New Approaches to Banking Business Models in the Digital Economy

Abstract

The factors of the post-crisis development of the world banking system, the strengthening of the role of information technology in all industries, the increasing role of innovative Fintech intermediaries in the banking market encourage the management of banks to revise traditional business models and to form new approaches to managing the modern bank. In the article the authors aimed to investigate the impact of digitization on the choice of banking business model and the development of algorithm for estimating a bank's business model.Traditionally banks choose one of five business models: lending, high leverage, investment, fee, margin. Most operating banks opt for traditional models because the business environment requires it. However, maintaining the bank's competitiveness, enhancing its efficiency and resilience to financial imbalances is possible by building an innovative business model that takes into account the modern diffusion of information technology and the functioning of FinTech companies as an alternative to traditional banking business. Although nobody knows yet what will replace the current business model, there are currently three approaches to assimilating FinTech in banking: the Financial Control Center, Banking-as-a-Service, the Niche Bank. The choice of the banking business model and its transformation should be accompanied by an assessment of the bank's business model.Thus, an important component of banking management in an unstable environment is the analysis of the business model of the bank and its transformation in order to minimize the impact of possible negative effects of financial crises on the performance of the bank. The proposed algorithm for estimating a bank's business model includes 6 stages: preliminary assessment of the main components of the bank's business model; assessment of the business environment of the bank; stress testing of the viability of the bank's business model; evaluation of the bank's strategy; identification of key vulnerabilities to which the bank's business model is prone or likely to be vulnerable; and justification of the results and formation of effective conclusions.