How banks will work in ten years: instructions for use

In my opinion, the development of new digital technologies will lead to the fact that the retail lending market will undergo significant changes. For example, there will be changes in the mortgage market. Those who have already taken out a mortgage and will be paying it off for at least the next decade, most likely, do not need to worry. On the contrary, new technologies will create even more convenient opportunities to repay monthly loan payments without leaving your home or office. And the preferential mortgage, it seems to me, is unlikely to be canceled even in ten years. There are serious doubts that even ten years from now, the vast majority of Russians will be able to buy apartments or houses exclusively with their own funds. In the meantime, this has not happened, for sure, state support for mortgage borrowers will continue. Maybe there will be no interest rate subsidies that are customary today, but there will certainly be some targeted types of mortgage lending, where the interest rate, for example, will be partially subsidized by the employer for their employees, or, possibly, by the trade union. Most likely, car loans will also remain, and moreover, it is very likely that some kind of preferential loan for the purchase of a domestic-made electric car will appear.

But an unsecured consumer loan, in my opinion, in ten years it will be much more difficult to get in a bank than today, and here’s why. Firstly, there is a high probability that the decision-making process on loans will be fully automated, that is, the verdict on issuing a loan or refusing to lend will be made by artificial intelligence and, possibly, even without human participation. Therefore, the probability of refusing a loan if it is not secured by collateral will be much higher than today – artificial intelligence will most likely be programmed in such a way as to minimize the risks of a credit institution. Secondly, it is possible that the reverse side of digital technologies will work in full, that is, simply put, credit institutions will be able to access information not only about the income of their clients, but also about expenses, and indeed to many aspects of their biography, and not necessarily labor. And the more information the bank receives about its client, the less attractive its credit history may turn out to be for the bank, even if the client has never taken loans before. Therefore, the likelihood that banks will refuse such a service in the long term or start issuing unsecured loans to a very limited number of borrowers is quite high.

The development of digital technologies and the introduction of the state digital ruble into everyday circulation, it seems to me, will lead to a significant change in the format of providing banking services. Simply put, we can expect that in ten years there will be very few bank offices left, and it cannot even be ruled out that there will be none left at all. But for a simple individual client, this is not a reason to worry, rather the opposite – almost all banking services can be received without leaving home. Already today in Russia there are fully digital banks that do not have an office, but have a convenient mobile application, and more than one. And in the post-Soviet space, for example, in Kazakhstan, there are already mortgage lending and online car loans. So it can be expected that this trend will develop significantly in the future.

At the same time, it can be expected that, along with the digital transformation of the banking sector, there will be a change in the so-called ecosystems of banks (the ecosystem today means the offering by banks of services that were previously considered non-core for credit institutions through their subsidiaries, for example, mobile communications, purchases in online stores) . It is possible that over time the term “ecosystem” will go out of fashion, but will only come out because there will be a closer integration of the banking business with other types of businesses. For example, today large online stores are creating subsidiary banks, and banks, in turn, are acquiring online stores, food and other goods delivery services, and even online cinemas. With the appearance of the digital ruble in everyday circulation, these integration processes are likely to accelerate. For example, today we go to a shopping center, where we can buy groceries in the same place, use the services of a bank, go to the salon of a telecom operator, and even watch a movie. And in ten years, there may not be any bank offices or shopping centers, but we will be able to receive all these services from our own smartphone through the mobile application of a company or several companies that combine shops, banks and other trade and service enterprises in their structure. . At the same time, it is very likely that we will be able to pay for these services in digital rubles. Digital technologies in the future, most likely, will save our time even more, the main thing is that they do not turn us into hermits and hermits who rarely go out into the street.

What will happen to bank deposits and depositors if bank offices disappear or are reduced to a minimum in ten years is a topical issue today. Depositors who have kept their savings in reliable Russian banks for years and even decades, in my opinion, do not need to be afraid of anything – their savings will not be lost. For comparison: remember that today, if the bank office where you kept your deposit is closed, then nothing bad happens to the deposits – they are also stored in the main office of the bank, and you can now withdraw part of the deposit or deposit additional money through any ATM of this bank or even a partner bank and not pay commissions. On the contrary, in the future there will be much more profitable opportunities to not only passively keep your savings, while receiving a modest interest, but also to increase your investments by placing part of them, for example, in a mutual or exchange-traded fund, in reliable and profitable securities. in an individual investment or conventional brokerage account, or even by investing part of the funds in gold or other precious metal. That is, it is very likely that banks are even more closely integrated with other financial service providers. There are already trends towards this today – after all, most large banks are professional participants in the stock market, have mutual investment funds and licenses of the Central Bank of the Russian Federation for operations with precious metals in their structure. This means that in the future we can expect the appearance of more advanced mobile applications that will allow people to open any multifunctional accounts in banks (and most likely in integrated financial corporations). Having put money into such an account, the investor will keep some of it on deposit, receiving interest, and place some of it at will in more profitable assets: for example, in securities, gold or on an impersonal metal account. And then a person will be able to receive from his deposits a higher income than today, while increasing the reliability of savings through the diversification of investments.

New digital technologies are becoming more and more part of our daily lives. However, there will certainly be skeptics and critics who will say that the innovations will not make life easier for Russian pensioners and socially vulnerable groups of the population, but, on the contrary, will only complicate it. However, critics can already be answered today that in the future, if bank offices become much smaller or disappear altogether, there will certainly be a cash delivery service for older and people with limited mobility. Such a service was already practiced by some banks during the coronavirus pandemic, but after the threat of a pandemic weakened, banks abandoned this service, although the problems of low mobility of some groups of citizens did not disappear. However, the introduction of new technologies will allow banks and financial corporations to take more care of the most diverse groups of their customers.

Surely skeptics will doubt that in the ten-year horizon digital technologies will cover all of Russia. Indeed, today in our country there are such settlements and even cities where there is no Internet, and to visit the office of the nearest bank you have to go to the nearest regional center. However, digital technologies can cover all of Russia much sooner than we think, especially if the government and the Bank of Russia assist the regional authorities in introducing such technologies to make people’s lives easier.