EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
ISSN: 2750-8587
VOLUME04 ISSUE12
181
DEVELOPMENT OF THE INSURANCE SYSTEM IN THE CONTEXT OF DIGITALIZATION OF
THE ECONOMY
Iskandarov Abdurasul Mirjalil ugli
PhD, Associate Professor of the Department of Finance Karshi Engineering and Economics Institute,
Uzbekistan
Nigora Hamdamova
Master of the "Finance" Department of Karshi Institute of Engineering and Economics, Uzbekistan
AB O U T ART I CL E
Key words:
Banking system, banking sector,
digital bank, digital technologies, digitalization,
strategy, priorities.
Received:
08.12.2024
Accepted
: 13.12.2024
Published
: 18.12.2024
Abstract:
The article presents the key aspects of
the development of the banking sector in the
context of digitalization. The features of digital
banks and trends in their development in
Uzbekistan are revealed. Proposals have been
formulated on priority areas for the use of digital
technologies as part of the further development of
the principles and procedures of management.
INTRODUCTION
Mankind receives a lot of information every day. This is largely due to the ever-growing technical
capabilities of mobile phones, the Internet, smartphones, people's involvement in social networks and
the growth of Internet speed. The transformation of commercial banks and the transition to a digital
banking system is a response to the development and active dissemination of new information
technologies around the world, moreover, digital technologies not only improve the quality of products
and services, but also reduce unnecessary costs. The development of digital financial services is an
important aspect of the development of the country's banking and financial system.
Of course, today we can observe radical changes in society, government, economy, business, trade and
banking due to significant changes in the information system. After the signing of the Presidential
Decree “On measures to radically improve the activities of the Central Bank of the Republic of
Uzbekistan”, the banking system was given the task of organizing “digital” banks and banking divisions
VOLUME04 ISSUE12
https://doi.org/10.55640/eijmrms-04-12-32
Pages: 181-185
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
ISSN: 2750-8587
VOLUME04 ISSUE12
182
specializing in banking and customer service using innovative banking technologies in order to further
improve the quality service.
The concept of "digital banking" has developed rapidly in European countries during 2015-2020. Digital
banks are widely using modern digital innovations to provide their customers with more convenient
and useful services. The digital transformation of financial services will help expand the economic
opportunities for customers, while creating a wide range of opportunities for bank customers, which is
an important step towards increasing financial activity. In a word, one of the prospects of digital banks
is to reduce the cost of services by 40-60% due to the digitalization of these financial sectors. A visit to
the bank will save customers time and money on paperwork.
The banking system of the Republic of Uzbekistan today is introducing modern innovative ICT into
activities, which is of great importance for the development of digitalization of banking activities. The
introduction of ICT in banks inevitably leads to radical changes in structural, functional and personnel
characteristics. And this , in turn, makes it possible to evaluate the effectiveness of transformations not
by quantitative financial results, but by qualitative ones. The effectiveness of the banking system is very
low, and the President of the People's Republic of Uzbekistan Shavkat Mirziyoyev of the Oliy Majlis of
the Republic of Uzbekistan said: "The banking system will last for 10-15 years with the development of
new technologies and new banking products. software". [ 1 ].
In Uzbekistan, in recent years, the digital banking model has been transformed, and it is becoming more
and more popular and widespread. Banks invest in the development of this business model. Digital
technologies are technologies that use electronic computing equipment to record code pulses in a
certain sequence and at a certain frequency [ 2 ]. In Uzbekistan, taking into account the world
experience, President Sh. Mirziyoyev ordered to implement digitalization projects in various areas of
the economy until 2025. He said: “Without the digital economy, the country's economy has no future” [
3 ] .
Analysis of scientific literature.
With great attention, the digitalization of the banking system is studied by theorists and practitioners.
K. Skinner [ 4 ] revealed the conditions for creating a digital bank, its advantages, as well as problems
and prospects. J. Kronkis studied the experience of digitalization in the process of transforming financial
services [ 5 ], etc. Sharma Gaurav, who is based in the HCL Noida SEZ office and leads the global PMG
function on the Next Generation Data Center (NGDC) team in his publication "What is Digital Banking?"
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
ISSN: 2750-8587
VOLUME04 ISSUE12
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it is argued that digital banking is part of a broader context of the transition to online banking, where
banking services are provided via the Internet [ 6 ].
Main part
In Uzbekistan, the banking system is divided into two levels: the first level includes the Central Bank,
the second - commercial banks and credit organizations. The Central Bank makes decisions within its
powers and functions independently of other state authorities and management. [ 7 ]. The monetary
policy of the Central Bank is aimed at ensuring the stability of the banking system and the functioning
of payment systems. The Central Bank manages the banking system through a single digital centralized
system. In the world, several central banks are exploring the issue of the possibility of state support for
digital currency, reducing capital outflow, money laundering , tax evasion, organizing economic activity
. In 2017, the banking system of the Republic of Uzbekistan included 28 commercial banks, then at the
beginning of 2021 there were 33 of them, of which two were registered in 2020. All these banks provide
a traditional range of banking services: lending, deposit operations, settlement and cash services, etc.
(Table 1)
Infrastructure of banks and credit organizations
2021
2022
2023
1. Total-to- credit organizations
104
121
147
in volume including:
Commercial banks, of which:
28
29
30
banks with state stake
11
13
13
other banks
17
16
17
No banking credit organizations, from them:
76
92
117
microcredit organizations
30
37
56
pawn shops
46
55
61
2. branches of commercial banks
862
876
850
3. banking service centers (service offices and mini-
banks)
980
1151
1050
4. 24-hour self- service points (24/7)
902
Source: Central Bank of Uzbekistan. URL:
https://cbu.uz/
*
There are no branches of commercial banks and non-banking credit organizations abroad
According to the table, it can be seen that the number of non-bank
credit institutions for 2017‒2019
increased by 41, taking into account the financing of small businesses and private entrepreneurship,
non-bank credit institutions are flexible and accessible.
In turn, the digital transformation of banks is aimed at improving the needs of customers, as well as the
population and organizations. The process of digital transformation should be based on a digital
strategy developed taking into account the characteristics and needs of a particular bank[8].
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
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Decree of the President of the Republic of Uzbekistan UP-5992 dated May 12, 2020 No. The "Strategy
for Reforming the Banking System of the Republic of Uzbekistan for 2020-2025" was approved. The
strategy was developed in accordance with the State Program for the implementation of the Action
Strategy for the five priority areas of development of the Republic of Uzbekistan in 2017-2021. The
strategy defines the goals, objectives and priorities for the development of the banking system,
directions for the transformation and reform of the banking system in the period 2020-2025, ways to
find possible solutions based on the experience of transforming the financial sector of foreign countries,
taking into account global trends in the financial sector.
The main goal of the Strategy is to carry out comprehensive reforms in the banking system aimed at
creating a modern banking system, increasing the investment attractiveness of banks and introducing
new standards of banking services.
CONCLUSION
Digital transformation is a transformation of bank structures based on the use of digital technologies, a
change in the target orientation of activities that ensures the creation of new services and new market
opportunities. All over the world, digitalization is replacing existing business models in banks, and the
market for mobile and contactless payments, digital currencies, etc. is growing rapidly.
In Uzbekistan, banks, due to strict regulations and a high state share in them, have IT infrastructures
that are not very flexible and difficult to integrate with new solutions. In recent years, banks have
created digital business units in their structure and strive to be in trend. They offer safe storage of
deposits, transactions, acceptance at bank branches, use of a network of information kiosks and ATMs,
issuance of loans, exchange services, etc. These services are provided mainly in branches, partly
through Internet banking and mobile applications.
Statistical assessment of the use of modern ICT by banks makes it possible to monitor the level of ICT
development. In order to change the situation, banks need to have employees with the appropriate
professional knowledge on staff, enter into agreements with leading technology providers and use the
most efficient and effective. Improving the efficiency of the banking system through digitalization will
meet the growing needs of business entities and the population for affordable and high-quality financial
services. In accordance with the studied Strategy, ensuring the financial stability of the banking sector,
reducing the state share in the banking sector, increasing accessibility quality financial services are
priority directions reforming banking systems Uzbekistan.
EUROPEAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH
AND MANAGEMENT STUDIES
ISSN: 2750-8587
VOLUME04 ISSUE12
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REFERENCES
1.
Message from the President of the Republic of Uzbekistan Shavkat Mirziyoyev to the Oliy Majlis .
Official website of the President of the Republic of Uzbekistan . 2 5.01.2020 . [Electronic resource].
URL: https://president.uz/ru/lists/view/3324 .
2.
Digital Economy: Textbook for Universities / Ed. by I.A. Khasanshin.
3.
URL : http :// infocom . uz /2020/09/22/ prezident - bez - cifrovoj - ekonomiki - net - budushhego
- u - ekonomiki - strany /
4.
Skinner K. Digital bank. How to create a digital bank or M.: Mann, Ivanov and Ferber, 2015.308 p.
5.
Cronk J. Digital transformation of financial services is a reliable investment in the future. URL
6.
: https :// www . cisco . com / c / dam / m / ru_ru / internet - of - everything - ioe / iac / assets /
pdfs / cisco_financial_ru pdf
7.
Sharma, Gaurav. "What is Digital Banking?". Venture Skies. Retrieved May 1, 2017. [Electronic
resource]. Access mode: https://www.ventureskies.com/blog/digital-banking
8.
Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" dated
November 11, 2019 No. ZRU-582.
9.
Alekseeva D.A. Digital transformation of the banking system // Bulletin of St. Petersburg State
University of Economics. 2019. No. 5
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