Ecosystem banks:Forms, risks and methods of regulation

Abstract

The 2019–2021 pandemic has cardinally reshaped the global economy. New platform models and ecosystems related to new technologies radically changed the rules of business organization, functioning and regulation.Business ecosystems in advanced countries are usually associated with high-tech companies (BigTech), whilecountries like Russia start building ecosystems on the basis of large system-forming banks (BigBank), whichunite businesses from various, often unrelated sectors and geographic locations. However, the banks enteringthe adjacent economic spheres may lead to cross-sectoral risks in economy, as well as to the growing additionalrisks for creditors and investors. The article tests the methodology of the Bank of Russia. We assess the risksassociated with the formation of above-limit dead assets in the banks’ returns, which may threaten the financialstability of a bank and the banking system as a whole. While modeling the assessment of cross-sectoral risks,we used the official data on three large Russian banks actively developing their ecosystems, namely, SberbankPJSC, VTB PJSC, and Tinkoff Bank PJSC. Research findings show that: the development of ecosystems based on asystem-forming bank as a core institution may lead to high risks for investors (creditors) and significant risksto the financial stability of the national economy; large Russian banks inherited from the Soviet economy anexcessive amount of dead assets in the form of capital assets, non-core property, investments into non-financialinstitutions and investment funds, as well as other assets which do not imply refund claims; no one of the largeRussian banks is able to regularly increase a secondary capital out of profits in order to neutralize both thestress-sectoral and additional risks in their activity; in Russia, ecosystems should be built relying on modernfintech companies, while a digital bank should play a merely auxiliary role, but not a dominant one