Consumers Of Financial Services Research Articles

Digitization of banking processes and operations

Introduction. Due to the total digitization of banking processes and operations, foreign and domestic banks are actively transforming their activities from the traditional format of customer service in bank branches to the remote format of providing services online. 
 Problem. Banks strive to function in the format of financial assistants available 24 hours a day. Therefore, virtual banks or neobanks which carry out their activities exclusively through remote sales channels with the help of Internet banking tools and mobile applications are actively developing. 
 The aim of the article is to study foreign trends in the development of neobanks and prospects for the development of neobanking in Ukraine. 
 Methods. The methods of theoretical genera­lization, analysis and synthesis, grouping, and systematic approach were used in the research process. 
 Results. The key trends in the development of neobanks in Ukraine and the world have been studied. The foreign experience of the licensing mechanism of neobanks is considered. The dynamics of the number of neobanks in the world and their geographical affiliation are analyzed. The global trend of growth in the number of clients-users of neobanks is indicated. The peculiarities of the activity of domestic neobanks have been studied. The general problems and prospects for the development of neobanks in Ukraine have been identified. 
 Conclusions. Neobanking in the world is in great demand by consumers of financial services and is interesting for investors, so the number of neobanks and their users in the world is growing at a high rate. The domestic banking sector is gradually introducing and implementing innovations in accor­dance with global trends in the development of banking services. Domestic neobanking gained a particularly noticeable development during the coronavirus pandemic and in the conditions of martial law. Due to the lack of a legislative initiative regarding the licensing and regulation of the activity of neobanks in Ukraine, their potential development is restrained. Currently, the development of domestic neobanks directly depends on state support for their activities, internal regulatory policy and competitive environment.

PROTECTING THE RIGHTS AND INTERESTS OF CONSUMERS OF NON-BANKING FINANCIAL SERVICES: IS AN ALTERNATIVE COURT POSSIBLE?

This article considers the existing methods of protecting the rights and legitimate interests of consumers of non-banking financial services. Based on the current EU legislation, it is proposed to create the institution of a financial ombudsman as one of the possible alternative ways to protect the rights and interests of the relevant entities. It is emphasised that the financial ombudsman should be at the level of a state body in order to ensure the reliable protection of investors and consumers of financial services and faster response and resolution of problematic situations in disputes of individuals by public authorities. The authors used the following special legal methods: conceptual-legal, comparative-legal, formal-legal, and others. For example, the comparative-legal method helped the authors compare the existing approaches to consolidation at the regulatory level of ways to protect the rights of consumers of non-banking financial services. Based on the analysis of existing mechanisms for protecting the rights and legitimate interests of consumers of non-banking financial services and taking into account the experience of the countries of the EU, this article emphasises the relevance and expediency of implementing this suggestion in Ukraine, along with the judicial remedy of subjects of non-banking financial services markets and alternative remedies. In particular, attention is focused on the advantages of the financial ombudsman institution.

Informed decisions regarding flood events induces propensity for insurances

Approaching climate changes are expected to cause an increase in the frequency of very severe events (see, e.g., Global Risk Report, 2017, Czajkowski et al., 2013, Botzen et al., 2009), such as hurricanes, droughts, and floods that affect the well-being of millions of people all over the world. Therefore, interest has grown in risk management associated with climatic events from the perspective of the financial services consumer and from the actors that provide protection – the insurance companies. We conduct a survey of over 1000 lower middle-class heads of household in a country with an emerging economy (Brazil), including people living in high risk areas, to verify the intuition that there is a causal link between the existence of information and the willingness of individuals to acquire flood insurance. The results of the experiment reveal that supplying information regarding the probability and severity of flood events increases the demand for protective services. Furthermore, living in a high-risk flood area encourages the acceptance of higher insurance premiums. We also document a set of attitudes of the surveyed subjects towards flood risk, according to the region in which they reside and the availability of information about flood risk.

Consumers of financial services: features of the legal status in the conditions of financial inclusion

The urgency of the study is due to the reform of the national legislation in the context of institutional transformation of the financial services market. The purpose of the study is to develop a scientific basis for legislative changes aimed at optimizing the legal status of individuals as consumers of financial services. The methodological basis of the study consists of general scientific and special legal methods, in particular, dialectical, statistical, comparative law, formal law, methods of sociological research, analysis and synthesis. The general principles of realization of such strategic direction of development of the market of financial services as financial inclusion and its influence on formation of legal requirements to the person of the consumer of such service are investigated in the article. The particular interest are scientific positions, legislative novelties on the definition of the scope of persons who have the status of consumers of financial services. The peculiarities of the acquisition of such status by minors and young persons, as well as the second spouse or a third party in the obligation are clarified. On the basis of the conducted research the corresponding conclusions are formulated.

DIGITAL TRANSFORMATION OF THE FINANCIAL MARKET: RISKS AND OPPORTUNITIES

The introduction of modern digital technologies into the practice of financial market entities contributes to the resolution of contradictions in economic relations between suppliers and consumers of financial products by forming a local compromise. The digitalization of financial services helps to increase the physical and tariff accessibility of financial services, reduces the costs of a financial company to expand its client portfolio. However, it should be noted that the production, sale and consumption of digital financial services and the digitalization of business processes of financial companies are associated with additional risks for all participants in economic relations.
 Purpose. Study of opportunities and risks of forming an effective financial strategy for a consumer of financial services in the context of digital transformation of the financial market.
 Methods and methodology. The article used the methodology of conflict-compromise management of economic relations, the general theory of risk, as well as content analysis of the literature on the research problem.
 Results. Results were obtained that confirm the hypothesis that the digitalization of various business processes in financial companies will lead to an increase in the process of disintermediation, which will inevitably lead to the transformation of traditional business models of companies, a revision of the factors affecting the formation of profits of financial companies, and for consumers of financial services to the need to form patterns of responsible financial behavior in the context of financial market transformation.
 Practical implications it is advisable to apply the results obtained by economic entities involved in the formation of functional strategies of companies.

Building the Scale for Fraud Detection on the Internet Using ML

The widespread digitalization of the modern society and the development of information technology have increased the number of methods of interaction between financial institutions and potential consumers of financial services. At the same time, the advent of new financial products inevitably leads to an increase in threats, and the use of information technology facilitates the continuous "improvement" of fraudulent schemes and unfair services that negatively impact both the financial market as a whole and its individual participants, such as financial institutions and their clients. Due to the development of modern society, most financial transactions have moved to the Internet, including the fraudulent ones. When services are provided remotely, it is more difficult to trace and prosecute the beneficiary, but there are still ways to stop fraudulent activity. They can be characterized as labour-consuming, as the monitoring and analysis of huge amounts of unstructured information (BigData) located on the Internet take great amount of time and effort. The solution to detecting illegal activity in the financial market is based on open data intelligence, the application of machine learning methods and systems analysis techniques. The article examines the types of financial services provided on the Internet, among which fraudulent activities are most common. In order to identify illegal financial services, criteria are identified and grouped according to their contribution to the decision-making process. The main result of the study is the construction of the scale of a complex indicator, which is used to develop a mathematical model based on the selected criteria and machine learning methods to identify the extent of illegality of financial services provided on the Internet.

Legal Mechanism for Countering Illegal Activities in the Provision of Consumer Credit: Current State and Prospects for Improvement

The high profitability of consumer credit activities, supported by growing demand, has determined the formation of an illegal sector of financial services provided by entrepreneurs on behalf of an individual. Not being among the entities authorized to provide consumer credit services, these persons are not only not burdened with the Bank of Russia control, but are also invulnerable to the law. In order to protect the rights of consumers of financial services, in 2021 the legislator criminalized illegal activities for the provision of consumer loans (loans) (Article 171.5 of the Criminal Code of the Russian Federation) and changed the content of the related Article 14.56 of the Administrative Code of the Russian Federation. Having deviated from the rules of legal writing when formulating Article 171.5 of the Criminal Code of the Russian Federation and burdening the composition with administrative prejudice, without eliminating the reasons for the low effectiveness of the application of Article 14.56 of the Administrative Code of the Russian Federation, the legislator blocked the implementation of Article 171.5 of the Criminal Code in practice. According to the author, the inevitability of administrative liability of illegal creditors can be ensured by excluding restrictions on the subject from Part 1 of Article 14.56 of the Administrative Code of the Russian Federation, as well as changing the approach to determining the end of the specified offense, linking it not with the date of conclusion of the contract, but with the date of presentation by the creditor of documents for the organization of enforcement of court decisions on debt collection. The implementation of administrative responsibility, as well as a change in the judicial practice of debt collection in favor of the pawnbroker, which excludes the «interests» of the illegal creditor from the sphere of state protection, will prevent illegal actions in the financial market, and eliminate the need for a criminal ban. The preservation of the criminal act will require changes in Article 171.5 of the Criminal Code of the Russian Federation, the author’s version of which is proposed in the paper.

INFRASTRUCTURAL ASSURANCE OF THE MECHANISM FOR REGULATING IMBALANCES IN THE MOVEMENT OF FINANCIAL RESOURCES OF THE UKRAINIAN ECONOMY IN THE CONTEXT OF EXTERNAL FLUCTUATIONS

The article proves that the state regulation of negative manifestations in the functioning of the financial architecture of the national economy is carried out on the basis of a list of effective instruments of national financial policy, directly fiscal and monetary. It is determined that the subjects of ordinary state regulation of the financial architecture of the national economy are the National Bank of Ukraine, the National Commission on Securities and Stock Market, other regulatory bodies (such as the Antimonopoly Committee of Ukraine and the Ministry of Finance of Ukraine and others). It is proposed to include in the goals of such regulation: protection of socio-economic interests of potential participants in financial architecture; equal access of relevant market participants to various components of the financial architecture; support of healthy competition in the financial market, level of transparency and openness, gradual integration into the international financial architecture. It is concluded that the presented strategic directions for state regulation of negative manifestations in the functioning of the financial architecture of the national economy are aimed at forming a reliable system for protecting the rights of investors, as well as protecting socio-economic interests of relevant consumers of financial services. The regulatory mechanism is presented, under which we propose to understand the interconnected system of subjects, forms, instruments and objects of financial market regulation, which operates to achieve sustainable development of financial architecture and all its components, which is generally aimed at improving the sustainability of national economy.

The Fintech Industry in Romania - Assessing the Level of Acceptance for the Financial Services Consumers

The Fintech Industry in Romania - Assessing the Level of Acceptance for the Financial Services Consumers

Interrelation between State Regulation and Self-Regulation in the Cryptocurrency Market

The rapid development of the cryptocurrency market makes us think about the need and subject of regulation of activities related to their issuance, placement, storage and circulation. The question arises whether the activities that are related to them are entrepreneurial or professional, related to the commodity or financial market, subject exclusively to state regulation, exclusively self-regulation or both types of regulation at the same time. The authors come to conclusions that will allow building a theoretical basis for a more systematic perception of the cryptocurrency market in the future, including revealing the concept and legal nature of cryptocurrencies, the features of these objects of civil rights that require their free circulation in the financial market, the role of private entities in their creation and use. It is concluded that the activities related to the turnover of cryptocurrencies are entrepreneurial, unregulated activities in the capital market as part of the financial market. Special attention is given to public interest in the framework of the circulation of cryptocurrencies, in particular to national security issues, protection of the weak side of transactions using cryptocurrencies, protection of personal data. In particular, the authors acknowledge that intermediary activities in the cryptocurrency market involving financial services consumers should be regulated and recognized as professional. The authors, on the one hand, point to the need to ensure state regulation of the use of cryptocurrencies, on the other hand, emphasize that a balance must be achieved between public and private interests in this area, that it cannot be over-regulated, which will ensure stable economic growth in the digital environment.

Do credit unions have distinct objectives? Evidence from executive compensation structures

AbstractCredit unions compete directly with commercial banks in markets for consumer financial services yet receive an exemption from federal corporate income tax. Commercial banks claim that credit unions are no different than banks and that the credit union tax exemption represents an unfair competitive advantage. Credit unions counter that while they offer similar products and services, they differ from commercial banks in terms of structure and mission, given their not‐for‐profit, cooperative status. In this paper, we test for substantive differences in the objective functions of commercial banks and nonprofit credit unions by comparing CEO compensation structures. Drawing on the relevant principal–agent literature, we provide several arguments to support the hypotheses that credit union boards of directors establish lower‐powered incentive contracts with their CEOs relative to similarly sized commercial banks, and offer lower total compensation. We find that credit union CEOs receive approximately 250% less performance‐based compensation relative to CEOs of similarly sized community banks. Bank CEOs also earn approximately 15% to 20% more total compensation on average. The results are generally robust to controlling for CEO‐ and board‐level characteristics, local economic conditions, and institution‐level indicators of size, growth, complexity, liquidity and risk. The findings suggest important differences in incentive structures and objectives between banks and credit unions.

УПОЛНОМОЧЕННЫЙ ПО ПРАВАМ ПОТРЕБИТЕЛЕЙ ФИНАНСОВЫХ УСЛУГ: СТАТУС И ПРАКТИКА ДЕЯТЕЛЬНОСТИ НА СОВРЕМЕННОМ ЭТАПЕ

In this article, the author examines the features of the constitutional and legal status of the Commissioner for the rights of consumers of financial services and its place among the functioning commissioners in various fields of activity, as well as issues that arise in the courts when applying the provisions of the Federal Law » On the Commissioner for the Rights of Consumers of Financial Services», establishing the procedure for the pre-trial settlement by the financial commissioner of disputes between consumers of financial services and insurance organizations under contracts of compulsory insurance of civil liability of vehicle owners( CTP), voluntary insurance of vehicles( CASCO), voluntary insurance of civil liability of motor vehicle owners (DSAGO).

ЦИФРОВІЗАЦІЯ РЕГУЛЮВАННЯ ТА НАГЛЯДУ ЗА ДІЯЛЬНІСТЮ ФІНАНСОВИХ УСТАНОВ

The article examines the peculiarities of the processes of organizing regulation and supervision of the activities of institutions of the financial sector with the help of modern information, communication and digital technologies, an analysis of the practice of digital transformations in the financial sector based on the use of digital channels of financial customer service is carried out, the factors, conditions and problems preventing the introduction of new supervisory and regulatory technologies in Ukraine are identified. It is proven that the development of digital technologies in the financial sector has formed a fundamentally new approach to the interaction of financial institutions, consumers of financial services and regulators based on the creation and functioning of digital ecosystems. The factors that determine the need for the development and use of new supervisory and regulatory technologies and mechanisms are characterized, the main ones of which are the activation of the processes of digital transformation of the financial sector, the creation of digital financial institutions, the introduction of digital lending models, the transfer of certain types of activities to cloud services and the strengthening of interaction with decentralized financial markets. The conditions, advantages and disadvantages of using the complex of Suptech and Regtech digital technologies are determined, as well as the main results of their implementation for regulators and financial institutions, taking into account the prospects of further digitization of the financial sector. It has been proven that the main advantages of using Suptech and Regtech technologies are ensuring a high level of consolidation of information resources and effective digital interaction between regulators and financial institutions, simplifying the implementation of regulatory requirements, reducing administrative costs for their compliance, expanding the scope of supervision, simplifying the processes of preparation and reporting, increasing the effectiveness of risk monitoring and management. Recommendations for the introduction of new regulatory and supervisory technologies in the financial sector have been developed, a structural and logical scheme for the organization of regulation and supervision of the activities of financial institutions based on Regtech and Suptech technologies has been proposed, and the main areas of improvement of regulatory and supervisory mechanisms based on the use of such modern digital technologies have been identified as artificial intelligence, Big Data, cloud computing and machine learning in order to ensure the efficient and stable functioning and development of the financial sector of Ukraine.

Factors influencing the acceptance of financial technology by consumers of traditional financial services in Portugal

Digital technologies are driving a process of reshaping the value proposition of existing financial products and services. Areas such as digital currencies, payments, funding, investment, risk management and insurance are experiencing major changes driven by the adoption of financial technology. Consumers by other side are increasingly adopting new information technologies and digital resources. Value chains tend to no longer present standard solutions to become more dynamic with personalised solutions, integrating physical or digital products/services, developed from information about consumer preferences. The objective of implementing financial technology in traditional financial services, allows an improvement in the experience and efficiency of the services provided. To accomplish this goal is essential identifying the variables across the entire market that influence consumer behaviour, with the aim of achieving a relevant digital relationship and value generation for all current and potential users.

Factors influencing the acceptance of financial technology (FINTECH) by consumers of traditional financial services in Portugal

Factors influencing the acceptance of financial technology (FINTECH) by consumers of traditional financial services in Portugal

РАЗВИТИЕ ФИНАНСОВОЙ ГРАМОТНОСТИ КАК НЕОБХОДИМОЕ УСЛОВИЕ СОЦИОКУЛЬТУРНОЙ АДАПТАЦИИ ИНОСТРАННЫХ СТУДЕНТОВ

Financial literacy of foreign students is an important condition for their successful social and cultural adaptation. Universities should contribute to the transformation of foreign students into literate and active consumers of financial services by developing their skills in budget planning, savings plan creation, and financial opportunities usage in the country of study. These skills will allow foreign students to finance their study, to rent or buy a flat, to find a job. Unfortunately, insufficient attention is paid to the development of financial literacy of foreign students in Russian universities. The article presents the results of a sociological survey of foreign students of SUSU aimed to assess the level of their financial literacy. The results of the survey showed that the students had problems in managing personal finances and using financial opportunities in the country of study. Thus, the research aim is to identify the level of financial literacy of foreign students of the South Ural State University (SUSU) and offer a way for its improvement. The authors assessed the financial literacy of foreign students; revealed the demand for knowledge in the field of personal finance management; determined the sufficiency of training programs and forms of their implementation; offered a way to improve the financial literacy of foreign students. The authors developed a concept to increase the level of financial literacy of international students that is realized in the form of additional training integrated into the education process. The model offers various forms to improve students’ competence in effective management of personal finances. The originality of the study is in the design and testing of an integrated approach aimed at improving the financial literacy of foreign students that allows to increase the effectiveness of socio-cultural adaptation.

"The behavior of the consumer of financial services in the post-pandemic period "

The COVID-19 pandemic has had a profound impact on the global economy, and the financial services sector has been no exception. The way in which consumers interact with financial institutions and products has changed significantly in the past year, and these changes are likely to continue in the post-pandemic period. In particular, the rise of digital banking and payments has accelerated dramatically, as has the move towards contactless transactions. At the same time, concerns about data security and fraud have increased, as criminals have sought to take advantage of the upheaval caused by the pandemic. As a result, the behaviour of the consumer of financial services is likely to change significantly in the post-pandemic period. Financial institutions must be prepared to adapt their products and services to meet the needs of their customers in this new environment. Research shows that the behaviour of the consumer of financial services has changed in the post-pandemic period. The increase in awareness of the importance of financial planning and saving has led to a change in spending habits. Consumers are now more likely to research comparison shop and make decisions based on value, rather than price. They are also more likely to use online resources to research and compare products and services. These changes in behaviour are likely to continue in the post-pandemic period, as consumers become more mindful of their finances.

ТЕХНОЛОГИИ ИСКУССТВЕННОГО ИНТЕЛЛЕКТА В БАНКОВСКОМ И ФИНАНСОВОМ СЕКТОРАХ

Recently, the issues of placing new technologies on the market of consumers of financial services, remote access and verification technologies for the purpose of information protection, customer service technologies in various fields have been increasingly discussed. Particular attention is paid to the problems of transition to the provision of financial services through digital services, the impact of financial literacy and distrust of new financial technologies, that is, the predominance of conservative views in the management of the organization. The development of technologies directly related to the processing, transmission, receipt, output, presentation of information is inextricably linked with the development of illegal receipt of this information, thereby raising the question of the security of data systems. The banking and financial sectors are more susceptible to cybercrime, so it is here that significant attention is paid to the protection of the information structure. In order to form a sustainable development of the cybersecurity mechanism, the issue of ensuring information security with the help of AI technologies remains relevant.

Subjects of the civil process: a modern approach

The article is devoted to the problem of the composition of the subjects of the civil process at the present stage. The basis of the procedural doctrine of the subjects of civil and arbitration process are the works of scientists-proceduralists of the pre-revolutionary and Soviet periods. Most of the scientific studies that substantiate the connection between the subjects of civil procedure and the court as an obligatory participant in civil procedural legal relations belong to them. At the dawn of the procedural doctrine, there were two opposite theories: one reflected the view of civil procedural legal relationship as a private law relationship between the court and the persons involved in the case, the other proceeded from the understanding of civil procedure relations as public law, power relations. Later, an approach took root in science, according to which the civil procedure is a legal relationship, the obligatory participant of which is the court considering the case, by virtue of which this relationship has a public law nature. At present, against the background of the differentiation of procedural forms of protection of violated rights and legitimate interests, a new procedural institution is being introduced into the civil process - judicial reconciliation. The legal status of a judicial conciliator is very complicated and has two sides: on the one hand, he does not participate in the administration of justice, on the other, he acts on behalf of the respective court. On the basis of a theoretical analysis of the institution of judicial reconciliation, a conclusion was made about the public-law status of a judge-conciliator and it was proposed to refer him to the first group of subjects of the civil process - the court. At the same time, the idea of the need to revise the foundations of the system of subjects of the civil process was rejected in connection with the emergence of new “legal figures”: the Commissioner for Human Rights and the Commissioner for the Rights of Consumers of Financial Services. It has been proven that these subjects fully meet all the characteristics of the persons participating in the case, and must occupy an independent procedural position in their system.

Challenging the decision of the financial commissioner in court: distribution of the burden of proof

This article discusses evidentiary activities with an insurance (financial) company contesting the decision of the financial commissioner, adopted by him at the request of a consumer of financial services at the pretrial stage of resolving an auto insurance conflict. Comparative legal analysis, system-structural analysis, and synthesis make up the methodological basis of the study. The relevance of the study, because of the legal nature of cases challenging the decision of the financial commissioner, reflecting a qualitatively “new” format of the mechanism for protecting the rights of this participant in auto insurance legal relations in the Russian Federation, is because proving in any civil case makes up the “core” of all judicial activities to resolve civil law conflict. The author evaluates implementing the legally established paradigm of adversarial litigation in the consideration and resolution of this category of cases, because the subject of judicial review is the decision of a public competent person, who, as a general rule, is charged with proving the legality and validity of his decision. The article explores the feasibility of implementing an “active” role of the court in implementing this mechanism for protecting the rights of insurance companies.