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Sovcombank: What the Rise of Contactless in Emerging Markets Means for Big Tech

Contactless technology for payments has been on the rise for years, with the encouragement in light of the Covid-19 Pandemic only increasing its adoption.

The question remains as to how this boom in contactless has affected emerging markets. Someone who knows all about this is Alexey Panferov, who joined Sovcombank in 2015 as a member of the Supervisory board of PJSC Sovcombank, and since 2017, has been vice-chairman of the board.

Here, shares his thoughts on what the rise of contactless in emerging markets means for big tech.

Alexey Panferov, Deputy Chairman of the Management Board, Sovcombank

As the widespread administration of Covid-19 vaccines feeds optimism that social distancing will soon be relegated to the past, the popularity of contactless payments is expected to endure. The surge in contactless is an indicator of how the broader technology and financial ecosystem is evolving, and emerging markets are in the pole position, driving the transformation.

Contactless is a big trend, but it’s not a new trend. A rapidly rising number of Sovcombank customers were choosing contactless at the start of 2020, and that momentum surged during the pandemic as customers were drawn to payment methods that minimise physical contact and shopped online in record numbers while isolating at home.

The share of Sovcombank customers aged 45 and older exclusively using contactless tripled over the past two years, primarily due to increased use by older, married women. The share of married people who opt for contactless payments exclusively has grown to 77% of married men and 71% of married women, up from 71% of married men and 66% of married women in 2018. Young people are another Sovcombank demographic demonstrating rapid contactless uptake, driven by more favourable cashback options for payments made via near field communication (NFC)-enabled smartphones and the inclusion of more shops popular with this demographic being included in our instalment payment system, Halva.

One of the reasons for this explosive growth of contactless is the dynamic nature of emerging markets, which can create challenges but also opens opportunities for innovation. For instance, Russia is not highly dependent on the rest of the world and the Russian economy adapted very quickly after sanctions were levied in 2014, which equipped the country for rapid growth. And so, while Russia was deeply impacted by Covid-19, there was a significant innovation in response, resulting in a consistently moderate unemployment rate and once again, the country’s economy adapted very quickly.

A 2016 PwC report predicted that “growth in economic power within the emerging markets and their ability to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem, which will set the pace for markets worldwide.” This forecast was based on drivers such as a need for financial inclusion, more favourable regulations, and agility, given that financial institutions in emerging markets are less likely to be tied to cumbersome legacy infrastructures, freeing them to quickly embrace new systems.  The rapid growth of contactless is evidence that emerging markets are reaching – and exceeding – their potential to transform the payments space, a development that provides clues as to how the relationship between tech and financial will continue to evolve.

As emerging markets leapfrogged developments in mature markets and contactless payment use exploded, tech giants such as Google, Amazon and Facebook continued to disrupt the traditional banking model. It’s no secret that technology companies are already building their own ecosystems wherein banks and their applications are a key element. Initially, the discussion around tech companies’ efforts to make inroads into financial services was about how banks could compete with big tech, but now, there is a shift toward a hybrid approach.

Technology companies provide integrated delivery of services and a commitment to ongoing investment in new tech, while financial institutions bring to the table a deep bench of existing customers who already entrust the bank with money and sensitive data. Challenger banks are especially well-positioned to play a vital role in these evolving ecosystems, advantaged by a lack of legacy systems and a deep connection to a customer base that uses the bank specifically because of the advantages it provides. Our disruptive product Halva launched in 2017 we already have more than 20% of all retail shops in Russia within the system. Halva has shown significant growth in assets and net interest income in the retail business over three consecutive reporting periods, with huge potential for further expansion due to rising demand among customers for a buy-now/pay-later product.

Halva’s success story contains the elements of what will make a hybrid approach successful for both finance and tech companies – the service has carved out a place in the broader ecosystem while enabling Sovcombank to retain our connection with our customers, who choose Halva based on the range of advantages the card provides. By continuing to focus on meeting customer and purchasing needs, we remain an entry and decision-making point for customers planning to make a purchase. In turn, Halva has established its own unique ecosystem of partners and the various benefits they provide.

As big tech and banks jockey for position in the financial services market, the eager uptake of contactless payments by customers in emerging markets can provide some guidance into how to establish symbiosis, rather than competition.  By focusing on improving and innovating their specific functions, both technology and financial services can capitalise on their respective strengths while exploring the enormous potential of new partnerships within big tech’s evolving ecosystems.


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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