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The Russian Fintech sector is not ready for the coronavirus outbreak

Yegor Klopenko, a venture investor, founder of iTLEADERS, said that Russia is not ready for coronavirus. Even if the pandemic develops further, there is no way to increase the load on existing services by more than statistical 10%. This applies only to some individual segments, and, on average, there will be a decline in economic activity and a decrease in the audience of fintech projects.



This picture show a world map and the covid-19 name on top of it.

The Fintech sector in Russia is not ready for the coronavirus outbreak in the country, according to several interviewed experts in the banking sector.

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Russian people are not used to online shopping

At the end of January 2019, Rospotrebnadzor (Federal Service for Supervision of Consumer Rights Protection and Human Welfare) recommended Russian citizens to limit welcome handshakes, kisses, and hugs during the active circulation of the new coronavirus in the world. The Office drew attention to the danger of pneumonia due to COVID-19 infection.

However, in the event of an epidemic and related restrictions on contact between people, difficulties in visiting hospitals, shops, and transport, existing Russian online services will not be able to help. Electronic registration in clinics is not always available, the cashless payment system is not established, and delivery services are developed only in large cities, according to financial analysts.

Yegor Klopenko, venture capitalist, founder of iTLEADERS said: “The Russian fintech sector is not ready for the new coronavirus and is unlikely to start preparing. Even if the pandemic develops further, I do not see any options with the increasing load on the existing Russian services more than the statistical 10%. Again, it concerns only some separate segments, and on average in such a situation there will be a decrease in economic activity and, as a consequence, a decrease in the audience and the majority of fintech projects.”

However, according to Pavel Myasoyedov, director and partner of “Intellectual Reserve”:  “there are drivers for the growth of the fintech industry and innovation in Russia.”

Fintech services are popular in large cities

Pavel Myasoyedov, director and partner of the company “Intellectual Reserve” commented: “In Russia, delivery services are developing in large cities, they have not yet reached small settlements. People prefer to order food from restaurants and cafes, and fresh fruits and vegetables to choose for themselves. Having received expired goods once, the client is ready to refuse delivery in favor of an independent visit. In some cities electronic records in clinics were introduced a few years ago, but are not always available – sometimes there is no equipment, or there are not enough narrow specialists.”

“In China, the situation is different,” added Measoedov, “delivery services in the Celestial Empire have been working for many years and not only in megacities, and the population is used to the cashless payment system.”

The Russian e-commerce market is not ready yet

An outbreak of pneumonia in December 2019 in Chinese Wuhan brought popularity to the already popular local messenger, which also has an internal payment system – WeChat. The service, along with the Weibo platform and news aggregators ByteDance Toutiao and Tencent News, launched an application with messages about new virus outbreaks and published medical advice.

There are no analogs of such products in Russia, but only the leading banks of the country can create them, said Gennady Nikolaev, an expert of the Academy of Finance and Investment Management. He called the Russian e-commerce market too immature in contrast to China, with a volume of $740 billion, and the U.S. – $561 billion. In Russia, the analyst estimated that it does not exceed $31 billion.

“Domestic banks are the main innovators in this area, actively developing B2B and all sorts of marketplaces in cooperation with the largest IT companies in the country,” explained Nikolaev. “Unlike startup enthusiasts, financial organizations have enormous resources, both human and monetary. That is why the fintech sector in Russia will develop thanks to major players and will be more focused on the banking infrastructure,” said the expert.

“In recent years, financial institutions are simplifying registration for users on their sites as much as possible, offering cashback – the return of some spent money on the card and other formats of the loyalty system. However, the creation of lifestyle services turns out to be rather expensive and requires considerable time expenses,” said the head of the mobile applications development department of Tinkoff Bank Anna Mikhina.

Coronavirus and the demand for fintech services in Russia

“In the event of an epidemic, technology will become a necessity in Russia,” said Viktor Zuev, a virologist at the Gamaleya Institute. He stressed that the importance of following personal hygiene rules will increase as the epidemic will develop,” said Zuev.

He continued: “So far, Russia has been doing well and in regions of the world, where the coronavirus blazes, of course, it is worth reducing contacts between people and to increase the use of electronic technologies. It is quite obvious.”

Gennady Nikolaev believes that coronavirus will not increase the demand for fintech applications in Russia. The exception may be a full-fledged quarantine, in which entrepreneurs will have a choice: either to quickly implement online products or lose profits, he said. In turn, leading Forex Optimum analyst Ivan Kapustyansky doubts the popularity of services in case of mass outbreaks of infection.


(Featured image by geralt via Pixabay)

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Suzanne Mitchell juggles the busy life of a full-time mom and entrepreneur while also being a writer-at-large for several business publications. Her work mostly covers the financial sector, including traditional and alternative investing. She shares reports and analyses on the real estate, fintech and cryptocurrency markets. She also likes to write about the health and biotech industry, in particular its intersection with clean water and cannabis. It is one of her goals to always share things of interest to women who want to make their mark in the world.