President of Russia Vladimir Putin: Ms Nabiullina, to begin with I would like to hear your assessment of the state of the national banking system, the financial system. I know that later on you would like to tell me about new technology and other aspects of your current work. Go ahead please.
Governor of the Central Bank Elvira Nabiullina: The banking system and the financial system as a whole are stable. In terms of key indicators of profitability and soundness, we have reached the 2014 level after the fairly difficult 2015 and 2016.
Lending is gradually growing. Consumer lending services are already posting good growth rates, and lending to non-financial organisations, the real economy, is starting to increase.
Banks have accumulated profit, which is a source of capital. Banks need capital to develop lending. We hope, and our forecasts show, that lending is expected to grow steadily.
We are witnessing new trends in the banking market. I wanted to tell you about financial technology. Technological progress is important in all areas, including finance. We are already witnessing that this is significantly changing both the business model of banks and relations with customers.
Many financial services are provided remotely. We see that in the past two years online payments increased 1.8 times. For instance, payments from mobile telephones increased by 90 percent.
E-commerce is on the rise. Russia is in no way inferior to other countries in terms of the financial technology development levels, and even surpasses them in some respects. For example, mobile banking applications are estimated to have one and a half to two times the functionality as those of our European colleagues.
Of course, the development of financial technology poses several challenges for the Central Bank as a regulator. Developing the infrastructure is the first. Protecting citizens' rights when using financial technology is the second. Defending against cyberattacks is, of course, the third.
I wanted to say a few words about financial infrastructure, because numerous legislative initiatives are being discussed now. Importantly, we do not want to find ourselves in a situation similar to the one three years ago when our access to financial markets was limited, and we had to urgently create a nationwide payment card system and a reinsurance company, as well as to develop our own rating industries.
In financial technology, we also need to build a national infrastructure which will allow us to move forward building on our own foundation. First of all, this concerns the remote identification system, and the legislation is being amended accordingly. We believe this is important, because people want to obtain services regardless of where they are, at any time of the day, and without having to go to offices.
There should be a remote identification system in place, including on the basis of biometric data. We can see some banks beginning to develop this system. However, we believe it should be a single state system with protected personal data and the ability to exchange information, so that everyone could develop this technology, not just major banks or big players, but smaller participants as well.