“The development of fintech will worsen the financial situation of banks”

Vasily Pozdyshev, Deputy Chairman of the Bank of Russia, noted that a turning point in the development of financial technologies has now arrived.

Pozdyshev noted that the introduction of financial technologies related to banking to the work of large technological corporations could adversely affect the financial position of banks. This was stated by the Deputy Chairman of the Central Bank
at the conference “Deposit Insurance and Liquidation of Banks: Standards, Best Practices and Innovations” held this week in St. Petersburg.

Vasily Pozdyshev noted that due to the current situation, the regulator can no longer ignore the emergence and distribution of new products, such as cryptocurrencies and e-wallets.

“I believe that the year 2019 is a turning point in the development of financial technology in the banking industry. This is the year when large corporations operating in the area related to the provision of high-tech services seriously attack the traditional banking model, ”said Pozdyshev.

He noted that first of all a significant mass of small deposits and funds in the accounts will come out of the deposit insurance systems. At the same time, the base for deductions will be reduced, and the financial position of banks will worsen, because these liabilities are the cheapest for the bank.

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The deputy chairman of the Central Bank also said that the cost of liabilities of banks is already growing, and the situation will worsen in the near future. Mass distribution and the consequences of the development of new financial products have not yet been determined, but, most likely, they can increase the risk of bank failures, concluded Pozdyshev.

Recall that this week it was reported that the choice between a ban and the legalization of cryptocurrency in Russia will be made before July 25.