The Impact of Digital Technology Development on Economic Stability Under Commercial Bank Competition and Directions for Its Improvement (Zenodo)

Summary

• Digitalization can lower banks' costs, widen access to financial services and improve risk management.p.1
• It also brings cyber risk, dependence on a small number of technology providers and competitive barriers for smaller banks.p.1
• Competition among Uzbekistan's banks takes place in service quality and speed, price, product differentiation and customer experience.p.3
• Digitalization proceeds through remote services, payment infrastructure, scoring and data analytics, artificial intelligence, and open banking partnerships.p.3
• Listed risk factors are cybersecurity, technological dependence, digital inequality, aggressive competition and a shortage of qualified staff.p.4
• The paper concludes that digitalization should go hand in hand with regulation, information security and staff training.p.5

Key insights

1. Competition among banks is described as the main reason for adopting digital technologies, with a positive effect on economic stability.p.5
2. Digital players such as Click and Payme and digital banks have changed the competitive environment in Uzbekistan.p.3
3. Digitalization supports stability and creates risk; the outcome depends on technological capacity, quality of supervision and risk culture.p.4
4. South Korea brought digital banks to market through regulatory sandboxes, and Turkey introduced a national instant payment system.p.4
5. The paper proposes testing new fintech products in a regulatory sandbox before wide rollout.p.5
6. It recommends developing credit bureau and open API standards so that small banks have equal opportunities.p.5
7. It recommends including cyberattack and system outage scenarios in stress tests.p.5