MODERN MECHANISM OF TRANSFORMATION OF THE BANKING SECTOR UNDER THE INFLUENCE OF FINANCIAL TECHNOLOGIES

Abstract

The article is devoted to the development of a mechanism for the digital transformation of banks and the identification of approaches to its implementation. It is emphasized that the efficiency of the banking business model in recent years has significantly increased precisely due to the digitalization of the main internal business processes, mechanisms for interaction with clients and the introduction of innovative products, as well as the overall innovative development of the banking sector, which is supported by the introduction of advanced digital technologies. Five stages of the digital transformation of banks are formulated. The elements of the mechanism for the digital transformation of the banking sector are considered. The most popular financial technologies under the influence of which the digital transformation of Ukrainian banks is carried out are outlined. From the analysis of foreign experience in the digitalization of banking activities, the most promising areas for the use of digital technologies in the financial sector were identified, namely the use of smart assets and smart contracts in the lending process, storage of credit histories using blockchain technologies, and others. Three approaches to the digital transformation of the banking system are identified, and a characteristic of each of these approaches is given. The technological approach ensures the implementation and development of financial technologies in order to increase the efficiency of the functioning of the banking sector to optimize external and internal processes; develop and improve the banking digital environment. According to the strategic approach, FinTech is seen as a means to fundamentally rethink business models and build digital ecosystems to enhance financial sustainability and growth in the banking sector in the long term. The “sustainable digital transformation” approach aims to ensure that digital transformation tools are aligned with environmental, social and governance principles, with a key objective being to integrate social responsibility and ethical objectives into technological development.