Alexey Kruglov, director of the Digital Business Platform Department of Sberbank’s Retail Business Block, talks about how the bank focuses innovation to meet real needs.
Global Finance: What drives innovation at Sberbank?
Alexey Kruglov: For us, everything starts with the client. We feel the immense speed at which the world is changing, inside and outside the banking industry. This feeling drives innovation at Sberbank and our overall development. According to industry benchmarks and ratings, Sberbank is one of the global leaders in many areas. Despite this, we believe it is possible to retain our leading edge only by continuing to seek out new things. The bank continuously keeps track of trends in different industries. We have selected several areas in which we intend to develop. At the same time, we keep an eye out for new inputs from the market so we can adjust our course if necessary. The client’s interests continue to serve as our main reference point as we develop, and as our core value. We not only carefully study all the feedback and suggestions from clients, but also strive to anticipate their needs by launching innovative services.
GF: Is it better to partner with fintechs or to innovate in-house?
Kruglov: We have extensive experience of working with both partners and in-house development. As part of the development of our ecosystem, we launch services together with other companies; but our strategy organically combines both approaches. We consider that it would be unwise to focus exclusively on one.
Let me offer two great examples of in-house innovation. The first is Sberbank Online, our internet bank for retail clients. It was created eight years ago and continues to successfully develop within the bank. The second, a recent launch, is our DomClick service. This is an online marketplace that lets you solve housing-related needs—from submitting a mortgage application to registering the title to your home. In 2017, Sberbank foresaw a possible paradigm shift in the market and decided to build in-house and launch this new mortgage and real estate service.
GF: How do you see the banking sector in the CEE region developing over the next 10 years?
Kruglov: Technological trends are gaining momentum, and digital usage will continue to actively grow in the region. The digitization of an increasing number of services and banking products, including mobile platforms, will help grow digital sales. Personalization and AI [artificial intelligence]-based solutions will be actively deployed, more and more smart digital assistants will appear, and bank branches will undergo a transformation. More banks will start actively working with fintech companies and creating their own ecosystems.
Platformization will also be a trend. Sberbank is already keenly investing in platformization as a product—despite the fact that, for example, there is no PSD2 in Russia. At the moment, Sberbank’s platforms mainly operate for internal teams, but the principle can easily be deployed for external partners.
GF: Which of the recent technologies do you see as most transformative?
Kruglov: AI is one of our central areas at Sberbank. We are deploying AI in various different processes and services, from simple client products to much more complex technological solutions. For example, we use basic machine-learning algorithms in our application’s search function, which can guess what clients are looking for. We use considerably more-sophisticated technology to create and develop various assistants (text, voice, visual, etc.).
GF: What will the Sberbank of the future look like?
Kruglov: We have to ask ourselves frank questions and concentrate more on the challenges of the future than our current successes. Sberbank is carrying out its Strategy 2020, which aims primarily to achieve a new level of competitiveness, in part by building an ecosystem and transforming into a universal tech company. Traditional banks will have to change their way of thinking if they want to survive.