DIGITIZATION OF THE BANKING SECTOR OF UKRAINE – CHALLENGES AND PROSPECTS

Abstract

The purpose of the article is to characterize the digitalization of the banking sector of Ukraine and to identify the main challenges and prospects accompanying this process. The article defines the digitization of the banking sector and formulates its main principles. The main factors of the digitalization of the Ukrainian banking sector are outlined, which include: competition, growth in the amount of information and the speed of its processing, rapid development of social networks, digitalization of social and administrative services, improvement of fraudulent schemes, regulatory and sanitary restrictions, the need to carry out activities under martial law. It has been identified that the COVID-19 pandemic has significantly impacted the digital transformation of the banking industry, creating a direct need for banks to communicate with their customers through digital channels such as platforms and apps, leading to a significant increase in the number of digital users. The cycle of implementation of digital technologies in the bank's activities is presented, the components of which are the trigger, development, analysis of technologies, adaptation, implementation, improvement. The consequences of the Ukrainian banking sector digitalization have been determined: the negative dynamics of the number of operating structural divisions of Ukrainian banks and the number of employees in this field of activity. It was found that the result of the active digitalization of the banking sector was the emergence and rapid development of neobanks: their fixed costs are lower, while the income from customers is one-thirtieth of the average bank, and it can reach a return on capital of more than 30%. The trends and risks of digitization of the Ukrainian banking sector are characterized. The challenges and prospects of implementing digital technologies in the Ukrainian banking sector are summarized. It is noted that in the conditions of digitalization of the banking sector, new risks associated with technological development arise. The wider use of technology and the more active involvement of third parties, for example through outsourcing and cloud computing, will make banks more dependent on the availability of IT services and more vulnerable to cyber risks.