TRANSITION FROM TRADITIONAL BANKING TO DIGITAL BANKING AS A PARADIGM CHANGE IN GLOBAL BANKING ACTIVITIES

Анотація

The article is devoted to the current issues of the transition from traditional banking to digital banking. The problem of transition from a traditional commercial bank to its digital counterpart in modern realities is becoming increasingly acute, especially for medium and small commercial banks, which are gradually losing their competitiveness and becoming prone to the risk of bankruptcy. The article provides the concepts of traditional and digital banking. It is shown how, under the influence of the transformation of banking, the definition of the term “bank” has changed over the past 100 years in the interpretation of scientists and in regulatory acts. It is emphasized that digital transformation is a complete rethinking of banking with an emphasis on maximum customer orientation. The chronology of the gradual digitalization of banking business from the mid-1990s to the present is considered. It is noted that every decade since the mid-20th century, the banking system and the work of banks themselves have undergone fundamental changes, which have gradually reduced the privileged monopoly role of banks in influencing customer choice. The evolution of banking systems in terms of accessibility and interaction with customers from unorganized to ubiquitous banking, which is carried out thanks to the rapid development of digitalization, is traced. Product and process innovations that are being brought about by the digital transformation of the banking sector have been identified, such as, for example, digital data and information transmission technologies; the use of artificial intelligence, big data processing and blockchain technologies, internet banking, and bank payment card transactions. The characteristic features of the transition from “Bank 1.0” to “Bank 4.0” have been identified. It has been found that to comply with modern standards of Bank 4.0, a bank must adhere to a systematic innovation policy, which includes restructuring all areas of activity. It is concluded that banking is becoming an unalternative choice for banks that want to make a profit, respond to new market demands, and value the speed of implementing solutions. Thus, banking can become a new paradigm of the modern financial sector.

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