Oleg Tinkov, founder and Chairman of Tinkoff Bank: Paving the way for digital banking in Russia
Source:
TRCW and Tinkoff Bank's data
Oleg Tinkov, the founder and chairman of the board of directors of Tinkoff Bank, shares his experience in pioneering new practices on the Russian financial services market, offering his visions for the future development of internet banking and the new goals of Tinkoff Bank in this space.
Launching a bank has always been my dream. I finally got to grips with the idea in 2005, when I sold my previous business, a beer company, to InBev.
Back then, seasoned bankers I talked to were skeptical about my vision of a purely online bank with no branches, arguing that a banking background was critical for running such a complex business.
But such attitude only left me more excited to embark on the project – I love achieving what others think impossible. At the same time I don’t consider myself more gifted than anybody else. I engaged BCG to do a perception study, and it confirmed the viability of the model for Russia.
The study didn’t provide details about the mechanics of the project or its target audience, but it was something we figured out as we went along. When our project was launched in 2007, we had Goldman Sachs as our investors with Vostok Nafta joining in 2008 and Baring Vostok and Horizon Capital in 2012.
In late 2013, we held a successful IPO on the London Stock Exchange, raising over USD 1 bn of investments. Over these nine years on the market, we have evolved into a leading industry player: Tinkoff Bank is a Top-4 Russian bank by credit card portfolio and an employer of over 6,000 people. We are now one of the largest purely online banks globally.
There are a couple of questions we are often asked: ‘What was the secret ingredient that helped your business take off?’ and ‘Why are there hardly any successful analogs, even though large banks have made some considerable investments in online banking recently?’ To answer, I usually provide them with a few areas of focus my team and I work on throughout the process.
An out of the box approach
I started off by building a team and searched for people outside the industry – those who could think out of the box and deliver a business model never before seen in Russia. I didn’t want to hire people with a background in banking.
This way we steered clear of any stereotypes about how to run a bank. We focused on building the business processes from scratch and were not distracted by fighting for areas of influence – something that plagues traditional businesses after adopting a new business model.
We also invested heavily in our priority areas. For example, we spent USD 20m on IT infrastructure alone, purchasing the most innovative kit available at the time.
When the project was still at the drawing board stage, we were inspired by western online banks. But as we brought the idea to life, it was only our proprietary solutions and our own insights that we relied on.
Russia has some very particular banking regulation, and so to comply, we created all the tools for our branchless model from scratch. We have a wealth of in-house knowledge and expertise, and it would be incorrect to say that we simply adopted the western model for the Russian market.
Changing perceptions
Initially, people were used to having to queue for hours just to get very basic banking services. With such an outdated mentality, they found it hard to believe they could manage all their banking transactions themselves, using a call centre or a mobile bank. This perception still partly exists, but things are changing quickly. We have found that once customers use a remote service channel, they almost never want to go back to a brick and mortar bank.
Customer-focused initiatives
We created a network of over 1,000 smart couriers across Russia, enabling us to deliver our products almost anywhere in the country, usually the next day after the customer submits an application through our website. It is not simply about delivery: our smart couriers are specially-trained professionals capable of advising customers on the spot. The penetration of banking in Russia is still low today, and our model helps bring innovative banking services to people in some of the most remote regions.
Embracing innovation
As our remote service channels are the only point of contact with customers, we invest heavily to make sure they are best-of-breed and as user friendly as possible. We were the first bank in Russia to roll out voice authentication technology to each call center workplace as early as 2014.
At that time, the service was in use by only a few UK banks usually confined to VIP customers. This technology saves time for our customers, as their voices are recognized and authenticated within seconds, making dozens of code words and passwords redundant, and provides extra security, as the risk of confidential data leaks is extremely high in our era of social engineering.
We also have in-house development teams focused on our online banking and mobile apps, with only basic technical functions outsourced. In recent years, our online services have repeatedly been voted best-in-class in terms of both functionality and design, receiving recognition from both Russian and international experts.
In addition, we have a large team of mobile app developers who help deliver applications for a broader audience and not just our customers. Examples include an app to monitor and pay traffic fines, and MoneyTalk, an app that combines instant messenger and money transfer capabilities.
I believe that products and services should be developed by those who use it – in our case it’s a team of young geeky professionals. I am the oldest person at the bank, and I make sure I don’t interfere in what they do best.
I am not running the bank at the operational level being focused on strategic vision, but at the same time I am a very hands-on shareholder who goes deeply into smallest details, which can include a design of one of thousands icons for a particular merchant in our internet bank.
So what is next for Tinkoff Bank?
Our strategy for the next five years is to grow into the Amazon of finance, becoming a financial marketplace where, in addition to our products, customers can also shop for services offered by our partners.
The Tinkoff.ru portal will be the single point of entry: customers will only have to provide basic information on what they need and we will come up with the best offer on the market. Thus we make life easier for clients as we help them choose a product that suits them best and for partners as we help them cut their acquisition expenses by taking over this function.
The future of financial services is customer experience. To deliver this, Tinkoff Bank goes beyond improving our own products and also focus on making our partners’ products more user-friendly and accessible.
Web design,