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Russian banks held up as technology role model for UK financial services firms

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By Finextra

The UK’s banks are trailling their counterparts in Russia in their attitude to innovation and cybersecurity, delegates were told at the annual Russian-British Business Forum in London.

Russia has a fast-growing high technology sector, which will receive a further boost following the announcement during an address to the country’s Federal Assembly by President Vladimir Putin on Thursday that investments will be made to build a digital economy.

The importance of digital technologies and fintech specifically was a topic of discussion at the London forum. Dmitry Politov, director, international relations department of the Skolkovo Foundation described digital technology as “one of the deepest changes for humanity that will change the way we all interact”. The Foundation acts as an incubator for innovative startup companies and encourages venture capitalism.

Russian banks have an advantage over many Western banks, being relatively younger (many established after the collapse of the Soviet Union in the early 1990s) and less encumbered by legacy systems and practices. Tinkoff Bank, for example, operates without physical branches and has become Russia’s biggest internet bank. In this sense, UK banks lag those in Russia, said Ilya Sachkov, CEO of Group-IB, a cyber security firm. “I find this strange as historically the UK was a very innovative country.”

Another surprise for Sachkov is that despite the wealth of experience Russian cyber security companies have in fighting online crime (which started to flourish after the collapse of the Soviet Union), UK banks are reluctant to use them. This is despite international police agencies Europol and Interpol using the systems of Kaspersky Lab, for example. Kirill Slavin, managing director Kaspersky Lab UK and Ireland added: “Sometimes politics interfere” in business.

Matthew Sebag-Montefiore, a partner at management consulting firm Oliver Wyman, said in initial discussions UK banks and other companies are reluctant to work with Russian companies, but if a product “does what it needs to do” quality then dominates the discussion.

“UK banks need to be more open to innovation,” said Sachkov. “Russian banks such as Alpha and Tinkoff are very innovative and use technology in a very interesting way for retail and corporate customers. Their online presence is also very secure.”

Like Kaspersky Lab, Group-IB plans to establish operations in the UK to establish a bridge into Europe (Brexit not withstanding) and to try to crack the UK market.

There were some words of warning from the panellists about the risks in digital technologies. The internet of things, for example, could open very serious cyber crime possibilities. Slavin said “excessive digitisation” was not a good thing. Wifi chips placed into devices, such as a kettle, could be hacked, compromising a household – or a company’s – digital network. “Having digital devices on everything, everywhere is not good from a security point of view.”

First appeared at Finextra

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