MODERN BANKING SYSTEM: PROBLEMS AND DEVELOPMENT TRENDS

ABSTRACT

In this article, we analyze the conclusions of economic analysts on the banking sector for 2020. We are studying the impact of the coronavirus on the banking sector. We consider the main problems facing the banking sector at the moment. We show how the central bank of Russia is going to work with this, what policy it will to do. What trends will develop in the banking sector.

Keywords: banking system, trends in the development of the Russian banking system, problems of the banking system, development of banking regulation, 2020 results and analysts predicts for 2021.

The coronavirus pandemic has had a negative impact on the Russian banking sector. After 2020, the sector requires a serious recovery, experts estimates are not good. Here are brief points on what they think about it:

1. The number of voluntary bank liquidations exceeded the number of annulled licenses in 2020.

2. In 2020, the indicator of credit activity in the sector decreased by 2 points to 76%, because lending grew more slowly than the resource base.

3. Due to the closure of a number of programs, the growth rate of lending in key segments by the state will decrease.

4. Low lending growth rates will not allow banks to keep their clear interest margins at the wishful level.

5. Analysts believe that in 2021, the clear profit of the sector will decrease by 20-30%

6. In 2021-2022, clear interest income is expected to stagnate and the role of commission income and from investments in other businesses is expected to increase.

New problems in the banking system in 2021 [3]

Inflation in 2020 and negative forecasts about the stability of the economy, reject production investments and long-term loans. The situation is worsened by the unstable situation in State policy. The only way out for banks is to increase the trust of customers, listen to them, study their behavior, desires, and so on. It is necessary to increase the convenience and diversity of services, in our era of information technology, this remains fundamental. But still, the main criterion for choosing a bank and trusting it is reliability. Reliable banks will always be followed by people.

But back to the problems again. Economists have carefully studied the sector and identified the main internal problems of the system. We have selected the main problems that complicate the development of the banking system in Russia:

1. The high level of control of the Central Bank of Russia over the activities of commercial banks.

2. The current system of refinancing does not allow investing in long-term financial resources.

3. Liquidity cannot be provided at enough level due to the low capitalization of banks.

4. Fraudulent schemes and abuse of authority of the highest level of bank management.

5. Low level of risk assessment of loan defaults.

Taking into account all the current problems, the central bank proposed a policy for the development of the banking sector for 2021 from 08.01.2021.

Development of banking regulation: plans for 2021 [1]

In 2021, the Bank of Russia will continue to improve banking regulation so that its adjustment would allow banks to assess risks even more accurately and, at the same time, contribute to the development of lending to the economy:

- implementation of the Basel III standardized approach to credit risk assessment for unsecured retail loans (including credit cards) will continue. This can further free up capital to expand lending;

- approaches to assessing lending risks will be improved to support lending to medium-sized and businesses small, mortgage lending and housing construction, as well as to preserve the potential of banks to lend to the economy amid the spread of coronavirus infection. The previously announced regulatory changes aimed at limiting lending to M&A transactions should come into force on October 1, 2021;

- it is planned to reduce the threshold for the size of assets for voluntary use by banks of the approach based on internal ratings (IRB, IRB-approach) from 500 billion to 150 billion rubles. Such changes will allow more banks to move towards a more progressive way of assessing capital adequacy and creating reserves;

- work will continue the concept of a mandatory transition of systemically important banks to IRB. In 2021, a consultative document on this topic could be published, which will outline the vision of this process in more detail. In addition, in 2021, the Bank of Russia plans to return to the elaboration of the issue of differentiated premiums for capital adequacy for systemically important banks, as well as the introduction of a concentration ratio of large credit risks (N30) for them;

- preparations will continue for the introduction of new approaches to assessing the interest rate risk of the banking portfolio and market risk, including currency risk, in accordance with international standards;

- it is planned to introduce a new calculation of the amount of operational risk included in the capital adequacy ratios, which will allow banks to use the loss ratio to calculate the amount of capital to cover operational risk based on the real level of direct losses from the implementation of operational risk events;

- in October 2021, a new methodology for assessing credit risk for financial derivatives is expected to come into force in accordance with the new standardized Basel III approach for calculating the mandatory ratios of banks with a universal license;

- work will continue to improve the transparency of the activities of banking groups and credit institutions. It is planned that from October 1, 2021, new requirements will be introduced for the disclosure of information on the assessment of the interest rate risk of the banking portfolio, as well as on the assessment of credit and operational risks in accordance with the new standardized approaches of Basel III. will come into force;

- it is assumed that in the first quarter of 2021 changes will come into force in the procedure for disclosing information on interest rates by credit institutions under bank deposit agreements with individuals, which will simplify the procedure for disclosing this information by credit institutions. Banks will calculate the maximum return on deposits under the new rules, which provide for taking into account all conditions for increasing depositors' income when calculating the indicator.

In addition, the Bank of Russia will continue to improve the regulation of the activities of banks with a basic license.

Banking trends

The development trends of the Russian banking sector in 2021 can be divided into three parts:

Technology Race - the development of technology allows you to improve processes and bring the application to a new level. Key technology trends include the further development of biometrics collection and recognition technologies, smart apps, individual rates for each user, and open APIs for integration with third-party applications. The larger and more successful a bank is, the more it invests in testing and developing new tools, services and options. The competition in the banking segment is high, which turns the process of developing services into an arms race. [4]

Changing services in response to changing lifestyles - in 2020 we all had to become more technological and move many processes online. So far, there are no prerequisites that life will change dramatically with the beginning of 2021. In this regard, banks have once again rethought the role of offices and expanded the functionality of online services. [2]

Market players news - there are players on the market whose actions change everything. Among them, for example, Yandex, which last year transferred one financial asset - Yandex. Money "- to" Sberbank "and could not agree on the acquisition of another -" Tinkoff ". An increasing role is played by the Bank of Russia, which from a financial regulator becomes the initiator of technological solutions that cannot be abandoned. [5]

References:

1. Development of banking regulation: plans for 2021 - [Electronic resource]. - Access mode: https://cbr.ru/press/event/?id=9451
2. The pandemic changed banks: 7 trends you'll feel in 2021 - [Electronic resource]. - Access mode: https://rb.ru/opinion/bank-trends/
3. New developments in the banking system in 2021- [Electronic resource]. - Access mode: https://center-yf.ru/data/economy/novoe-v-bankovskoy-sisteme-v-2021-godu.php
4. Borkova E. A., Osipova K. A., Svetlovidova E. V., Frolova E. V. Digitalization of the economy on the example of the banking system. - 2019. - Volume 13. - No. 6. P. 1153-1162 — 0,8/0,2
5. Borkova E. A., Noskova P. O. Modern development of the e-commerce market in the macroeconomic conditions of Russia // Russian entrepreneurship – - 2019. - Volume 20. - No. 4. - pp. 917-926 – - 0,6/0,3 p. l.