Internet Banking Rank 2014

Researching and rating the effectiveness of internet banks in Russia for private individuals

Introductory ReportАpril 2014

Internet Banking Rank 2014Introduction

Internet Banking Rank 2014 is the third wave of annual research into the effectiveness of online banking services for private individuals. It is conducted by the research agency Markswebb Rank & Report.

Effectiveness of online banking is defined here as the degree to which online banking satisfies user needs.

The study tracks two main performance parameters:

1) Functionality, i.e. the range of financial issues that a client can resolve through their bank's online banking system.

2) Convenience, i.e. clarity and user-friendliness of the online banking experience for the client.

The study analyzed 32 online banking systems operating in Russia.

Purpose of the study: to improve the overall quality of remote banking in Russia.

Research methodology: - desktop research of online

banking interfaces;- a series of usability tests;- questionnaires submitted to

banking specialists.

Key findings:

• The best overall online banking experience was provided by TCS Bank (Tinkoff Credit Systems Bank), which scored 76 out of 100 possible points measuring overall efficiency.

• TCS Bank also came out on top with respect to functionality, earning an AAA rating thanks to its high level of information and payment capabilities, as well as opportunities to manage banking products and services.

• CBM Online (Credit Bank of Moscow) and Alpha-Click (Alfa Bank) were found to provide the most convenient online banking experience, netting 3.8 points out of 5 for ease of use.

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Internet Banking Rank 2014Geographic distribution of users of internet banks

In Russia, 15.4 million* people use online banking, accounting for 55% of all active internet users aged 18 to 64 who live in Russian cities with a population of 100,000+.

Online banking achieves most substantial market penetration in Moscow: 63% of internet users in Moscow have access to at least one online bank.

As the size of the city decreases, so does the market penetration of internet banking; however, the difference between large and small cities is not very substantial.

* Out of 28.3 million daily internet users, as given by e-Finance User

Index 2014

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Percentage of internet users who use online banking, by city of residence:

Moscow St. Petersburg Other cities with pop. >1

million

Cities with pop. between

500,000 & 1 million

Cities with pop. between

100,000 & 500,000

63%56% 57% 54%

49%

Internet Banking Rank 2014Who uses online banking?

53% of all users of online banking in Russia are women.

The median age of people who use online banking is 35, with 50% of the users being younger and 50% being older.

That said, for all age groups under 35, women are the more active users of online banking. Among users over 45, it's the reverse: the more active users of online banking are men.

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Percentage of internet users who use online banking, by age groups and gender:

18-24 25-34 35-44 45-54 55-64

40%

59% 59%54% 53%

46%

64%60%

47%51%

MenWomen

Internet Banking Rank 2014How much do customers of internet banks earn?

The largest group of online banking customers (38%) are people of moderate means, with incomes between 20,000 and 50,000 rubles a month. People with higher income (over 50,000 rubles a month) make up only 19% of online bank customers. Almost half of them (43%) are lower income earners.

The market penetration of online banking into overall internet audience grows noticeably as personal income increases, but peak penetration is among those earning 50k-100k rubles a month. Better-off Russians are more reluctant to bank online.

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Percentage of internet users who use online banking, by monthly income per single family member:

Under 10,000 rubles

10,000-20,000 rubles

20,000-50,000 rubles

50,000-100,000 rubles

100,000 rubles or more

40%

51%

59%

71%

63%

Internet Banking Rank 2014Frequency of use of internet banks

More than half of those who bank online use two or more internet banks, which allows one to evaluate and compare the consumer qualities of different services.

Almost half of current customers of internet banks started banking online in 2011-2012. Currently the customer base of internet banks grows by about 15-20% a year.

54% of online bank customers use them at least once a week.

Distribution of internet bank customers by number of internet banks used:

Distribution of internet bank customers by length of use:

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47.0%

28.3%

24.7%

1 internet bank

2 internet banks

3 or more internet banks

15.4%

45.6%

23.7%

14.6%0.6%

Less than a year

1-3 years

3-5 years

More than 5 years

Difficult to say

Internet Banking Rank 2014Popular online banking systems

The most popular internet bank in Russia, significantly ahead of the competition, is Sberbank Online, which is used by 3 out of 4 online bank customers. Sberbank Online also has the largest share of exclusive users: 46% of its customers do not use any other internet banks.

The combined customer base of internet banks Alfa-Bank, Bank VTB24, Russian Standard Bank and TCS Bank comprises 38% of all online bank customers in Russia. These online banks, together with Sberbank Online, account for almost 90% of the people who bank online. These services, therefore, are the ones that shape the public's opinion about online banking, as well as consumer habits and expectations.

10 most popular internet banks, by share of all internet bank customers:

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Internet bank %

Sberbank of Russia 73,6%

Alfa-Bank 15,0%

Bank VTB24 14,1%

Russian Standard Bank 7,8%

TCS Bank 5,6%

Svyaznoy Bank 4,2%

Home Credit & Finance Bank 4,1%

Raiffeisenbank 4,1%

Promsvyazbank 3,0%

Bank Uralsib 2,8%

9 out of 10 internet bank customers in Russia use one of these five systems

Internet Banking Rank 2014Tasks performed via online banking

Customers most commonly use internet banks to view their account statements and transaction history.

Three quarters of internet bank customers make at least one payment transaction through an online bank every month. The most popular transaction categories are paying for mobile communications, internet, making inter-account transfers within the bank, and making utilities payments.

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Operations performed by internet bank customers over the course of a month:

Viewed account statement (transaction history)

Viewed amount remaining in account/on the card

Paid for mobile services

Transferred funds between different accounts within the bank

Paid for utilities

Acquired bank details

Transferred funds to another client of the same bank

Paid for purchases made in online stores

Transferred funds to a client of a different bank

Paid taxes

Paid traffic violation fines

Bought/sold foreign currency

76%

64%

34%

29%

20%

17%

17%

16%

8%

7%

4%

2%

Internet Banking Rank 2014Differences between "newbie" users and experienced users

Online banking as an experience is highly dependent on the user's level of familiarity with the process. Among those with less than a year's experience with online banking, only 22% log into an online bank several times per week.

Among customers with 3 or more years of experience, there's a marked increase: 45% log into an online bank several times per week. The percentage of those who log into an internet bank once a month or less over 3 years of use drops from 20% to 7%.

Transaction activity also increases in proportion with experience. 1-2 years after signing up for online banking, 20% of users choose to pay their utility bills online versus 7% of those who used online banking for less than a year. For inter-bank fund transfers, the numbers increase fourfold: 8% versus 2%.

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Payments performed via online bank over the course of a month, by user experience:

Mobile bills Internet Utilities Purchases in online stores

TV Landline phone

Taxes Traffic fines Documentary stamp taxes

24%

13%

7% 8%6% 7%

4% 3%0%

35%

26%

20%

14%15%

13%

7%

3% 2%

31%

27%

21%

16%17% 16%

8%

4% 3%

less than 1 year 1-3 years more than 3 years

Internet Banking Rank 2014Research Methodology

32 of Russia's largest internet banks were chosen for the survey:

- 24 online platforms for largest retail banks as measured by total amount in consumer loans and private deposits in 2013.

- 5 internet banks not in top 24 by size of retail business but which placed near the top in the Internet Banking Rank 2013 study.

- 3 internet banks added upon request of the banks themselves.

Markswebb Rank & Report researchers had bank cards issued in all participating banks, signed up for online accounts and conducted test operations.

Each internet bank was evaluated using a checklist of 200+ criteria describing functionality, various elements and characteristics of the interface responsible for ease of use, and other criteria that determine the

consumer qualities of internet banks.

To evaluate ease of use, a series of usability tests was conducted involving real online bank customers. All in all more than 50 people took part in the testing process, each one working in turn with three different internet banks to performing a series of typical tasks.

To confirm some of the special characteristics of online bank operations, Markswebb Rank & Report conducted a selective survey of specialists in charge of remote banking services in Russian banks.

On the basis of the data collected from the checklists, observations of participants during usability testing, subjective evaluations by the participants, and questionnaires given to bank employees, Markswebb Rank & Report specialists graded functionality, usability, and overall

effectiveness of online banks.

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Internet Banking Rank 2014Evaluating functionality

Online bank functionality was evaluated according to 108 formalized criteria broken up into 6 categories:

1. Ability to receive information about one's accounts and cards.

2. Ability to make payments and transfer funds

3. Ability to manage bank products: make deposits, open and close accounts and debit cards, apply for loans, and prepay loans.

4. Ability to manage bank services: turn on/off text and/or email notifications, bank card insurance, changing phone numbers and other personal data.

5. Integration with federal and municipal organizations and service providers: obtaining information about payments due.

6. Additional opportunities for analyzing and planning personal

finances (personal finance management).

A grade between 0 % and 100 % was assigned within each group, based on the quantity and weight of the criteria satisfied.

The grades per group were then crosschecked against a table of general functionality evaluations:

• “C” - an out of date internet bank; lacks or underperforms even with respect to basic functions like providing information about account and cards, as well as transaction opportunities

• “B”, “BB”, and “BBB” - the internet-bank as an adequate instrument for keeping track of account information and making payments. The level of information and transaction capabilities is reflected in the number of letters in the rating, from one to three.

• “A”, “AA”, and “AAA” - the internet bank as an adequate substitute for a brick-and-mortar bank branch and/or contact center. Beyond offering information and transaction capabilities, it also enables the customer to control their account and cards, and offers additional services.

• “X” - innovative internet bank. An “X” bank offers its customers additional “non-banking” functions alongside all the capabilities offered by the “A” and “B”-level banks.

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Internet Banking Rank 2014Evaluating functionality

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The table of online banks functionality grades assigned on the basis of separate groups of criteria

Grade Information about accounts and cards

Payments and funds transfers

Managing products

Managing services

Integration with outside systems

Analysis and planning of expenditures (PFM)

C 0-25% 0-25% N/A

B 25-50% 25-50%“+” added to the grade if the average

grade for managing products and services is over 30%

N/A BB 50-75% 50-75%

BBB

75-100% 75-100%

A 25-50% 25-50% “+” added to the grade if the average

grade for integration with outside systems and analysis/planning of

expenditures is over 30%

AA 50-75% 50-75%

AAA75-100% 75-100%

X 50-100% 50-100%

Internet Banking Rank 2014Evaluating usability and effectiveness

General usability was calculated from the grades of 11 distinct aspects of usability, multiplied by their respective weights and added together.

Specific aspects of usability were graded based on:

• Satisfaction of formal criteria• Average subjective grades given

by participants in the course of usability testing

• Expert grades given by Markswebb Rank & Report specialists, assigned on basis of observing participants during usability tests.

Overall usability was graded on a scale ranging from 1 (completely lacks usability) to 5 (ideally configured for maximum usability).

Overall effectiveness was graded on a scale ranging from 0 to 100 points, as a measure of conforming to the ideal

bank with grades “X” for functionality and “5” for convenience.

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Usability aspects of internet banks and their weight in the overall evaluation of user-friendliness

Usability aspect Weight

1. Layout, interface design 8%

2. Registration, account recovery 12%

3. Logging into the online bank 12%

4. Home screen 8%

5. Navigating the bank 12%

6. Exporting the data 4%

7. Payments 12%

8. Repeating operations 12%

9. Personalized security settings 8%

10. Customizable interface 4%

11. Customer support 8%

Internet Banking Rank 2014Distribution of functionality and usability grades

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C

B

BB

BBB

A

AA

AAA

X

C+

B+

BB+

BBB+

A+

AA+

AAA+

1 2 3 4 51½ 2½ 3½ 4½

TCS Bank

Credit Bank of Moscow

Promsvyazbank

Svyaznoy Bank

Alfa-Bank

Probusinessbank

Bank Saint-Petersburg

Bank24.ru

Ural Bank for Reconstruction and Development

Sberbank of Russia

Moscow Industrial Bank

Bank VTB24

Russian Standard Bank

Home Credit & Finance Bank

Vostochny Express  Bank Bank Uralsib

MDM Bank

MTS Bank

Otkritie Bank

Nomos-Bank

OTP Bank

West Siberian Commercial Bank  Unicredit Bank

Bank Vozrozhdenie

Bank of MoscowRaiffeisenbank

Bank Trust

Rosbank

Bank of Khanty-Mansiysk

SKB-Bank

Gazprombank

Renaissance Credit

Marked in blue: Russia's top five most popular internet banks, as determined by Markswebb Rank & Report.

Functional capabilities

Usability

Internet Banking Rank 2014Rating internet bank effectiveness for private individuals

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№ Internet bank Grade

1 TCS Bank 76 (AAA/3,7)

2Credit Bank of Moscow

68 (A+/3,8)

3 Promsvyazbank 67(AA+/3,3)

4 Svyaznoy Bank 66 (A+/3,7)

5 Alfa-Bank 62(BBB+/3,8)

6 Probusinessbank 61 (AA/3,1)

7Bank Saint-Petersburg

59 (AA/2,9)

8 Bank24.ru 58 (A+/3,1)

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Ural Bank for Reconstruction and Development

55 (A/3,1)

10Sberbank of Russia

54(BBB+/3,3)

№ Internet bank Grade

11Moscow Industrial Bank

53(A+/2,7)

12 Bank VTB24 50(BBB+/3)

13Russian Standard Bank

49(BB+/3,3)

14Home Credit & Finance Bank LLC

48(BB+/3,2)

15-16

Vostochny Express  Bank

47(BB/3,3)

Bank Uralsib 47(BB/3,3)

17 MDM Bank 46(BB+/3,1)

18-19

MTS Bank45(BBB+/2,6)

Otkritie Bank 45(BB/3,2)

20 Nomos-Bank 44(BB+/3)

№ Internet bank Grade

21 OTP Bank 43(BB+/2,9)

22-23

West Siberian Commercial Bank 

40(BB/2,9)

Unicredit Bank 40(BB/2,9)

24Bank Vozrozhdenie

39(BB/2,8)

25-26

Bank of Moscow 37(BB/2,7)

Raiffeisenbank 37(BB/2,7)

27 Bank Trust 35(BB/2,6)

28 Rosbank 34(BB/2,5)

29Bank of Khanty-Mansiysk

33(BB+/2,2)

30 SKB-Bank 31(BB/2,3)

31 Gazprombank 29(BB/2,2)

32Renaissance Credit

24 (B/2,2)

Internet Banking Rank 2014Commentary

Out of 32 banks participating in the research, 15 have launched new or substantially improved internet banks in the last year.

The biggest leap was made by PSB-Retail of Promsvyazbank, Svyaznoy Bank, and the online bank of Bank Vozrozhdenie, all of which substantially expanded functionality and successfully updated their interface design. This allowed all three systems to improve consumer qualities and rise in the effectiveness ranking.

On the other hand, the new general “toughening” of the grading methods for functionality and usability compared to the methods employed in 2013 lead to lower grades for several of last year’s leaders:

• Alfa-Bank, due to its low scores on opportunities to control products,

• Bank24.ru and Bank Saint-Petersburg, which had their grades lowered in several aspects of usability,

• Russian Standard Bank (a new version of internet bank), due to its low score on accessing card transaction history

The launching of new online banks belonging to Bank Uralsib and Ural Bank for Reconstruction and Development turned out to be a mixed bag. Noticeable improvements of the most important aspects of usability, such as navigation, making payments, and general layout and interface design, were overshadowed by a lack of significant expansion of functionality and even a removal of certain functions available in previous versions of these internet banks.

For the majority of internet banks, the

average performance level remains around "BB"/"BB+" with respect to functionality and around 2.5 - 3.5 with respect to usability (about half of all internet banks investigated here fall within these parameters).

On average, the five most popular internet banks earn higher grades with respect to both functionality and usability.

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December 2013Sberbank of Russia

updates the design of their online bank Sberbank

Online and adds to it an PFM feature

December 2013Alfa-Bank adds an PFM function ("My Expenses") to the internet bank Alfa-Click

Internet Banking Rank 2014Most significant developments in the Russian internet banking sector, Spring 2013- Spring 2014

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April 2013Svyaznoy Banklaunches the new online bank iQBank (later renamed Qbank)

November 2013Raiffeisenbank launches a new version of the R-Connect internet bank

September 2013Rosbank launches a new internet bank for private

individuals

March 2014Bank Vozrozhdenielaunches a new internet bank for private individuals

March 2014Credit Bank of Moscow

implements PFM-service (Personal Finance Management) and

integration with SIS FMP (State Information System of

Federal and Municipal Payments) in its internet

bank

February 2014Otkrytie Bank introduces

a beta-version of the online bank Otkrytie

Online

October - November 2013Bank Uralsib launches a new internet bank for private individuals

September 2013Russian Standard Bank

launches a new internet bank for private

individuals

December 2013VTB24 introduces a new version of the internet bank Telebank

February 2014Ural Bank for Reconstruction

and Development introduces a new internet bank for private

individuals

October 2013Promsvyazbank introduces a new online bank PSB-Retail with an PFM feature

Internet Banking Rank 2014№1. TCS Bank

The Internet Banking Rank 2014 study determined that Tinkoff Credit Systems (TCS) confirmed its superior performance level, placing it at the top in the overall ranking: 

• "AAA" for functionality with its high level of information and payment capabilities, as well as extensive opportunities to manage banking products and services,

• 3.7 for usability - one of the best grades among Russian internet banks

Over the course of 2013 and the start of 2014, TCS Bank was upgraded with a feature allowing the customer to make payments directly into the budget of the Russian Federation (for instance, taxes); there was also a new opportunity to control a bonus program ("Bravo") and some minor design updates.

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Internet Banking Rank 2014№2. MCB Online

The Internet Banking Rank 2014 study determined that MCB Online confirmed its superior performance level, placing second in the overall ranking. MCB Online scores:

• "A+" for functionality, with its high level of information and payment capabilities, as well as extensive opportunities to manage banking services and average opportunities to manage banking products,

• 3.8 for usability - the best grade among Russian internet banks.

In March 2014, MCB Online added several features enabling PFM and integration with SIS FMP (State Information System of Federal and Municipal Payments), allowing the users to access information about unpaid taxes, fines, and other federal and municipal liabilities and services

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Internet Banking Rank 2014№3. PSB-Retail (Promsvyazbank)

The Internet Banking Rank 2014 study determined that PSB-Retail (Promsvyazbank) confirmed its high performance level, placing third in the overall ranking. PSB-Retail (Promsvyazbank) scores:

• "AA+" for functionality with its high level of information and payment capabilities and average opportunities to manage banking products and services,

• 3.3 for its average levels of usability

In October 2013, a new version of the PSB-Retail internet bank was introduced, featuring several new payment and information features (notably a feature enabling the customer to search through transaction history and card-to-card fund transfers). An opportunity to analyze personal expenditures was also added, along with some design upgrades.

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Internet Banking Rank 2014Trends and development issues for internet banking in 2014

1. Confronting the limitations of program platforms

Even the best Russian internet banks often suffer from interface solutions dictated by variously limiting aspects of program modules and platforms, which seem absurd from the point of view of the end user.

For instance, the interface dividing transfers between various bank accounts and card-to-card transfers (the user's primary options are to identify the transaction as "to oneself/to another person" and "within the bank/to another bank" rather than identifying the payee or the source of funds used), or the function allowing the user to save as a template payments made to cover SRTSI (State Road Traffic Safety Inspection) fines for traffic violations (absurd from the user's standpoint, since the reference I.D. for each payment, i.e. the number of the judgment entered on the administrative offense in question, will be necessarily different for each

payment).

Dealing with these limitations and creating interfaces from the standpoint of user needs, rather than platform capabilities and ease of development, is an important ideological shift that has prevailed over the past 2-3 years and will continue to do so in 2014-2015.

2. Overcoming scale limits in payment functions

Expanding payment options for users of online banking by adding new parties to the list of possible payments has reached its limit. Users do not understand what kinds of payment opportunities the online bank offers them when they look at a long, meaningless list of payees.This problem has become especially noticeable with respect to paying for federal or municipal services and/or utilities, in which the names of the payees are either, unfamiliar to users or contradict each other.

Further expansion of payment functionality will only be possible if the paradigm is shifted away from the customer choosing a "payee" and towards them choosing a "service" and augmented with a convenient non-linear search function for these services.

3. Developing services that help customers analyze and plan personal expenditures

3 of the 5 most popular online banks already possess PFM-functionality, which means that such features will likely spread quickly to other online banks. However, the real issue with implementing PFM widely lies not in the tool itself but rather in the lack of prudent money management culture within the population. This culture and the habits associated with it will not appear by itself just because some tools for analyzing and planning expenditures are suddenly made available.

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Internet Banking Rank 2014Trends and development issues for internet banking in 2014

4. Integration with federal and municipal services

Integrating internet banks with SIS FMP (State Information System of Federal and Municipal Payments), as well as other federal or municipal services and/or utilities streamlines payments into the budget of the Russian Federation and housing & community amenities, which is beneficial for both parties.

That said, the examples of integration currently presented by some of internet banks leave a lot to be desired both from the technical standpoint and from their comprehensibility to the consumer.

5. IT support

Lack of user-friendly references, guides, and user manuals contextually integrated into the interface is a long-standing problem with internet banking. This issue will

only become more pressing as online banks expand their functionality.

6. Internet banking as an e-wallet

Several Russian internet banks are already offering the option of adding cards issued by other banks to the user's account, enabling them to transfer funds and make payments from these cards.

Since competition between online banks is stiff, and their customer base has a high degree of overlap, one can expect that this function (primarily offered by e-wallets: money.yandex.ru, VISA QIWI Wallet, and others) will become an important element of fund transfer and payment activity between banks.

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Internet Banking Rank 2014A full report on the results of the survey

This document presents a brief overview of the Internet Banking Rank 2014 study and contains a general summary of its research into the effectiveness of Russian internet banking for private individuals.

A full report of the study Internet Banking Rank 2014 is a "handbook" for RBS managers, marketing managers, heads of development for RBS, marketing, and e-business for banks, as well as managers and administrators of electronic payment systems.

A full report of the study offers detailed answers to all major questions required for grasping the current level of development and trends within internet banking in Russia.

On a commercial basis, the agency Markswebb Rank & Report offers two options for acquiring the full report:

1. Standard report

The report includes a detailed comparative analysis of 32 Russian Internet banking systems, examples of common shortcomings, and best interface examples.

The main content of the report consists of comparative tables, charts, screenshots of interfaces, and analytical commentary.

2. Advanced report

In addition to the standard report, we offer the results of auditing the functionality and convenience of the Customer's own internet bank: assessing overall effectiveness, a defects report, recommendations for overall development of the internet bank, and evaluating specific

functions and interface elements.

The detailed report is a ready technical guide for beginning the process of improving the online bank.

Content, costs, and timeframes for the reports can be obtained from the agency Markswebb Rank & Report by e-mail from hello@markswebb.ru

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About the agency Markswebb Rank & Report

The research agency Markswebb Rank & Report specializes in research, auditing, and consulting services concerning the development of effective internet products.

The agency was founded in 2010. Its managing partners are professionals with many years of experience both on the market of internet marketing and in Russia's largest internet companies.

One of the agency's basic work principles is complete independence of its research and published ratings.

Agency Markswebb Rank & Report possesses three key areas of analytical expertise:

1. e-Finance - effectiveness research of online financial products: internet banking; mobile banking; electronic payment systems; and websites of banks, insurance

companies, and asset management companies.

2. e-Commerce - effectiveness research of online stores offering either physical or digital goods.

3. e-Media - effectiveness research of electronic mass media, as well as internet information and communication services.

R&A and consulting services on online banking products are one of the agency's key areas of activity and expertise. Markswebb Rank & Report conducts five regular annual studies for the banking industry:

4. Bank Website Rank – effectiveness research of online banks for private individuals

5. Internet Banking Rank – effectiveness research of online banks for private individuals

6. Mobile Banking Rank –

effectiveness research of mobile-access banks for private individuals

7. Business Internet Banking Rank – effectiveness research of online banking for legal entities

8. e-Finance User Index – consumer research in the areas of electronic financial and payment services.

The agency's clients include such companies as Alfa-Bank, B&N BANK, Bank VTB24, Promsvyazbank, Raiffeisenbank Bank, Sberbank of Russia, TCS Bank, FG Life, Afisha-Rambler, X5 Retail Group, Sports.ru, Tvigle Media, and others.

To learn more about the agency, visit markswebb.ru

or contact us: hello@markswebb.ru

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