Sberbank is located in Moscow, Russia, and is owned by the state. In 2015, the name of the bank was changed from "Sberbank of Russia" to Sberbank. The bank operates in many European and post-Soviet nations. It became the biggest bank in Russia and Eastern Europe from 2014, and according to Banker’s top 1000 it ranked first in Eastern and Central Europe, the third-biggest in Europe, and ranked 33rd in the world. Although the bank has been very successful over the past 179 years of its existence, it wants to join tech giants like Google and Apple to be part of the big tech team.

The company is reportedly dropping the word “bank” from its brand as part of the move towards becoming a tech giant. It has also previewed a few of its new tech devices to Reuters to lead its progress. Some of the devices created by the company include a virtual assistant, a smart speaker, and a TV streaming box, which will be unveiled on Thursday. This news is taking its clients by storm and many other financial institutions, who might be considering a move in this direction as well.  David Rafalovsky who is currently the company’s Chief Technology Officer said in an interview that they will launch a “SmartMarket” for its devices which is the same as the Google Play Store and Apple’s App Store.

The company heads are very excited about this venture, saying that not only is it a big investment but that it is a huge investment, even for a big and successful company such as Sberbank. The challenge for the new tech company is the fact that the markets also have many big players as well and is potentially a risky gamble for such an increasingly competitive industry. David Rafalovsky declined to disclose how much the investment cost when asked but emphasized on the fact that the investment was huge. A 50% stake of the company is owned by the Russian government and also a 1% share at Sberbank, which is the nation’s oldest creditor. From August, the company was worth $401 billion and had a market value of over $67 billion.

Since the company is aiming at achieving a major presence in the tech economy of Russia, it has ventured into a wide variety of products and services. That ranges from auto-pilot cars to cloud services throughout the previous year. However, the introduction of domestic constitutes a major step into the tech industry. The company, solely operating a financial institution describes their new venture as one of the most significant transformations in the company’s history. Rafalovsky majestically said that they have always been a company with a chip on their shoulder, and will now be considered a tech company with a banking license. He also said that a majority of their clients associate the company with banking products. The company will be releasing a wide range of new product devices on Thursday after it announced the change of its logo. The launch is said to take place at SberConf, which is a virtual event designed by global tech firms for the launch of products.

Sberbank is reinventing itself through numerous tech investments but it will still remain as a fintech company. This is mostly due to the largest investments being consolidated into areas more akin to finance than anything else. For example, their markets project can be explained by learning how ECN brokers work in general. This means mostly extra-fast access to the market for the customers, or consolidation of market orders on the existing database that Sberbank will most definitely have.

Sberbank New Gadgets

The company has launched a wide variety of new tech devices. Among them is a SberBox, which is a TV streaming service device, the company also launched a smart speaker called the SberPortal, that will come with a screen that provides voice and gesture recognition. The company is also launching a wide range of virtual assistants called Salute. These virtual assistants are said to have more emphasis on an emotional bond that is more than what Amazon’s Alexa, Apple’s Siri, or Hey Google offer. Sberbank’s mobile apps and devices will have this service in-built. The main feature that makes Sberbank’s voice assistant different from any other device in the market is that the program has three different personalities. Some of the devices’ personalities include pedantic Athena and cheerful joy.

On the other hand, Sberbank’s SmartMarket is going to have a coding instrument, which will be accessible to entrepreneurs and other businesses, for producing their own income-share scheme and their own online shopping apps, and then Sberbank will only charge apps that take money. Rafalovsky said that it is very important because this option acts as a bridge for their entire market ecosystem.

Tech’s A Risky Business

The first target market for the company’s new product will be its local markets in Russia, where it serves over 100 million active banking customers. Although the company works in over 17 countries apart from Russia, the company will only start selling these devices abroad at a later date. Russia has always been considered by Western tech organizations as an appealing, yet high-risk market, because of the danger of many sanctions from the Russian administration, like the ones that were implemented in 2015. Which required that all the information about the country’s citizens be stored there. Amazon is not a major in Russia as it is in other parts of the world, because its location makes logistics very difficult. LinkedIn has been blocked in Russia because it breached the 2015 data rule, although local tech companies control social networks and web search engines.

Nevertheless, the company’s expensive tech drive is challenging as well as risky because there are no guarantees that it will succeed in a market that is increasingly competitive and fragmented.  Samsung 005930.KS, Apple AAPL.O, and Huawei are among the leading tech companies in the tech industry and production of smart devices, with more developed app ecosystems, long-term experience in the field, and very wealthy. Domestic companies like lvi and many other companies already have TV streaming services. And internet group Yandex YNDX.O, Mail.ru MAILRq.L, and MTS MTSS.MM, which is a mobile operating company has all released smart speakers in the Russian market. Yandex which is considered as Russia’s substitute to Google and Sberbank announced that they won’t be working together on joint ventures anymore. This incorporates Yandex’s e-commerce investment. Their partnership with Yandex’s market and payment Yandex.Money will soon expire and will pit the two companies against each other as competitors.

Life Beyond Banking

Although this move by the company could come with many risks, experts say that financial institutions in Russia are increasingly finding it difficult to make money, as the main interest rate is decreasing at an all-time low rate of 4.25%, with very low prices at some of their markets around Europe. Elena Tsareva, a market global analyst, said that the margin of banking in Russia was increasingly becoming low and highly regulated and that new clever online lenders were quickly disrupting the market. One good example of such online lenders is Tinkoff, a potential Yandex investment, as the company is in talks about its acquisition.