Software banks – Newspaper Kommersant No. 22 (7467) dated 02/07/2023

Russian banks have the ability to replace foreign software in a wide range – the share of coverage of the functionality of foreign vendors is 69-100% in various areas, Kept estimates. However, the presence of such developments does not mean the possibility of a full-fledged transition. Implementation takes both time and money, including ensuring compatibility and improving the quality of analogues.

According to a study by the consulting company Kept (Kommersant got acquainted with it), Russian developments can largely replace the functionality of foreign analogues of software (SW) for the financial sector. According to analysts, the products of foreign vendors accounted for more than 50% of all systems used by banks.

In the Process Mining systems segment (a technology that allows obtaining new knowledge based on data from the company’s information systems), Russian developers can already offer solutions that cover 69% of the functionality provided by foreign vendors. In other areas, coverage is higher: in the management system and work with data – 84.5%, decision-making system – 91.3%, monitoring systems – 93.3%, customer relationship management systems – 95.8%, marketing campaign management – 96.5%. The limit indicator (100%) is in the system of fraud monitoring and BPM (the concept of process management of an organization, credit conveyors work on the basis of such systems).

However, the mere fact of software availability does not mean the effectiveness and even the possibility of its application. As Kommersant’s interlocutor among bankers emphasizes, “solutions for managing large databases for the largest banks are unique,” and domestic counterparts are inferior in quality. “The most difficult thing is to change the bottom layer of the structure, in particular after the departure of the American Oracle. Above this is a lot of application software that has been implemented for decades. Quickly replacing all software without the threat of “dropping” the bank and maintaining profit and return on capital is a big challenge, ”says the interlocutor of Kommersant.

Banks began to prepare for the transition to domestic software even before 2022, some have already had an analysis of contractors, but active work began only last year, says Anna Zdanevich, head of financial institutions at DRT.

In 2023, the active phase of import substitution in the financial sector will continue, according to Kept. However, it is advisable to change the software when the current version of the update is already functionally obsolete, explains Olga Blednova, director of the Kept practice for providing consulting services to companies in the financial sector, so banks “look primarily at the complex of systems without which activities will be impossible or significantly limited.”

Systemically important banks, according to Ms. Blednova, are making the transition faster (see Kommersant of January 23). So, Sberbank noted that in the near future they will transfer 90% of ATMs to their own operating system based on Linux. In the field of infrastructure, the share of import substitution for MKB is about 20%. The RSHB claims that at the beginning of 2023, the share of Russian software included in the register of the Ministry of Digital Transformation for various classes was about 70%.

At the same time, bankers note natural difficulties with the transition to new software. “Applied solutions may be limitedly compatible with Russian operating systems, DBMS or other infrastructure components or require additional efforts to adapt, which increases the implementation time,” explains the RSHB. Periodically, the bank “faces significant increases in producer prices,” they add.

The interlocutor of “Kommersant” in the information security market confirms that “there were cases of overpricing compared to Western counterparts.” He explains that “development is expensive, and the number of implementations at the initial stage is small.” Now the situation is leveling off, according to a Kommersant source.

In addition, the starting positions before large-scale import substitution among banks are seriously different. As Ms. Blednova notes, some banks had their own solutions, some were completely based on imported software. She calls it a “viable scenario” for large banks to develop their own solutions and sell the rights to use them to small and medium-sized banks. This, according to the expert, “can work quickly for those banks that are consolidated under major players or have such plans.”

Olga Sherunkova