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18УДК [336.717:004]=111
DIGITAL TECHNOLOGIES AND THEIR IMPACT ON THE TRANSFORMATION OF BANKING PRODUCTS
A.A. Kudelina
Financial university under the Government of the Russian Federation, Moscow, Russia
E-mail: coolgirl_10@mail.ru Scientific advisor: T.V. Moiseeva, senior teacher Financial university under the Government of the Russian Federation, Moscow, Russia
E-mail: moiseewa.tv@yandex.ru
Abstract. The banking sector represents the area of human activity where the digitalization of all processes from communication tools to electronic technologies is the most effective. Nowadays, the banking system is already mastering a completely new stage of development. In order to maintain its leading advantage and enhance its financial influence in a highly competitive environment, many banks are changing their traditional business models and using new methods of customer services which include digital banking.
Keywords: digital technologies, identification, personalization, mobile and online banking, chat bots, contactless payments, virtual cards, artificial intelligence, machine learning.
Аннотация. Банковский сектор представляет собой область деятельности человека, где цифровизация всех процессов, от средств коммуникации до электронных технологий, является наиболее эффективной. В настоящее время банковская система находится на существенно новой стадии развития. Чтобы поддержать своё лидирующее преимущество и усилить финансовое влияние в высоко конкурентной среде, многие банки меняют традиционные модели и используют новые методы потребительских услуг, которые включают цифровые банковские операции.
Ключевые слова: цифровые технологии, идентификация, персонализация, мобильные и online банковские операции, чатботы, бесконтактные платежи, виртуальные карточки, искусственный интеллект, электронное обучение.
The world is on the verge of a qualitative financial institutions, alongside corresponding
breakthrough driven by digital technologies and changes in internal and external corporate and
their impact on the traditional business personal relations to enhance customer services
performance and banking products. Thanks to and efficient banking operations [1, C. 138]. electronic know-how and the rapid growth of The essence of digital banking can be
Internet penetration, digital technologies have represented by the following scheme (Fig. 1). become available in any region of the country: a A digital bank provides most of its products
person, being on the periphery, can receive the and services digitally. Its clients use digital
same excellent services as a resident of the channels for their daily banking activities. The
capital. Digital banking has changed not only infrastructure of such a bank is optimized for
products and communication channels, but also real-time digital interactions. the way of thinking. According to experts, digital transformation
Digital banking is often confused with mobile in the banking sector will take place in five main
and online banking, in other words, multi- stages. The first stage is associated with the
channel banking. Of course, all of these concepts emergence of digital channels: ATM (automated
include digital applications in one form or teller machine) networks, Internet banking,
another. But digital banking is the integration of mobile banking, and chat bots. [3, C. 94]. new emerging technologies into the activities of
Fig. 1. The essence of digital banking
At the second stage, digital products appear: Big Data, contactless payments, virtual cards, artificial intelligence, machine learning. With the help of advanced modern software, E2E (end to end) products are created, designed to satisfy the financial needs of customers around the clock.
The third phase will mark the creation of a complete digital service cycle. Banks are not only adding digital services to their traditional products, but new digital businesses are being created, completely changing business models. The use of digital tools allows them to become global.
The fourth stage is a creation of "a digital brain" that continuously and automatically examines data across all business segments, departments, product lines and services.
The fifth stage is associated with the creation of "digital DNA" (deoxyribonucleic acid) - a new coordinate system for making strategic decisions throughout the entire life cycle of the bank.
In accordance with the new development banking strategy for the period up to 2024, banks are aimed at digitalization. The process of preparing for their transition requires significant costs for the transformation of head offices and branches which should promote banking products on a new digital basis. Most of these
costs at the initial stage are associated with fixed assets, namely with equipment [5, C. 33].
The process of digital transformation of banking products took place in several stages. First, in the 1960s, new digital channels were actively developed - ATM networks. Later, in the early 1990s, Internet banking and mobile banking appeared. In the third phase, which began several years ago, leading banks began to change their business models.
Within the next five years, credit institutions plan to develop a lifestyle platform with a full range of services to become the number one bank in the clients' wallets and the leader for their satisfaction. In addition, many banks plan to provide all products online by 2023, sell half of their products remotely and get rid of paper workflow [2, C. 77].
At present, the preservation of the traditional banking business is far from feasible. Many banks are already changing their business models adding digital details to all their communication channels, products, services, programs and even management solutions to meet emerging customer needs at a new digital level in real time.
Availability of unique...
25 %
Multichannel
■ 15 %
Innovation
■ 20 %
Low cost
Fig. 2. Factors of transition to new digital models
The introduction of digital technologies into their activities gives credit institutions the opportunity for endless options to improve business processes, ideas and solutions, to reduce the costs by ensuring the flexibility of ongoing processes, as well as to immediately analyze the large amount of data.
As a result of the study, the problems that many credit institutions faced in the process of introducing digital technologies and transforming banking products based on them were identified. They are as follows:
• clients' distrust of the virtual space, i.e., conservative thinking;
• underdevelopment of digital channels on the periphery (Internet banking and mobile banking);
• necessity of high costs to create a powerful digital platform;
• lack of a perfect modern IT platform based on artificial intelligence, which could allow machine learning and "training" of robots to be carried out in full;
• outdated software for ATMs and terminals;
• chat bots for mobile banking have not been created;
• Problems of security of payments and fraud that needs to be addressed through the introduction of blockchain and the use of a biometric identification system.
Based on the analysis of these problems in the process of work, the following proposals have been formulated:
1. Introduction of a single digital signature using blockchain technologies. An electronic signature is information in an electronic digital form that can be used to identify an individual without his personal presence.
2. Expansion of the functionality of ATMs and terminals. Given many people solid salary base and the still ongoing need for cash, this channel continues to
be of particular importance. The software of all terminals needs to be updated. ATM's sets are developed not only for issuing money, but also for communicating with customers when offering them banking products.
3. Development of the conversational interface by training a chatbot for a mobile bank based on artificial intelligence, which in many cases can replace contact center employees. Nowadays, at least 20% of tasks can be transferred to robots. In the near future, this percentage is expected to rise to 50%. Soon, artificial intelligence will communicate with clients to advise them and at any time, at the request of the client, to transfer difficult questions to operators. For example, if we are talking about complex cycle transactions -mortgages or refinancing.
4. Development of biometrics in the banking sector. The development of biometrics will improve the accuracy of customer's identification, simplify the procedure for checking and verifying personal data.
5. Improving artificial intelligence and machine learning. A new generation of digital technologies has arrived: artificial intelligence, machine learning, big data, and contactless payments (such as Android Pay, Apple Pay, and Samsung Pay). The paper part falls out of the process of issuing a loan.
Many of the problems that hinder the development of digital technologies can be solved right now, especially since information technologies solve a number of problems, it will help the development of other areas not directly related to banking [4, C. 67].
Currently, we can surely say that in Russia both financial institutions and citizens are actively using digital innovations, and they are also interested in their further development, since most digital solutions really need to be finalized. To do this, it is necessary to improve the financial and digital literacy of the population, to use big data based on artificial
intelligence and update the functional programs of ATMs and terminals.
It seems that the future belongs to digital banking. Nowadays, in Russia the volume of non-cash funds stored on the servers of financial institutions is four times greater than the volume of cash. And this is just the beginning.
References
1. Civil Code of the Russian Federation. - M.: Omega-L, 2020. - 522 p.
2. On banks and banking activity: Federal Law of December 2, 1990 No. 395-1 (as amended on December 30, 2020) // ATP ConsultantPlus.
3. On the Central Bank of the Russian Federation (Bank of
Russia): Federal Law of the Russian Federation of July 10, 2002 No. 86-FZ (as amended on February 24, 2021) // ATP ConsultantPlus.
4. About personal data: Federal Law No. 152-FZ of July 27, 2006 (as amended on March 1, 2021) // SPS ConsultantPlus.
5. On joint-stock companies: Federal Law No. 208-FZ of December 26, 1995 (as amended on February 24, 2021) // ATP ConsultantPlus.
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