Sberbank: A Digital Bank That Lacks A Digital Strategy

Sberbank (OTCPK:SBRCY) continues to increase its presence in the Russian tech sector with mixed intermediate results. In an effort to have it all, the bank faces numerous issues with products and services it develops. It seems that the transformation of Sberbank to a tech company won’t be as smooth as the bank imagines.

A Wannabe Tech Giant

Sberbank said it had signed a non-binding agreement with Gazprombank on the purchase of a minority stake in MF Technology, which is a shareholder of Mail.ru Group. The transaction is planned to be closed before the end of the year after obtaining government approvals.

Gazprombank owns a stake in Mail.ru through a joint venture MF Technologies, which also includes MegaFon, Alisher Usmanov’s USM Holdings, as well as Rostech. Gazprombank has 35% in the joint venture. In total, MF Technologies has 58.87% of the voting power. The share of Gazprombank, therefore, is 20.58% of the voting shares of Mail.Ru Group.

The approximate transaction price may be about $170 million. For Sberbank, $170 million is not a significant amount, it is only about 1.3% of net profit for 2018 and there should not be a significant impact on financial results for 2019. At the same time, participation in Mail.ru should contribute to the development of the Sberbank ecosystem, at least in theory. In practice, things are a bit more complicated.

According to the strategy of Sberbank approved at the end of 2017, by 2020, it should be transformed into a tech company and compete with Yandex (NASDAQ:YNDX), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) or Alibaba (NYSE:BABA). The bank is building an ecosystem in which it will own a technological platform where it aggregates producers of goods and services form the best offer for them based on an analysis of the behavioral characteristics of customers.

Sberbank’s ecosystem

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