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Russia's Love for Mobile Banking Grows

20.07.2016 15:46 / The Bank of Russia

The Bank of Russia has conducted a second annual financial inclusion survey, comparing 2015 ratios versus 2014.

The regulator website states that Russia shows growth in the number of POS credit card terminals (up 15.7%), private bank accounts (up 5.2%) and corporate (non-banks) accounts (up 1.1%).

Digital and long-distance financial services are an alternative to bank branch development, cutting costs and establishing more convenient channels of financial services access. In 2015, more individuals have used online/mobile banking (from 19.6% to 23.7%), as well as small and mid-size enterprizes (from 68% to 74.6%).

In Russia, mobile networks are some of the most developed infrastructure systems. Mobiles are used for payments and client identification. Text notifications enable customers to keep track of their credit card and e-wallet activity, blocking unauthorized transactions. Unsurprisingly, more people used their gadgets for cash transfers in 2015 (from 16.8% to 20.7%).

In the meantime, bank branches continue to diminsh in numbers. A decrease of 4.1% in 2014 was followed by a drop in 11.2% in 2015. In that same year, 2015, the number of insurance companies wnat down 15.7%, microfinance down 12.2%, consumer credit co-ops down 1.3%, ATMs and POS terminals down 6.9% and 10% respectively. By end-2015, 14% of bank branches and 18.2% ATMs were located in Russia's two major cities, covering 0.02% of the country's surface. Only the number of pawnshops has increased 8%. The decrease in the number of non-banks is due mainly to elimination from state registrars of companies which fail to report or severely violate laws and regulations.

According to IMF studies, in 2014 Russia was among world learers (ahead of the Top 10 and BRICS) in number of bank branches per each 100 thousand of 18+ individuals.

Despite frequent negative media coverage of banks, which continues to dominate over positive coverage, the overall amount of trusts between financial market participants is growing on the back of the current reguatory policy and new laws, aimed at customer rights protection. The share of people who do not trust banks has dropped from 24.1% to 11%,microfinance – from 40.4% to 27.6%, consumer credit co-ops – from 34.4% to 20.9%, pawnshops – from 32.6% to 20.5% and insurance companies – from 32.3% to 17.2%.

A possible reason for mistrust is a lack of fundamental financial knowledge and understanding of financial instruments. In 2015, the financial literacy index was at 1.86, with the projected goal for 2017 at 2.1. The Bank of Russia uses the index as KPI for the Financial Market Development Policy 2016–2018, a priority of which is financial literacy.

The Bank of Russia's first Financial Inclusion Survey is scheduled for publication in 2H 2016.

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