Banks in the Context of “New Normality” and the Need to Restructure Business Processes

Abstract

The reduction by the Bank of Russia of the key rate as a tool for quantitative monetary easing leads to stagnation in the banking sector profitability. The purpose of the research was to disclose the importance of the mainstreaming factors of the banking profits formation. It is shown that the reasons that led to the financial result in 2017 had an unstable, temporary nature. It is revealed that the effect of the bank margin reduction under the “new normality” conditions can be overcome only by increased lending. In the situation when the real quality of a bank loan portfolio does not correspond to official data the introduction of risk-oriented business models into practice is essential for the growth of corporate lending. A progressive model of the loan life cycle is described. It is concluded that banks should use the model more extensively in providing loans to corporate borrowers in order to reduce risks, accelerate the loan application procedure and improve the profitability and competitiveness of credit institutions.