Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

'We're a tech company': Russia's Sberbank bets big on strategy shift

Stock MarketsSep 24, 2020 04:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. Handout picture of SberBox TV streaming device 2/2

By Alexander Marrow

MOSCOW (Reuters) - Sberbank (MM:SBER), Russia's dominant lender, is planning one of the biggest reinventions in its 179-year history as it seeks to join the likes of Apple and Google (NASDAQ:GOOGL) in the global pantheon of Big Tech.

The company, which is dropping the word "bank" from its logo as part of this drive, gave Reuters a preview of the devices it has developed to lead its charge - including a TV streaming box, virtual assistant and smart speaker - ahead of their official unveiling on Thursday.

Sberbank's Chief Technology Officer David Rafalovsky also said in an interview that it was launching "SmartMarket", an equivalent to Apple's AppStore or Google Play.

"It's a huge investment, not a big investment. Even for a successful company, it's a huge investment," he said about the new range of gadgets and tech services, a potentially risky bet in an increasingly competitive market of domestic and foreign players. He declined to disclose the specific amount.

The Russian government owns a stake of 50% plus one share in Sberbank, the country's oldest lender with assets of $401 billion as of August and a market value of about $67 billion.

In pursuit of a stronger presence in Russia's digital economy, it has invested in everything from cloud services to driverless cars in the past year. But the launch of in-house hardware marks a deeper move into tech; the company describes the new push as the "largest transformation" in its history.

"We've always had a chip on our shoulder, we believe we are a technology company with a banking licence," Rafalovsky said, adding that most of its customers predominantly associate Sberbank with banking products.

Sberbank announced the logo change and is unveiling the range of devices and services on Thursday at SberConf, a virtual event modelled on product launches by global technology firms.

NEW GADGETS: MEET SALUTE

Among Sberbank's new gadgets are SberBox, a TV streaming device, and SberPortal, a smart speaker with a screen attached which provides gesture and voice recognition.

Sberbank is launching a family of virtual assistants, called Salute, which it said had more of a focus on emotional attachment than Apple's Siri, Hey Google or Amazon (NASDAQ:AMZN)'s Alexa. It is built into all Sberbank's devices and mobile apps.

What sets it apart from other voice assistants on the market is that it has three personalities, Rafalovsky said. They are "cultured Sber, cheerful Joy and pedantic Athena," Sberbank said.

The company's SmartMarket, meanwhile, will have coding tools available for businesses and entrepreneurs to produce their own apps and a revenue-share model where Sberbank will only take money from apps that charge money.

"It's strategically important because SmartMarket instruments act as a bridge for the entire market into our ecosystem," said Rafalovsky.

TECH'S A RISKY BUSINESS

The new products will initially be targeted at the Russian market, where Sberbank says it serves almost 100 million active banking clients, though it operates in 17 other countries and the devices could potentially be rolled out abroad at a later date.

Western technology companies have traditionally seen Russia as an attractive but high-risk market, due to the threat of sanctions and Russian laws such as those passed in 2015 requiring all data about Russian citizens to be stored in the country.

Amazon does not have a big presence in Russia, whose sheer geographical size makes logistics daunting, Microsoft (NASDAQ:MSFT)'s LinkedIn (NYSE:LNKD) is blocked after a court found it breached the data storage rule, while domestic players dominate web searches and social networks.

However Sberbank's costly tech push could be both risky and challenging, with no guarantees of success in a fragmented and increasingly competitive hardware and software market.

Apple (O:AAPL), Samsung (KS:005930) and Huawei are leading players in smart devices, with a wealth of experience, developed app ecosystems and deep pockets. Local player Ivi and others already offer TV streaming services, while Mail.ru (L:MAILRq), internet group Yandex (O:YNDX) and mobile operator MTS (MM:MTSS) all have smart speakers on the market.

In June, Sberbank and Yandex - known as Russia's answer to Google - said they would stop working together on joint projects, including e-commerce venture Yandex.Market and payment service Yandex.Money, with non-compete agreements expiring in the third quarter, potentially putting the two in direct competition.

LIFE BEYOND BANKING

While Sberbank's diversification drive could carry risks, analysts say it has become increasingly difficult for banks to make money in Russia, where the key interest rate is languishing at a historic low of 4.25%, while rates are negative in some of their European markets.

BCS Global Markets analyst Elena Tsareva said banking was becoming lower margin and more regulated, and that it was being disrupted by new, nimble players such as online lender Tinkoff, which Yandex is in talks to acquire.

Against that backdrop, it makes sense for Sberbank to move into new areas, Tsareva said.

"How do you earn money if you do banking business only?" she added.

'We're a tech company': Russia's Sberbank bets big on strategy shift
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Alexander Popov
Alexander Popov Sep 24, 2020 5:16AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Transition from banking to monkeying.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email