INNOVATIVE PRINCIPLES OF DEVELOPMENT IN THE CONTEXT OF THE FINANCIAL AND BANKING SECTOR

Abstract

The article is devoted to the processes of constant growth of competition in the banking and financial sector. The article specifies that the key to successful implementation and introduction of the latest products and technologies in the banking sector is retention and conquest of specific segments of the financial market. The author's approach to understanding the properties, development and improvement of banking institutions' development in relation to new market demands, in accordance with economic changes in the environment under the influence of globalisation in the world space, is formulated. The author believes that the innovative principles of development of banking and financial institutions should take into account the innovative vector of economic growth and competitiveness. The most important means of ensuring stability and efficiency of activities, first of all, depends on the ability of a banking institution to meet certain customer needs. The article formulates the main conditions that ensure the increase and improvement of innovative methods and management decisions aimed at the latest marketing strategies, as well as in the long run, the response and sustainability of financial and banking institutions. Based on the current state of the economy in the process of globalisation changes, the main components characterising the situational positions of assessing the effectiveness of innovations are allocated, and measures for their further improvement are proposed. Technology-based products give opportunities to have significant cost advantages, increasing profitability and facilitate lower risk than traditional banking products. In addition, studies show that if there is enough customer demand the technology-based products of the bank there will be the return of investment on this field in short time. Empirical studies made on various countries, reveals that electronic banking services improve the performance of banks. However, the expected results is not seen in some less developed and developing countries because of infrastructure investment could not do enough and customers prefer traditional branch-based banking. From the perspective of findings and assessments, the applications of electronic banking in 23 advanced and emerging country on banks performances effects are analyzed. In the analysis, we investigated the effect on the profitability of the various electronic-based banking services. The most important difference of our study from other experimental studies is the use of a sample consisting of a large number of countries. In addition, electronic banking infrastructure in many countries taking in to account is developed and the services of the bank performance will be able to monitor more accurately. Dynamic panel data method was used as an analysis method. So it will be possible to take into account the dynamic effects on the time. The findings indicate that almost all the banking services under consideration affect the profitability. However, the number of POS terminals and the number of customer using internet banking service are determined to effect profitability negatively. This situation can be interpreted as the sample had differences in electronic banking infrastructure and socio-cultural characteristics of customer behavior in the countries. In addition, balance corrupted income statment in some developing countries due to high infrastructure costs and high advertising expenses factors. The findings indicate that almost all the banking services under consideration affect the profitability. However, the number of POS terminals and the number of customer using internet banking service are determined to effect profitability negatively. This situation can be interpreted as the sample had differences in electronic banking infrastructure and socio-cultural characteristics of customer behavior in the countries. In addition, balance corrupted income statment in some developing countries due to high infrastructure costs and high advertising expenses factors.