New financial technologies become the bank's main challenge, according to Elvira Nabiullina

'Banks could fall into a trap,' stated Nabiullina. 'What do they mostly complain about now? Low interest rates, tough oversight, unjust regulation compared with parallel sectors. Meanwhile financial technologies quietly crept up from behind, and that's the main challenge that banks should pay attention to.'

The cryptocurrencies (e.g. bitcoin) circulation, peer-to-peer landind and other emerging technologies require a thorough examination by state central banks, according to Bloomberg. Nevertheless, some countries like Singapore implement a less strict approach allowing fintech companies to act without regulation until they grow to a sufficient size. The same attitude can be practised by Russia: 'As long as financial technologies aren't too massive, we shouldn't push too hard on our regulation,' the Central Bank's governor said. 'We need to give new technologies a chance to develop.'

'Since the environment is changing, we are forced — under the old paradigm — to produce ever more documents, to limit, regulate,' she said. 'Institutions are evolving dynamically, new technologies and services develop, and ordinary regulators are failing to catch up.'

Rustam Minnikhanov, Elvira Nabiullina, Farid Mukhametshin, Herman Gref, Roman Shaikhutdinov at FINOPOLIS 2016. Photo: Maksim Platonov

Meanwhile, the investors' interest to the new technologies such as bitcoin increases as they seek protection against the policies of low and negative interest rates, according to Janus Global Unconstrained Bond Fund manager Bill Gross. 'Policies by the U.S. Federal Reserve, the Bank of Japan and the European Central Bank are destroying historical business models that foster savings, investment and economic growth,' said Gross in his monthly investment outlook.

While demand for traditional banking services remains for some time, client preferences for new technologies will increasingly crowd older approaches out, Nabiullina said. 'Banks must be prepared for this,' she said. 'Whether they use the chance to transform, or go extinct as institutions, depends only on them.'

Besides the growing interest of the investors, there is another significant reason to concentrate on the financial technology evolution. Thefts performed by cybercriminals have recently become a serious problem for the banks. For example, in February 2016 $81 million were stolen from the central bank of Bangladesh. The total amount of funds stolen from June 2015 to July 2016 in cyber attacks from the Russian banks is around 2,5bn rubles ($40 million). Some attacks made use of a messaging system run by the Society for Worldwide Interbank Financial Telecommunication, better known as Swift. A banking system running on a blockchain can become an alternative to the traditional one as such system runs simultaneously on all the computers linked to it around the world.

Elvira Nabiullina also expessed her concern about cybercrime risks. 'The threat will grow,' she said. 'Cybercrime can't be treated lightly.'