Irina Tkachenko: “Business has no other way but digitalization”

Deputy Chairman of the South-Western Bank of Sberbank, curator of the corporate investment business block Irina Tkachenko spoke about the trends of the southern business,the importance of state support and new digital opportunities for Sberbank

- In your opinion, how has the modern businessman changed recently? What fundamental differences can you name between business today and a couple of years ago?

- First of all, this is a change in traditional business models and strengthening of communications with the end consumer. Last year's experience of the pandemic showed that the most customer-oriented and flexible business remains on the market. To do this, today, entrepreneurs in the South of RUSSIA and the North Caucasus are increasingly using modern digital work channels and optimizing costs by outsourcing most business processes. At Sberbank, we see this as an example of the rapid development of ecosystem companies, with which every tenth of our clients is already working.

Secondly, the global trend towards an increase in the number of entrepreneurs, which is increasingly relevant for the South of Russia and the North Caucasus. Over the past two years, the share of start-up entrepreneurs in the world (the business has existed for less than 3 years) has almost doubled and amounted to 9.3% of the adult working population. And the total share of entrepreneurs, including the self-employed, is 14.4%, that is, every 7th economically active citizen is an entrepreneur.

Thirdly, business is getting younger. Today, every third student already has their own individual entrepreneur or LLC. The average age of our small business client is also on the decline. And a couple of years ago it was considered the norm to first accumulate capital by the age of 40, and then start with it. Now, with the development of financial literacy, young people are no longer afraid to look for investors in their startups and take loans for development in Sberbank.

“Today, the state pays great attention to the education and development of start-up entrepreneurs. Is Southwestern Sberbank integrated into this agenda?

— Of course, Sber, as a market leader, pays great attention to education and small business development. We have a successful program in partnership with GOOGLE to teach the basics of entrepreneurship, industry conferences and training seminars are held on changes in legislation and new state support programs. We also organize our own local meetings for our clients. Recently, the development of the agro-industrial complex and trading were discussed online, we are preparing a meeting on real estate and a large forum on tourism.

From the latest examples, I will also cite 3 SberBusinessLive conferences that we hold from March to June for regional businesses. We gather businessmen from a particular region and help them to “reboot”, increase their efficiency and grow in all indicators. The analysis is carried out with the participation of federal and local experts on real business cases: dentistry, children's center, restaurant business or cosmetics production. In total, these three events will involve more than 5,000 young entrepreneurs from the South of Russia and the North Caucasus.

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At the same time, Sber greatly simplifies the technical process of obtaining the status of an entrepreneur and working with clients, contractors, and government agencies. Now you can become self-employed directly in SberBank Online, register an individual entrepreneur or LLC in just one visit to the bank, and most transactions and processes can be carried out using a smartphone or tablet in SberBusiness. We recently launched the first free Do-It-Yourself package for the self-employed. All these services are intuitive and do not require special knowledge in accounting, finance or law. It is comfortable to work with them and concentrate on the strategic development of your business idea.

- What part of interaction with corporate business is accounted for by small business? Has the approach of small entrepreneurs to raise funds changed with the advent of the pandemic?

- Today, in the structure of our clients, about 90% are small businesses. Speaking in numbers, these are more than 286 thousand clients from dozens of industries and directions: from small workshops or family cafes to high-tech start-ups. Our managers work with each of them and we help each of them to choose the right development trajectory. As experience shows, we do it quite successfully. Every year, dozens of small businesses grow into medium-sized businesses. Last year, even taking into account all the economic difficulties, there were 68 of them. In total, in 2020, we financed small businesses for 71 billion rubles.

The pandemic has virtually paralyzed many important sectors of the economy: from catering and personal services to air travel and tourism. And it was the small business that was hit the hardest. Sberbank quickly reacted in this situation and was the first to propose its own restructuring programs. We were also the first to start lending to businesses under the 2% Salary program, and then we offered the Government directions for its improvement. As a result, in May 2020, Decree of the Government of the Russian Federation No. 696 (business lending at 2%) was issued. In the South of Russia and in the North Caucasus Federal District, during its operation, we have helped 14.5 thousand companies receive more than 19 billion rubles. And 90% of them are small businesses.

Therefore, last year we actually worked 24/7 with our clients to save their companies. Advised on new state programs, restructuring opportunities, and other areas. For example, we have successful cases of re-profiling from a fur trade to a mask sewing workshop, or traditional cafes became Dark kitchen (from the English "dark kitchen" - a restaurant where food is prepared only for delivery). We went to meet everyone in that difficult situation and actually helped to survive in the market. Another important part of our work also helped in this: Sber became the main operator of state support. In fact, 80% of the businesses that received it are our clients: those who already worked with us before the pandemic or came from other banks.

Today, the situation has generally returned to normal. We see an increase in business activity and a high demand for lending for business development. For our part, we additionally supported the business by lowering service rates in May and launching new digital products. For example, in the service sector, business cards with a soft loan for 100 days are in great demand. For our customers they are now free. Online loan approvals calculated using artificial intelligence technologies are growing rapidly. The decision can be obtained online in an average of 3-7 minutes. We issue such loans for more than a quarter in the general structure.

Also today we see the interest of small businesses with 30 non-financial services of the Sber ecosystem: they are increasingly using SberLogistics for cargo delivery, ordering CityMobil for night delivery of employees in public catering, checking counterparties through SberKorus and finding personnel on Rabota.ru. Since the beginning of 2021, there has been a shift in focus in favor of consulting products.

— How many entrepreneurs have used state-supported loans during the pandemic? What is the delinquency rate on these loans?

- 2020 has become an unusual, crisis year for everyone. We in the South-Western Sberbank have focused on helping small businesses. Because more than 1/3 of the small business market in 11 regions of the country needed our help. Assistance, both financial and quick and professional advice. In total, in 2020, Sber actively worked with ten state support programs for small and medium-sized businesses. But 3 of them became key.

1,824 interest-free loans were issued for the payment of salaries in the amount of 3.6 billion rubles. Restructuring was carried out under 11,154 loan agreements with a pledged amount of 26.5 billion rubles, incl. as part of the credit holidays, 8,566 loans with a debt of 13 billion rubles were restructured, and within the framework of the bank's own programs, 2,588 loans for 13.5 billion rubles.

And this year we continue this work within the framework of concessional lending at 3%. To date, more than 1,220 such loans have been issued for a total of 3.3 billion rubles. About 90% of recipients are small businesses.

From April 1 to April 15, under the terms of business lending in 2020 at 2%, 14,360 companies that retained their staff were repaid debts in the amount of about 19.9 billion rubles. I note that, contrary to initial forecasts, only 256 companies did not fulfill the conditions of this program, which is less than 2% of the number that received this type of state support.

Let me give a more understandable example of supporting the catering industry. According to our estimates, about 23,000 companies operate on the market and almost 40% are Sber's clients. Of these, 1,360 customers in the amount of about 1.5 billion rubles took advantage of state support measures under the OKVED “Activities of Public Catering Enterprises” in 2020. If we take into account that, on average, 8 people work in a cafe or restaurant, then we have helped save them more than 10,000 jobs.

— How has the approach to business lending changed during the pandemic? How much has the bank's loan portfolio increased or decreased? What is its dynamics?

“Even with a challenging past year, our corporate business portfolios have grown at a solid pace. By the beginning of May, the loan portfolio of legal entities exceeded 602 billion rubles, which is 62 billion more than in April 2020 (+12%). The liability portfolio of legal entities exceeded 314 billion rubles, which is 72 billion rubles (+30%) higher than the same period last year. Against the general backdrop of market contraction over the past few years, the client base is also growing: more than 326,000 clients work with Yugo-Zapadny Bank.

What did you grow up with? In the shortest possible time, we implemented the possibility of full online support for loans within the framework of state support: all stages from the application to the provision of funds without visiting the office. Over the course of the year, we continued to work on converting all of our key financial and non-financial products to digital: now they are all available in SberBusiness Internet Banking. In general, the very ability to do everything online during the period of lockdown and self-isolation turned out to be critical for entrepreneurs, and Sberbank had the resources and technologies to ensure this. The main driver of all these changes and innovations was our desire to support customers as much as possible during the pandemic. Preferential lending, services for organizing remote work for businesses, and much more were aimed at this.

With the help of ecosystem companies, we have also launched a line of special products and solutions for customers. These are testing for covid-19 from SberHealth, a free “hotline” for organizing remote work from SberResolutions, educational courses of the Business Environment that are relevant in times of crisis, and our joint project with Google — a free online business skills development program BusinessClass, in which 850 people became participants. thousands of people across the country, free electronic document management services from SberKorus and SberA.

While the vaccination of the population continues and all restrictions are not lifted, businesses need help, so Sber is actively involved in the development of new programs and measures to support entrepreneurs.

— Sberbank actively finances the construction industry in the South. What is the total volume of this lending area?

— Real estate construction financing remains one of the fastest growing sectors of Sber's corporate business. In the South and North Caucasus in 2020, the portfolio grew from 50.5 to 95 billion rubles. (by 88%), and for 4 months of 2021 - by another 23.8 billion rubles, amounting to 118.8 billion rubles.

The main driver of growth is the financing of residential real estate, incl. using escrow accounts. Our share in project financing of developers using escrow accounts for settlements under agreements for participation in shared construction in the first quarter of this year remains the leader.

— We have many large and small companies operating in the agro-industrial complex. Sber pays great attention to the development of its corporate portfolio in this area. What trends exist in this market today, and what forecasts can you give for its development?

- Today, a third of the total loan portfolio of the South-Western Bank - more than 180 billion rubles - falls on the agro-industrial complex. Here, the largest sub-sectors remain crop production (89 billion rubles) and trading of agricultural products (24 billion rubles), where more than 80% of exporters of agricultural products work with Sberbank.

If we talk about trends, then one of the fastest growing has become horticulture. According to statistics, already more than 70% of marketable fruits entering the wholesale and retail trade network of the country are collected in the Southern Federal District and the North Caucasus Federal District. The increase in production volumes is primarily due to the high rate of establishment of modern intensive orchards and nurseries. Sber has a unique expertise in this area. With the participation of the bank, more than 700 hectares of new orchards were planted in the Southern Federal District and the North Caucasus Federal District, storage facilities for almost 80 thousand tons of apples were built. Thanks to this, over the past 3 years, the share of provision with own horticultural products in Russia has increased from 52% to 61%. In industrial horticulture, Sber works with projects in Kabardino-Balkaria, North Ossetia-Alania, Karachay-Cherkessia, Ingushetia, Kuban, Stavropol and Dagestan.

We also see a growing interest in digitalization and robotization in the classical direction of crop and livestock production. 14 combine harvesters equipped with unmanned Cognitive Agro Pilot units are already operating in the fields of the South of Russia. By the end of the year, their number will grow to 50 units. By the way, Cognitive Agro Pilot is also available for purchase through leasing financing tools. This year, South-Western Sberbank concluded the first such deal in the country for the purchase of TORUM combine harvesters manufactured by Rostselmash. Another development is a cloud service from the Geomir company for the digitalization of agricultural production management. It remotely monitors the state of sown areas and the operation of equipment in the fields, systematizes and automates production information.

The digital service for livestock breeders - "Easy Solution" from Mustang Feeding Technologies - is based on artificial intelligence algorithms and analyzes 180 production indicators: feeding, MILK production, reproduction, disease - to improve work efficiency and identify the causes of deviations. He already works in more than 50 farms throughout Russia, including on the Don.

— Today, domestic tourism is actively developing and many are thinking about investing in this direction. Does Sber have a Development Strategy for this cluster and what examples can you give from recent major partnerships?

“We share high expectations for the 2021 tourist season and already see the prerequisites for a successful season. Even in the off-season, the flow of tourists to our regions continued to grow. Comparing the first quarters of 2020 and 2021, the turnover of acquiring in the tourism sector increased by 36%: from 16 to 22 billion rubles. Undoubtedly, Krasnodar Territory remains the key one for tourism. In the first quarter of this year, we recorded an increase in non-cash trade turnover in the hotels segment by 51%, in the restaurants segment by 52%, in entertainment by 36%, and in transport and air travel by 31%. In fact, the resorts of the Krasnodar Territory are increasingly approaching the status of year-round resorts.

At the same time, in the winter period and in the off-season, the regions of the North Caucasus Federal District appeared in the TOP-10, in which there are ski resorts in Russia (Krasnodar Territory + 21%, KBR + 18%, Dagestan + 18%, KRC + 10%). This indicates a growing demand for this type of recreation. And business, of course, is striving to enter this direction. Here we are actively working both pointwise with individual clients and recreational locations, and we participate in the development of large regional all-season resort areas.

We are attracted as experts, because Sber already understands this market well. With our participation, development strategies are being developed: both for the region as a whole and for individual resorts or recreational areas. For example, together with the Miracleon resort area in Anapa and Strategy Partners, a concept was developed for hotels operating all year round with a very high level of service that is not inferior to foreign counterparts.

Also in March, Sber introduced the "Tourism" analytical panel, intended for representatives of regional authorities and network industry clients. An analytical panel with deep data coverage on the SberAnalytics cloud platform helps to prioritize the development of tourism infrastructure and compete in attracting investments, assess the contribution of tourism to the regional economy and the potential to attract tourists, improve the tourism industry development strategy and monitor the effectiveness of measures taken.

In June, the Rostourism subsidizing program is launched to support the development of the tourism cluster. The goal is to subsidize the interest rate on new loans for the implementation of investment projects for the development of tourism. At least 50 projects are ready to apply for participation in this program in the territory of the South-West Bank.

— The transition to online has affected all areas of business, including the work of banks. In your opinion, is it possible for Sberbank to become completely remote? Is this even possible in the banking sector?

— The business itself is not yet ready to completely go into online interaction. In our regions of the South of Russia and the North Caucasus, this is especially noticeable, as customers more often choose a call to the manager, rather than communication with a robot or communication in a chat bot. Today, the bank office is becoming a “place of attraction”. And Sber, within the framework of the Strategy-2023, is transforming its offices for this task. This year we are opening our flagship offices of a new format in major southern cities.

— Sberbank has recently positioned itself as the core of the Sber ecosystem. Surely this approach is possible in large cities, where society is sufficiently developed technologically. But to what extent is building an ecosystem fully possible in small settlements - for example, in the republics of the North Caucasus?

— The meaning of our ecosystem is in the multiplicative development of the economy of a country, region or individual business. Sber has come a long way in digital transformation from a traditional state-owned bank to one of the world's banking leaders, having created such products and even entire markets as SberBusiness or P2P transfers by phone number. Now we have entered a new stage of development within the ecosystem, where the client with his daily tasks is at the center. And it does not matter at all whether he works in the center of Krasnodar or in a distant village in Dagestan. We are forming a unified digital system of services. If we talk about accessibility, then most of the operations and integrations with our ecosystem can now be carried out online by businesses.

Now we have become an ambassador of the digital agenda and help the regions to comprehensively solve the tasks of the Digital Economy national project. We do not offer individual products and services, but we build unique platform solutions that quickly and effectively improve the quality of people's lives and provide new opportunities for business development. There are more than 120 services in the Sber ecosystem - and objectively, no one on the market today has such opportunities to develop a unique product and scale of implementation.

For businesses, these are new synergies and partnerships, while Sber ecosystem solutions save time and money for end consumers of goods and services. We continue to develop urban infrastructure with the help of SberMarket and Samokat, open SBER EAPTEKA hubs for the development of the digital pharmaceutical market, implement SberHealth, Voice2Med services, an AI model for detecting lung pathology in healthcare, as well as the implementation of such important social projects as SberClass and voice robot consultants (for example, the Zalina voice robot operator in North Ossetia-Alania).

Moreover, our services also work for the development of private business. Entrepreneurs should solve truly important, strategic development tasks, and not engage in routine and micromanagement. All supporting functions can be taken over by Sber, which becomes a universe of services for any business tasks. SberSolutions can be used for bookkeeping. Another company in our ecosystem Rabota.ru will quickly and efficiently recruit staff. And SberKorus will check counterparties and introduce electronic document management. The main result of using all these services is the growing business of our clients.

— Recently, the ESG approach has become more and more relevant for business. Sber already lends to several such projects. What is the total amount of funds already received for key projects?

Social responsibility is not measured in money or financial statements, but it is already vital for business. Today, large companies largely depend on ratings, which means that the price of money will be lower or higher depending on the development of the country where you will do business. Therefore, non-financial reporting should be close to financial reporting. We are already one step away from the equivalence of these reports when, due to the lack of ESG, there is no access to funding.

And even the value of a business depends on ESG. If a business cannot operate and develop in this context, then, in fact, it will die. For the first time in history, there is a situation where human criteria are vitally built into the business.

Therefore, since 2020, Sber has been implementing its own ESG strategy and helping to develop Russian business in this direction. We have already identified more than 1,200 promising projects for the South of Russia and the North Caucasus. In the first quarter of 2021, 5 ESG transactions were completed for a total of RUB 2.2 billion. These are projects for laying APPLE orchards in the North Caucasus, as well as the construction, modernization and reconstruction of heat supply systems, treatment facilities and water supply facilities in the Rostov region.

- Thanks for the interview. In conclusion, let's briefly talk about the image of the southern entrepreneur of the future?

Entrepreneurs are courageous "engines" of the economy who are not afraid of risk and huge responsibility. At the same time, they are increasingly using digital solutions, developing social projects and spending a lot of time