Russian central bank’s digital head reports slow progress on national biometric system
Adoption of the unified biometric system instituted by the Central Bank of Russia (CBR) has been slow, surpassing 100,000 users near the end of 2019, nearly a year and a half after launching, according to an interview with CBR Deputy Governor Olga Skorobogatova in Euromoney.
Skorobogatova is considered a driving force behind the national biometric system, a national digital payment system, a regulatory sandbox, financial technology association and a blockchain platform, having been recruited from Societe Generale Russian subsidiary Rosbank to lead digital initiatives. She joined the central bank after Visa and Mastercard restricted services to some Russian banks and individuals following the annexation of Crimea in 2014, which raised fears in the country that it would be cut off from international payment systems.
The central bank was tasked with developing the national payment card system (NSPK), which began issuing cards in 2015. The payment system has reached 70 million Mir payment cards issued by December, 2019, and accounts for nearly a quarter of all payments in Russia, according to the report.
Last year, CBR launched a faster payment system (FPS) to provide inexpensive peer-to-peer payments for Russian retail bank customers. Online banking has become popular in the country, and the FPS is now supported by all banks.
Biometrics are too expensive for most banks in Russia to implement, however, according to Skorobogatova. She also says that in a market with multiple biometric systems, “customers will simply never move from one organization to another, because their biometric samples will be different due to different requirements. The Russian market needed a single, secure, high-quality platform.”
Promoting competition on a level playing field was thus part of the motivation for the system. Russians can now enroll their biometrics at more than 11,000 branches operated by roughly 200 different banks. Eventually, Skorobogatova says, the platform could be extended from individuals to legal entities, so that in two or three years it could ease opening accounts and other operations for businesses.
“It will take some time for biometrics to gain traction among the wider population because it is a novel concept for most people,” Skorobogatova tells Euromoney. “Nevertheless, we are absolutely sure that it is the right way forward.”
Skorobogatova also says in the interview that time has proven her right about the utility of blockchain in some financial services applications, but not others. She also says that Russian authorities do not believe in cryptocurrencies as a method of payment, but may consider enabling some uses of stablecoins, like Facebook’s Libra.