REGULATING THE DIGITAL TRANSFORMATION OF BANKS: CURRENT PRACTICES AND CHALLENGES

Abstract

The digital transformation of the banking sector represents one of the defining structural processes of the contemporary financial system, characterised by the accelerated integration of digital technologies, the expansion of non-bank actors, and a fundamental reconsideration of the balance between financial stability, innovation, and technological sovereignty. The digitalisation of financial services -  encompassing artificial intelligence, distributed ledger technologies, and data infrastructure -  is reshaping banking business models while simultaneously challenging the effectiveness of existing regulatory frameworks. The findings indicate the multi-layered nature of contemporary regulation, which operates simultaneously at the institutional, functional, and technological levels. Structural contradictions between prudential requirements and innovation imperatives are identified, particularly with regard to the treatment of intangible assets, cybersecurity governance, and technological sovereignty policy. An international comparison reveals that the European Union favours an approach based on harmonisation, openness, and coordination, while China pursues a centralised model oriented towards control and strategic planning. The article concludes that effective regulation of digital banking transformation requires the development of hybrid mechanisms capable of reconciling stability, innovation, and competitiveness.