“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 3, ISSUE 01, 2025. YANUARY
ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
378
IMPROVING THE INNOVATION ACTIVITY OF COMMERCIAL
BANKS IN IMPROVING BANKING SERVICES
Toyirov Shahboz Ziyodullo ugli
Karshi University of Economics and Pedagogy
Assistant Professor of Economics
Ulashov Turaxon Otabek ugli
Karshi University of Economics and Pedagogy
2nd year student of economics
Abstract:
This article, written based on the results of my research, is devoted
to the issues of improving the management of innovative activities of commercial
banks of Uzbekistan. The study analyzes the theoretical foundations of banking
innovations, foreign experience, the practice of local banks, and develops proposals
and recommendations for the development of innovative activities. The results of
the study show that commercial banks of Uzbekistan have been paying special
attention to the intensive development of innovative activities in recent years.
Keywords:
banking innovations, digital banking, innovation management,
digital technologies, financing, human resources, security, open banking, artificial
intelligence.
ENTRANCE
Innovation is essential for banks to increase their competitiveness, provide
new products and services, and meet customer needs. At the same time, effective
management of innovation activities plays a crucial role in ensuring the financial
stability of banks and supporting their long-term development.
In the context of modernization and diversification of the economy of the
Republic of Uzbekistan, improving the management of innovative activities of
commercial banks is of particular relevance. In our country, large-scale measures
are being implemented to reform and develop the banking system. In particular,
according to Goal 50 of the Decree of the President of the Republic of Uzbekistan
on the Strategy "Uzbekistan 2030", the tasks of accelerating reforms in the banking
system, increasing the size of the banking services market and developing
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 3, ISSUE 01, 2025. YANUARY
ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
379
competition in the sector are set. At the same time, currently, a number of problems
remain in the banking system of Uzbekistan in terms of introducing modern methods
and tools for managing innovative activities, strengthening interbank competition,
developing new banking products and services and implementing them in practice.
To eliminate these problems, it is necessary to improve the management of
innovative activities of commercial banks, study advanced foreign experience and
adapt them to the national banking system.
Many foreign and domestic scientists have conducted research on the topic of
managing the innovative activities of commercial banks. These studies cover the
essence of innovative activities, the theoretical foundations of its management, and
the practical aspects of introducing innovations in the banking system.
There are different approaches to the essence and content of the concept of
innovative activity. Schumpeter (2020) defines innovation as the main driving force
of economic growth. According to him, innovation brings about structural changes
in the economy by introducing new products, production methods, markets, sources
of raw materials and organizational structures.
Furthermore, Drucker (2019) considers innovation as an integral part of
entrepreneurship. He defines innovation activity as a process aimed at directing
resources to create new opportunities. Drucker also emphasizes the need for a
systematic approach to innovation management.
There are specific features of innovative activity in the banking sector.
Mishkin (2020) defines banking innovation as the introduction of new financial
instruments, technologies, and institutions. He emphasizes the importance of
innovation in improving the quality of banking services, reducing costs, and creating
new sources of income
1
.
Mention (2021) also examines banking innovation in the context of digital
transformation in the financial services industry. He argues that digital technologies
are fundamentally changing the traditional banking business and creating a need to
introduce new innovative solutions.
A number of studies have also been conducted in Uzbekistan on the
development of innovations in the banking system. Jumaev (2022) analyzed the
trends in the development of innovation processes in the banking system of
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
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ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
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Uzbekistan. He emphasizes the need to improve the legal framework for the
implementation of banking innovations in our country, expand the use of digital
technologies, and increase the innovative potential of banking specialists.
Abdullaeva (2023) studied the current issues of financing the innovative
activities of commercial banks. In her opinion, the introduction of new mechanisms
for financing innovative projects, including the use of venture financing and
crowdfunding, is of great importance in stimulating banking innovations.
ANALYSIS AND RESULTS
Today, the banking system of our country is in a stage of rapid development,
and banks are striving to increase the efficiency of their activities through the
introduction of digital technologies, financial innovations, and modern services.
According to the Central Bank of the Republic of Uzbekistan, as of January
1, 2023, there were 31 commercial banks operating in our country. These banks play
an important role in the development of innovative activities and serve to increase
the quality and scope of banking services.
To improve the management of innovative activities of commercial banks, it
is advisable to implement reforms and measures in the following areas:
Development of digital banking.
The rapid development of digital
technologies also requires fundamental changes in the banking sector. Through the
development of digital banking, it is possible to increase the speed, convenience and
efficiency of banking services. For this, it is necessary to widely introduce mobile
banking, online services, cloud technologies and artificial intelligence. In
accordance with the Resolution of the President of the Republic of Uzbekistan No.
PQ-87 dated January 28, 2022, a large-scale set of measures has been established to
further develop digital banking and introduce modern banking technologies in our
country by 2026. In particular, it is planned to increase the number of users of the
mobile banking system to 15 million people in 2023, and to 18 million people in
2024.
Development of innovative banking products and services. Commercial banks
need to constantly develop new and innovative banking products and services to
meet the changing needs and demands of customers. Today, innovative solutions
such as remote banking services, QR code payments, NFC technologies, virtual and
augmented reality are becoming increasingly popular. According to the results of
2021, more than 100 types of innovative banking products and services were
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 3, ISSUE 01, 2025. YANUARY
ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
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introduced in Uzbekistan. Further increasing this indicator and implementing
innovative banking services on a large scale are of great importance in ensuring the
competitiveness of banks.
Development of innovative competencies of bank employees.
In order to
effectively organize and manage innovative activities, it is necessary to improve the
relevant knowledge, skills and qualifications of bank employees. To develop the
innovative competencies of employees, it is necessary to regularly organize training
courses, training and seminars, improve professional development programs, and
ensure the active participation of employees in the development and implementation
of innovative projects. At the same time, it is also important to introduce a system
of encouraging innovation and motivating employees in banks. In 2023, it is planned
to organize more than 100 training courses and training programs to develop the
innovative competencies of employees of banks in Uzbekistan.
Development of an open banking ecosystem.
The concept of open banking
implies the cooperation of banks with external partners, fintech companies and third-
party providers. Through open API (Application Programming Interface)
technologies, banks can integrate their services into external applications and
platforms, thereby expanding the range of innovative services. The development of
an open banking ecosystem for Uzbek banks will allow for collaborative
innovations, new business models and the creation of additional sources of income.
By 2024, it is planned to provide 10 large banks in Uzbekistan with open APIs and
integrate with more than 100 partner organizations.
Increasing financial inclusion and digital financial literacy development
.
Increasing financial inclusion is of great importance to ensure the widespread
availability of innovative banking services. This requires expanding access to
banking services, developing digital payment infrastructure, and offering simplified
and affordable banking products for retail customers. At the same time, increasing
the digital financial literacy of the population and developing skills to use innovative
banking services are also urgent tasks. According to the results of 2022, the total
number of retail customers in Uzbekistan exceeded 32 million, which is a 42%
increase compared to 2019. Further expanding the reach of banking services and
increasing financial inclusion remain priorities in the coming years.
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
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ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
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Introducing new mechanisms for financing banking innovations To
effectively organize innovative activities, it is necessary to strengthen their
financial support .
Today, along with traditional sources of financing for banking
innovations, new financing mechanisms such as venture funds, joint investments,
crowdfunding platforms can also be widely used. It is planned to create funds worth
$200 million in Uzbekistan to finance innovative banking projects in 2023-2024.
These funds will be directed to support the development and implementation of new
innovative solutions.
For the introduction of regulatory sandboxes and innovative projects
creation of experimental legal regimes.
It is necessary to create a favorable legal
environment to support and encourage innovations in the banking sector. Regulatory
sandboxes provide special legal spaces for the introduction and testing of innovative
solutions. They allow startups and fintech companies to test and improve their
products without serious legislative restrictions. In Uzbekistan, favorable conditions
for the development of innovative banking services are also created by introducing
regulatory sandboxes and creating experimental legal regimes. It is planned to
launch regulatory sandboxes in 5 large commercial banks by 2024.
International cooperation and study of best practices.
Studying and
effectively using best practices in foreign countries is important in the development
of banking innovations. Uzbek banks should expand cooperation with leading
companies in the fintech sector, reputable financial institutions and innovation
centers, implement joint projects, and actively participate in international arenas. In
2022, more than 30 international cooperation agreements and memorandums were
signed by leading banks of Uzbekistan. Further strengthening and expanding such
international relations will allow for the exchange of knowledge and experience in
the field of innovations.
Improving the management of innovative activities of commercial banks in
Uzbekistan requires the implementation of comprehensive measures, such as the
widespread introduction of digital technologies, the development of innovative
banking products and services, the development of bank employees' competencies,
the formation of an open banking ecosystem, increasing financial inclusion, the
implementation of new financing mechanisms, and the creation of a favorable legal
environment. Consistent reforms and a systematic approach in these areas will
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 3, ISSUE 01, 2025. YANUARY
ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
383
increase the competitiveness of the banking system, ensure its innovative
development, and contribute to the sustainable growth of our country's economy.
Research and analysis on improving the management of innovative activities
of commercial banks show that the strategic importance of introducing and
developing innovations in the banking system is growing. Today, commercial banks
operating in our country face important tasks in the large-scale application of
innovative solutions, active mastery of digital technologies, and the introduction of
new business models.
According to the results of the Central Bank of the Republic of Uzbekistan for
2022, the number of innovative banking products and services introduced by
commercial banks operating in our republic is steadily increasing .
Mechanisms for supporting and financing innovations by commercial banks
are also being consistently improved. In 2023, a special fund worth $150 million
was established in Uzbekistan to support innovative projects of banks. These funds
will be used to finance innovative ideas, support startups, and stimulate research and
development.
At the same time, special attention is being paid to the introduction of modern
information security systems and ensuring cybersecurity in the banking sector. After
all, as digital technologies develop, the risk of cyber threats also increases.
According to the results of 2022, the amount of funds spent by Uzbek commercial
banks on ensuring information security exceeded $120 million, which is 35% more
than in 2021.
World experience shows that for effective management of innovations in
commercial banks, it is advisable to establish separate innovation centers or
laboratories within the bank. These structures will perform the tasks of developing
innovative projects, testing them and integrating them into the banking activities.
Currently, 12 large commercial banks of Uzbekistan have established their own
internal innovation centers, and it is expected that other banks will popularize this
experience in the near future.
CONCLUSION
In conclusion, improving the management of innovative activities of
commercial banks remains one of the urgent tasks of today. The consistent
implementation of modern trends such as digital banking, mobile technologies,
artificial intelligence, Big Data analysis and cloud services in banking activities will
“JOURNAL OF SCIENCE-INNOVATIVE RESEARCH IN
UZBEKISTAN” JURNALI
VOLUME 3, ISSUE 01, 2025. YANUARY
ResearchBib Impact Factor: 9.654/2024 ISSN 2992-8869
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create opportunities for our commercial banks to increase their competitiveness in
the global financial market and provide better quality services to customers. The
currently implemented reforms, adopted regulatory and legal documents and
financial support mechanisms will undoubtedly serve as an important factor in
increasing the innovative potential of our country's banking system.
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