INTERNATIONAL EXPERIENCE IN THE DEVELOPMENT OF DIGITAL BANKING SERVICES AND PROSPECTS FOR THEIR EFFECTIVE APPLICATION

INTERNATIONAL SYMPOSIUM “ADVANCED RESEARCH IN ECONOMICS AND BUSINESS MANAGEMENT”, SEPTEMBER 19, 2025 726 INTERNATIONAL EXPERIENCE IN THE DEVELOPMENT OF DIGITAL BANKING SERVICES AND PROSPECTS FOR THEIR EFFECTIVE APPLICATION Samandar Raimberdiev UBS Tashkent branch, teacher of the Department of Economics https://doi.org/10.5281/zenodo.17289215 Annotation. Since the early days of our country’s independence, the implementation of fundamental economic reforms in the banking system has become one of the key directions of national economic policy. At present, the ultimate objective of commercial banks is to maximize profits, and achieving this goal requires not only the steady growth of returns on bank assets but also the optimization of expenses. In this process, particular emphasis should be placed on the qualitative aspects of enhancing the profitability of bank assets, which carries significant practical importance. Attaining this, in turn, necessitates the ability of each commercial bank to effectively manage its financial resources. Keywords: intelligent automation, revenue streams, digital banking brand, digital channels, digital branch of the bank. The first bank to offer its services via the Internet emerged in 1995 under the name “First Security Network Bank”. As a result of electronic services, the bank’s assets increased by USD 110 million in its first year, with an average monthly capital growth of 20 percent, while the number of customer accounts rose by tens of thousands. Although it transformed into a fully virtual bank in 1997, it ultimately failed due to a lack of customer trust and was subsequently acquired in 1998 by the U.S.-based “Royal Bank Financial Group.” This bank operated exclusively within the digital sphere, with no physical branch offices for customer interactions. Through the bank’s website, clients were able to open and manage various types of accounts, make payments for goods and services, and check the balances of their personal accounts. The bank’s clientele was distributed across 45 U.S. states. By December 2001, each of the eight largest banks in the United States had at least one million online users, while over 19 million U.S. households were managing their bank accounts online[1]. In 2005, banks began providing services in online mode, which naturally required the adaptation of banking legislation to real-time operations. For this reason, the Federal Financial Institutions Examination Council (FFIEC) developed regulations and guidelines for financial institutions. In particular, these included conducting risk-based assessments, evaluating customer notification programs, and implementing security measures for the authentication of remote payment transactions[2]. Since the 2000s, and particularly after Apple Corporation introduced the iPhone in 2007, banking access channels began shifting from personal computers to smartphones. As a result, banks started offering mobile device–based banking services to their clients. From 2007 onward, mobile communication tools became an essential platform for bank customers. Today, Bank of America continues to be a leader in the banking sector, providing innovative services to more than 24 million active mobile users and over 30 million total users[3]. INTERNATIONAL SYMPOSIUM “ADVANCED RESEARCH IN ECONOMICS AND BUSINESS MANAGEMENT”, SEPTEMBER 19, 2025 727 According to a study conducted by the European Information Technology Corporation, over the next five years there will be four major transformational challenges and opportunities for the future of banking. – Meeting the comprehensive needs of customers. Based on research by the Digital Banking Report agency, considering the most significant trend of the past four years, it is deemed appropriate for financial institutions to shift from physical interactions to digital communication. For digital banks and credit unions, the challenge of meeting customer needs while reducing routine visits and costs remains pressing; however, if these issues are effectively addressed, they may translate into substantial benefits for banks[4]; – Optimizing costs. Due to the efficiency of digital competition, banks and credit unions must consider differentiating themselves from non-bank operations and adopting intelligent automation. In addition, institutions will need to reengineer office processes and replace outdated infrastructure[5]; – Creating new revenue streams. The use of specialized software by banks contributes to cost reduction, revenue growth, and the emergence of new opportunities. By optimizing the traditional banking ecosystem, banks are able to develop new products and segment their markets, thereby offering differentiated value propositions and expanded monetization opportunities. – Developing security and compliance systems. Although for many financial institutions customer data itself represents a form of “product,” the need for advanced security measures and sophisticated artificial intelligence–driven insights will become a defining factor beyond compliance and customer trust. Such measures can lead to cost reductions and foster business growth. According to IBM’s report Designing a Sustainable Digital Bank, four models of digital banking are identified and explained: 1. Model A – Digital banking brand. Traditional banks, seeking to adapt to more advanced and demanding customers, create new brands through innovative products and offerings. These brands are then applied to the already functioning banking infrastructure. Examples include FRANK by OCBC in Singapore and LKXA by CaixaBank in Spain. 2. Model B – Banks with digital channels. Unlike Model A, these banks create a network that enhances the existing customer experience. They rely on the parent bank’s backoffice systems and license, while reselling services through a more user-friendly interface. Examples of this model include Moven in the United States and Rocketbank in Russia. 3. Model C – Digital subsidiary of a bank. This model combines two directions: digital user experience and new business processes. Banks operating under this model function as separate entities in practice. One example is Hello Bank, the digital subsidiary of BNP Paribas. 4. Model D – Fully digital bank. Such banks provide their entire range of products exclusively through digital technologies. A prime example is Fidor Bank in Germany. The characteristics specific to each of these four models are outlined below. The data suggest that Models A, B, and C operate under the license of their parent bank, while only Model D embodies a fully-fledged digital banking institution (Table 1). Table 1. Four models of digital banking[6] Model A - B – S – bank D – INTERNATIONAL SYMPOSIUM “ADVANCED RESEARCH IN ECONOMICS AND BUSINESS MANAGEMENT”, SEPTEMBER 19, 2025 728 digital bank brand digital to the channels has bank digital branch complete digital bank Products, sales, marketing Independent Independent Independent To your bank charter has it's not Channels Many in cases with the founding bank together or in a position Independent Independent To your bank charter has it's not Back office Founder bank from the bottom uses Founder bank from the bottom uses Independent To your bank charter has it's not Bank charter To your bank charter has it's not To your bank charter has it's not To your bank charter has it's not To your bank charter has it's not Thus, Model D banks are considered fully digital banks, which, in addition to selling products and delivering marketing services digitally, also possess independent channels, independent back-office systems, and their own independent banking charter. From the above, it can be concluded that a genuine digital bank delivers its core products and services digitally, while its customers conduct their daily banking activities through digital channels. The infrastructure of a digital bank is designed for real-time digital interaction and is highly adaptable to new advancements in digital technologies. REFERENCES 1. Online Banking Report, Jan. 2012. 2. “Authentication in an Internet Banking Environment”. Federal Financial Institutions Examination Council, accessed March 24, 2014, http./Ywww.ffiee.gov/pdf/authenticationguidance.pdf. 3. www.bankofamerica.com – The official website of “Bank of America”. 4. https://www.digitalbankingreport.com – The official website of the Digital Banking Report journal. 5. https://thefinancialbrand.com – The official website of The Financial Brand 6. “Designing a sustainable digital bank” Learning from the digital pioneers-IBM Sales and Distribution White Paper Executive Summary// Copyright IBM Corporation 2015-p.3.