Advantages and risks of integrating financial technologies into the banking business

Kovalenko Victoria
D.Sc. in Economics, Professor of the Department of Banking, Odesa National University of Economics, Odesa, E-mail: kovalenko-6868@ukr.net, ORCID ID: https://orcid.org/0000-0003-2783-186X

Sheludko Sergii
Ph.D. in Economics, Associate Professor, Head Specialist of the Department of Valuation and Collateral Operations, Pivdenny Bank PJSC, Odesa, E-mail: s.szeludko@gmail.com, ORCID ID: https://orcid.org/0000-0003-0636-4940

Cite this article:

Kovalenko V., Sheludko S. (2022) Advantages and risks of integrating financial technologies into the banking business. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Perevahy ta ryzyky intehratsii finansovykh tekhnolohii u bankivskyi biznes; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 9-10 (298-299), pp. 56-69.

Abstract

The paper is devoted to the features of the development of the financial innovations' market, since digitalization of the economy significantly influenced vectors of the formation of financial technologies and new innovative financial products and contributed to their transformation. The study confirmed: traditional approaches to the provision of banking services and activities do not satisfy the growing demand and expectations of customers, and do not meet high efficiency and profitability requirements. This paper defines FinTech-companies and FinTech-services as the newest instrument of the FinTech-services market, which meets the current requirements of the modern world. The study examines modern trends and characteristic features of financial innovations in such classes as radical and socially oriented, banking products and services, service channels, internal processes. The main principles of implementing financial innovations are identified, in particular: accessibility, growth point, targeting, diversity of mass media, openness and cooperation, standardization, confidence and security. It is systematized and classified FinTech-companies according to their spheres of activity and specialization, and a number of their features and potential opportunities in the field of financial services are considered. The role of FinTech-companies and FinTech-technologies in the modernization of the financial services market is revealed; the current global trends in the development of the FinTech sphere, as well as the prospects for its use, are explored. The FinTech boom in late 2021 has proven to have quickly transformed into fears of a potential recession in the first half of 2022 as uncertainty surrounding Russia's full-scale military invasion in Ukraine, ongoing supply chain issues, rising inflation and interest rates, made a negative impression both at the state level and on private companies. The challenges and threats for the banking business, which are caused by the spread of digitalization of the economy and affect the emergence of new financial innovations, are identified. It was concluded that the current stage of digitalization of the economy determined the trends and directions of development of the financial services market and the banking sector in particular.

Keywords

innovations, financial innovations, digitalization of the economy, financial services sector, banks, FinTech-companies.

JEL classification: G210, O310; DOI: 10.32680/2409-9260-2022-9-10-298-299-56-69

UD classification: 336.71:330.341.1-028.63

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