Financial technology (fintech) in Russia

Global Fintech Market

Main article: Fintech Market (FinTech)

Russian Banking Informatization Market

Main article: Russian market of banking informatization

2023

Throw and pay. How a new payment method is developing in Russia

In May 2023, Smart Ranking analysts published a study of the Russian payment sticker market. They are a sticker with an NFC chip built into it and work like regular debit bank cards. Read more here.

The Central Bank of the Russian Federation has created a repository of IT solutions for the financial industry

On March 2, 2023, Olga Skorobogatova, First Deputy Chairman of the Board of the Central Bank of Russia, announced the creation by the regulator of a repository of IT solutions for the financial industry. Read more here

2022: Market growth by a third to RUB 138.88 billion

The volume of the Russian financial technology market in 2022 reached 138.88 billion rubles, an increase of a third (by 32.7%) compared to 2021. This is evidenced by the data of the Smart Ranking agency, which were released in early May 2023.

According to the researchers, the significant growth of the Russian fintech market was the result of several factors:

• the introduction by the Central Bank of the Russian Federation of a ban on banks from using SWIFT in transfers within Russia;
• disconnection of Visa and MasterCard payment systems;
• termination of Apple Pay and Google Pay services;
• increasing the debt burden of the population;
• requirements for import substitution of products of foreign IT corporations Microsoft, Oracle, SAP, Cisco;
• unprecedented growth in cross-border transfers: in 2022, remittances from Russia to neighboring countries increased by 300-500%.

The volume of the Russian financial technology market reached 138.88 billion rubles

Smart Ranking notes that sanctions and the departure of foreign vendors, blocking the usual promotion channels forced players to urgently revise their strategies and look for new solutions that could patch up the holes that have formed. Many Russian companies had to adjust their plans - the rating participants note that on average, about 25-50% were not enough for the initially intended revenue targets for 2022. It is the consequences of sanctions (especially the transition to new payment systems) that have become the main driver of the growth of domestic fintech, analysts point out, whose data is provided by Forbes magazine.

The group remained the largest player in the Russian financial technology market, Qiwi which in 2022 earned about 35.23 billion rubles on such decisions, which is 52.5% more than a year ago. In second place in the rating is the YukAssa SberbankYuMoney project affiliated with the Electronic Payment Service and managed by it. Their total revenue, according to SR, in 2022 increased by 15% and amounted to 24 billion rubles. According to Dmitry Karmishin, commercial director of YuMoney, payment scenarios and the context of doing business have changed in 2022.

Many companies had to rebuild their business model and look for an alternative to the departed Apple Pay and Google Pay, change software and familiar communication channels. We at YuKassa were able to quickly offer our customers alternative payment methods: SberPay, payment with cards linked to Sberbank ID, electronic wallets "YuOney," by QR code and through MirPay, "he said.

The third position is occupied by the Solar Staff service for automation of payments to teams and freelancers, which earned more than 12 billion rubles in 2022 and increased its revenue by 64.5%. According to the head and co-founder of the company Pavel Shinkarenko, Solar Staff planned to receive revenue from new markets and products, but did not have time to launch a new product on time and eventually received revenue from new markets, but with old products.

This was mainly due to a decrease in the number of competitors: there were several events in our area that turned out to be disastrous for them, he explains. - Firstly, this tightening of requirements and new KYC procedures, sanctions and counter-sanctions - all this required investments, but not all of them had them. Secondly, the so-called cryptozyme affected. The deeper the companies were integrated into cryptocurrency, the more they suffered. Thirdly, startups, which were heavily dependent on investment rounds, did not survive due to the outflow of investments. Weak players left the market, and strong players rose.[1]

2021: Russian fintech market doubles

The volume of the Russian financial technology market at the end of 2021 reached 67.1 billion rubles, having more than doubled compared to 2017, when the indicator was measured at 31.7 billion rubles. This is stated in a study that BusinesStat analysts released in August 2022.

Most of the market under consideration in 2021 fell on payments and transaction processing - about 40.9 billion rubles. Expenses on financial technologies for business reached 11 billion rubles, on solutions in the field of personal finance - 6.2 billion rubles, on fintech solutions for banks - 9 billion rubles.

The fintech market of the Russian Federation has doubled in 5 years

According to experts, the COVID-19 coronavirus pandemic has made noticeable adjustments to the plans of companies around the world. The measures that were introduced by the governments of the countries led to a partial or complete shutdown of companies and a partial freeze of IT developments. Financial technology companies were forced to look for new channels for commercialization and development of their services, including going directly to retail customers.

Analysts note that in comparison with other markets, the financial technology market in 2021 managed to show positive dynamics even at the peak of the pandemic. Financial technologies are among the actively developing industries. Innovative approaches to the delivery of services have changed the essence of financial flows and formed the need to develop new solutions for the financial sector, according to a study published in August 2022.

According to researchers, the sanctions introduced in 2022 by the EU and the United States led to the departure from Russia of a number of foreign companies operating in the fintech sphere. Under the current conditions, domestic developers got the opportunity to occupy the vacant niche of this sector. Given the competent use of existing potential in the future, this will provide an additional incentive for the development of financial technologies in the country.^[2]

2019: Russia enters the top three countries in terms of fintech services popularity

Russia entered the top three countries in terms of the popularity of fintech services. This is evidenced by the results of the EY study, released on November 21, 2019.

Experts estimated the penetration index of fintech services in Russia at 82%. The higher rate is only in China and India (87%). The top five also included South Africa (82%) and Colombia (76%). Read more here.

2018: Fintech market growth by 12% to RUB 54bn - Deloitte

In October 2018, the consulting company Deloitte published the results of a study of the Russian financial technology market. Experts expect a 12 percent growth of this market to 54 billion rubles at the end of 2018.

According to the economic information agency Prime, citing data from Deloitte, 76% of companies positively assess the current state of the market from the point of view of the financial well-being of the business. 60% of respondents are optimistic about the prospects for market development.

The Russian financial technology market is predicted to grow to 54 billion rubles in 2018

From the beginning of 2017 to October 2018, 17 transactions totaling 19 billion rubles were concluded on the Russian financial technology market. The average age of a company working in this sector is 3 years, and the average number of employees in one company is 15 people.

Among the factors contributing to the rise of the fintech market, experts attribute the growing demand for services in Russia, the  activity of the regulator, as a result of which infrastructure is formed, as well as the dynamic supply - regular entry into the market of new products and services.

The most popular financial technologies in the Russian Federation include payments, money transfers, scoring (credit assessment ) and lending. Market participants attribute great prospects to artificial intelligence, machine learning, predictive analytics, deep learning and big data.

Among the main barriers that hinder the development of the financial technology market are the unattractive sector for external investors, low solvency of the population and geopolitical risks.

Deloitte notes that financial technologies in Russia are developing unevenly. Thus, breakthrough projects are available mainly to residents of million-plus cities or clusters, where they purposefully develop technological infrastructure and teach people to use it.^[3]

Notes