Transformation of Russian Banking System under Conditions of Economic Restructuring

Abstract

Russian banking sector is one of the largest structures in the global space and it has a significant impact on economic development by mediating in the financial sector. Banking institutions accumulate citizens' funds by offering various products, and, at the same time, direct financial resources to support businesses. In addition, acting as lenders and investors, banks actively participate in operations on financial markets, which contributes to maintenance of necessary level of liquidity and overall stability of the financial system. Growing competition in the banking sector forces financial institutions to develop non-standard approaches to emphasize the advantages of their services. Neobanks and fintech companies offering innovative solutions and customer experiences pressure traditional banks, forcing them to accelerate digital transformation processes. Banks are actively investing in the development of online services, mobile banking, artificial intelligence and big data to increase efficiency, reduce costs and improve customer experience, which creates new opportunities to expand access to financial services, especially in remote and sparsely populated areas. Under conditions of digital environment expansion, credit institutions significantly increase financing of measures to protect against cyber threats integrating biometric identification everywhere. The use of artificial intelligence and machine learning algorithms helps detect illegal transactions and deviations in user activity. Introduction of ESG standards and principles is an important element of banks' development strategy. They not only assess the risks and opportunities associated with ESG factors, but also strive to improve their own performance in this area by reducing the carbon footprint, increasing the energy efficiency of its own operations, supporting social initiatives and developing corporate governance. The regulatory and legal framework created by mega-regulator, which monitors the work of banking organizations, determines the requirements for capital, liquidity and other key parameters, and takes measures aimed to prevent and resolve crisis situations in the banking sector, is of key importance for maintaining prevention and settlement of banking system.