Russian banking sector concerned CBDC entry cost too high for small lenders: report

Experts warn that the high investment required to participate in the digital ruble platform could be prohibitive for small Russian banks, as it exceeds their annual technology budgets by several times.

The cost for Russian banks to participate in the Bank of Russia’s central bank digital currency platform appears to be extremely high for small lenders, as it significantly exceeds their annual technology budgets, Russian newspaper Kommersant reported, citing local industry participants.

According to their estimates, the cost of upgrading their systems, including automated banking and compliance software, will be between ₽120 million and ₽200 million rubles (about $1.3 million to $2.2 million). The problem for smaller banks is that “digital banking systems often come from multiple providers, making integration difficult,” said one of the sources familiar with the matter.

The Central Bank of Russia aims to offer digital ruble services to all banks by 2027, starting with systemically important institutions in 2025. The regulator believes that the timeline is sufficient for banks to integrate the digital ruble, noting that many large banks are already running pilot operations.

In early September, crypto.news reported that Russia’s banking giant Sberbank plans to begin operations with digital rubles for its customers in early 2025.

The Bank of Russia first introduced the digital ruble prototype in December 2021, and tests will begin in 2022. As of August 2023, customers and employees of 13 Russian banks participated in the pilot transactions. In September, the central bank expanded the pilot to include 9,000 people and 1,200 companies, up from about 600 people and 22 companies previously.

In late July, Russia’s central bank stated that the digital ruble could be rolled out for wider use by July 2025. The central bank assured that the digital ruble will complement existing cash and non-cash rubles rather than replace them. In a key reference for Russia’s digital currency initiatives, China has started paying government salaries in Changshu with its own CBDC (digital yuan) to increase adoption of the state-controlled currency.