DIGITIZATION OF BANKING BUSINESS: CHALLENGES AND OPPORTUNITIES FOR GOVERNMENT REGULATION

Abstract

The evolution of the banking sector has been ongoing for many years, as banking systems serve crucial functions in supporting the real economy and the population. In the past, obtaining banking services required physically visiting bank branches and waiting in long queues to access funds. Today, the digitization of the card business has largely resolved this issue, enabling instant money transfers without the need to visit a physical bank. Remote access to banking services through specialized programs or applications allows for opening deposits, applying for loans, making payments, generating reports and statements, optimizing the quality and speed of service for both individuals and corporate entities. Therefore, the development of Internet banking and mobile banking has streamlined the processes of remote access to a wide range of banking services. Integration with mobile applications for electronic government services (such as Ukraine's "Diia" platform) enables document exchange and the use of electronic methods for document signing and client identification. Thus, technological advancements have led to changes in the methods of conducting banking operations, and over the last decade, the banking sector has undergone significant transformation due to the impact of digitalization. The digital revolution has altered how customers interact with their banks and how banks conduct business. Currently, the process of digitalization in the banking sector is ongoing. While consumer-oriented technologies, such as real-time payments and mobile banking, hold great promise for banks, the modernization of back-office infrastructure may become a key focus for cost savings and enhancing competitive advantages in the future. Therefore, in the near future, the key direction for the development of digitalization in the banking sector will be a focus on technology and continuous investments in IT across the entire sector. This article explores the trend of digitalizing the banking business, provides forecasts for the development of the banking sector, and offers recommendations for improving the regulatory and institutional framework in the face of digital changes. The practical application of the results obtained contributes to the practical input of bank management in terms of potential directions for the development of the banking sector in the era of digitalization.