Russian tech giants Yandex, Mail.ru Group, Ozon and Wildberries are developing their own fintech services in an expansion that could put them in stiff competition with the country’s leading banking institutions, Forbes Russia reports.

NASDAQ-listed Yandex, which has been described as Google, Amazon, Uber and Spotify rolled into one,  provides services ranging from music streaming to express grocery delivery. Yandex has ended two joint ventures in ecommerce and payment with state lender Sberbank (now renamed Sber) and negotiations to buy Russia’s digital-only Tinkoff Bank last year did not end in a deal. Now, Yandex has decided to go at fintech alone. While the company has disclosed few details, fintech promises to be an important topic for Yandex this year as the company continues to seek ways to launch financial services either organically or through mergers and acquisitions, according to analysts at Sova Capital.

Email and online service provider Mail.ru Group recently announced that it has signed on to create two joint ventures in payment and finance with USM holding, Jack Ma’s Ant Group, Russian cell phone operator Megafon and the Russian Direct Investment Fund (RDIF). The values of the payment and financial joint ventures are estimated at $150mn and $200mn respectively, according to a Goldman Sachs analytical note.

Two of Russia’s leading online marketplaces have also entered the fintech race. E-commerce giant Ozon, which has been called the “Amazon of Russia” and had a wildly successful IPO in the United States last November, has been expanding fintech services for buyers and sellers on its platform. These include Ozon Credit microfinance loans to consumers, the Ozon.Invest lending platform for marketplace sellers and the Ozon.Card cashback debit card – the first offer of its kind from a Russian retailer and which also became available in digital format in December. Meanwhile, the marketplace Wildberries has just purchased a bank to advance its payment services.

The boom in e-commerce during the pandemic has given a major boost to fintech development, particularly among large retailers, according to analysts cited by Forbes. Digital payment is a key component of online shopping, and online retailers that can offer a seamless payment experience are more likely to increase customer loyalty, which will bring in more revenue.

And it’s not just tech companies edging into fintech as consumer activity increasingly moves online. Walmart, one of the largest retailers in the United States, has launched a fintech start-up that will offer online banking services. The fact that Walmart invited two senior Goldman Sachs bankers to lead the initiative underscores the new challenge that banks face as tech innovators edge into their traditional turf.

At the end of the day, the success of fintech services provided by technology companies will depend on how well they can serve their customers – from the convenience of their product offering to the speed and quality of product integration. The examples from Russia provide one test case of whether tech companies will be able to rise to the challenge.

-

This article first appeared in New Economy Observer (NEO), a digital publication covering the intersection between finance and social responsibility, with a special focus on emerging markets. It offers news and analysis on major issues shaping the new global economy, including climate change and renewable energy, sustainable development, e-commerce and tech innovation, and the future of work.