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Saidov Rasulbek Boltaboevich, Doctor of Philosophy, Dean of Banking Faculty Tashkent Institute of Finance E-mail: saidov_rasulbek@mail.ru Khasanboeva Malikakhon Valijon kizi, Student, Faculty of Banking Tashkent Institute of Finance E-mail: malikakhasanboeva@gmail.com Ibrokhimov Ilkhomjon Shavkatjon ugli, Master degree student, Faculty of Banking Tashkent Institute of Finance E-mail: ilkhomjon.ibrokhimov@mail.ru
DIGITALIZATION OF BANKING SPHERE CONTRIBUTES TO THE DEVELOPMENT OF THE ECONOMY AND THE GROWTH OF ENTREPRENEURSHIP
Abstract: the article outlines the significance of digitalization in the example of banking sphere, the role of digital banking in the development of the economy and signs its contribution to the growth of entrepreneurship. In the era of modern technology and rapidly changing demand of customers, the need for digitization of the banking sphere is ever increasing. Although switching from traditional banks to digital banks requires some effort and inquires budgetary allocations, it brings enormous benefits to the whole society. In the article, statistical data to show how digital banking system is improving across the world is provided.
Keywords: digital banking, online banking, mobile banking, peer comparisons, agility, "one-click" system, personalized service.
It is undeniable that digital modernization of Digitalization has been occurring in banking
economy is the need of today's world. National sector as well as other financial and industrial fields.
economy in either developed or developing coun- When issues such as attracting foreign investment,
tries have necessity to new services and without expanding welfare of a nation and increasing con-
them, it has become hard to survive in world com- venience of each individual in society are among
petition. Thus, each country is trying to digitalize priorities, it is difficult to imagine all of these with-
various sectors of economy systematically. Klaus out banking services. Applying modern information
Schwab, the founder and executive chairperson of technologies in banking services and ensuring their
the World Economic Forum outlined such a trans- continuity is crucial for further developments of
formation of societies as the "fourth industrial other fields. Because the reliability of banks is one
revolution" or "Industry 4.0" [1]. According to ex- of the most important factors determining the de-
perts, in the next decade, information technology velopment any national economic system.
will fundamentally change a person's personal life, Digital banking does not only mean going paper-
business and global economy. less or it is far beyond online and mobile banking.
Each customer with a digital bank starts his operations via the internet and stays online without the need to visit any physical location. Although in online banking many core activities are available online, there has not been a full transition to the digital world. The front-end is digital, nevertheless, behind-the-scenes processes remain largely the same whereas digital banking includes the digitization of this legacy back-end.
Digital banks proactively inform customers about a rich spectrum of personalized products and services, including financial advice, new opportunities, and peer comparisons used by professional analysts showing which stocks may be overvalued or which
might make good additions to a portfolio. Customers benefit from fair prices with increased transparency and comparability. Banks meet their needs with immediate, high-quality interactions, and transactions are performed quickly and securely. A good payment system is essential for the efficient functioning of an economy. With the advancement of technology, the speed of service has greatly improved and accelerated non-cash money circulation. In the economy, it provides health competition atmosphere, takes away barriers to new entrants and motivate banks to advance their services. In one word, both customers and government enjoy the banking experience (Figure 1).
Figure 1. The advantage of digital banking system to banks [4]
Being aware of the benefits digitization brings most banks are expanding their budgets on technology advancement. In 2018, global organization EY that is one of the firms Ernst & Young Global Limited conducted the survey and asked senior executives at 221 banks across 29 markets about their views regarding their views regarding "their bank's financial performance, strategic business priorities and technology adoption plans over the next 12 to 36 months. According Global banking outlook survey, almost two-thirds of banks anticipate that their technology investment budgets would rise by more
than 10% in 2018 (Figure 2). Investing in technology to serve customers better, drive efficiency and implement digital transformation programs all feature in the top 10 priorities for banks globally. The increase in budgets is also expected to influence positively on most functions, with more money available for investments in a range of areas, including compliance, risk, finance, IT, operations and product development. Despite these encouraging results, we still expect that most banks will struggle to become more digitally mature over the next three years unless they develop coherent strategies and investment
plans and address legacy concerns related to poor data and disparate risk and control processes [2].
Figure 2. Expected% change in banks 2018 technology investment budgets Source: Global banking outlook 2018
Nowadays, wholesale digitalization is not an essential feature of banking sphere because of associated costs. However, banks try seriously considering a variety of alternatives. Year by year bank's digital maturity ambitions are strengthening. The following
figure indicates that how banking industry aspires toward digital maturity between 2018 and 2020 [2]. Sixty two percent of global banks expect to be digitally mature in 2020, compared with just 19% in 2018. (Figure 3).
Maturing or a digital leader by 2020 Maturing or a digital leader In 2018
Figure 3. The banking industry aspires toward digital maturity Source: Global banking outlook 2018
Overall result of digitization in banking sphere Commercial and specialized banks always play
and increased digital maturity come with huge ad- an important role in the growth and development
vantages to the whole society. Let us look at the en- of entrepreneurship. Apart from providing financial
trepreneurial and business sphere. assistance, banks also give valuable inputs to support
and promote their enterprise. Positive outcomes of digital banks can be as followings:
• Personalized service. Entrepreneurs want a bank that behaves the way they do. "Digitally focused challengers" are able to provide a more personalized customer service. Any time 24/7 is ready for entrepreneurs and they can easily control all their financial steps without help of bank assistant and can get financial advice so quickly from the exports with no additional efforts. In addition, the process and the operations they make are no longer time consuming and "painful". As Ben Little, co-founder of innovation consultancy Fearlessly Frank said, "Entrepreneurs want a bank that behaves as they do, and works at the same speed too - both from a personal point ofview and business point ofview" [5].
• Reduced costs. The growth of digital banking has reduced the cost of starting or doing business tremendously and greatly helped entrepreneurs in modern days. It is also very helpful for those involved with businesses on foreign soil. For instance, most international businesses are conducted on credit, with payment later. Commercial Banks offer a quick foreign exchange - a service where money is transferred to any part of the world on behalf of the banks' clients. With banks playing this crucial role, they have now become a very important part ofpromoting entrepreneurial development [6].
Currently, Uzbekistan is also implementing reforms to introduce digital banking in its banking system. On June 30, 2018 the Central Bank of the Republic of Uzbekistan approved a procedure for «Registration and licensing of banks, approved by
the Resolution of the Board of the Central Bank of the Republic of Uzbekistan dated August 15, 2009 N23/3'' was amended and supplemented [7]. According to it, the creation of conditions for the introduction of modern banking services in Uzbekistan, the introduction of innovative banking technologies and the establishment of a digital banking business are planned. In August 2018, there was only one bank with own mobile system but in November 2018, the number of banks with their mobile phone app system has reached 13. Because of practical work in Uzbekistan "Qishloq Qurilish bank'' and "Kapitalbank'' have set up their digital banking.
Digital banking has not only modernized the economy, but also has a high place in strengthening the economic cooperation with the foreign countries and gaining their trust. Thus, the following suggestions are acceptable to enhance digital banking services in banks:
• To advance customer care;
• To prevent overcrowding/traffic;
• To increase awareness, account confirmation and high security;
• To establish easy interaction with expanded engagement and applicance of world experience.
To conclude, digitalization deduced the bank from the status of a complex and frightening system, whose only task is to carry out obscure operations with money. The application can now be a friend, assistant and adviser in financial matters. New revolution in the banking sphere has benefited both government and individuals as well, from the simple customer, employee to a businessperson. The more we admit that it is important in our success, the more impossible for us to think a world without digital banking.
References:
1. Article: "Digital banking as a component of credit organization's economic security" by Gon-tar A. A. Вестник Волжского университета имени В. Н. Татищева - No. 4.- Том 1. 2017.
2. Global banking outlook, 2018. Ernst & Young Global Limited, UK. - P. 15-16.
3. Electronic source. URL: https://www.fivedegrees.com/digital-banking/what-is-digital-banking
4. Prepared by the author on the information of the web site. Electronic source. URL: https://www.ven-tureskies.com/blog/digital-banking
5. Electronic source. URL: https://www.theguardian.com/small-business-network/2016/dec/28/chal-lenger-bank-entrepreneur-funding-startups
6. Electronic source. URL: https://www.entrepreneur.com/article/323863 Article: "The contribution of Banks in the growth and development of Entrepreneurship" by Ajay Sharma, President - Abhinav Outsourcings Pvt. Ltd
7. Electronic resource. URL: https://www.spot.uz/ru/2018/06/20/digital-bank
