DIGITALIZATION OF THE BANKING SECTOR OF UKRAINE: CURRENT STATE AND DEVELOPMENT PROSPECTS

Abstract

The article is devoted to researching the processes of digitization of the banking sector of Ukraine at the current stage. The article highlights the main prerequisites for active digitization of the domestic banking system. The main digital technologies that are reforming the global banking space, namely artificial intelligence, machine learning, blockchain technologies, and the Internet of Things, are given attention and characterized. Summarized advantages and challenges of the transition of traditional banking institutions to the digital sphere, both for the banks themselves and for their customers. The capabilities of the bank's customers when using mobile applications and Internet banking are defined, customers can carry out financial transactions at any time and anywhere in the world using mobile applications and Internet platforms. The number of bank branches in Ukraine during 2019–2023 was studied and the main patterns in their dynamics were identified. It is emphasized that the process of digitalization of the banking sector, along with positive moments, brings new problems and challenges: financial and technological risks: cyber attacks, technical failures become a significant problem in ensuring the stability and economic security of banks. At the same time, despite the challenges, digitalization gives banks the opportunity to review their business models, introduce innovations in products and services, and cooperate with fintech companies. The article also focuses on business models of banks in the conditions of digitalization of banking operations. The business model – a fully digital bank – is considered, namely the application prerequisites, implementation goals, functioning mechanism, advantages and disadvantages of the model. The final point of the article is the outline of future potential and already existing, but not yet very active trends and trends in the process of further digitalization of the banking sector of Ukraine. It is emphasized in the conclusions that the digitalization of the banking sector is an opportunity for banks to improve their activities, taking into account modern technologies and customer expectations. Those banks that can successfully adapt will hold the key to long-term success in the era of financial digitalization.