The quitrent ecosystem

How banks earn hundreds of billions of rubles on commissions and imposed products

According to the Central Bank, in 2018, Russian credit institutions achieved a profit of almost 2 trillion rubles, while in the same period they did not earn even 800 billion. Such high results were achieved by increasing various commission fees and improving the system for checking borrowers.

It is obvious that today the Russian banking system is functioning quite efficiently. Banks work with the real sector of the economy, attracting liabilities at reasonable rates and issuing loans to those borrowers who are able to repay the money. Last year, banks successfully provided acquiring services for corporate clients, cash collection, settlement and cash services, and verification of counterparties.

Commission and insurance products (30-40% of all profits) provided banks with large profits. Many credit institutions have been successfully selling insurance products even to ordinary depositors for five years now. We are talking about investment life insurance, which is provided "as a load" to deposits as a mandatory addition. This product has a margin of up to 60%. But the investor's profitability drops to 1-2% per annum instead of the promised 15-20%.

In addition, last year Russian banks increased the interchange fee, and now companies pay banks an acquiring rate of 2% or more, and large businesses - from 1.8%. All this is "sewn up" in the final cost of goods and services. Meanwhile, the bank makes a profit on every transaction. From half to a quarter of this profit is paid to customers in the form of cashback, but customers of far from all banks know that they are credited with money for paying for goods and services by bank transfer.

In any case, taking a bank interchange commission is a very profitable and growing business. The share of acquiring in Russia exceeds 45% of the total transactions of companies, and this percentage is increasing every year. At the same time, collection is gradually becoming a thing of the past. It is interesting that the expense of companies for cash collection services is usually only 0.1%, and for acquiring - 2%.

Of course, earning billions on commission products is much easier than diversifying and taking into account the needs of the client, offering him profitable investment or lending packages. In addition, commission income is more stable.

Modern banks are an "ecosystem" of all kinds of financial products: banking services, insurance, stock market opportunities, and more recently, crowdlending (* lending to borrowers directly by individuals, without the mediation of banks. - * Ed. ) .

Banks have a very valuable resource - a customer database. And they successfully convert this resource into new offers, increasing their profits.

When faced with non-core activities, banks are rarely able to do this job professionally. Even if it seems that the bank has successfully mastered a new direction, often the internal processes are not debugged in the best way. I know a lot of talented people who consider working in banks to be unprestigious because of the bureaucracy and poorly debugged technical system.

The logic is simple: first you need to create a product, and only then enter the sales market and build up the sales system. Banks, having not solved their main technical and personnel problems, are trying to enter all markets at the same time, and, as a result, they do it not in the best way. For example, applications of large banks are not always the most convenient to use. In general, they have few competitive products, but they have an administrative resource that allows them to attract millions of customers.

Another reason the Russian banking system has been able to earn trillions is its ability to absorb risk. The banks were finally able to separate the bad borrowers from the good ones and thereby ensure a high percentage of loan repayments. This trend is relevant for the entire financial market. Crowdlending platforms also achieved high results in checking borrowers.

In my opinion, absolutely everyone benefits from this - both financial structures and the economy as a whole. If a company fails to properly use the loan, it goes into default. In this situation, only bankruptcy lawyers benefit. If a bank has badly debugged scoring and its borrowers have gone into default, the credit institution has to be sanitized at the state expense, spending taxpayers' money on it, which could be invested in more valuable resources.

But it will be much more effective for the country's economy if IT companies take the place of banks. It is necessary to create such a model of the financial system, in which there will be fast and more efficient IT companies on the market that make exactly the same product (for example, a mobile application), but 10 times cheaper than banks.

The idea is to allocate 2 trillion rubles of bank profits to the real economy through digitalization. Without banks, people would be forced to far fewer insurance products, and they could put that money to better use.