The boundaries between the banking and retail industries are gradually eroding, as customers seek an easy single-window access to a wide range of financial and non-financial services. Like incumbent banks around the world, Russian banks are facing increased competition not only among themselves and challenger banks, such as Tinkoff, but also from domestic technology giants, such as e-commerce platform Yandex, internet company Mail.ru (which rebranded as VK in October) and mobile network operator Mobile TeleSystems.
While the onset of the pandemic has certainly intensified competition in the banking sector, the large Russian banks had already begun to respond to the changing competitive landscape by moving into non-core activities a few years ago. The domestic regulatory framework has allowed this transition as there were no regulatory limits on the volume of non-core assets that banks can hold.
