Abstract
The current phase of banking development is under the great impact of digital technologies. Digital transformation in banking can be defined as the structural changes in bank economics and the banking sector driven by financial technologies. The past decade has borne witness to the transformative power of digitalization as new, enabling financial technologies continue to shape competition and existing market structures in financial services. Digitalization is impacting banks, banking sectors, and the financial system at large as newly unleashed competitive forces force incumbents to reassess opportunities and threats, and strengths and weaknesses, all leading to a transformation of business models. To survive, banks and other incumbent financial firms have embraced digitalization and suitably revised their business models. Moreover, the main focus should not only be placed on the economic dimension of banking transformation but also present institutional (mainly legal) and socio-economic results. The discussion embraces the legal conditions of the new entrants to the banking sector and the regulatory barriers for such entrants, the regulations of the digital ways of providing banking services, such as cybersecurity, and the intellectual property rights (e.g., the division of intellectual property rights between banks and technology providers). The social dimension of these sector-level considerations should refer to the market structure and the inclusion of disadvantaged firms and customers, as well as to the impact of artificial intelligence on the structure of human resources in banking.