Innovation Insider towards SG’s North Star. Let's talk with Alexei Lola about the transformation of the Retail Banking Business in Russia

SG is present in 62 countries, driving innovation for our customers by unleashing the collective intelligence of our 138,000 colleagues is an adventure every day! Time to meet our innovators leading the transformation of our businesses and creating new business models. Let's stop in Moscow with Alexei Lola.

I first met Alexei in London in 2018 for our digital deep dive. We had dinner together where I discovered Alexei was no less than the Nik Storonsky of Societe Generale. After a career in Cybersecurity, he moved to Products & Marketing, then onto Digital and at the beginning of this year, Alexei was appointed head of Retail of Rosbank, one of Russia’s leading banks (1.5 million customers).

Alexei, could you please tell us about the changes of Rosbank under your leadership?

When I joined Rosbank back in the Q2 of 2017, our digital channels ranked outside of the TOP-30, only 20% of customers used digital channels and our digital sales were close to zero. It was clear that in such a competitive market, we could not survive with such little digital maturity.

To start the digital transformation, we had to reengineer all touchpoints at any stage of the funnel: Public -> Prospect -> Customer -> Loyalist.

Public layer: the key channel for people, who are not yet customers or even prospects, is our website. 3 years ago, our website was very outdated from both a technology perspective and UI/UX. In addition, it was more of an informative resource about Rosbank rather than a sales tool. We built an in-house team, which in 1 year created a new website from scratch – a new modern technological stack, outstanding UI/UX. As a result, in 2019 our website won 1st place in 2 awards as best website for financial markets in Russia. The number of unique visitors almost doubled and the share of newly acquired customers via the website grew from 16% in 2018 to 45% now.

Prospect layer: while it is great to have a modern website it is not enough to differentiate on the market. Most banks allowed prospects to just fill in an application for a call back and then sent a prospect to their branch.

Imagine a situation where you want a 15,000 euro consumer loan – you visit a great website with cool UX, a consumer loan page says that the rates are 5% to 15%, then you fill in a short application, later you receive a call from a call centre which asks you some more questions. Finally, you visit a branch where after a 30-minute process, you’re told either “Sorry, you are rejected” or “You are approved, 5,000 euro”. Quite common customer journey, isn’t it?

I wanted to change this experience completely. We built a digital sales tool, which is integrated into the website and a credit conveyor that allows prospects to get a decision on any product (consumer loan, credit card, mortgage, and car loan) in 5 minutes (the whole process). Prospects just need to authorize with Gosuslugi ID (governmental electronic ID) and give permission on using their personal data stored in the governmental databases. It takes just a few clicks and all the magic happens behind the scenes – we pull prospect data from more than 30 external data sources, process it in the credit conveyor and make a decision in 50 seconds on average. It should be noted that achieving 50 seconds was also a quite challenging task since before we built the digital sales tool, our credit conveyor was making a decision in 5 minutes on average - OK for branches but infinity for digital. In addition, we were able to free up more than 50% of call center capacity, as we no longer had call prospects that are rejected. However, the most important thing is the value that the prospect gets – he can get 24/7 real-time personalized decisions, he knows whether he has been approved or rejected, he knows the concrete amount, he knows the concrete rate based on his risk profile. Yes, the last step is physical and you know what you go for and the origination process takes less time since all of the data is already in the system.

Customer layer: this layer is mainly about mobile banking – its servicing and sales capabilities. We focused a lot on catching up with the market in terms of mobile app functionality. From being outside the top-30 in 2017, we reached #5 for iOS and #6 for Android in 2019 and my ambition is to be in the top-3. This effort paid off – digital penetration grew from 20% in 2017 up to 62% now, we even got an award recently as the fastest digitally growing bank amongst >200 banks from all over the world. Digital penetration among new clients reached 85% now; this makes me believe that all of the customer base will reach 80% digital penetration by the end of 2021.

In 2019, we launched the digital cash loan with 10 minutes time to cash. In 2020, 30% of all cash loans are originated through this process and recently we made a decision that this process should be target one even for the branches – our branch employees help our customers to get the loan in their mobile app, it is a paradigm shift for the network from cashier model to advisory model. In our products range which are available for end-to-end origination you can find – savings accounts, term deposits, cash loans, refinancing (debt consolidation from other banks), life insurance, fraud insurance, and digital debit cards. Just a couple weeks ago we launched a digital credit card where customers can get a decision on card limit in just a few clicks, Visa/MasterCard token is instantly issued, and customers link it to Apple/Android pay – it takes just 5 minutes from wish to first transaction. These capabilities helped us a lot during the quarantine period as in April our digital sales share grew up to 42% for all core products.

Loyalist layer: digital loyalty has become essential for all mobile banking apps and we had to take this call. We built a special program “Everything is allowed”. On the mobile app, customers can manage how they get bonuses for transactions – it can be travel miles or cash-back. They may change it once a month, no need to have several banking cards. Collected travel-miles can be converted into flight tickets right on our app – the external service OneTwoTrip is embedded in the Rosbank app. If customers prefer cashback, we give them an option to choose which concrete categories he prefers – for example I use Taxi, Restaurants and Kids. The percentage of cashback grows as you spend more with Rosbank. In addition, we embedded external services that provides promos from hundreds of popular merchants. Customers that use “Everything is possible” generate 40% more NBI than others.

So, we have been transforming each layer (Public-Prospect-Customer-Loyalist) and I would say we are only 70% done with it, but it is already starting to pay off and I am quite optimistic that there is more to come!

Russia’s banking landscape is transforming very fast between Sberbank pursuing its platform transformation with its 100 million customers and TinkOff fast acquisition of 10 million customers on its banking as a lifestyle platform; What’s the key differentiator for Rosbank to emerge, are you working with start-ups to compete?

I think the fintech industry in Russia is quite different in comparison with Europe. There are many startups in Europe that aim to achieve disruption or add value in different parts of the finance world. Then many traditional large banks a constantly looking for success stories and try to acquire it to empower their market proposition. On the Russian market, disruptions come mainly from banks themselves – the best examples here are Sberbank and Tinkoff. They successfully managed to go way beyond traditional banking. For example, Sberbank embedded in its ecosystem an eHealth service, a movie streaming service, a food delivery service, a virtual telecom provider and many other things and all these can be managed from their mobile banking app. In the Tinkoff mobile app, beyond advanced daily banking operations, you can buy cinema tickets, order a taxi, book a table in restaurant, buy concert tickets and many other lifestyle things. It is not just these two banks; all other top banks are quite aggressive in innovations. Rosbank is mainly focusing on housing and mobility. These areas are our historical strengths and we want to maintain digital pioneering positions in these two areas.

Our Group Innovation and Digital strategy is focused on scaling-up AI, Open Banking and Open Innovation, what are your main achievements to date?

We made great progress and successfully managed to catch up with the market but at the same time, I understand that in order to be successful in 2023 we need to have an even better platform – more flexible, more reliable, and more secure. Therefore, we have started building a completely new mobile app platform Rosbank EVO (short for EVOlution). Its microservice architecture allows us quite fast to publish any banking services as well as integrate partners’ services in our front. Being fully cloud based, the platform can be flexibly managed in terms of capacity and performance. In addition, we have built a modern design system to significantly improve UI/UX. Rosbank EVO will fully replace the current app in the Q1 of 2021.

For example, we launched an AI-based engine for property searches – it helps our customers find the best living areas that fit their needs the most. Another example is our recently launched AI-based chat bot that I hope in the future will remove a significant workload from call centre staff. We are now about to start the project on implementation of data-driven personalization. It will be the cornerstone for digital sales boost, and we plan to implement the AI-powered technological platform of a fintech that analyses clients’ data in real-time, understands individuals’ financial behaviour, anticipating their needs and proposes the right product/service, which fit customer needs.

We see how PSD2 changed the situation on financial markets and we expect that the similar regulation act will appear in Russia in the near future. We already have good experience in API-integrations with our partners in mortgage and product aggregators. We designed the new mobile app Rosbank Evo in a way that we can easily expose any of our services via Open APIs and make partnerships with fintechs. I expect real business impacts from it in 2021 when Evo will be launched in full mode.

Where do you see Retail Banking in 5 years?

I believe that banking products will be more and more commoditized. This already happened with the telecom industry and I do not think that banking will be an exception. This means that we will step in the era of interface war – customers will choose the app which has the best UI/UX, they will manage 7 products of 3 banks in one app but the only bank which owns the app will have strong x-selling opportunity. For less tech-savvy people, branches will remain a very important channel, especially for complex products. For these people I think the winning bank will be the one which is the most humanized.

Alexei, you’ve embraced a very traditional role as head of Retail with a digital and cybersecurity background, how do you make it work?

I get this question quite often as nobody gets how a cybersecurity engineer can reach a head of retail position. I may sound quite banal, but I think the two main components of success are empathy and your team that you attract with your empathy. I used to work as a cybersecurity consultant at PwC in New York City and after coming back to Russia I logically continued my career in cybersecurity. I joined DeltaCredit bank (Rosbank mortgage subsidiary) as Head of IT security and started to do many activities beyond my area of responsibility. Why? Just empathy towards our customers – I truly believed that I could change the way mortgage is working and it is nothing about cybersecurity although it is quite important too. The top management noticed my effort and I was promoted from Head of IT security to Head of products and marketing. It was quite stressful as my knowledge about Products and Marketing was (let’s be honest) quite poor. I was not sure if I should make such a strange career shift. However, I had a very clear vision of what I wanted and where I wanted mortgage process to be in the future – I said Yes to this challenge and started gathering people who can help me get there. I can proudly say that our team built the first digital online approval process for mortgage in Russia and many other things that were pioneering for the market. This strange career move gave me a lot – I learnt that it does not matter what your background is! Keeping strong empathy, being enthusiastic and having like-minded people around is all you need to go! No need to say that my next 2 shifts – promotion to Head of digital in Rosbank and now to Head of Retail I took without any worries.

By the way, just last week we originated a mortgage for a customer from Singapore who bought an apartment in Moscow without single visit of Moscow – Amazing! We keep changing the mortgage market!

3 key words to describe yourself?

Enthusiasm, Empathy, Vision

Thank you Alexei! If you enjoyed it, please like it or Share it! 

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