Integration of banks and insurance companies activities in Ukraine

Оlena Zharikova,Kateryna Cherkesenko

doi:10.33445/sds.2021.11.2.5

Abstract

The article reveals the essence of modern bancassurance and new challenges and prospects for its development in Ukraine. The definition of “bancassurance” is theoretically substantiated and the general financial and economic characteristics of Ukrainian banks is given. The normative indicators of commercial institutions are analyzed along with the main risks affecting banking and insurance activities, the possibility of their leveling are determined. The study provides theoretical and practical information on the process of banks capital of and insurance companies merging, financial and economic analysis of JSC PrivatBank – one of the largest banks in modern Ukraine, and the assessment of the financial stability of its insurance partners. The insurance Ukrainian market study concerning the detection of possible prospects for cooperation with the studied bank was done. The calculations suggest that PrivatBank can cooperate with the leading insurance companies, such as AXA Insurance and Providna recommended as new partners. It is established that bancassurance technologies have a significant place at the current stage of development of the domestic financial market. Using a large customer base and a wide network of branches and outlets, banking experts expect that revenues from the sale of insurance products in 2021 may amount to 15% of total bank revenues, as the volume of bank insurance in JSC CB PrivatBank is growing quite rapidly. The activity of banks in market conditions is subject to its general laws, and therefore requires the development of a viable mechanism for managing financial activities, aimed at increasing the competitiveness of banks. Thus, the ability of bank managers to determine the degree of financial stability of their bank as well as that of the competing banks and counterparties is essential in making decisions. Therefore, the search for ways to optimize the financial condition of the bank is one of the principles of further rapid development of the banking system in Ukraine.

Highlights

Today, given the functioning of a market economy, all parts of the financial services market need to improve their activities and find new ways to innovate in their activities to strengthen their position in the market niche, to rise the competitiveness and expand sales channels for their products and services
The process of globalization of financial markets in the world economy has transformed the relationship between banks and insurance companies
Integration in the form of bank insurance has been put into practice in the domestic market and has its own dynamics of development

Summary

Introduction

Given the functioning of a market economy, all parts of the financial services market need to improve their activities and find new ways to innovate in their activities to strengthen their position in the market niche, to rise the competitiveness and expand sales channels for their products and services. The process of globalization of financial markets in the world economy has transformed the relationship between banks and insurance companies. Integration in the form of bank insurance has been put into practice in the domestic market and has its own dynamics of development. The integration of banks and insurance companies is currently a new stage in the development of the banking and insurance systems. It is predetermined by both the expansion of activities and spheres of influence of banks, and the insurance companies desire to increase the number of customers and, the amount of profits.

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Results

Conclusion