Digital transformation in the banking industry

Abstract

The article presents a forecast of economic development in the era of digitalization. The author sees the division of the economy in the postindustrial era into two major components: the exponential economy, the development of which will be much more effective and will enter the global level, where competition from local markets will move to global markets, and the indicator of business success will be a multiple increase in capitalization; and the digital economy, which will exist only in the virtual space, human-invented entities will be digitized. The author believes that this will be a kind of machine economy created by machines and serviced by machines, a human will not be able to fit into this kind of economy due to the physical inability to perform such a number of operations in the established time intervals. At the same time, the digital economy will be a global superstructure over the exponential economy. Particular attention is paid to the analysis of the future of the financial industry associated with the transition to the digital economy. The number of analytical operations required by banks to create relevant and popular products will increase so much, they will become so complex that only those banks that implement the most appropriate data analysis algorithms will be able to compete. The most efficient algorithms will redesign the market configuration in favor of their owners. This will cause the ‘collapse' and the merger of banks, and the author does not exclude that the only remaining Bank in the market as a result of this process will be the Central Bank of the country.