrars is already well regulated.

The registers are strictly and in detail regulated; the registrars are supervised at the level of the central office of the Bank of Russia. Statistics also indicate the proper level of market regulation: there are only isolated cases of complaints and litigation regarding the maintenance of registers, and then they are mainly related to corporate conflicts. In addition, information about shareholders is confidential, its disclosure is also strictly regulated at the level of the law, the Central Bank told the publication.[4]

First implementations in the Russian financial sector

On July 18, 2016, it became known that the Russian financial market began to master blockchain. First, the technology is planned to be tested on safer projects that are not related to the transfer of funds, Kommersant reports.

Representatives of financial organizations spoke about pilot projects using blockchain at a meeting of the Committee on Corporate Finance and Capital Markets of the Association of Managers of Russia. Thus, Sberbank announced its participation in the technological examination of the platform, which allows recording information about factoring transactions. The goal is to avoid double payments for the same monetary requirement, since all state changes are recorded in the system and are available to its participants, Ekaterina Frolovicheva, executive director, head of the technological research department of Sberbank, told the publication. According to the newspaper, we are talking about the startup Factor.

The Russian financial market is mastering blockchain

A new blockchain-based project was also unveiled by the National Settlement Depository. He tests the e-proxy voting system, which excludes the exchange of messages along the chain - from the owner of the security through his depository, higher depository and further to the registrar.

Kommersant notes that in general, Russian financiers are very careful about the blockchain, testing the technology only in data transmission systems that are not related to money transactions.

According to Alexei   Volostnov, Director of Business Development at Frost & Sullivan, any use of blockchain carries two types of risks.

On the one hand, these are fundamental risks associated with a lack of experience and competencies among domestic IT specialists. On the other hand, there are fraud risks that are inevitable even when used in areas that are not directly related to money transactions. For example, it will be extremely difficult to file an appeal based on the results of the shareholders' vote - the blockchain does not make it possible to "roll back," the actions are irreversible, the expert believes.[5]

Central Bank: the time of the emergence of blockchain technologies in the banking sector from one and a half to two years

On February 11, 2016, the Central Bank announced its vision of a period of penetration of blockchain technologies into the global financial sphere - 2017-2018. This was announced by Deputy Chairman of the Central Bank Olga Skorobogatova at a meeting with representatives of commercial banks of the^[6].

author = Olga Skorobogatova In 2017-2018, we will see real examples of the use of this system. From the point of view of the regulator and the protection of the financial market... thought moves towards the use of this technology in the so-called closed form: so that it is possible to identify the recipient and sender, so that there are rules, so that market participants understand them, share them... Because the open technology that Bitcoin uses, for example, involves complete anonymity and validation, which can take up to an hour. As a closed system, I think this is the future, and we need to prepare for it.

"Blockchain as a technology that is used by the bitcoin payment system is certainly interesting, but the distributed registers themselves provide more interesting opportunities in a combination of elements not only in the form of chains and validation, but also when processing distributed stored information for simpler tasks," Olga Skorobogatova noted.

In September 2015, the head of the Central Bank Elvira Nabiullina announced the regulator's understanding of the risks in the use of cryptocurrencies and at the same time the Chairman of the Bank of Russia noted the need to study the issue by the regulator and then, in September, the Central Bank created a working group to study technology.

German Gref: Blockchain is able to turn over the spheres of state regulation and finance

President of Sberbank German Gref at a meeting with Vladimir Putin in January 2016 said that blockchain is able to turn over the spheres of state regulation, finance, etc.^[7] Gref himself admitted in September 2015 that he had cryptocurrency.^[8]

Notes