Russia's Alfa-Bank goes back to basics to regain digital leadership
New chief executive says ‘smart simplicity’ hold key to success for Russia’s largest privately owned bank.
Alfa-Bank can regain its status as Russia’s most digitally sophisticated lender within three years, new chief executive Vladimir Verkhoshinskiy has told Euromoney.
The 37-year-old Citi and McKinsey alumnus, who headed VTB Bank’s retail operation before joining Alfa-Bank in August, says Russia’s largest privately owned lender had lost some of its competitive edge in recent years.
“In the mid 2000s, if you asked someone what’s the best bank in Russia, they would most likely say Alfa-Bank,” he says. “Over the past five years, however, the sector has changed. State-owned banks are showing tremendous growth in digitalization, while digital monoliners are emerging as competitors.
“You can’t say today that Alfa is perceived as the best bank in Russia. Our strategy is to get this position back again.”
For Verkhoshinskiy, technology is key to Alfa-Bank’s renaissance. The lender, which is part of Mikhail Fridman’s Alfa Group, was the first in Russia to introduce both internet and mobile banking.
Last year, however, Russian rating agency Markswebb ranked the bank eighth in the sector for digital banking.
Verkhoshinskiy says this slippage was partly due to a lack of focus.
“Five years ago, many players in the Russian market – including Alfa-Bank – were in a situation where they didn’t know what to do about technological changes, so they decided to try to do everything,” he says.
As a result, by last year Alfa-Bank had 370 digitalization projects ongoing. “That’s too much by a factor of 10,” says Verkhoshinskiy.
His solution has been to implement a strategy of “smart simplicity”, which in terms of technology means focusing on a handful of key infrastructure projects such as the development of digital signature capabilities.