Ecosystem banks: Forms, risks and methods of regulation

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), while countries like Russia start building ecosystems on the basis of large system-forming banks (BigBank), which unite businesses from various, often unrelated sectors and geographic locations. However, the banks entering the adjacent economic spheres may lead to cross-sectoral risks in economy, as well as to the growing additional risks for creditors and investors. The article tests the methodology of the Bank of Russia. We assess the risks associated with the formation of above-limit dead assets in the banks' returns, which may threaten the financial stability 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, Sberbank PJSC, VTB PJSC, and Tinkoff Bank PJSC. Research findings show that: the development of ecosystems based on a system-forming bank as a core institution may lead to high risks for investors (creditors) and significant risks to the financial stability of the national economy; large Russian banks inherited from the Soviet economy an excessive amount of dead assets in the form of capital assets, non-core property, investments into non-financial institutions and investment funds, as well as other assets which do not imply refund claims; no one of the large Russian banks is able to regularly increase a secondary capital out of profits in order to neutralize both the stress-sectoral and additional risks in their activity; in Russia, ecosystems should be built relying on modern fintech companies, while a digital bank should play a merely auxiliary role, but not a dominant one.