DIGITAL TRANSFORMATION DIGITAL TRANSFORMATION
VTB underwent rapid digitalisation in 2020. Thanks to actions and initiatives taken in the second half of 2019 and the well-coordinated work of the entire team, VTB was able not only to respond to the unprecedented challenges of the past year but also to bolster its leadership position in the market as a whole. In accordance with the Development Strategy adopted in April 2019, VTB Group set itself rather ambitious goals for the period up to 2022 and outlined key development areas. All of them are connected in one way or another with the technological transformation.
In accordance with the Development Strategy for 2019–2022, the following key priorities for the Bank’s technological development have been identified:
- a reliable and flexible platform;
- a new production model and new competencies;
- internal efficiency.
To fulfil our established goals and objectives, 12 digital transformation programmes got under way starting at the end of 2019 and continuing throughout 2020. By the end of 2020, we had achieved the following important results in terms of the Bank’s technological development:
- the number of VTB Online users increased by 1.6 million (to 10 million) during the year; the share of VTB Online sales in the Retail Business increased from 15% to 25% in 2020;
- the share of mortgage applications submitted through digital channels increased threefold (from 5% to 15%), and the share of loans issued without a visit to a Bank office increased from 10% to 25%;
- there was a fourfold reduction (to four days) in the time needed to develop a pre-approved offer for key products through the new retail credit conveyor, and the average limit for pre-approved loans and credit cards increased by 18%;
- express loans and express guarantees for small and medium-sized businesses were introduced based on the technologies used for the credit conveyor;
- there was a 24-fold reduction (to 20 minutes) in the time needed for an individual entrepreneur to open a current account thanks to the optimisation of verification on the part of the back office;
- the productivity of remote banking services for legal entities in terms of payment orders for customers and the provision of statements increased more than tenfold thanks to the implementation of the platform and the reduced complexity of the processes involved;
- the time needed to review applications for a number of large-business products was reduced to 85 minutes thanks to the creation of a technological basis for the digitalisation of our loans business;
- the use of artificial intelligence in 2020 enabled us to earn RUB 1.2 billion (137 models are in use in the business processes of all global business lines). Data analytics platforms (a graph platform, a geo-platform, and a model development and application platform) were introduced. For example, the geo-platform enables the Bank to make a variety of forecasts and receive data analysis for various objects, connections and parameters in the form of interconnected information blocks (graphs). With its help, it is possible, for example, to calculate with a sufficiently high degree of precision the prospects for the development of a land plot, the optimal cost per square metre of real estate and the level of demand. A platform for natural language processing (NLP) became available in our VTB Online mobile application at the end of February 2021; the platform is needed for the introduction of smart chatbots and voice assistants.
Building technology platforms
We achieved the results described above thanks to intense work on the creation of technology platforms. The following projects were implemented in 2020 as part of our efforts to build technology platforms:
- the first microservice platform in Russia for complex automation of all channels of communication with customers was developed; the following services were introduced on the platform:
- a new mobile bank for the Retail Business, which was included in ratings of the top five mobile financial applications;
- the first products for MSB customers in the context of remote banking services (opening and maintaining accounts, cash transactions, currency control, deposits and others);
- a platform for open application programming interfaces (open APIs) was introduced for integration with the Bank’s partners in developing the partner network;
- a qualitative leap was made in terms of the reliability and availability of systems – system availability increased to 99.87%, including scheduled maintenance work; the number of crashes was reduced by more than half, and the time needed to correct them was also reduced by more than half;
- in the context of the unification and simplification of the IT landscape, all Bank branches were migrated to a single centralised banking IT system (Krasnodar, Novosibirsk, St. Petersburg, Voronezh, Khabarovsk, Yekaterinburg, Moscow and Samara);
- data processing centres (DPCs) are undergoing a large-scale, comprehensive upgrade programme.
New management model and production process
Successful work on the Bank’s technological development is based on a new model of programme and project management and a new production process, thanks to which:
- a platform for automating the development and introduction of technology products was created, and the working rhythm between the business lines and IT in cross-functional teams was synchronised with deliveries of changes every two weeks;
- the time to bring new technological products to market was reduced by 87.5% (from 240 to 30 days);
- a new organisational model for VTB Bank was developed in accordance with the target IT architecture;
- through effective procurement management, we managed to secure significant additional discounts, which made it possible to meet excess business needs and also to take into account the changes associated with the spread of COVID-19 without increasing the budget.
As a result of the acceleration of the Bank’s technological transformation and the successful implementation of technological programmes in 2020, the reliability of the Bank’s IT systems increased considerably (from 96.74% to 99.87%), and the number of IT system crashes was reduced by more than half, and the time needed to recover from crashes decreased by 58%. At the same time, the total number of changes in our IT systems increased over this period by 57%, and the time-to-market indicator (time for displaying changes) decreased by 87.5%.
In addition, the Bank developed and strengthened the architectural function that controls all IT systems, namely:
- the Bank developed its target application architecture for the period to 2022;
- a decommissioning plan was approved for 100 untargeted IT systems;
- the entire IT landscape was brought under full architectural control with a focus on omnichannel and credit conveyors;
- the platform architecture was developed;
- the controllability and transparency of architectural processes were improved;
- a qualitatively new process for making architectural decisions at all levels (strategic, stream and team) was built; proactive monitoring of the achievement of the target architecture was introduced.
The key elements of the new production operations for developing technology products were successfully implemented. More than 170 streams were generated with assigned responsibility for business and technological results. About 1,250 cross-functional teams were created in streams, employing more than 12 thousand participants working according to the agile methodology. An effective monitoring and reporting system was created with more than 100 dashboard metrics (available online to monitor the work of streams and teams). A target platform for the automated development and testing of technological products (DevSecOps) was introduced. As a result, a single operational rhythm was created for all of VTB Bank, which ensures synchronisation in achieving the Bank’s strategic goals.
Data management development strategy
In the context of the implementation of the data management strategy, the following results were achieved:
- reducing the cost of ownership by approximately RUB 0.4 billion per year thanks to the introduction of a new platform for archiving information in the main data warehouses;
- the performance of data warehouses doubled thanks to their migration to state-of-the-art platforms;
- online analysis of business performance was enabled through the introduction of an operational data warehouse for 20 of the Bank’s key systems;
- about 100 aggregated data marts were developed for use by the Bank’s global business lines and by global functional lines in the data platform.
The use of data models in VTB Bank’s business processes made it possible to achieve the following results:
- RUB 346 million in income was received in 2020 thanks to the use of data models; over a period of three years, the expected total income will be about RUB 10 billion;
- some 137 models were developed and applied in the Bank’s business processes (99 of which are joint models with the Retail Business; 23 – with the Medium and Small Business; and 15 – with the Corporate-Investment Business);
- the centralised platforms for the execution and management of data models were put into commercial operation;
- the process of purchasing and loading external data sources into Bank systems was centralised.
|Reliable and flexible platform||1||Omnichannel approach|| |
|2||Credit conveyor for retail clients|| |
|3||Credit conveyor for corporate clients|
|4||Unification of IT platforms||migration of all branches to a single centralised banking IT system completed|
|Internal efficiency||6||OpsNEXT|| |
|7||Paperless Bank|| |
|8||Introduction of ERP 2.0||unified personnel management system introduced in the SAP HANA in-memory database; fivefold reduction in the time needed for payroll processing|
|New production model and new competencies||9||New model for IT production|| |
|10||Advanced analytics lab|| |
|11||Data platform modernisation|| |
|12||Transition to the use of internal ratings for calculating credit risk (based on the internal ratings of borrowers)|| |
It should be noted that the Bank continues to file patents for its intellectual solutions on a regular basis. In 2020, the Bank received four patents:
- Method and system for validating complex data structures in an integrated microservice architecture with the visual display of results: this provides a way to verify the integrity and reliability of electronic data when working with customer data in the remote banking system. What makes this method unique is the breakdown of the process of verifying and controlling data into three independent parts:
- logic (verification rules).
- Automated system for the selection of combined loan offers: this solution reveals a number of advantages of the system and algorithms used for calculating loan offers in the credit conveyor. A combined personal product is selected for the customer that consists not only of banking products but also of non-banking products, such as insurance.
- Two patents for a set of pages for the graphical user interface for the My Smart City mobile application: as a design solution, the interface pages were patented – the interface is a state-of-the-art digital channel for integrated communication between the City, its residents and the Bank’s payment services.
An international application was filed in relation to an invention called the Decentralised Payment Service System. The system enables users to launch fast and instant payments, cross-border payments, loyalty programmes, etc.