Financial Technology in Banking Business: Realities and Prospects

Abstract

The article aims at studying the place of and prospects for financial technology development in the banking business during the digitalization process in the economy by using both the theoretical and empirical research methods. Having analyzed research works on the topic, the authors systematize the key trends in banking innovations in Ukraine and prove the relevance of financial technology in the banking business during the current digitalization. As a result, the current place of financial technology in the banking business is determined by identifying modern customers’ needs and current market conditions in the field of money services (the growing number of Internet users, gadgets, and hence the growth of the cashless money transfer turnover), and the following prospects are suggested: customer value and the quality of service provisioning (i.e., quickness, flexibility of the business structure and extensive use of various technologies). The results are based on the synthesis and analysis of the achievements of financial technology companies in the Ukrainian and world markets, their cooperation with banks, as well as their actions in the global pandemic, the latter reducing the financial inflow, but at the same time encouraging innovations. Research prospects in this context lie in suggesting the key trends of the future, such as including financial services in non-financial relations, the Internet of Things (seamless payments, where the focus shifts from payment to the service itself, providing long-term interaction between the seller and the buyer); the nature and consequences of changing the format of payment services in the domestic market (PSD2). Still, much will depend on further results of the work of the Ministry of Digital Transformation of Ukraine and the actions of the regulator, i.e. the National Bank of Ukraine, concerning the digital development of the financial sector

The impact of innovation and fintech on the banking business

“…So, the Ukrainian banking system is gradually introducing innovative products into its activities. The National Bank is the initiator of many projects that stimulate the innovative development of Ukrainian banks [20]. Innovations allow banks to improve the quality and speed of service provision, reduce operational costs.…”

Improving customer relations in the banking sector of Ukraine through the development of priority digital banking products and services: Evidence from Poland

“…As part of "open banking", the bank provides third parties (developers) with access to customer data (with their consent) using open APIs (technology for exchanging data between information systems through standard interaction protocols). It allows analyzing the needs of a particular customer and personalizing products and services to his requests (Mosteanu et al, 2020;Khudolii & Khalievina, 2021). Thus, the aspect of interaction with customers through digital tools in modern banking is complemented by the need to involve certain "third parties", whose interests and capabilities should also be considered.…”

“…At the same time, this country is implementing quite advanced solutions in bank digitalization, which significantly stimulate changes in customer preferences. Thus, the country has a relatively high level of use of bank cards, mobile and contactless payments, and mobile banking applications, often at a higher level than some European countries (Druszcz, 2017;Khudolii & Khalievina, 2021). It is also interesting to analyze the experience and priorities of digitalization of Ukrainian banks compared to the experience of Polish banks, the territorial proximity of which allows us to interpret it in the context of the development of Ukraine's European integration.…”