Are banks ready for innovations and modernization of the Russian economy?

The XX International Banking Congress dealing with modernization, innovations and investments has finished its work in St. Petersburg. The forum, sponsored by the Central Bank of the Russian Federation and the Government of St. Petersburg, hosted over 600 representatives of the financial sector from 60 cities and 17 countries this year. Representatives of 120 credit organizations, 8 central banks and 13 national banks took part in the event.
 
A wide range of issues were discussed at the forum: the role of banks in forming the innovations policy, the issues of participating in investment projects, of risk management, of applying new technologies in the banking business, and the topical aspects of banking regulation and supervision.
                                                                                                 
Sergey Ignatyev, Chairperson of the Bank of Russia, opened the Congress. In his greeting, he noted the positive trends in development of the banking sector but also mentioned the slow growth in it:
 
The crisis trends are still topical for the banking market. In particular, the extremely low crediting activity of the banks has not yet improved, with a large volume of bad debt still remaining. While before the crisis, the amount of bad debt was equal to 1.5%, now it is 5.6%, which is quite a serious figure.
 
Garegin Torsunyan, President of the Association of the Russian Banks, spoke at the congress about the primary tasks of developing the banking business of Russia. This is how he commented on the establishment of the country’s financial and credit system under the new economic conditions:
 
Over the recent twenty-something years, we have covered a long way from total lack of any laws regulating the banking activities to establishment of a considerable legislative base. On the other hand, we’ve managed to survive such a number of economic crises that even one-tenth of them would be lethal for any other banking system or country. But we have overcome the crises and reached such level that our banks are now recognizable in the international market. We cannot compare the twenty year ago situation in the interaction of the Central Bank and the regulating agencies with the banks. There was neither dialogue nor normal mutual respect. Over these years, much has changed: most importantly, mentality has changed, as the present customers have a totally different level of culture and represent business of a different scale. Besides, a system of deposit insurance has emerged.
 
At the plenary session The Banking Sector and Modernization of the Economy, the speakers were: G. Melikyan, First Deputy Chairperson of the Bank of Russia; A. Murychev, Executive Vice-President of the Russian Union of Industrialists and Entrepreneurs, Chairman of the Council of the Association of the Regional Banks of Russia (Russia Association); A. Kostin, President-Chairperson of OAO Bank VTB; L. Pepelyayeva, Deputy of the State Duma of Russia, Deputy Chairperson of the Financial Market Committee; A. Aksakov, Deputy of the State Duma of Russia, member of the Financial Market Committee, President of the Association of the Regional Banks of Russia (Russia Association); V. Miroshnikov, First Deputy Director General of Deposit Insurance Agency State Corporation; N. Nikolayeva, Vice-President of ZAO Citibank Commercial Bank, E. Filippova, Director General of ZAO PricewaterhouseCoopers Audit, and others.
 
This year, the Congress organizers have successfully applied organizational innovations: in the Congress framework, four theme discussion sessions took place: ‘The Banking Sector and Modernization of the Economy’, ‘Innovations and Investments in Banking Business’, ‘The International Reform of Banking Regulation: Objectives and Methods of Achievement’, and ‘Development of the National Payment Systems’. The discussion was moderated by German Gref, CEO of Sberbank; Mikhail Zadornov, CEO of VTB 24 Bank; Oleg Vyugin, Chairman of the Board of Directors of MDM Bank; and Jörg Bongartz, Chairperson of the Board of Deutsche Bank. The discussions turned out to be acute, informative and lively.
 
German Gref, President, Chairperson of the Board of Directors of Sberbank of Russia, presided over a discussion session ‘The Banking Sector and Modernization of the Economy’ at the Congress. The participants of the session discussed the role of banks in upgrading and forming the innovative economy in Russia, their participation in investment projects, application of innovative technologies in the banking business, and the topical aspects of banking regulation and supervision. The bankers and the representatives of the supervisory agencies also touched upon the issues of transition to the Basel II standard for the Russian banks.
‘I thank the organizers for holding the Congress. We need such forums where we could exchange our opinions. Modernization and the innovative growth of the Russian economy are impossible without the corresponding development of the financial system,’ German Gref said. ‘The banking sector is now at the threshold of applying new technologies and should become a key innovation sector.’
 
Maria Mikhailova, Deputy Chairperson of the Board of Center of Financial Technologies Group of Companies, took part in the discussion dedicated to the future of the National Payment System of Russia. One of the issues discussed was devoted to the draft of the federal law ‘On the National Payment System’ which is now being considered by the State Duma. ‘Adopting the law on the National Payment System would be beneficial for the market,’ Maria Mikhailova stressed, ‘as it would bring the organizers of the payment systems to the legal field and assigns two processes to them—not just control but also monitoring procedure which would, to a certain extent, stimulate the development trends of the National Payment System as a whole.’