DIGITAL TRANSFORMATION OF THE FINANCIAL MARKET: BUILDING COMPETITIVE ADVANTAGES AND MANAGING EMERGING RISKS
Abstract
The article provides a comprehensive analysis of the digital transformation of the financial market as a systemic phenomenon that substantially exceeds the scope of mere digitization of individual processes and involves fundamental changes in business models, service delivery forms and methods, as well as a redistribution of competitive positions between traditional financial institutions and fully digitalized actors. The universal global nature of this process is revealed alongside its pronounced heterogeneity across different market segments (banking sector, neobanks, non-bank credit and financial institutions) and countries with varying levels of economic and technological development. Particular attention is devoted to assessing the benefits of digital transformation – including enhanced operational efficiency, expanded financial inclusion, theiveness, creation of innovative products, and strengthened customer orientation – as well as the accompanying risks, notably in the areas of cybersecurity, regulatory gaps, vulnerability to external shocks, the emergence of new technological threats (deepfake, quantum computing), and the insufficient preparedness of infrastructure and personnel for their identification and mitigation.The aim of the article is to delineate the characteristics of the digital transformation of the financial market with a focus on evaluating risks and competitive advantages for its participants. In the Ukrainian context, the stimulating role of crisis factors (the COVID-19 pandemic and military events) that accelerated the shift to digital channels is emphasized, while key restraining barriers are identified: the fragmented nature of legal regulation (particularly regarding the circulation of cryptoassets and open banking), underdeveloped infrastructure, limited access of fintech companies to financing, and a chronic shortage of investment in protective technologies. The practical significance of the study lies in substantiating the need for a comprehensive risk-oriented approach, strengthening regulatory and infrastructural frameworks, and prioritizing investments in cybersecurity and digital competencies. Taken together, these measures create the prerequisites for building sustainable competitive advantages for the national financial market and ensuring its resilient development amid global digital restructuring.
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