Landscaping Report: Financial Inclusion in Russia
The Russian Federation presents a picture of rapid and accelerating change in the financial inclusion landscape for lower income Russians in the years since transition to a market economy. Since 2008, when CGAP conducted its first research on the state of innovations in financial inclusion in Russia, progress has been significant. In certain aspects – such as the penetration of bank branches per 100,000 adults – Russia has now moved ahead of some highly developed countries. Therefore, the issue of financial inclusion in Russia has its own specifics – more typical, perhaps, for developed countries that have all the basic prerequisites for financial inclusion. For example, for city dwellers, particularly in larger cities, access to a range of financial services has become more commonplace, with uniquely Russian innovations in retail payment services emerging to make usage of such services increasingly convenient for customers. Yet, for residents of smaller cities, towns and rural areas, access to safe, high quality financial services remains a far greater challenge. Here – and particularly in the most remote and sparsely populated areas, which are also generally among the poorest – innovations in retail payments have potentially a more critical role to play, not only enhancing convenience for customers transacting with financial service providers, but making it possible at all.
- Section 2 presents an overview of the demand for and usage of formal financial services in Russia with a particular emphasis on the characteristics of the most financially excluded categories and reasons for continued financial exclusion. This section also covers several important initiatives vis-à-vis the demand side – on financial literacy and education and financial consumer protection, including the current and planned Financial Ombudsman institution.
- Section 3 presents today’s picture of the supply of financial services in the country and covers a range of providers – the traditional banking sector, the sector of microfinance organizations and credit cooperatives (which has existed for about two decades but only recently was brought under a regulatory and supervisory framework), and the newly formed and rapidly growing sector of payment services providers which are at the forefront of technology innovation in terms of the delivery channels. The section explores the role and potential of each provider type in advancing financial inclusion, as well as key constraints they face.
- Section 4 covers issues related to the infrastructure and other initiatives with relevance for financial inclusion – the Universal Electronic Card project of the Russian Government, the infrastructure for credit reporting, the Russian Financial Inclusion Strategy and Russia’s collaboration with the Alliance for Financial Inclusion.
- At the end of each subsection, the authors share observations on the key challenges and opportunities with respect to the topics covered and suggest recommendations for follow-up activities.
- The report concludes with a summary of the key opportunities and challenges outlined for each subsection (Section 5).