Facing up to post-cold war economic realities, Russia's largest consumer bank is receiving a big injection of Western technology designed to match the capabilities of American and European institutions.

The Savings Bank for the Russian Federation, the descendant of a Soviet-era behemoth called Sberbank, has been the place where generations of Russians have gone to stash their rubles.

Using the current astronomical exchange rate of about 1900 rubles to one dollar, the bank currently has only about $4 billion of assets, but that yardstick belies its true size. More than two-thirds of all of Russia's consumer savings is held at the. bank, in an almost mind-boggling 221 million deposit accounts.

That market dominance has kept the bank profitable in spite of the struggling Russian economy.

But now that the Iron Curtain has been lifted, that hegemony is being threatened. Western bankers' interest in Russia is at an all-time high. Since last year, more than a dozen foreign banks, including Citicorp and Chase Manhattan Corp., have opened branches in the country.

These American and European institutions have initially targeted Western firms seeking help in financing their dealings in Russia's nascent market economy.

But many Russian bankers fear these newcomers, with all their flashy computer and telecommunications technologies, will eventually go after newly privatized businesses and the emerging Russian middle class.

These concerns persuaded Russian President Boris Yeltsin to briefly block the licensing of additional foreign banks last year, but in January he reversed his decision.

Retooling Seen Needed

In light of these new challenges, the Russian Savings Bank decided that a top-to-bottom retooling was required. The bank has committed to spending hundreds of millions of dollars to completely overhaul its operations over the next few years, installing a bevy of computer systems from a number of American and European technology firms.

One of its most ambitious projects will be to install core accounting software from Systemaries Financial Services, a unit of Alltel Corp., and mainframe computers from International Business Machines Corp. for its Moscow Bank unit.

Moscow Bank is the largest of the Russian Savings Bank's 78 regional affiliates spread across the country, producing one-fifth of the entire institution's annual revenue. It has nearly 800 branches in and around the Russian capital.

On a tire-kicking visit last week to Systematics headquarters in Little Rock, Gennadyj V. Soldatenkov, vice chairman of the Russian Savings Bank and chairman of Moscow Bank, explained through a translator what his institution would gain from the new systems.

Starting from Behind

"The first benefit we hope to see is to raise the level of service to our customers," Mr. Soldatenkov said. "We want to become more competitive in the banking market in Russia and to meet the standards of international banks."

Moscow Bank officials acknowledged that they are starting far behind Western banks in terms of using technology, and that they will have to accept an unprecedented amount of organizational change to catch up, according to Alan Dacre, Systematics' regional marketing manager for Europe, the Middle East, and Africa.

"When I first visited the bank, their technology consisted of few personal computers in their branches, with all the back office stuff being done manually," Mr. Dacre said. "They understand this project will entail a complete rethinking of their culture as well as how they deliver services to their customers."

Cuts Foreseen

Mr. Dacre added that the bank also realizes a greater deployment of automation will mean an eventual reduction in its workforce, which today totals a staggering 300,000 employees.

"We told them this project will probably result in the elimination of a lot of middle managers," he said.

Mr. Dacre said the bank hopes the Systematics software will enable it to broaden its product line beyond the most rudimentary passbook savings accounts it historically offered. For example, the bank just last year began offering for the first time the equivalent of certificates of deposits at various interest rates and terms.

Testing the Waters

On the lending side, the bank has issued its first MasterCards to 1,500 customers, mainly Russian businessmen who travel outside the country.

But how much the Russian Savings Bank values this connection to the global electronic payment system was vividly illustrated when Mr. Soldatenkov was shown an automated-teller machine in a Systematics office building during his tour.

He immediately pulled out his Moscow Bank MasterCard, stuck it in the machine and within seconds received $25 - grinning broadly when the globe-hopping transaction was successful. "We hope to have 500,000 credit cards issued to our customers by the end of 1995," Mr. Soldatenkov said.

Plant Is Converted

However, Moscow Bank is not turning to the West for all its needs. For example Mr. Soldatenkov said his bank plans to install over 1,500 Russian-made ATMs over the few years.

While it already has a modest ATM network comprised of 15 self-service devices from Interbold Inc., Mr. Dacre said the bank decided to invest $1.5 million with a former Soviet arms manufacturer to help the firm convert its plant to make ATMs to be marketed to financial institutions both inside and outside of Russia.

"Until recently, all of Russia's best computer scientists and engineers worked exclusively for the military," he noted. "The bank has been very aggressive in getting these people to work with them now."

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