FINANCIAL TECHNOLOGIES’ IMPACT ON THE DEVELOPMENT OF BANKING

Abstract

The development of financial technologies, so-called FinTech, has fundamentally changed the architecture of the modern financial services market, significantly affecting the role of banks in it. These changes determine the need of new approaches for the market behavior of both banks (to maintain competitive positions) and regulators (in order to prevent potential crisis phenomena).
 It is substantiated that at the present stage of development of financial-credit intermediation, determinants of competitive behavior of banks are nonconventional factors such as a degree of freedom to enter the market, an information asymmetry, a level of services and marketing support, an emergence of electronic channels for banking products’ distribution, the development of electronic payment systems and transfers of other banking information.
 It is investigated main approaches to the definition of financial technologies (FinTech). It is justified the necessity of distinguishing this concept and the FinTech segment, it is proposed to define financial technologies in the narrow sense as the provision of financial services by non-banking institutions using modern information technologies, which is rationalizing the analysis of the FinTech’s role in the banking.
 In the article it is identified and characterized external (caused by the objective development of society and fundamental changes in the banks’ environment) and internal (caused by the need of maintaining the competitive positions by banks) factors of financial technologies’ development.
 It is proved that the FinTech’s impact on banking is determined by changes in the structure of the financial services market, a decrease in barriers to entry the market, and an increase of its spatial coverage. The development of FinTech leads to lower costs and higher efficiency of banks, increased competition in the banking environment, reduced information asymmetry, increased financial inclusion, but at the same time leads to the generation of new financial and technological risks for banks.