Vladimir Verkhoshinsky: in 5 years we will not recognize the banking system

Member of the Board of VTB Bank Vladimir Verkhoshinsky in an interview with Fontanka on the sidelines of SPIEF-2018 predicted a further reduction in the cost of credits and a decrease in the share of plastic cards in Russia in 5 years.
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The banker also told how the merger of VTB with VTB24, the largest in the banking history of Russia, how to optimize the staff and why VTB launches digital banking branches.

- Almost half a year has passed since VTB24 joined VTB. What are the preliminary results?

- It was a very complex project of merging two large companies, and our task was to ensure that customers did not feel any inconvenience. As of today, we can say with confidence that all personnel and procedural issues are in the past. VTB is now a single bank and a single team.

We launched a joint mobile and Internet banks, implemented a single site on a new platform and for four months sold through it loans for 46 billion rubles. We have successfully passed the association and are making serious plans for the future.

- The plans were stated ambitious - to grow faster than the market several times. The volume of funds of individuals in the bank should increase by 26% in 2018, the lending market by 20%, the volume of the mortgage portfolio by 23%, auto loans by 30%. How realistic was this?

- This year we have already given out credits for 37% more than for 4 months of the last year. Mortgages are especially active, this year in general can become a record for the sale of housing loans in Russia. Relatively moderate growth is observed in the segment of car loans, sales are increasing due to a stable situation in financial markets. We overfulfill the plan for liabilities. Since the beginning of the year, the portfolio of raised funds has grown by 9% - to 3.38 trillion rubles. Growth is due in large part to serious results in the Private Banking segment, with an increase of 17%.

- Staff reduction in a single bank also went with an eye on large-scale plans?

- In fact, it was an optimization of the staff, and it only affected the parent organization - the number here decreased by 30%. This affected duplicate functions. In each direction we have chosen the strongest representatives, who now work in a single team.

Despite point-by-point cuts, due to the growth of our business plan, we increased the number of staff and added about 1800 people to our network to work with clients. All our selling capacities have been retained - this applies to all employees who are engaged in sales of banking products and business support functions. The number of clients we have is growing, and their maintenance should remain at a high level and at the time of merger.

- Do you plan to expand the network of offices in St. Petersburg? How many new people will you take?

- In St. Petersburg this year we have already opened one new branch. Until the end of the year we will increase the number of our sales outlets to 90. Staff are increasing in all regions. In Petersburg there are dozens of new people.

Vladimir Verkhoshinsky: After 5 years we do not recognize the banking system
- And because of the development of online technologies, the cuts will be?

- We do not plan any reductions related to remote channels. In a mobile bank and an Internet bank, we display routine operations: transfer money, replenish the account. And when customers conduct operations for obtaining a loan, placing a deposit, they want to talk with a living employee. And the volume of such operations only grows.

- Is the flow high?

- In comparison with the banking sector, we have turnover at a minimum. It is in the interests of both the bank and employees - the first six months or a year any specialist studies. Then comes the recoil. The longer he works, the higher his qualifications.

- VTB began to open new branches without the usual cash registers. What is it for?

- This is dictated by economic expediency. We have offices, where 2-3 employees of the front-line sit - and that's it. There simply is inexpedient to create a cashier, strengthen the cash register, keep the cashier. In such offices we place powerful multifunctional devices that work for reception, issue of funds. They have the functions of "renewal", when the customers' notes are then credited back to the cassette and given to other customers.

But, regardless of the size of the offices, we plan to implement the technology of fully digital confirmation of operations by the end of the year. You can sign a contract there simply by confirming the operation in a mobile bank, biometrics, via face id or touch id. Documents will also not be printed - they will go to the digital safe of the client. This will substantially relieve our front line.

- Will the rates on loans continue to decline, mortgage rates? Or has the market bottomed out?

- There is a potential for lowering interest rates on loans in connection with competition in the retail market. But the decline will not be as significant as it was in the last 1-1.5 years. By mortgages before the end of the year, we can see a decrease of 1 percentage point and 1.5-2 points on consumer and car loans.

- A significant part of clients of state-owned banks, and VTB in particular, are state employees. Is it a solvent category?

- We are able and like to work with budget organizations. In our client base, they occupy a significant share. For example, in Moscow, half of the city's budget employees are serviced by VTB. In Petersburg - more than a third. There is some strange and outdated opinion that such a category of clients to banks is not interesting because of their low incomes. But they have long stable wages, there are sources and additional income. They are financially literate people, and therefore a very attractive segment. We intend to actively develop our cooperation with state employees.

- How did the policy of the regulator to clean up the market affect the influx of customers in VTB? And do you support it?

"It's purely mathematical." When some banks are closed, then customers move to other organizations. And I support the work that the regulator is doing. A few years ago in Russia there were up to thousands of credit institutions. Most of them are some kind of pocket offices, semi-transparent. The work carried out by the regulator cleans not only the banking sector, but also the economy as a whole.

- And whether there were more people who, having disappointed in banks, have returned to storage of means under a conditional pillow?

- For me personally as for a retail banker, it's already irrelevant for five years. We see an increase in liabilities, which means that people trust banks. And now banks compete with each other for customers. We do not compete with mattresses and pillows. In addition, new attractive investment products are being created, which we offer to our customers. For example, bonds: we made our own issue last year, the demand for them surpassed our expectations.

- On the first day of the SPIEF, you signed an agreement on the launch of the "United Card of St. Petersburg". Will it bring you new customers?

- This is a project that will involve up to 400 thousand budget employees, and we hope that they will choose VTB Bank.

- Why should they do this? There will be several issuers, everywhere the same package of services ...

- Even if banks offer the same conditions for cards, then each bank has a brand, image, network of branches. On these parameters, we have every reason for leadership.

- Experts say that the "Single Card of St. Petersburg" system was relevant 5 years ago. And now there are mobile phones, biometrics, banks are evading the use of cards.

- Of course, there are early users of innovations, gadgets and systems. But mass customers, especially from the budget sphere, are unlikely to refuse cards tomorrow and will only use smartphones or biometrics. Therefore, card technologies to live for a long time. I think that in the next 3-5 years, while the volume of cash turnover will decrease, the card will be the dominant instrument of payment and a means of identification. But after 5 years, the transfer of operations to remote channels, mobile phones and biometric identification can become a trend that will lead to a decrease in the share of cards. I think that after these changes we will not recognize the banking system, in comparison with what it is today.