In an effort to ensure compliance with the transition plan to domestic software, electronic products and telecommunications equipment by banks and non-credit financial institutions, the Russian Bank regulator will begin strict monitoring from May 27, Vedomosti reports, citing a regulator statement from May 17.
This transition is in response to a Russian Federation presidential directive requiring that, from January 1, 2025, infrastructures critical to information, including those owned by banks, communication operators, government bodies, etc., operate exclusively on domestic software. The Central Bank (CB) guidelines stipulate that relevant credit institutions and non-credit financial organizations must report on their transition to domestic solutions, and the purchases made towards this, at the end of each quarter upon regulator’s request. The CB intends to manually monitor the abandonment of Western software in processing, automated banking systems, and technical solutions for remote banking service for individuals and legal entities and more.
According to Igor Panov, Director of the Department of Transformation and Operational Control of IT at Promsvyazbank, banks have long begun replacing foreign solutions with domestic ones. A VTB Bank representative told Vedomosti that approximately 70% of application systems were independent from foreign technology and domestic software expenditure made up 82% of their total amount. VTB plans to complete their software import replacement by the end of 2024. This includes not only software for working with critical infrastructure but also software products for user workstations. Predictions are that by the end of this year, VTB’s spending on domestic software will exceed 85% and only domestic software products will remain in the state bank’s critical IT infrastructure. The tech stack for target systems will have an import replacement level of no less than 98%, the representative said.
The Dom.RF group of companies, including Dom.RF Bank, started their import substitution process several years ago, according to a representative from the credit organization who spoke with the publication. They revealed that of the 60 classes of software used, the level of import substitution exceeded 90% in 48 classes. The transition process to Russian software is ongoing.
The report mentions that not all financial organizations can keep up with the pace of transitioning to domestic software. The Association of Russian Banks in mid-April had requested the authorities to extend the time for import substitution. The request argued that domestic solutions for banks are not yet ready for use.
