Why banks are investing millions in digitalization

Alyona Shevtsova
3 min readMar 5, 2021


The online services speed and simplicity are increasingly driving and adjusting the daily habits of customers. This directly relates to the way users interact with their banks. If earlier the physical bank branches and the standard form of banking services didn’t have any alternatives and were the only irreplaceable basis of the financial services market, then today many factors have changed the market position.

The banks that want to be in tune with the customers and maintain high ranking are investing wildly in strengthening IT departments and in cooperation with fintech companies in different directions from blockchain to lending. According to the EY consulting agency study, 38% of clients would change their financial services provider for another with better digital capabilities. Let’s discuss what triggered such mainstreaming of fintech and digital services in the banking sector.

New players in the financial services market

New and more flexible players are challenging traditional banks, striving to gain a market share. And they are succeeding, because users are now sidestepping the traditional idea of ​​a bank and use the phone for most financial transactions. The banks are now forced to be maximally open to the new technologies due to the behavioral changes associated with the rapid adoption of the latest technology and the payment preferences of Generation Z, which is now taking the centre stage. However, it’s more difficult for them than for fintech companies to meet today’s audience needs due to the tight banking structure and regulation.

In addition to relatively small fintech companies, the big four GAFA — Google, Apple, Facebook, Amazon — which also entered the financial services market is a strong competitor to banks. Google plans to launch full-fledged personal bank accounts through Google Pay. The company works with more than 10 American banks and credit institutions to launch the project. Facebook launches its own cryptocurrency, and one of the company’s services, WhatsApp, offers the option to pay for goods and services. Apple issues its own credit cards. And Amazon is expanding in all financial services areas — payments, lending, insurance, etc. — creating its own financial ecosystem.

Of course, it’s worth noting that most of these services aren’t yet available both in Ukraine and in most European countries, but the companies are planning to enter the European financial services market in the near future.

The emergence of neobanks

We won’t talk here for long. Everything is clear. Neobanks are about speed, convenience and ease of use — what we value so much in today’s pace of life. The neobanks have already reached 39 million users worldwide with their personal finance management tools, low fees and excellent user experience. According to a Kearney consulting company report, the number of neobanks customers in Europe could reach 85 million by 2023 — about 20% of the population over the age of 14. This trend is confirmed and promoted by several neobanks in Ukraine.

Covid — 19

And the transition of banks to digital was, of course, significantly accelerated by the Covid-19 pandemic. This affected work at all levels, from document flow, apps, and to the introduction of blockchain technologies. The new digital solutions for remote customer service (remote identification, digital signature, etc.) were necessary for the comprehensive services provision by banks. Amid the pandemic, 53% of banks around the world reported the launch of new solutions to enable full operation during a lockdown. Also, the use of electronic money and the introduction of digital currencies by central banks have become more widespread, which I have already referred to.

The banks together with the regulators have performed a great task to create a more digitalized banking ecosystem, and there are still many challenges ahead. The implemented solutions inspire and motivate for further development.



Alyona Shevtsova

CEO of the international payment system LEO, the shareholder of IBOX Bank