As of March 1, foreigner messenger services such as Microsoft Teams, Discord, WhatsApp, and Telegram have banned the provision of financial services in Russia. In response, Russian state-owned bank VTB is creating a digital bank within mobile messaging app VKontakte.
By using the Vkontakte app, customers will be able to make certain bill payments, money transfers, and even mobile phone top-ups.
Deputy President and Chairman of VTB’s management board, Anatoly Pechatnikov, said during a briefing:
“VTB is focused on developing digital channels and alternative formats for servicing clients. The development of our own technology is especially relevant in the context of geopolitical risks and international restrictions.”
Financial Implications
Russia’s invasion of Ukraine has had large scale consequences and continues to rattle its financial sector.
CNN reported that Sberbank, a leading Russian lender, lost close to 80% in net profit in 2022. German Gref, CEO of Sberbank said that 2022 was “the most difficult year.” Russia’s second-in-line bank, VTB, has also struggled.
Furthermore, Russia’s central bank also warned of “systemic risks” within the banking sector, creating a domino effect, as lenders struggled to turn a profit.
The country was also hit last year by a series of financial events as the ruble lost 25% of its value, a record low against the U.S. dollar. Then the Russian central bank racked up the interest rates to 20%, more than double than normal, and the Moscow stock exchange had to close its doors for the day.
